Oct. 1, 2013 deadline to send employee notices
The Affordable Care Act (ACA) requires all employers provide notice of "exchanges" or "marketplaces" to employees by Oct. 1, 2013, and to any new hires after this date within 14 days of the start date. All emloyees, regardless of full/part-time emloyment status, must receive the notice.
The notice should include the following:
- Information on the existence of exchanges, a description of the services provided and how to contact and seek assistance from the exchange;
- Notice that employees may be eligible for a premium tax credit or cost sharing reduction through the exchange if the employer?s plan does not meet minimum value;
- Notice that employees may lose the employer contribution if they opt-out of group coverage to purchase coverage through the exchange.
This free program sounds interesting for small business with fairly simple accounting needs. Worth a look anyway. Take a look at the Sleeter blog above.
Minnesota law changes affect 2012 taxes for some individuals
ST. PAUL, Minn.: Minnesota has adopted most federal tax changes enacted by Congress for the 2012 tax year under a new law signed by Gov. Mark Dayton. The changes will provide $...18.5 million in tax benefits to Minnesotans.
Conforming to federal tax law also helps provide clear and consistent rules that help reduce taxpayer confusion and makes it easier to calculate and file state tax returns. Legislation enacted February 20, 2013, adopts all of the federal tax provisions enacted since April 14, 2011 that affect federal taxable income for tax year 2012, except:
- The increased federal section 179 expensing is subject to an addback of 80 percent in the first year and a five-year recovery, as under current state law, and the additions related to the phase out of itemized deductions and personal exemptions, and the standard deduction for married taxpayers, which were enacted in 2011, are unaffected by this new law.
The new law eliminates the need for the 2012 Schedule M1NC, Federal Adjustments. It also eliminates the need to add back the federal educator expenses and college tuition and fees deductions on lines 16 and 37 of Schedule M1M, Income Additions and Subtractions, for tax year 2012. For taxpayers who have not yet filed their 2012 Form M1:
- Do not complete Schedule M1NC. The schedule is now obsolete.
- Do not complete lines 16 and 37 of Schedule M1M. This adjustment on the 2012 Minnesota return is no longer required of taxpayers who deducted educator expense or college tuition and fees on their federal return.
- Use the Schedules M1NR, M1CD, M1ED, and M1MT, revised February 2013, if they are:
- part-year residents or nonresidents
- claiming the child and dependent care credit, or the K-12 education credit
- reporting alternative minimum tax
For those taxpayers who have already filed their Minnesota return and included Schedule M1NC or reported an amount on Schedule M1M, lines 16 or 37:
- Do not file an amended return.
- The department will review filed returns that reported an amount on Schedule M1M, lines 16 and 37, and/or included Schedule M1NC, to determine if adjustments are required based on available information. When possible, the department will make needed adjustments, notify taxpayers of changes and send any additional refunds due.
- Taxpayers will be notified if further action is required by them.
The new law, which applies only to the 2012 tax year, conforms Minnesota's income tax laws to most federal changes enacted through January 3, 2013.
For additional information including the most current forms, schedules and instructions go to the Minnesota Department of Revenue website at www.revenue.state.mn.us.
If you have kids in K-12, you may be missing this state deduction.
When a renter is unable to obtain a Certificate of Rent Paid (CRP) from their landlord, the Department of Revenue offers an alternative that can be used to file for a Property Tax Refund called the Rent Paid Affidavit (RPA). To use an RPA to apply for the refund, you will need to provide proof of payment in the form of receipts or cancelled checks for the rent you paid to the landlord.
You can order a 2012 RPA beginning March 15, 2013 by calling Taxpayer Assistance at (651) 296-3781. The information you will need to provide to the representative will be the name, address and phone number of the landlord, the dates of your rental, the number of adults who lived there and the total amount of rent paid. We will mail you two copies of the RPA. Using an RPA requires you to file a paper return. You will need to mail your completed M1PR form, one copy of the RPA, and proof of payment.
Also on 4-1-13, the Hermantown local sales and use tax increases from 0.5% to 1%.
The deduction for mortgage insurance could easily be missed this year. The 2012 Form 1098 does not contain a box for qualified mortgage insurance premiums. This is likely due to the fact that the new tax bill was passed in January when mortgage companies were already in the process of issuing 1098s. The mortgage insurance premiums are deductible for 2012 and 2013, but you will need to let us know if you have them.
You can use this link to check whether donations to organizations are tax deductible. It is also useful to make sure vulnerable adults aren't being scammed.
This is major good news that I haven't heard this mentioned in the news so I wanted to highlight it.
Changes are made to the Alternative Minimum Tax to permanently index it to inflation and thus to avoid the annual "patch" that was previously required to prevent it from impacting middle-class families
The employee medicare rate is unchanged for most people but is up .9% for wages above $200,000. There is no change in the employer rate.
The social security taxable wage limit has increased to 113,700.
On January 2, 2013, President Obama signed the American Taxpayer Relief Act of 2012 (H.R. 8). The bill raises tax rates on income above $400,000 for individuals and $450,000 for couples.
In addition, the temporary Social Security payroll tax reduction that was in effect for tax years 2011 and 2012 has expired. For paychecks dated in 2013 the employee Social Security rate returns to 6.2%.
Limitations for Health Savings Accounts for 2013:
Self-only coverage - $3,250
Family coverage - $6,450
Annual deductible of HDHP (high-deductible health plan):
Self-only coverage - not less than $1,250
Family coverage - not less than $2,500
Annual out-of-pocket expenses for HDHP:
Self-only coverage - not more than $6,250
Family coverage - not more than $12,500
Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
56.5 cents per mile for business miles driven
24 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
The Social Security Administration (SSA) recently announced that Social Security statements may now be viewed online at www.ssa.gov/mystatement. The statements provide workers with an estimate of benefits under current law and an earnings record with Social Security and Medicare for taxes paid over their working career. A printable version of the Social Security statement is available. To get an online statement, a person must be 18 or older and able to provide information that matches their SSA file. After verification, an account is created with a unique user name and password to access the online statement.
Individual Self-Only - $3,250
Family Coverage - $6,250
Minimum Annual Deductible
Individual Self-Only - $1,250
Family Coverage - $2,500
Maximum Annual Out of Pocket:
Individual Self-Only - $6,250
After June 30, 2012, businesses are no longer required to withhold 2 percent from payments made to individual construction contractors.
The IRS is giving unemployed people six extra months to pay their 2011 taxes due without penalty. This applies to wage earners who were jobless at least 30 consecutive days in 2011 or in 2012 up to the April 17 filing deadline. Self-employed taxpayers whose income in 2011 was at least 25% lower than in 2010 also get this same break. Couples with incomes over $200,000 and others with incomes exceeding $100,000 don't qualify. Filers owing over $50,000 are out of luck as well. File Form 1127-A with IRS by April 17 to request the extra time to pay. And keep in mind that interest will still be due on any unpaid balance. And more individuals will be able to pay their back taxes in installments without having to supply detailed financial information. IRS is doubling the threshold to $50,000 to use these streamlined installment procedures and is allowing six years for repayment. You'll have to agree to let the IRS debit your bank account monthly.
From Jennings Seminars
Unemployment benefits. The new law changes several unemployment benefit provisions, including the following:
? Temporarily extends benefits for up to 99 weeks, depending on the state.
? Requires an unemployment insurance beneficiary to be able to work, available to work, and actively seeking work.
? Under certain circumstances, states may enact legislation to require an applicant to submit to and pass a drug test for the unlawful use of controlled substances.
? Allows states to create self-employment assistance programs to help unemployed workers while they are establishing businesses.
The Internal Revenue Service issued its annual ?Dirty Dozen? list of tax scams, reminding taxpayers to use caution during tax season to protect themselves against a wide range of schemes ranging from identity theft to return preparer fraud.
If you didn't receive a W-2 from an employer IRS advises the following steps:
1) Contact employer to verify address
2) If the W-2 is not received by February 14, 2012 contact the IRS and provide the employer's information, dates of employment and estimated wages and taxes withheld.
3) File the 1040 by April 17, 2012 and attach Form 4852 Substitute for Form W-2.
4) Prepare an amended 1040 if the W-2 is eventually received and differs from the tax return numbers used.
National Taxpayer Advocate Nina E. Olson released her annual report to Congress, identifying the combination of the IRS? expanding workload and declining resources as the most serious problem facing taxpayers. The result, the report says, is inadequate taxpayer service, erosion of taxpayer rights, and reduced tax compliance. The advocate expressed her continuing concern that the IRS? expanding use of automated processes to adjust tax liabilities is causing harm to taxpayers and recommended that Congress enact a comprehensive Taxpayer Bill of Rights.
Those who bought a home in 2008 and claimed the First-Time Homebuyer Credit must repay the credit in 15 equal annual installments beginning on the 2010 return. Some tax professionals have confusion with new clients on whether or not the client needs to repay the credit; they claimed the 2009 credit, which requires no repayment or how much has already been paid back. The IRS has released a new tool, First Time Homebuyer Credit Account Look-up, which allows taxpayers to see their balance of the credit and repayment amount.
Payments to corporations are not subject to 1099-MISC except attorneys. Payments of at least $600 to attorney would require a 1099-MISC even if they are incorporated.
To prepare the forms you will need name, address and social security number or EIN. You can obtain this information by having form W-9 filled out for each service provider. It is a good idea to get this form filled out and signed before payment is made whenever possible.
If you receive a social security number, you will fill out the 1099-MISC with the person's name even if they have a business name. If you receive an EIN, you must use the business name.
Low- and moderate-income workers can take steps now to save for retirement and earn a special tax credit in 2011 and the years ahead.
The saver?s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and to 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver?s credit is available in addition to any other tax savings that apply.
from e-News for Tax Professionals
The IRS released standard mileage rates for use in 2012:
Business miles - 55½ cents per mile.
Medical or moving miles - 23 cents per mile
Charitable miles - 14 cents per mile.
Rather than using the standard mileage rates, taxpayers may instead use their actual costs if they maintain adequate records and can substantiate their expenses.
401(k) & 403(b):
Maximum contribution - $17,000
Catch-up contribution (50 and older) - $5,500
SIMPLE or SIMPLE 401(k):
Maximum contribution - $11,500
Catch-up contribution (50 and older) - $2,500
Maximum contribution - 25% of wages up to $50,000 or
20% of SE income after 1/2 SE tax up to $50,000
Traditional & Roth IRA:
Maximum contribution - $5,000
Catch-up contribution (50 and older) - $1,000
The IRS has made changes to its lien filing practices that will lessen the negative impact on taxpayers. The changes include:
- Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens.
- Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill.
- Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement.
- Creating easier access to Installment Agreements for more struggling small businesses.
- Expanding a streamlined Offer in Compromise program to cover more taxpayers.
Following are some tax tips for taxpayers seeking employment:
You can deduct employment and outplacement agency fees paid while looking for a job in your current occupation.
Amounts spent for preparing and mailing copies of resumes to prospective employers are deductible as long as you are looking for a job in your current occupation.
Travel expenses to another location in search of a job in your current occupation are deductible if the primary purpose of the travel is to look for a new job.
You should keep receipts for expenses and documentation of travel to substantiate job search expenses. Qualifying expenses are taken as a miscellaneous itemized deduction on Schedule A (Form 1040), Itemized Deductions, subject to the 2% AGI limitation.
You cannot deduct job search expenses if there is a substantial break between the end of the last job and the time you begin looking for a new job. Also, expenses for taxpayers searching for a job for the first time are not deductible.
Information is from The TaxBook
The Affordable Care Act increased the amount of the credit to as much as $13,170 and made it refundable.
The IRS has indicated that inflation adjustments may be made for 2011 to the phaseout amount, as well as to the maximum credit amount.
Information is from The TaxBook.
Effective for taxable years beginning on or after January 1, 2011, the owner of the account or a person authorized to contribute to the account such as a parent, grandparent, great-grandparent, aunt, or uncle of the beneficiary is allowed the subtraction from income for up to $3,000 of the amount the person contributed to the college savings account or tuition expense program if the beneficiary of the account is the owner's or authorized person's child, grandchild, great-grandchild, niece, or nephew.
Sch E is being re-designed for 2011 - more data will be required, including:
Type of Property - Single Family Home, Condo, Commercial, etc.
Number of Days Occupied
Number of Days Used for Personal Purposes
You will want to start tracking this data right away to make your life easier at tax time!
In the event the government shuts down after midnight on Friday, April 8, all taxpayers should continue filing their tax returns and paying their taxes as normal. The April 18 deadline remains in effect.
The IRS plans to continue accepting all tax returns -- both electronic and paper. Refunds will continue to be processed normally for electronically filed tax returns, and most taxpayers will not see delays for e-filed returns. However, taxpayers should expect delays for paper tax refunds.
Taxpayers can still expect to receive refunds in less than two weeks with direct deposit.
If people have already filed their return and the IRS has started processing their tax return, they generally will see no delays in their refunds being issued. The best source for information will be checking "Where's My Refund" at www.IRS.gov.
Due to a computer processing glitch, the IRS mailed 200,000 CP-14 balance due notices to taxpayers who filed electronically. These notices told the taxpayers that their balance was due by April 15, even if they had already designated automatic withdrawal from their bank accounts.
These notices were not to be processed in the middle of tax season, and instead should have been processed after the database had been updated to account for direct debit payments.
The IRS has stated that if a taxpayer consequently pays twice using direct debit and check, the IRS will automatically issue a refund for any overpayment.
It is important to note that not all taxpayers have received a Notice CP-14 in error. If the bank account listed on the tax return was listed incorrectly, a taxpayer would receive this notice.
Microsoft has released Internet Explorer 9. There may be some compatibility issues with Quickbooks so if you are using Quickbooks you may want to hold off on upgrading your Internet Explorer.
The IRS has a new online tool to make it easier to remember important tax and deposit deadlines. Download the free IRS CalendarConnector and keep it on your computer desktop to check important tax dates on a daily, weekly or monthly basis.
Refunds totaling more than $1.1 billion may be waiting for nearly 1.1 million people who did not file a federal income tax return for 2007, the Internal Revenue Service announced. However, to collect the money, a return for 2007 must be filed with the IRS no later than Monday, April 18, 2011.
IRS will begin accepting tax returns with itemized deductions and other delayed forms after 11 am Eastern time next Monday.
The IRS has announced that for tax years beginning on or after Jan. 1, 2010, most tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the e-Postcard. The threshold was previously set at $25,000 or less. (However, supporting organizations of any size must file the standard Form 990 or, if eligible, Form 990-EZ).
When you have a few minutes to spare, surf over to Microsoft's Office at Work website. You may find that investing just a few minutes there may save you many hours in the future. The site is loaded with business templates (from analysis worksheets to Excel expense reports), software tips and budget designs, all of which are free to download. The website is tinyurl.com/dhghvu.
A dependent has to file a return if the dependent has:
1) Only earned income (W2s, 1099s etc) and the total is more than $5,700
2) Only unearned income (interest, dividends etc) and the total is more than $950
3) Both earned and unearned income and the totalincome is more than $5700 or the unearned income is more than $300
The new tax act reduced employee share of social security from 6.2% to 4.2% for 2011 only. Medicare remains unchanged at 1.45%.
The IRS reminds employers about the new withholding tables released Friday for 2011. Employers should implement the 2011 withholding tables as soon as possible, but not later than Jan. 31, 2011. Publication 15, (Circular E), Employer's Tax Guide, containing the extensive wage bracket tables that some employers use, is available on IRS.gov.
Following last week's tax law changes, the Internal Revenue Service announced Monday that taxpayers affected by three recently reinstated deductions need to wait until mid- to late February to file their individual tax returns. In addition, taxpayers who itemize deductions on Form 1040 Schedule A will need to wait until mid- to late February to file as well.
You can still bring all your return in and have it prepared at your usual time but we may have to delay the actual e-filing. The IRS will announce specific dates in the near future.
Business Miles .51 .50
Medical Miles .19 .165
Moving Miles .19 .165
Charitable Miles .14 .14
Attention! As of January 1, 2011, businesses will be required to make federal tax deposits electronically.
You must be enrolled in EFTPS to pay. If you recently were pre-enrolled in EFTPS and cannot find your PIN, call 888.434.7338. Payments must be scheduled by 8 p.m. ET the day before the due date to be received timely.