BLOG POST: SEPTEMBER 7, 2018
Key tax developments during the second quarter of 2018
The following is a summary of important tax developments that have occurred in April, May, and June of 2018
that may affect you, your family, your investments, and your livelihood. Please call us for more information about
any of these developments and what steps you should implement to take advantage of favorable developments
and to minimize the impact of those that are unfavorable.
... Postcard tax form. The IRS released a new draft version of the 2018 Form 1040, U.S. Individual Income Tax
Return. The new Form is markedly different from the 2017 version of the form and would replace the current
Form 1040, as well as the Form 1040A and the Form 1040EZ. In addition to reflecting a number of changes made
by the Tax Cuts and Jobs Act (TCJA; P.L. 115-97, 12/22/2017), the "postcard" draft form is about half the size of
the current version and contains far fewer lines than its predecessor. However, this reduction in length is
countered by the fact that the draft form has six new accompanying schedules.
... The IRS advises a "payroll checkup." The IRS has encouraged taxpayers who have typically itemized their
deductions to use the withholding calculator on the IRS's website to perform a "payroll checkup," noting that
changes made by the Tax Cuts and Jobs Act (TCJA, P.L. 115-97, 12/22/2017) may warrant an adjustment. TCJA
made a number of law changes, effective for tax years beginning after 2017 and before 2026, that affect the
amount of itemized deductions that can be claimed and whether taxpayers choose to itemize or claim the
standard deduction. They include: nearly doubling standard deductions; limiting the deductions for state and
local taxes; limiting the deduction for home mortgage interest in certain cases; and eliminating deductions for
employee business expenses, tax preparation fees and investment expenses (including investment management
fees, safe deposit box fees and investment expenses from pass-through entities). In light of these changes, some
individuals who formerly itemized may now find it more beneficial to take the standard deduction, which could
affect how much a taxpayer needs to have their employer withhold from their pay. Also, even those who
continue to itemize deductions should check their withholding because of TCJA changes. The IRS warned that
having too little tax withheld could result in an unexpected tax bill or penalty at tax time in 2019, and also noted
that taxpayers who have too much tax withheld may prefer to receive more in their paychecks instead of in the
form of a tax refund.
... Tax reform's effect on vehicle and unreimbursed employee expenses. The IRS has provided updated
information to taxpayers and employers about changes from the Tax Cuts and Jobs Act (TCJA, P.L. 115-97,
12/22/2017) affecting vehicle and unreimbursed employee expenses. Shortly before the enactment of the TCJA,
the IRS released optional standard mileage rates for 2018, as well as the maximum standard automobile cost that
may be used in computing the allowance under a fixed and variable rate (FAVR) plan. However, TCJA made many
tax law changes, including those affecting move-related vehicle expenses, unreimbursed employee expenses, and
vehicle expensing. The IRS advised taxpayers that TCJA generally suspended the deduction for moving expenses
for tax years beginning after 2017 and before 2026, with an exception for certain members of the Armed Forces.
Accordingly, no deduction is allowed for use of an automobile as part of a move using the pre-TCJA 18¢ mileage
rate. For the same period, TCJA also suspended all miscellaneous itemized deductions that are subject to the
2%-of-adjusted gross income (AGI) floor, including unreimbursed employee travel expenses. Thus, the 54.5¢
business standard mileage rate generally can't be used to claim an itemized deduction for unreimbursed
employee travel expenses (but the 54.5¢ rate still applies for expenses that are deductible in determining AGI,
such as for unreimbursed employee travel expenses claimed by reservists and certain state or local government
officials). And, for purposes of computing the allowance under a FAVR plan, the maximum standard automobile
cost may not exceed $50,000 for passenger automobiles, trucks and vans placed in service after 2017 (up from
the pre-TCJA $27,300 for passenger automobiles and $31,000 for trucks and vans).
... Family and medical leave credit. The IRS has provided guidance on the new family and medical leave credit,
which was added by the Tax Cuts and Jobs Act (TCJA, P.L. 115-97, 12/22/2017). Under new Code Sec. 45S, for
wages paid in tax years beginning in 2018 and 2019, eligible employers can claim a general business credit equal
to the applicable percentage (between 12.5% and 25%) of the amount of wages paid to qualifying employees for
up to 12 weeks per tax year while the employees are on family and medical leave, if certain requirements are
met. For purpose of the credit, family and medical leave includes leave for: the birth of an employee's child and
to care for the child; placement of a child with the employee for adoption or foster care; care for the employee's
spouse, child, or parent who has a serious health condition; a serious health condition that makes the employee
unable to perform the functions of his or her position; any qualifying exigency due to an employee's spouse, child,
or parent being on covered active duty (or having been notified of an impending call or order to covered active
duty) in the Armed Forces; and care for a service member who is the employee's spouse, child, parent, or next of
... Inflation-adjusted HSA amounts for 2019. The IRS has released the annual inflation-adjusted contribution,
deductible, and out-of-pocket expense limits for 2019 for health savings accounts (HSAs). Eligible individuals may,
subject to statutory limits, make deductible contributions to an HSA. Employers, as well as other persons (e.g.,
family members), also may contribute on behalf of an eligible individual. A person is an "eligible individual" if he is
covered under a high deductible health plan (HDHP) and is not covered under any other health plan that is not a
HDHP, unless the other coverage is permitted insurance (e.g., for worker's compensation, a specified disease or
illness, or providing a fixed payment for hospitalization). For calendar year 2019, the limitation on deductions for
an individual with self-only coverage under an HDHP is $3,500 (up from $3,450 for 2018). For calendar year 2019,
the limitation on deductions for an individual with family coverage under an HDHP is $7,000 (up from $6,900 for
2018). For calendar year 2019, an HDHP is defined as a health plan with an annual deductible that is not less than
$1,350 (same as for 2018) for self-only coverage or $2,700 (same as for 2018) for family coverage, and with
respect to which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not
premiums) do not exceed $6,750 (up from $6,650 for 2018) for self-only coverage or $13,500 (up from $13,300
for 2018) for family coverage.
... More returns to be filed electronically. The IRS has issued proposed regulations that would require all
information returns, regardless of type, to be taken into account in determining whether a person met the
250-return threshold and thus was required to file the returns electronically. The proposed regs would also
require any person required to file information returns electronically to file corrected information returns
electronically, regardless of the number of corrected information returns being filed. Existing regs provide that
the 250-return threshold applies separately to each type of information return and each type of corrected
information return filed. Accordingly, under the existing rules, different types of forms are not aggregated for
purposes of determining whether the 250-return threshold is satisfied, with the result that fewer taxpayers are
required to file electronically. The proposed regs are proposed to go into effect for returns filed after Dec. 31,
BLOG POST: APRIL 4, 2018
The Oklahoma Tax Commission recently put out this letter reminding us that sales tat is done on a point of sale rule. That applies to sales out of state as well. If you are selling in other states besides Oklahoma, you should be registered to do business in that state and remit taxes to them for their share. Call us if you have any questions!
Oklahoma Tax Commission (OTC) Rule 710:65-18-3 states that when sales are delivered to a purchaser, the sales must be taxed and reported at the delivery location. For example, if your store is in Tulsa but you deliver to an address in Enid, you must charge the tax rate associated with the address in Enid.
To assist you with determining the correct rate to charge on delivery sales, OTC has available an online sales and use tax rate locator system. This system assigns city and county tax rates to all of the addresses, then ZIP+4 and 5 digit zip code areas in the state. It allows you to find the correct address and if necessary the correct ZIP+4 Code area (and corresponding tax rates) for individual addresses.
To determine the tax rate of a specific address, go to: http://oktax.csa.ou.edu/Rate_Locator/.
You can also visit our website at www.tax.ok.gov and select the Online Services tab followed by the Online Filing – Businesses tab. From that menu select the Sales & Use Rate Locator option. To utilize the rate locator, click the Enter the Sales & Use Tax Rate Locator System link, and select the Search By Address option. On this page, the rate tables are also available in a downloadable format.
BLOG POST: MARCH 12, 2018
TRIAD SAFE SHOPPING
Always get a shopping cart, even for one item.
Ready your method of payment by the-unmentionables.
Parking lots and registers are 'Hot Spots" for targeting.
ID, Credit cards, cash-and checks should be kept on you, not in purse.
Men, never carry your wallet in back hip pocket.
One strap purse is safer than two. Never wear cross body purses.
Carry your cell phone on your person, ALWAYS ON!
Never get your method of payment out at the register.
Never push your shopping cart through the register, PULL IT!
Always use a Gel Ink pen when writing a personal check.
Use your debit card as a credit card.
When entering your pin, use your car key or gel pen or stylist-never warm the keys with fingertips.
Before leaving the building, ready your bait money and bait keys.
Walk with confidence, check your 6. (Practice range of motion)
LEAVE CHECK BOOK AT HOME
NEVER CARRY YOUR SOCIAL SECURITY CARD.
BLOG POST: AUG 15, 2017
Schools are either back
open or will be soon. Please look out for School Buses and walkers as they may not look out for you!
BLOG POST: JUNE 30, 2017
We can help you with the confusion and changes. Give us a call over the summer and we can help project your 2017 picture and forward.
BLOG POST: MAY 30, 2017
President Trump’s Tax Plan Summary
Here is a summary of President Trump’s proposals for his tax plan. There is not a lot of detail yet, as this is a merely a proposal and has not yet even been introduced to Congress as a bill. Once it is a bill it must be passed by both the House and the Senate and then signed by the President. I’m not adding any comments or opinions, just presenting you a summary.
C corporation tax rates would be reduced from the current highest rate of 35% to a new flat rate of 15%. Pass-through S corporation and LLC income would also be taxed at 15% rate for small and medium sized businesses (which were not defined).
Corporations would no longer be taxed on a worldwide system, but would be taxed on a territorial system, and a one-time repatriation tax would apply on the foreign earnings of US companies.
The proposal does not include a provision change from the current depreciation system to allowing expensing of all business assets, as originally proposed.
Individual tax brackets would reduce from the current seven different individual tax brackets to three brackets, with rates set at 10 percent, 25 percent, and 35 percent. The prosposal would also double the standard deduction to $24,000 for MFJ, repeal alternative minimum tax and the estate tax and expand the credit for child and dependent care expenses, while also repealing the dreaded net investment income 3.8% surtax.
With the new standard deduction and changed brackets, individual taxpayers with taxable income less than $25,000 and married taxpayers with taxable income less than $50,000 would owe no Federal income tax.
Most individual itemized deductions would be repealed, but the deduction for mortgage interest and charitable donations would be retained.
BLOG POST: MAR 5, 2017
Happy St. Patrick’s Day!
Don’t rely on the luck of the Irish to get your taxes done or handle all the ins and outs of payroll. We are always looking for new clients to assist with their tax needs or other accounting services. We have a great team with over 100 years of collective experience.
We are ready to assist you!
Call 405-943-1272 and ask for Jennifer or email me at email@example.com
BLOG POST: DEC 16, 2016
Recordkeeping Rules for Travel & Entertainment Expenses
The IRS requires taxpayers to follow the recordkeeping rules for T&E (travel and entertainment)
expenses to a “t.” Otherwise, deductions may be denied.
Although the recordkeeping requirements under the standard mileage method aren’t as stringent
as the rules for deducting actual expenses, you still must substantiate the following:
* The amount of business mileage for each business use of the automobile;
* The total mileage (business and nonbusiness) of the automobile during the taxable year
* The date of each business use of the automobile; and
* The business purpose of each business use of the automobile.
To substantiate these automobile expenses with adequate records, a taxpayer must provide (1) an
account book, log, or similar record and (2) documentary evidence (i.e., receipts, paid bills, or
similar evidence) which, in combination, are sufficient to establish the following elements: the
amount of mileage for each business use, the total amount of mileage (business and nonbusiness)
during the taxable year, the date of each business use and the business purpose of each business
The account book, log, or similar record must be prepared or maintained in a “contemporaneous
manner.” A record maintained on a weekly basis may suffice.
BLOG POST: AUG 8, 2016
"COPY" PAPER DRIVE
Sponsored by: Del City Rotary Club
Donate a ream of paper to support the Del City Public Schools between August 1st & August 19th.
Take it by one of local Del City Drop-off sponsors:
Del City Public Library
4200 S Sunnylane Road
4509 SE 15th St
FNB Community Bank
4330 SE 29th St
4600 SE 29th St
Del City City Hall
Del City Chamber
& Welcome Center
3701 SE 15th St
5540 SE 15th St
Monetary donations will also be accepted and will be used to purchase additional paper. Contact firstname.lastname@example.org and we will come by & pick up your donation.
Thank you for your participation!!!
BLOG POST: JUNE7, 2016
There are many scams out there using the IRS as the scare tactic. You may get a prerecorded message via a phone call stating that it is the IRS. They will claim you owe them money and that if you don’t call them back they will turn you over to a collection agency or you might even go to jail! They give you a phone number to call to “resolve the issue”.
Please don’t fall for this scam. The IRS does not call or email to correspond with you. They might drop in for a visit, but never via phone or email. If they have any issue, you will receive correspondence from them via the US Postal Service regarding the matter with instructions on what you need to do to respond.
Please check out any contact you get prior to giving out any personal and confidential information. Here is a link to the IRS website with instructions on how to report scams: https://www.irs.gov/uac/report-phishing.
BLOG POST: March 8, 2016
Happy St. Patrick’s Day!!!
Don’t rely on the luck of the Irish to get your taxes done. We are always looking for new clients to assist with their tax needs or other accounting services. We have a great team with over 100 years of collective experience.
We are ready to assist you!
Call 405-943-1272 and ask for Jennifer or email me at email@example.com
BLOG POST: February 2, 2016
The 2015 PATH Act: small business expensing
The yearly uncertainty for small businesses is over…at least as it pertains to Section 179 expensing limit. Finally fixed asset planning will be able to be done on-going instead of wondering if the last year rules will still apply.
Here is an overview of these tax provisions in the Protecting Americans from Tax Hikes Act of 2015. The new law, retroactive so as to not leave out tax years beginning in calendar year 2015:
makes permanent the eligibility for expensing of most computer software;
makes permanent the eligibility for expensing of qualified real property (certain leasehold building improvements, retail building improvements and restaurant property); and
makes permanent the ability to revoke an election, or change its specifics, without IRS consent.
And, for tax years beginning after calendar year 2015 (post-2016 years), the new law:
indexes both the $500,000 and $2 million limits for inflation;
ends the exclusion from expensing of air conditioning and heating units; and
removes the $250,000 cap on qualified real property expensing; the capped expensing nevertheless also had to be applied against the $500,000 limit.
I hope this information is helpful. If you would like more details or have questions, please contact us.
Congress passed and the President signed into law the "Tax Increase Prevention Act of 2014" (TIPA, or "the Act"). The Act extends through 2014 a host of depreciation and expensing provisions for businesses that had expired at the end of 2013, including generous Code Sec. 179 expensing and phaseout limits; 15-year writeoff for qualifying leasehold improvements, restaurant buildings and improvements, and retail improvements; and 50% bonus first-year depreciation. That gives us a couple of weeks for tax planning!!!
New law. TIPA extends 50% first-year bonus depreciation for one year so that it applies to qualified property acquired and placed in service before Jan. 1, 2015 (before Jan. 1, 2016 for certain longer-lived and transportation property).
New law. Under the luxury auto dollar limits, depreciation deductions (including Code Sec. 179 expensing) that can be claimed for passenger autos are subject to dollar limits that are annually adjusted for inflation. For passenger automobiles placed in service in 2014, the adjusted first-year limit is $3,160. For light trucks or vans, the adjusted first-year limit is $3,460. Light trucks or vans are passenger automobiles built on a truck chassis, including minivans and sport-utility vehicles (SUVs) built on a truck chassis that are subject to the Code Sec. 280F limits because they are rated at 6,000 points gross (loaded) vehicle weight or less.
The applicable first-year depreciation limit is increased by $8,000 for any passenger automobile that is "qualified property" under the bonus depreciation rules of Code Sec. 168(k) and which isn't subject to a taxpayer election to decline bonus depreciation.
New law. TIPA Act extends for one year the election to increase the AMT limitation in lieu of bonus depreciation so that it applies to property placed in service before Jan. 1, 2015 (Jan. 1, 2016 in the case of certain longer-lived and transportation property). For property placed in service after Dec. 31, 2013, in tax years ending after that date, the Act provides a similar option to corporations with respect to "round four extension property," generally, property newly eligible for 50% bonus first-year depreciation under the Act's one-year extension provision, i.e., property placed in service after 2013 and before 2015 (before 2016 for the aircraft and long-production-period property).
The Act further provides that a corporation that has an election in effect to claim minimum tax credits in lieu of bonus depreciation with respect to round three extension property (generally, property that was newly eligible for 50% bonus first-year depreciation under the 2012 Taxpayer Relief Act) is treated as having an election in effect for round four extension property, unless the corporation chooses otherwise. A corporation that does not have an election in effect with respect to round three extension property may also elect to claim minimum tax credits in lieu of bonus deprecation for round four extension property.
New law. TIPA retroactively extends for one year the increased $500,000 maximum expensing amount under Code Sec. 179 and the increased $2 million investment-based phaseout amount. These increased amounts will apply for qualified property placed in service before Jan. 1, 2015. This increase is only for one year. For tax years 2015 and beyond, the maximum expensing amount is again scheduled to drop to $25,000 and the investment-based phaseout amount is scheduled to drop to $200,000
The Act also provides that:
. . . For tax years beginning before 2015 (also a 1-year extension), an expensing election or specification of property to be expensed may be revoked without IRS's consent. But, if such an election is revoked, it can't be made again.
. . . For any tax year beginning in 2010, 2011, 2012, 2013, 2014, or 2014, up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) is eligible for expensing under Code Sec. 179 .
New law. TIPA retroactively extends for one year the inclusion of qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property in the 15-year MACRS class. Such property qualifies for 15-year recovery if it is placed in service before Jan. 1, 2015.
New law. TIPA retroactively extends for one year the 7-year straight line cost recovery period for motorsports entertainment complexes. The quick writeoff applies to qualifying motorsports entertainment complexes placed in service before Jan. 1, 2015.
New law. Taxpayers may elect to expense production costs of qualified film and television (TV) productions in the U.S. Expensing doesn't apply to the part of the cost of any qualifying film or TV production that exceeded $15 million for each qualifying production. The limit is $20 million if production expenses were "significantly incurred" in areas (1) eligible for designation as a low-income community or (2) eligible for designation by the Delta Regional Authority (a federal-state partnership covering parts of certain states) as a distressed county or isolated area of distress.
TIPA retroactively extends for one year the expensing election for costs of film and TV production. The election applies to qualified film and TV productions beginning before Jan. 1, 2015.
BLOG POST: July 10, 2014
Apparently, the IRS does not feel it needs to follow its own advice. See below the “IRS Tips for keeping records safe if disaster strikes”…
IRS Releases Tips for Keeping Records Safe in Case Disaster Strikes: With hurricane season officially starting, the IRS has issued a reminder of ways individuals and businesses can safeguard their records against natural disasters. Before disaster strikes (1) create a backup set of records (i.e., bank statements, insurance policies, tax records, etc.) electronically, (2) document valuables (by photograph or video), and (3) review and update the emergency plan at least annually. Store the electronic records in the cloud or somewhere outside the area that is likely to be impacted by a natural disaster. The IRS can provide copies or transcripts of lost or destroyed tax returns and has a disaster hotline dedicated to helping taxpayers with disaster-related tax issues. IRS Tax Tip 2014-15.
I don’t know about you, but I would think a national investigation constitutes a disaster, covered by the above IRS tips. They have 7 or so hard drive crashes, lose emails that are critical to a national investigation, and they want a pass?
Do you think if they show up at your door to audit your tax return, that they will take your word for it because your hard drive crashed? I don’t think so. We need to be prepared for the “disaster” of an IRS audit. Following is the recommendations for the length of time to keep tax returns and other business records.
Business Income Tax Returns and Supporting Documents: The length of time you should keep a document depends on the action, expense, or event that the document records. Generally, you must keep your records that support an item of income or deductions on a tax return until the period of limitations for that return runs out.
The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or that the IRS can assess additional tax. Typically, the IRS can come after your business for failing to report income for up to 6 years after your filing if the amount is greater than 25% of your business’s gross income. If you filed for a deduction for a bad debt or worthless security, the IRS suggests you keep your supporting tax records for 7 years. Under these circumstances, you may generally wish to retain your supportive records for at least 7 years.
Employment Tax Records: The IRS suggests that you retain all employment records for a minimum of 4 years after the date the taxes were due or paid, whichever is later. This would include your employer identification number, amounts and dates of wage, annuity and pension payments and tax deposits, the names, addresses, social security numbers, dates of employment and occupations of employees and records of allocated tips and fringe benefits.
Business Asset Records: The IRS recommends retaining your records until the period of limitations ends from the year you disposed of that property. These records will aid you in calculating applicable depreciation, amortization or depletion deductions and to determine any gain or loss on that property. If the business property is real estate or a vehicle, keep the deed or vehicle title in a safe, secure spot until you sell or otherwise properly dispose of that property.
Business Ledgers and Other Business Documents: Conservatively, you should keep your journal entries, profit and loss statements, financial statements, check registers and general business ledgers permanently. Similarly, major business documents, like annual reports, corporate by-laws and amendments, Board of Director information, annual meeting minutes and business formation documents, should also be retained on a permanent basis. Aside from supportive tax records, other documents such as accounts payable/receivable ledgers, invoices and expense reports and bank and credit statements should be retained for a minimum of 7 years.
Don’t follow the IRS’s example…keep paper copies in a secure location or electronic copies in such a way that they are backed up often and secure. When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes. For example, your insurance company or creditors may require you to keep them longer than the IRS does. When you do discard them, shredding is the best option to help prevent identity theft.
BLOG POST: December, 2013
Looking to the new year of 2014, we must still work through the closing of 2013. For your W-2's, please consider if any of the following items apply to you or your employees:
Self-Employed Health Insurance
Insurance Premiums paid on behalf of employees
Personal use of a company vehicle
Bonuses not processed through payroll
These are all items that should be included in payroll prior to year end and reported on the W-2's.
If you will need to issue 1099's for any reason, make sure that you have a completed W-9 on all vendors this affects.
1099's & W-2's to recipients is January 31, 2014
Paper file 1099's & W-2's to IRS/SSA is February 28, 2014
E-file 1099's & W-2's to IRS/SSA is March 31, 2014
Call us if you would like assistance with any of the above items.