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The following link will take you to questions and answers that will provide employers and payroll service providers information that will help them as they prepare to implement the Additional Medicare Tax which goes into effect in 2013. The Additional Medicare Tax applies to individuals’ wages, other compensation, and self-employment income over certain thresholds; employers are responsible for withholding the tax on wages and other compensation in certain circumstances. The IRS has prepared these questions and answers to assist employers and payroll service providers in adapting systems and processes that may be impacted.
Click on the link below to be taken to the IRS Q&A:
Questions and Answers for the Additional Medicare Tax - From the IRS
For further tax planning considerations and questions, contact Schutte & Hilgendorf, pllc – CPAs. We offer free initial consultations. Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
The Net Investment Income Tax is imposed by section 1411 of the Internal Revenue Code (IRC). The NIIT applies at a rate of 3.8 percent to certain net investment income of individuals, estates and trusts that have income above the statutory threshold amounts. The Net Investment Income Tax goes into effect on Jan. 1, 2013.
For more information directly from the IRS, click on the link below for a FAQ page.
3.8% NET INVESTMENT INCOME TAX – EFFECTIVE 2013 – FAQS
For further tax planning considerations and questions, contact Schutte & Hilgendorf, pllc – CPAs. We offer free initial consultations. Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
Provided by Professional Education Services, LP. :
For further information or questions, contact Schutte & Hilgendorf, pllc – CPAs. We offer free initial consultations. Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
Summary of the American Taxpayer Relief Act of 2012
On January 2, 2013 President Barack Obama signed into law the American Taxpayer Relief Act of 2012. Passage of this Act averted the so-called “fiscal cliff” and made “permanent” changes to the tax code. As with all Congressional legislation, however, no change is truly permanent so readers should understand that any of the components of the legislation could be changed in the future.
In a nutshell, the American Taxpayer Relief Act of 2012 extended specific provisions of two major Bush-era tax bills, the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs Growth Tax Relief Reconciliation Act of 2003. A compromise measure, the Act gives permanence to the lower rate of much of the Bush tax cuts, while retaining the higher tax rate at upper income levels that became effective on January 1 as a result of the expiration of the Bush tax cuts.
A. MAJOR TAX PROVISIONS
The following is a summary of some of the major tax provisions of the Act:
1. Individual Income Tax Rates
The American Taxpayer Relief Act of 2012 retains the 10%, 15%, 25%, 28%, and 33% income tax brackets. The 35% tax bracket ends at $400,000 for single filers. Above this threshold, there’s a new 39.6% tax bracket. Thresholds for the new 39.6% bracket for 2013 will be:
- Married Filing Jointly: $450,000 of taxable income;
- Qualifying Widow(er): $450,000 of taxable income;
- Head of Household: $425,000 of taxable income;
- Single: $400,000 of taxable income; and
- Married Filing Separately: $225,000 of taxable income.
2. Capital Gains Rate
The American Taxpayer Relief Act of 2012 retains the 0% and 15% tax rates on qualified dividends and long-term capital gains, and adds a new 20% tax rate that would apply to taxpayers who fall within the new 39.6% tax bracket. Which capital gains tax rate will apply depends on what tax bracket a person is in. The new capital gains tax rates for 2013 and future years will be:
- 0% applies to capital gains income if a person is in the 10% and 15% tax brackets;
- 15% applies to capital gains income if a person is in the 25%, 28%, 33%, or 35% tax brackets; and
- 20% applies to capital gains income if a person is in the 39.6% tax bracket.
3. Alternative Minimum Tax
The American Taxpayer Relief Act of 2012 provides the following AMT exemption amounts for 2012, and provides that these amounts will be indexed for inflation annually:
- Married Filing Jointly: $78,750;
- Qualifying Widow(er): $78,750;
- Single: $50,600;
- Head of Household: $50,600; and
- Married Filing Separately: $39,375.
4. Estate Tax Rates
The American Taxpayer Relief Act extends the $5 million exclusion. The new top tax rate for estates is 40%.
5. Pease Limitation
The American Taxpayer Relief Act resulted in reinstatement of the so-called “Pease Limitation” that caps the amount of itemized deductions high income earners are able to take. Under the new law, itemized deductions are limited for the following taxpayers:
- $300,000 for married couples and surviving spouses;
- $275,000 for heads of household;
- $250,000 for unmarried taxpayers; and
- $150,000 for married taxpayers filing separately.
These levels will be adjusted for inflation after 2013.
6. Personal Exemption Phaseout
The American Taxpayer Relief Act also phases out the amount of the personal exemption high earners are entitled to take. The total amount of exemptions a taxpayer may take is reduced under the new law by two percent for each $2,500 or portion thereof over which the taxpayer’s adjusted gross income exceeds specific levels, i.e., $300,000 for married couples and surviving spouses.
B. MISCELLANEOUS PROVISIONS
The Act contains numerous other provisions relating to both tax deductions and tax credits, including the following:
- The student loan interest deduction is permanently extended. The American Taxpayer Relief Act eliminates the rule that the deduction can be claimed only during the first 60 months of repayment;
- Mortgage insurance premiums will continue to be deductible as part of the mortgage interest deduction through the end of 2013;
- The sales taxes deduction, in lieu of a deduction for state income taxes, is temporarily extended through the end of 2013;
- The charitable deduction for contributing real property for qualified conservation purposes is temporarily extended through the end of 2013;
- The above-the-line tuition and fees deduction is temporarily extended through the end of 2013;
- The child tax credit remains unchanged and is permanently extended. The maximum amount of the child tax credit is $1,000, and the credit is partially refundable. However, the provision that reduces the earnings threshold for the refundable portion of the child tax credit to $3,000 will expire at the end of 2017;
- The dependent care tax credit remains unchanged and is permanently extended. Daycare expenses up to $3,000 for one child and $6,000 for two or more children qualify for the tax credit, and these amounts are not indexed for inflation;
- The adoption credit is permanently extended. The credit is worth up to $10,000 (indexed for inflation); and
- The American opportunity tax credit is extended temporarily through the end of 2017.
- The American Taxpayer Relief Act also allows the two-year old payroll tax cut to expire, meaning employees will see immediate reductions in their paychecks.
In all, the bill included $600 billion over ten years in new tax revenue. The Act did not permanently address the spending cuts that were set to take effect if the legislation had not passed. Rather, it merely extended by two months the time Congress has to reduce spending or have the so-called “sequestration” law take effect that will have a major impact on federal spending.
If you have questions related to any of the above, call Schutte & Hilgendorf, pllc – CPA’s for more information and a free initial consultation. Schutte & Hilgendorf, pllc – CPA’s, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals, small businesses, non-profits, and homeowners associations in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
IRS/DOL Crackdown
If you classify any workers as “independent contractors”—or have plans to do so—2013 is the year to make sure you get that classification correct.
Below is Topic 762 - Independent Contractor vs. Employee provided by irs.gov to help in identifying which classification a worker falls:
To determine whether a worker is an independent contractor or an employee under common law, you must examine the relationship between the worker and the business. All evidence of control and independence in this relationship should be considered. The facts that provide this evidence fall into three categories – Behavioral Control, Financial Control, and the Type of Relationship.
Behavioral Control covers facts that show whether the business has a right to direct or control how the work is done, through instructions, training, or other means.
Financial Control covers facts that show whether the business has a right to direct or control the financial and business aspects of the worker’s job. This includes:
- The extent to which the worker has unreimbursed business expenses
- The extent of the worker’s investment in the facilities used in performing services
- The extent to which the worker makes his or her services available to the relevant market
- How the business pays the worker, and
- The extent to which the worker can realize a profit or incur a loss
Type of Relationship covers facts that show how the parties perceive their relationship. This includes:
- Written contracts describing the relationship the parties intended to create
- The extent to which the worker is available to perform services for other, similar businesses
- Whether the business provides the worker with employee-type benefits, such as insurance, a pension plan, vacation pay, or sick pay
- The permanency of the relationship, and
- The extent to which services performed by the worker are a key aspect of the regular business of the company
For more information, refer to Publication 15-A (PDF), Employer’s Supplemental Tax Guide, or Publication 1779 (PDF), Independent Contractor or Employee. If you want the IRS to determine whether a specific individual is an independent contractor or an employee, file Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Contact Schutte & Hilgendorf with your questions related to independent contractor vs. employee. Schutte & Hilgendorf, CPAs, is a full service public accounting firm providing tax planning, preparation, audit, accounting, and QuickBooks consulting to individuals and small business in the Prescott and greater Yavapai County area. Call us at 928-778-0079 or visit www.prescottaccountants.com
IRS Plans January 30 Tax Season Opening For 1040 Filers
IRS Special Edition Tax Tip 2013-01, January 9, 2013
Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.
The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.
The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.
“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”
The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.
“The best option for taxpayers is to file electronically,” Miller said.
The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.
The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.
Who Can File Starting Jan. 30?
The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.
Who Can’t File Until Later?
There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.
The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.
As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.
Updated information will be posted on IRS.gov.
For additional information about the 2013 tax filing season or for tax planning assistance, contact Schutte & Hilgendorf, CPAs, a prescott CPA firm providing tax prepration, planning, accounting and auditing services to Yavapai County and Northern Arizona. Contact us 928-778-0079 or check out our website for udpated information at www.prescottaccountants.com.
All giving is valuable to those in need, but from a tax perspective, not all giving is rewarded with a tax write-off. Here is what you need to keep in mind:
1. YOU MUST ITEMIZE FOR FEDERAL FILING TO DEDUCT CHARITABLE GIVING. You can be as generous as you want, but a tax deduction is limited to those who itemize personal deductions and forego the standard deduction amount.
2. DEDUCTIONS ARE ALLOWED ONLY FOR IRS-APPROVED CHARITIES. You cannot claim a deduction for money you give directly to individuals. Check to see that a charity is IRS-approved at www.irs.gov/Charities-&-Non-Profits/Search-for-Charities.
3. ANNUAL DEDUCTIONS ARE LIMITED WITH RESPECT TO ADJUSTED GROSS INCOME. You cannot deduct cash donations in excesss of 50% of your adjusted gross income. Unused deductions can be carried forward for up to 5 years.
4. DEDUCTIONS REQUIRE SUBSTANTIATION. Your word or even a canceled check isn’t good enough. If you donate $250 or more, you must obtain a written acknowledgment from the organization, specifying your gift and stating that no goods or services were received in exchange. Special rules apply for donations of vehicles.
5. SOME GIFTS REQUIRE APPRAISALS. If you donate property valued at more than $5,000, you need a qualified appraisal. This must be done by someone who has the credentials to be a qualified appraiser.
6. DEDUCTIONS OF APPRECIATED PROPERTY PROVIDE A DOUBLE TAX BENEFIT. If you donate appreciated property that you have owned for more than a year, such as stock, you can deduct the value of the property on the date of the gift. What’s more, you don’t have to report any capital gain on the appreciation; it effectively becomes tax free to you.
7. CASH DONATIONS MADE BY YEAR-END ARE DEDUCTIBLE NOW EVEN IF RECEIVED IN THE NEW YEAR. If you mail a check to the charity on December 31, it is deductible on your 2012 return, even though the charity does not receive the gift until 2013. Also, you can charge a donation to a credit card; you can take the deduction in 2012 even if you pay the credit card bill in 2013.
8. OUT OF POCKET EXPENSES ARE DEDUCTIBLE. If you spend any money helping a charity, you can deduct those if you have substantiation. The value of your time volunteered to a charity, however, is NOT deductible. The mileage on your vehicle for driving to volunteer IS deductible at the rate of $0.14 a mile. Be sure to keep a record of the mileage, including the date and purpose of each charitable trip.
These tips are brought to you by Schutte & Hilgendorf, PLLC, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparaton and planning, Quickbooks accounting and setup, to individuals and small businesses. Contact us for a free consultation at (928) 778-0079.
November 29, 2012
As 2012 comes to a close, we wish you all SEASONS GREETINGS from Schutte & Hilgendorf, and thank you for your loyalty to our firm and for your referrals. We wish you all the best for your business and family in 2013.
We encourage you to have our firm calculate the expected taxable income or loss of your business and determine if there is anything that can be done to reduce any tax liability for 2012. This is important if your business net income is significantly different from 2011.
We also take this opportunity to pass on some tax information that will affect (or could affect) your business in 2012 and 2013.
DEPRECIATION
Section 179 Deduction- In 2012, your business can deduct up to $139,000 of Section 179 property placed in service during the year, subject to certain limitations. Section 179 property is tangible personal property for use in your business, but does not include land or buildings. TIP – it is advantageous to time equipment purchases in the last half of the year – your cash flow is increased and you get the same benefit in depreciation for the year whether you purchase in January or December.
As current laws are written, for 2013, Section 179 deduction will be limited to $25,000. If you are anticipating any large equipment purchases in the near future, it may be wise to make those purchases in 2012. Vehicles have their own special limits – depending on the type of vehicle.
Bonus depreciation – A 50% additional first-year depreciation deduction is available for qualified property placed in service in 2012. As of right now, this is set to go away in 2013.
HEALTH INSURANCE CREDIT
If your small business qualifies, you may be eligible for a tax credit for providing health insurance coverage for your employees. The rules are a complex, so if you may be considering this, please contact us.
WORK OPPORTUNITY CREDIT
For 2012, this credit is available only in the case of qualified veterans that your business hires by 12/31/12. This is set to expire in 2013.
BUSINESS MILEAGE RATES
Mileage rate for business for 2012 is 55.5 cents per mile. The IRS has announced this rate is going up to 56.5 cents for 2013.
MINIMUM WAGE INCREASE FOR ARIZONA
As of January 1, 2013, the minimum wage increases to $7.80 per hour. This must be met for all hourly employees, except for certain tipped employees.
1099-K
If you accept credit card payments for services, the credit card issuers will be issuing 1099-K’s to you in January for payments received in 2012. While the IRS has relaxed some rules they originally imposed, they will be watching that total revenues reported for tax purposes are equal to or above the amount reported on the 1099-K’s. We will require you bring those forms to us that you receive so we can verify revenue reported. This will avert future notices from the IRS of unreported income.
W-9’s
We also recently sent those of you that it might apply to, a letter requesting you get a W-9 completed from all your vendors. This also is to avert IRS notices. The IRS is increasing its enforcement of having these completed forms on file.
HIRE YOUR SPOUSE AND SET UP A HSA
Health Savings Accounts can be a big benefit not only for the health insurance benefits, but also as a deduction for your business. If your spouse is not employed outside the home or does not have an employer health plan to take advantage of there are options for you.
ADVERTISING TIP
Studies have shown in this electronic age, very few people consult the Yellow Pages for business referrals. Spend that money on a website and use more social media to advertise to get more “bang for your buck”.
As each business is unique, this is only a brief review of some tax savings ideas. If you think any of these tips can be beneficial or required for your business, give us a call or email to discuss in more detail. Visit our website often www.prescottaccountants.com for more articles and tips posted regularly.
HAPPY HOLIDAYS
Schutte & Hilgendorf, PLLC
(928)778-0079
loish@prescottaccountants.com
November 29, 2012
We are in the time of year for “Seasons”:
THANKSGIVING – When we express Gratitude for our Clients; their Loyalty and Referrals
RELIGIOUS HOLIDAYS – When we wish everyone and their families “Happy Holidays”,”Merry Christmas” and extend our wishes for Peace and Joy
NEW YEARS – When we wish everyone a Happy New Year filled with Success and Happiness
TAX SEASON – This one isn’t as fun as the above, but a necessary part of life in America. The following is an update on how we can try and make this easier for everyone, some tips to reduce your tax liability and update you on the changes for the 2012 income taxes and possible coming changes for 2013.
First – the tax provisions that expired at the end of 2011 and are no longer available for this tax year:
- Deduction of expenses for school teachers
- Tuition and fees deduction
- Deduction for state and local sales tax – no deduction of the sales tax for new vehicles
- Credit for non-business energy property
Next – the tax provisions set to expire on December 31, 2012 (pending Congressional action):
- The “Bush Tax Cuts” which include
- Lower tax rates on ordinary income, capital gains and qualified dividends
- No phase-out for itemized deductions and exemptions
- Marriage penalty relief (tax brackets, standard deduction)
- Increases to the following benefits – child tax credit, dependent care credit, earned income credit, American opportunity credit, and adoption credit.
- The 2% payroll tax cut for employees
WHAT’S NEW- 2013 This is part of the Health Care law and is not part of the Income Tax negotiations going on in Washington DC now:
A new .9% tax on earned income and a 3.8% tax on investment income for those with income of at least $200,000(single)/$250,000(married).
WHAT TO DO
While we don’t know yet what the final 2013 tax rates will be, it may make sense to accelerate income/deductions into the 2012 tax year to take advantage of lower rates now. These may include:
. Selling stocks or other assets that have a taxable gain
Taking qualified IRA distributions this year rather than next year, if you are 59 1/2 (some exceptions apply to this age qualification)
- Accelerating medical deductions into 2012 if you are under age 65. The threshold increases from 7.5% to 10% of AGI for those under age 65 in 2013.
- If you own a traditional IRA or SEP IRA, convert it to a Roth IRA, and recognize the conversion income this year.
- Consider delaying some deductible expenditures until 2013 to lower your taxable income, such as, paying for property taxes in 2013, or delaying sizable, out of pocket medical procedures until 2013 (if you won’t make the 2012 threshold anyway.
OTHER TAX SAVING TIPS
If you expect to owe taxes this year and you receive a paycheck, increase your Federal withholding for the rest of the year rather that make an estimated tax payment – this will reduce the chance of an underpayment penalty.
State Tax Credits- The credits for Arizona are still in effect for 2012 and a new one has been added:
- Working Poor Credit -$250 (single) $400 (married)
- Public School Credit – $250 (single) $400 (married)
- School Tuition Credit – $503 (single) $1,006 (married) – NOTE slight increase
- For 2012, an individual may claim an additional credit for making a donation to a School Tuition Organization if the amount contributed is greater than the maximum amount that can be claimed for the original STO credit. The additional maximum is $500 (single) and $1,000 (married).
As with all charitable contributions, you must have a receipt from the organization documenting the donation – the amount, date, and statement that you received no tangible benefit from the gift. The IRS is much more stringent in requiring these documents and we will ask for them during our tax interview.
This is not intended to be an all inclusive review, but to give you food for thoughton your individual tax situations and to encourage you to call or email us ifyou have questions regarding your situation before the year ends.
See you all soon
Schutte & Hilgendorf, PLLC
(928) 778-0079
loish@prescottaccountants.com
The link to the article below was published on the National Council of NonProfits’ website. It contains lots of facts about the Small Employer Health Credit and how to claim the credit, which is applicable to both for-profit and nonprofit entities with 25 or fewer full time employees.
Small Employer Health Credit
If you have questions about this credit or need assistance in claiming it, contact Schutte & Hilgendorf, a full service CPA firm, providing auditing, accounting and tax services for individuals, small businesses, non-profits and homeowners associations throughout Yavapai County and Northern Arizona. Call us at 928-778-0079 or email info@prescottaccountants.com
2011 YEAR END TAX CONSIDERATIONS AND PLANNING
FOR YOUR BUSINESS
The Holidays are here and that brings us thoughts of sugarplums and year-end close for your business. Below are some items for you to consider.
PURCHASE OF BUSINESS EQUIPMENT:
Qualifying new property placed in service before December 31 can be written off under 100% bonus depreciation. The bonus rate is scheduled to fall to 50% in 2012.
Section 179 depreciation applies to new or used equipment that can also be written off 100% up to a $500,000 purchase cost. This phases out after $2,000,000 of total qualifying purchases. Section 179 expensing will still be available in 2012, but the limits will be much lower.
As in previous years there are special rules and limits for vehicle purchases, so contact us if you have questions regarding those.
The qualifying equipment can be purchased on credit and expensed in 2011 as long as it is placed in service before year end.
IMPROVEMENTS ON YOUR BUSINESS REAL PROPERTY:
There are a variety of energy–related incentives that are scheduled to expire at the end of 2011. If you have, or are still considering some energy efficient improvements to your commercial building such as lighting, heating, cooling, and hot water systems this could be beneficial. There are certain standards that must be met to qualify.
VEHICLE USE EXPENSE IN YOUR BUSINESS:
A mileage log is required to prove your business-mile percentage if you use the vehicle for personal use or for commuting to work. This is required whether you use the standard mileage rate or actual vehicle expense, (i.e. gas, repair, etc). A value for personal mileage on a business vehicle needs to be calculated and added to your W-2 as an “auto fringe”. Call us for details or to calculate the personal value.
OFFICER WAGES AND HEALTH INSURANCE:
S-Corporation owners MUST pay themselves a reasonable wage and issue a W-2 to themselves. A “reasonable wage” is often described as what you would have to pay someone else to do your job. If you have taken “draws” out of the company this year and no wages, call us to reclassify an amount to wages and calculate payroll taxes on the amount. These payroll taxes must be paid by January 15, 2012 to avoid interest and penalties.
As a business owner, your personal health insurance premiums paid through the business should be added to your W-2 and thus deducted in full on your personal return– if they are not added to your W-2, the deduction is not a business deduction and will be taken on Schedule A- Itemized Deductions subject to the 7.5% medical adjustment. Call us for more information on how to handle this for maximum tax benefit.
HEALTH CARE TAX CREDIT FOR EMPLOYEES
If you pay any portion of health insurance premiums for employees you may be eligible for a credit on your tax return. There are eligibility requirements and the credit is limited to those who have 25 or fewer employees with average income of $50,000 or less. If you think you may qualify for this credit, contact us for more information.
HIRE ACT
The HIRE ACT, passed in 2010, provided credit for employers for each new person hired between February 4, 2010 and December 31, 2010 who had been unemployed for 60 consecutive days prior to hiring. The payroll tax credit was given on payroll taxes paid in 2010, but an additional credit is allowed if this employee was employed by you for the following consecutive 52 weeks. The additional credit is allowed to be taken on the 2011income tax return if this requirement is met. If this applies to your company, be sure to let us know.
PAYROLL
As of January 1, 2012, Arizona minimum wage will increase to $7.65. This amount is higher than the Federal minimum; however, Arizona employers must follow the Arizona statute.
THINGS TO DO:
Start gathering your business receipts, update your mileage logs, and tally up your income and expenses for the year. Remember to note the business reason for any travel, meals, and entertainment expenses on your receipts. If this is an over-whelming task for you, call us for help. We do provide this service at an hourly fee.
If you have employees, make sure you have up-to-date information on them – W-4 and A-4’s for deductions, addresses, name change if married/divorced during the year, and verify you have the correct Social Security number before you issue the W-2’s. If you pay year-end bonuses, be sure to add the amount to the W-2 and calculate and pay the additional payroll tax.
If you paid service providers/subcontractors over $600 during the year, make sure you have current addresses and a business EIN # or Social Security number for them. You must issue a 1099-MISC form to them by January 31. This also includes anyone you paid rent to if the amount is $600 or above. If you need assistance in this area give us a call.
We hope that this year was a prosperous one for your business. Call us before year-end at 928-778-0079 if you need an updated estimate of tax liability and to discuss any tax planning considerations.
Remember the filing deadline for Corporations and S-Corporations is March 15 – personal and Partnership returns is April 15.
This tip brought to you by Schutte & Hilgendorf, CPA’s, a Prescott firm serving the greater Yavapai County, providing audit, accounting, bookkeeping, tax preparation and planning, Quickbooks accounting and setup to individuals and small businesses.
Contact us for a free initial consultation 928-778-0079
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We Are The Piece That Fits.
Schutte & Hilgendorf PLLC
3140 Stillwater Drive
Prescott, AZ 86305
Phone: 928-778-0079
Fax: 928-778-0261
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