Tuesday, June 28, 2016

Tax Tips for Students Working this Summer

Tax Tips for Students Working this Summer
Many students get summer jobs. It’s a great way to earn extra spending money or to save for later. Here are some tips for students with summer jobs:
1. Withholding and Estimated Tax. If you are an employee, your employer normally withholds tax from your paychecks. If you are self-employed, you may be responsible for paying taxes directly to the IRS. One way to do that is by making estimated tax payments on set dates during the year. This is essentially how our pay-as-you-go tax system works.
2. New Employees. When you get a new job, you need to fill out a Form W-4, Employee’s Withholding Allowance Certificate. Employers use this form to calculate how much federal income tax to withhold from your pay. The IRS Withholding Calculator tool on IRS.gov can help you fill out the form.
3. Self-Employment. Money you earn working for others is taxable. Some work you do may count as self-employment. These can be jobs like baby-sitting or lawn care. Keep good records of your income and expenses related to your work. You may be able to deduct those costs. A tax deduction generally reduces the taxes you pay.
4. Tip Income. All tip income is taxable. Keep a daily log to report your tips. You must report $20 or more in cash tips received in any single month to your employer. And you must report all of your yearly tips on your tax return.
5. Payroll Taxes. You may earn too little from your summer job to owe income tax. But your employer usually must withhold social security and Medicare taxes from your pay. If you’re self-employed, you may have to pay them yourself. They count for your coverage under the Social Security system.
6. Newspaper Carriers. Special rules apply to a newspaper carrier or distributor. If you meet certain conditions, you are self-employed. If you do not meet those conditions, and are under age 18, you may be exempt from Social Security and Medicare taxes.
7. ROTC Pay. If you’re in ROTC, active duty pay, such as pay you get for summer advanced camp, is taxable. Other allowances you may receive may not be taxable, seePublication 3 for details.
8. Use IRS Free File. You can prepare and e-file your tax return for free using IRS Free File, available only on IRS.gov. You may not earn enough money to be required to file a federal tax return. Even if that is true, you may still want to file. For example, if your employer withheld income tax from your pay, you will have to file a return to get a tax refund.

Tuesday, June 21, 2016

CPA Peer Review

Currently going through the FICPA's Peer Review process.  A lot of work showing how we operate, a lot of work.  But we hope the procedure will be beneficial and earn the firm some insights not currently had.

Orlando Scams to be on the lookout for!

Beware- Orlando-Related Scams: IRS

The IRS has issued a consumer alert about possible fake charity scams in the wake of last weekend’s mass shooting in Orlando, Fla.
Scam artists commonly try to take advantage of generosity after such a headline tragedy by impersonating charities to get money or private information from taxpayers, the agency warns. Such fraudulent schemes may involve contact by telephone, social media, e-mail or in-person solicitations.
The IRS cautions donors to follow these tips:
  • Donate to recognized charities and beware of charities with names similar to familiar or nationally known organizations. Some phony charities use names or Web sites that sound or look like those of respected, legitimate organizations. The IRS Exempt Organizations Select Check feature, helps find qualified charities. Donations to these charities may also be tax-deductible.
  • Don’t give out personal financial information such as Social Security numbers or credit card and bank account numbers and passwords to anyone who solicits a contribution.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
  • Bogus Web sites may solicit funds for victims of this tragedy, frequently mimicking the sites of legitimate charities or claiming to be affiliated with legitimate charities.
  • Scammers often send e-mails that steer recipients to bogus sites that appear to be affiliated with legitimate charitable causes.

Wednesday, May 11, 2016

2015 Not For Profit Returns due soon!

May 16 Is Filing Deadline for Many Tax-Exempt Organizations; Do Not Include Social Security Numbers or Personal Data
IRS YouTube Videos
Do Not Include SSNs on Form 990:  English | Spanish | ASL
WASHINGTON — The Internal Revenue Service today reminded tax-exempt organizations that many have a filing deadline for Form 990-series information returns in mid-May.
With the May 16 filing deadline facing many tax-exempt organizations, the IRS today cautioned these groups not to include Social Security numbers (SSNs) or other unneeded personal information on their Forms 990, and consider taking advantage of the speed and convenience of electronic filing.
Form 990-series information returns and notices are due on the 15th day of the fifth month after an organization’s tax year ends. Many organizations use the calendar year as their tax year, making May 15 the deadline for them to file for 2015. However, because May 15 falls on a Sunday, the deadline this year moves to Monday, May 16.
Many Groups Risk Loss of Tax-Exempt Status
By law, organizations that fail to file annual reports for three consecutive years will see their federal tax exemptions automatically revoked as of the due date of the third required filing. The Pension Protection Act of 2006 mandates that most tax-exempt organizations file annual Form 990-series information returns or notices with the IRS. The law, which went into effect at the beginning of 2007, also imposed a new annual filing requirement for small organizations. Churches and church-related organizations are not required to file annual reports.
No Social Security Numbers on Forms 990
The IRS generally does not ask organizations for SSNs and, in the Form 990 instructions, and cautions filers not to provide them on the form. By law, both the IRS and most tax-exempt organizations are required to publicly disclose most parts of Form 990 filings, including schedules and attachments. Public release of SSNs and other personally identifiable information about donors, clients or benefactors could give rise to identity theft.
The IRS also urges tax-exempt organizations to file forms electronically in order to reduce the risk of inadvertently including SSNs or other unneeded personal information. More details can be found on IRS.gov.
Tax-exempt forms that must be made public by the IRS are clearly marked “Open to Public Inspection” in the top right corner of the first page. These include Form 990, Form 990-EZ, Form 990-PF and others.
What to File
Small tax-exempt organizations with average annual gross receipts of $50,000 or less may file an electronic notice called a Form 990-N (e-Postcard), which asks organizations for a few basic pieces of information. Tax-exempt organizations with average annual gross receipts above $50,000 must file a Form 990 or 990-EZ depending on their receipts and assets. Private foundations must file Form 990-PF.
Organizations that need additional time to file a Form 990, 990-EZ or 990-PF may obtain an automatic three-month extension. An organization may also request an additional three-month extension; however, the organization must show reasonable cause for the additional time requested. Use Form 8868, Application for Extension of Time to File an Exempt Organization Return, to request extensions. The request for extension must be filed by the due date of the return. Note that no extension is available for filing the Form 990-N (e-Postcard).
Check Tax-Exempt Status Online
The IRS publishes the names of organizations identified as having automatically lost their tax-exempt status for failing to file annual reports for three consecutive years. Organizations that have had their exemptions automatically revoked and wish to have that status reinstated must file an application for exemption and pay the appropriate user fee.
The IRS offers an online search tool, Exempt Organizations Select Check, to help users more easily find key information about the federal tax status and filings of certain tax-exempt organizations, including whether organizations have had their federal tax exemptions automatically revoked.

Tuesday, April 05, 2016

IRS Offers Tax Tips

IRS Offers 10 Tax-Time Tips
The April 18 deadline to file your federal tax return is less than two weeks away. Don’t wait until the last minute. If you haven’t filed yet, the IRS has these 10 tax-time tips to help you.
1. Gather your records.  Make sure you have all your tax records. This includes receipts, canceled checks and other records that support income, deductions or tax credits that you claim. If you purchased health insurance through theMarketplace, you will need the information in Form 1095-A to file.
2. Report all your income. You will need to report your income from all of your Forms W-2, Wage and Tax Statements, Forms 1099 and any other income – even if you don’t receive a statement – when you file your tax return.
3. Try IRS Free File. Free File is available only on IRS.gov. If you made $62,000 or less, you can use free name-brand tax software to file your federal tax return. If you earned more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. If you need more time to file, you can also use IRS Free File to get an automatic six-month extension to file your taxes. Remember, an extension to file your tax return is not an extension to pay taxes you owe, which are due April 18.
4. Try IRS e-file. Electronic filing is the best way to file a tax return. It’s accurate, safe and easy. If you owe taxes, you have the option to e-file early and pay by April 18 to avoid penalties and interest.
5. Use Direct Deposit.  The fastest and safest way to get your refund is to combine e-file with direct deposit. The IRS issues more than nine out of 10 refunds in less than 21 days.
6. Visit IRS.gov. IRS.gov is a great place to get what you need to file your tax return. Click on the "Filing" icon for links to filing tips, answers to frequently asked questions and IRS forms and publications. Get them all at any time. The IRS Services Guide outlines the many ways to get help on IRS.gov.
7. Use IRS online tools. The IRS has many online tools on IRS.gov to help you file. For instance, the Interactive Tax Assistant tool provides answers to many of your tax questions. The tool gives the same answers that an IRS representative would give over the phone. If you want to find a tax preparer with the qualifications and credentials that you prefer, use the IRS Directory of Federal Tax Return Preparers. IRS tools are free and easy to use. They are also available 24/7.
8. Weigh your filing options. You have different options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free help at aVolunteer Income Tax Assistance or Tax Counseling for the Elderly site.
9. Check out number 17. IRS Publication 17, Your Federal Income Tax, is a complete tax resource that you can read on IRS.gov. It’s also available as an eBook. It can help you with many tax questions, such as whether you need to file a tax return, or how to choose your filing status.
10. Review your return.  Mistakes slow down your tax refund. If you file a paper return, be sure to check all Social Security numbers. That’s one of the most common errors. Remember that IRS e-file is the most accurate way to file.

Friday, March 04, 2016

Captial Gains and Losses

Capital Gains and Losses – 10 Helpful Facts to Know
When you sell a capital asset, the sale normally results in a capital gain or loss. A capital asset includes most property you own for personal use or own as an investment. Here are 10 facts that you should know about capital gains and losses:
1. Capital Assets.  Capital assets include property such as your home or car, as well as investment property, such as stocks and bonds.
2. Gains and Losses.  A capital gain or loss is the difference between your basis and the amount you get when you sell an asset. Your basis is usually what you paid for the asset.
3. Net Investment Income Tax.  You must include all capital gains in your income and you may be subject to the Net Investment Income Tax if your income is above certain amounts. The rate of this tax is 3.8 percent. For details, visit IRS.gov.
4. Deductible Losses.  You can deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of property that you hold for personal use.
5. Limit on Losses.  If your capital losses are more than your capital gains, you can deduct the difference as a loss on your tax return. This loss is limited to $3,000 per year, or $1,500 if you are married and file a separate return.
6. Carryover Losses.  If your total net capital loss is more than the limit you can deduct, you can carry it over to next year’s tax return.
7. Long and Short Term.  Capital gains and losses are treated as either long-term or short-term, depending on how long you held the property. If you held it for one year or less, the gain or loss is short-term.
8. Net Capital Gain.  If your long-term gains are more than your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a net capital gain. 
9. Tax Rate.  The tax rate on a net capital gain usually depends on your income. The maximum tax rate on a net capital gain is 20 percent. However, for most taxpayers a zero or 15 percent rate will apply. A 25 or 28 percent tax rate can also apply to certain types of net capital gain.  
10. Forms to File.  You often will need to file Form 8949, Sales and Other Dispositions of Capital Assets, with your federal tax return to report your gains and losses. You also need to file Schedule D, Capital Gains and Losses, with your tax return.

Saturday, February 06, 2016

Who can claim the student loan interest deduction?

Can You Claim the Deduction?

Generally, you can claim the deduction if all of the following requirements are met.
  • Your filing status is any filing status except married filing separately.
  • No one else is claiming an exemption for you on his or her tax return.
  • You are legally obligated to pay interest on a qualified student loan.
  • You paid interest on a qualified student loan.
Claiming an exemption for you.   Another taxpayer is claiming an exemption for you if he or she lists your name and other required information on his or her Form 1040 (or Form 1040A), line 6c, or Form 1040NR, line 7c.
Example 1.
During 2015, Josh paid $600 interest on his qualified student loan. Only he is legally obligated to make the payments. No one claimed an exemption for Josh for 2015. Assuming all other requirements are met, Josh can deduct the $600 of interest he paid on his 2015 Form 1040 or 1040A.
Example 2.
During 2015, Jo paid $1,100 interest on her qualified student loan. Only she is legally obligated to make the payments. Jo's parents claimed an exemption for her on their 2015 tax return. In this case, neither Jo nor her parents may deduct the student loan interest Jo paid in 2015.
Interest paid by others.   If you are the person legally obligated to make interest payments and someone else makes a payment of interest on your behalf, you are treated as receiving the payments from the other person and, in turn, paying the interest.
Example 1.
Darla obtained a qualified student loan to attend college. After Darla's graduation from college, she worked as an intern for a nonprofit organization. As part of the internship program, the nonprofit organization made an interest payment on behalf of Darla. This payment was treated as additional compensation and reported on her Form W-2, box 1. Assuming all other qualifications are met, Darla can deduct this payment of interest on her tax return.
Example 2.
Ethan obtained a qualified student loan to attend college. After graduating from college, the first monthly payment on his loan was due in December. As a gift, Ethan's mother made this payment for him. No one is claiming a dependency exemption for Ethan on his or her tax return. Assuming all other qualifications are met, Ethan can deduct this payment of interest on his tax return.

Sunday, January 31, 2016

Figuring a Shareholder's Basis

The Calculation for figuring shareholder basis is as follows:
1) Beginning Stock Basis (cost or FMV of Stock)

Increases to Basis
2) Money or property contributed to the corporation
3) Your percentage of a corporation's  earnings (or a decrease if the corporation sustains loses)
4) Other increases, such as your share of excess deductions of a depleatible asset

Decreases to Basis
5) Distributions of money and FMV of property
6) Your share of the corporation's nondeductible expenses, if applicable, your share of corp loses under Reg section 1.1367-1(g), your share of the Sec 179 deduction, or any corporation charitable deductions
7) If Reg Section 1.1367-1(g) applies, add the amount of a corp's nondeductible expenses
8) The smaller of the excess, at 1/1/xx, of the amount you are owed for loans you made to the corp OR the sum of lines 1-7 above.  (This amount increases you loan basis)

9) Equals: Your stock basis in the corporation at the end of the year..

We would love to help with the computation!  Call me at my cell to talk more (813)309-0504.

Friday, January 29, 2016

Tax changes to Partnerships and Due Dates for 2016

A large number of important tax changes go into effect for partnerships this year, along with due dates for business tax returns.
Many were ushered in by the Protecting Americans from Tax Hikes (PATH) Act of 2015, although legislation enacted earlier in 2015 and in 2014 also contributed a fair share. Still other changes are the result of various administrative pronouncements by IRS.
This article reviews the important changes that apply to partnerships and those that apply to due dates for business returns. There are a number of other important business tax changes this year that I covered in a previous article (seeMajor Business Tax Changes for 2016).
Partnership ChangesThe recent legislation responsible for the lion's share of the changed rules for 2016 consists of the Protecting Americans from Tax Hikes (PATH) Act of 2015; the Fixing America's Surface Transportation (FAST) Act; the Bipartisan Budget Act of 2015; the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015; the Trade Preference Extension Act of 2015; and the Achieving a Better Life Experience Act of 2014 (ABLE Act), part of the Tax Increase Prevention Act of 2014
Taxpayers may elect new partnership rules: The Bipartisan Budget Act of 2015 repeals the TEFRA uniform partnership audit rules and similarly repeals the electing large partnerships rules. These rules are replaced with a streamlined single set of rules for auditing partnerships and their partners at the partnership level. Under the new streamlined audit approach, any adjustment to items of income, gain, loss, deduction or credit of a partnership for a partnership tax year (and any partner's distributive share of such adjustment) is determined at the partnership level. Similarly, any tax attributable to such an adjustment is assessed and collected, and the applicability of any penalty, addition to tax, or additional amount which relates to an adjustment to any such item or share is determined, at the partnership level.
The new rules generally apply to partnership tax years that begin after Dec. 31, 2017. However, except for certain small partnership election-out rules, partnerships may also elect (as directed by the IRS) for the changes to apply to any return of the partnership filed for partnership tax years beginning after Nov. 2, 2015 and before Jan. 1, 2018.
Family partnership rule clarified: A partnership generally is an unincorporated organization in which the parties (i.e., partners) have joined together to conduct an active trade or business. Under former Code Sec. 704(e)(1), a person can also be recognized as a partner if capital is a material income-producing factor, whether his partnership interest was obtained by purchase or by gift (the so-called "family partnership rule").
Some taxpayers have argued that this family partnership rule provides an alternative test for determining who is a partner without regard to how the term is generally defined in the partnership tax rules. Thus, they asserted that if a partner holds a capital interest in a partnership, the partnership must be respected regardless of whether the parties have demonstrated that they joined together to conduct an active trade or business.
For partnership tax years beginning after Dec. 31, 2015, the Bipartisan Budget Act of 2015 (1) amends the general definition of a partner to provide that, in the case of a capital interest in a partnership in which capital is a material income-producing factor, whether a person is a partner with respect to that interest is determined without regard to whether that interest was derived by gift from any other person (Code Sec. 761(b)) and (2) eliminates the pre-Act rule (at Code Sec. 704(e)) regarding the recognition of partners.
These changes clarify that family partnership rules were not intended to provide an alternative test for whether a person is a partner in a partnership. The determination of whether the owner of a capital interest is a partner is made under the generally applicable rules defining a partnership and a partner.
Due Dates for Business Returns
Revised due dates for partnership and C corporation returns: Domestic corporations (including S corporations) currently must file their returns by the 15th day of the third month after the end of their tax year. Thus, corporations using the calendar year must file their returns by March 15 of the following year. The partnership return is due on the 15th day of the fourth month after the end of the partnership's tax year. Thus, partnerships using a calendar year must file their returns by April 15 of the following year. Since the due date of the partnership return is the same as the due date for an individual tax return, individuals holding partnership interests often must file for an extension to file their returns because their Schedule K-1s may not arrive until the last minute.
Under the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, in a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015 (i.e., for 2016 tax year returns filed in 2017):
• Partnerships and S corporations will have to file their returns by the 15th day of the third month after the end of the tax year. Thus, entities using a calendar year will have to file by Mar. 15 of the following year. In other words, the filing deadline for partnerships will be accelerated by one month; the filing deadline for S corporations stays the same.
• C corporations will have to file by the 15th day of the fourth month after the end of the tax year. Thus, C corporations using a calendar year will have to file by Apr. 15 of the following year. In other words, the filing deadline for C corporations will be deferred for one month. (Under a special rule, for C corporations with fiscal years ending on June 30, the rule change won't apply until tax years beginning after Dec. 31, 2025.)
Revised automatic extension rules for corporations: Under the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, effective generally for returns for tax years beginning after Dec. 31, 2015, the three-month automatic extension of time for corporate returns in Code Sec. 6081(b) is changed to an automatic six-month extension (this change conforms the statutory rule with the six-month automatic extension for corporate returns in Reg. § 1.6081-3(a)).
However, for any return for a tax year of a C corporation which ends on Dec. 31 and which begins before Jan. 1, 2026, the automatic extension period is five months (not six months). And, for any return for a tax year of a C corporation which ends on June 30 and begins before Jan. 1, 2026, the automatic extension period is seven months (not six months).
Note that the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 also revised the extended due dates for various other returns.
Thanks to Thompson Reuter's Robert Trinz  for much of this research

Tuesday, January 26, 2016

Obama care required documents

The reporting requirements are considered the glue that holds together two of the largest pieces of PPACA: the individual and employer mandates. Since 2014, the individual mandate has required most Americans to purchase minimum essential coverage, qualify for an exemption from this requirement, or pay a penalty on their tax return. Beginning in 2015, the employer mandate places a requirement on applicable large employers (ALEs)—which are businesses with 50 or more full-time plus full-time equivalent (FTE) employees—to provide health insurance to 95% or more of their employees and dependents up to age 26.
Several new forms have been issued for both employers and insurance providers to file to comply with the new reporting rules. ALEs will file Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, and Form 1094-C, Transmittal of Employer-Provided Health Insurance Offer and Coverage Information Returns. The type of information reported by an ALE on the forms is meant to help the IRS pinpoint those employers that are required to but do not offer minimum essential coverage to their employees and their employees’ spouses and dependents. If it fails to provide the appropriate insurance, the employer is subject to steep penalties. The information reported on the returns also lets the IRS know if an employee is eligible for the premium tax credit.
Providers of minimum essential coverage will file Form 1095-B, Health Coverage, and Form 1094-B, Transmittal of Health Coverage Information Returns, to report information to the IRS and enrollees about individual coverage. Recipients of Form 1095-B can show they have minimum essential coverage and will not owe a penalty on their tax return associated with the individual mandate.
Who is subject to the information-reporting requirements?
ALEs are subject to the information-reporting requirements of Sec. 6056.
Any provider, such as an insurance company that issues minimum essential coverage to an individual, is subject to the information-reporting requirements of Sec. 6055.
Which form to file?
Which form to file?

What information is necessary to complete the forms?
The type and sheer volume of data that an employer has to gather to file Forms 1095-C and 1094-C is overwhelming, especially since certain information must be tracked by month. Employers have found themselves in the difficult position of having to implement new systems to track reportable data such as the following:
  • Whether the employer offered minimum essential coverage each month to the employee and the employee’s spouse and dependents;
  • Whether the employee and the employee’s spouse and dependents were enrolled in the coverage;
  • Whether the employee’s share of the lowest-cost monthly premium for self-only minimum essential coverage provides minimum value;
  • Which affordability safe harbor was used for each employee;
  • Whether the employee was full-time or part-time, on a monthly basis;
  • The total number of employees, by month, and the total number of full-time employees, by month;
  • Whether the employee was a new hire eligible for the coverage waiting period;
  • Whether the employee was a new variable-hour, seasonal, or part-time employee in the initial measurement period; and
  • Whether the employer was a member of a controlled group or affiliated service group.
An insurer will have to report the following information on Forms 1095-B and 1094-B:
  • Enrollee’s name, address, and Social Security number;
  • Employer’s name, address, and federal employer identification number;
  • Insurance provider’s name, address, and federal employer identification number; and
  • Covered individual’s name, Social Security number, and months of coverage.
What are the penalties for noncompliance?
The information-reporting rules are a serious business. ALEs as well as providers of minimum essential coverage can be hit with penalties of $250 for each information return not filed and another $250 for not providing each employee/enrollee with an accurate return. The total amount of penalties is capped at $3 million annually—a staggering amount! As you can see, the penalties provide employers and insurers a significant incentive to file the forms correctly and on time.
Thanks for the compilation of this info to Kristin Esposito, CPA, MST, is the senior technical manager–tax advocacy at the AICPA.

Thursday, January 14, 2016

Biodiesel mixture and Alternative Fuel taxes

Notice 2016-05 provides rules for claimants to make one-time claims for the 2015 biodiesel mixture and alternative fuel excise tax credits that were retroactively extended by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act), Pub. L. 114-113 Div. Q.  It also provides guidance for claimants to claim the other retroactively extended credits for 2015, including the alternative fuel mixture excise tax credit.
Notice 2016-05 will be published in Internal Revenue Bulletin 2016-06 on Feb. 8, 2016.

Wednesday, January 06, 2016

Obamacare and your tax return!

The Individual Shared Responsibility Provision and Your 2015 Income Tax Return
The Affordable Care Act requires you, your spouse and your dependents to have qualifying health care coverage for each month of the year, qualify for a health coverage exemption, or make an Individual Shared Responsibility Payment when filing your federal income tax return.   If you had coverage for all of 2015, you will simply check a box on your tax return to report that coverage.
However, if you don’t have qualifying health care coverage and you meet certain criteria, you might be eligible for an exemption from coverage. Most exemptions are can be claimed when you file your tax return, but some must be claimed through the Marketplace.
If you or any of your dependents are exempt from the requirement to have health coverage, you will complete IRS Form 8965, Health Coverage Exemptions and submit it with your tax return. If, however, you are not required to file a tax return, you do not need to file a return solely to report your coverage or to claim an exemption.
For any months you or anyone on your return do not have coverage or qualify for a coverage exemption, you must make a payment called the individual shared responsibility payment. If you could have afforded coverage for yourself or any of your dependents, but chose not to get it and you do not qualify for an exemption, you must make a payment. You calculate the shared responsibility payment using a worksheet included in the instructions for Form 8965 and enter your payment amount on your tax return.
Whether you are simply checking the box on your tax return to indicate that you had coverage in 2015, claiming a health coverage exemption, or making an individual shared responsibility payment, you or your tax professional can prepare and file your tax return electronically.  Using tax preparation software is the best and simplest way to file a complete and accurate tax return as it guides individuals and tax preparers through the process and does all the math. Electronic filing options include IRS Free File for taxpayers who qualify, freevolunteer assistancecommercial software, and professional assistance.
More Information
Determine if you are eligible for a coverage exemption or responsible for the Individual Shared Responsibility Payment by using our Interactive Tax Assistanton IRS.gov.
For more information about the Affordable Care Act and filing your 2015 income tax return, call us!  (813)309-0504 DIRECT LINE or (813)657-4137 OFFICE

Wednesday, December 30, 2015

Section 179 details

Section 179 at a Glance for 2015 (updated for the PATH Act of 2015)
2015 Deduction Limit = $500,000
This deduction is good on new and used equipment, as well as off-the-shelf software. This limit is only good for 2015, and the equipment must be financed/purchased and put into service by the end of the day, 12/31/2015.
2015 Spending Cap on equipment purchases = $2,000,000 
This is the maximum amount that can be spent on equipment before the Section 179 Deduction available to your company begins to be reduced on a dollar for dollar basis. This spending cap makes Section 179 a true "small business tax incentive".
Bonus Depreciation: 50% for 2015
Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached. Note: Bonus Depreciation is available for new equipment only.
The above is an overall, "simplified" view of the Section 179 Deduction for 2015. For more details on limits and qualifying equipment, as well as Section 179 Qualified Financing, please read this entire website carefully. We will also make sure to update this page if the limits change.
Here is an updated example of Section 179 at work during this 2015 tax year after the recent passage of the PATH Act of 2015:
What is the Section 179 Deduction?
Most people think the Section 179 deduction is some mysterious or complicated tax code. It really isn't, as you will see below.
Essentially, Section 179 of the IRS tax code allows businesses to deduct the full purchase price of qualifying equipment and/or software purchased or financed during the tax year. That means that if you buy (or lease) a piece of qualifying equipment, you can deduct the FULL PURCHASE PRICE from your gross income. It's an incentive created by the U.S. government to encourage businesses to buy equipment and invest in themselves.
Several years ago, Section 179 was often referred to as the "SUV Tax Loophole" or the "Hummer Deduction" because many businesses have used this tax code to write-off the purchase of qualifying vehicles at the time (like SUV's and Hummers). But, that particular benefit of Section 179 has been severely reduced in recent years, see 'Vehicles & Section 179' for current limits on business vehicles.
Today, Section 179 is one of the few incentives included in any of the recent Stimulus Bills that actually helps small businesses. Although large businesses also benefit from Section 179 or Bonus Depreciation, the original target of this legislation was much needed tax relief for small businesses - and millions of small businesses are actually taking action and getting real benefits.
Essentially, Section 179 works like this:
When your business buys certain items of equipment, it typically gets to write them off a little at a time through depreciation. In other words, if your company spends $50,000 on a machine, it gets to write off (say) $10,000 a year for five years (these numbers are only meant to give you an example).
Now, while it's true that this is better than no write-off at all, most business owners would really prefer to write off the entire equipment purchase price for the year they buy it.
In fact, if a business could write off the entire amount, they might add more equipment this year instead of waiting over the next few years. That's the whole purpose behind Section 179 - to motivate the American economy (and your business) to move in a positive direction. For most small businesses, the entire cost can be written-off on the 2015 tax return (up to $500,000).
Limits of Section 179
Section 179 does come with limits - there are caps to the total amount written off ($500,000 for 2015), and limits to the total amount of the equipment purchased ($2,000,000 in 2015). The deduction begins to phase out dollar-for-dollar after $2,000,000 is spent by a given business, so this makes it a true small and medium-sized business deduction.
Who Qualifies for Section 179?
All businesses that purchase, finance, and/or lease less than $2,000,000 in new or used business equipment during tax year 2015 should qualify for the Section 179 Deduction.
Most tangible goods including "off-the-shelf" software and business-use vehicles (restrictions apply) qualify for the Section 179 Deduction. For basic guidelines on what property is covered under the Section 179 tax code, please refer to this list of qualifying equipment. Also, to qualify for the Section 179 Deduction, the equipment and/or software purchased or financed must be placed into service between January 1, 2015 and December 31, 2015.
The deduction begins to phase out if more than $2,000,000 of equipment is purchased - in fact, the deduction decreases on a dollar for dollar scale after that, making Section 179 a deduction specifically for small and medium-sized businesses.
What's the difference between Section 179 and Bonus Depreciation?
Bonus depreciation is offered some years, and some years it isn't. Right now in 2015, it's being offered at 50%.
The most important difference is both new and used equipment qualify for the Section 179 Deduction (as long as the used equipment is "new to you"), while Bonus Depreciation covers new equipment only.
Bonus Depreciation is useful to very large businesses spending more than the Section 179 Spending Cap (currently $2,000,000) on new capital equipment. Also, businesses with a net loss are still qualified to deduct some of the cost of new equipment and carry-forward the loss.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation - unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.

Leasehold Improvements, Restaraunt and Retail property 

You can elect to treat certain qualified real property you placed in service as section 179 property for tax years tax years beginning before 2015. If this election is made, the term “section 179 property” will include any qualified real property that is:
  • Qualified leasehold improvement property,
  • Qualified restaurant property, or
  • Qualified retail improvement property.
The maximum section 179 expense deduction that can be elected for qualified section 179 real property is $250,000 of the maximum section 179 deduction of $500,000 for tax years beginning in 2014. For more information, see Special rules for qualified section 179 real property, later. Also, see Election for certain qualified section 179 real property, later, for information on how to make this election.
Qualified leasehold improvement property.   Generally, this is any improvement (placed in service before January 1, 2015) to an interior portion of a building that is nonresidential real property, provided all of the requirements discussed in chapter 3 under Qualified leasehold improvement property are met.
  In addition, an improvement made by the lessor does not qualify as qualified leasehold improvement property to any subsequent owner unless it is acquired from the original lessor by reason of the lessor’s death or in any of the following types of transactions.
  1. A transaction to which section 381(a) applies,
  2. A mere change in the form of conducting the trade or business so long as the property is retained in the trade or business as qualified leasehold improvement property and the taxpayer retains a substantial interest in the trade or business,
  3. A like-kind exchange, involuntary conversion, or re-acquisition of real property to the extent that the basis in the property represents the carryover basis, or
  4. Certain nonrecognition transactions to the extent that your basis in the property is determined by reference to the transferor’s or distributor’s basis in the property. Examples include the following.
    1. A complete liquidation of a subsidiary.
    2. A transfer to a corporation controlled by the transferor.
    3. An exchange of property by a corporation solely for stock or securities in another corporation in a reorganization.
Qualified restaurant property.   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2015. Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals.
Qualified restaurant property.   Qualified restaurant property is any section 1250 property that is a building or an improvement to a building placed in service after December 31, 2008, and before January 1, 2015. Also, more than 50% of the building’s square footage must be devoted to preparation of meals and seating for on-premise consumption of prepared meals.
Section 179's "More Than 50 Percent Business-Use" Requirement
The equipment, vehicle(s), and/or software must be used for business purposes more than 50% of the time to qualify for the Section 179 Deduction. Simply multiply the cost of the equipment, vehicle(s), and/or software by the percentage of business-use to arrive at the monetary amount eligible for Section 179.

Thanks to the Section179.org group for delivering this information so concisely!