IRS News Items of interest to home based small business owners in the U.S.

Latest IRS News
For Small Businesses

U.S. Bookkeeping Resource

by L. Kenway BComm CPB


On this page you'll find the latest IRS News and essential small business information relevant to ... the hard working ... self-employed ... U.S. business owner who does their own bookkeeping.

Be sure to visit IRS's video portal for videos on numerous small business matters.The portal is located at irsvideos.gov.


Before 2016 Year-end Reminder

  • Have employees update their W-4 (or state equivalent form).
  • Have a W-9 on file for all contractors.


Sole Proprietor Deadlines
2017 Personal Tax Returns

Tax Return Filing Due
Monday, April 17, 2017

If extension is not filed on Form 4868
Late filing penalties apply April 18, 2017


Extended Tax Return Filing Due
Monday, October 16, 2017
Late filing penalties apply October 18, 2017

Tax Payment Due Even If Extension Filed
Monday, April 17, 2017
Interest and late payment penalties
begin accruing April 18, 2017



Here's a TIP To
Keep More Money In Your Pocket.
CLICK HERE.


Source: IRS Tax Calendar

...


Pour yourself a cup of tea...

maybe lavender and honey tea. It's good for alleviating stress and calming nervousness ...

then spend your tea break glancing over the IRS News for items that may be of interest to your business ...

or poke about other bookkeeping pages to book mark and come back to later when you have more time.


Notice to Site Visitor

I initially developed this page as a handy reference for myself. While I do my best to ensure it is accurate and complete, I make it available for your use with the understanding that I cannot be held liable for errors and/or omissions. Please make yourself familiar with my site policies prior to relying on any of the information on this site.


How To Amend A Payment
On EFTPS


Electronic deposits became mandatory effective January 1, 2011.
Form 8109 was discontinued as of December 31, 2010.

See this tip if you need to amend a return payment using EFTPS.



Life's up and downs provide windows of opportunity
to determine your values and goals

Think of using all obstacles as stepping stones
to build the life you want


-- Marsha Sinetar --





The IRS News relevant to small business owners who work from home.





IRS NEWS ITEM

Interest Rates Announced

December 5, 2016

IRS announced that interest rates remain the same for the first quarter of 2017. The last rate increase occurred April 1, 2016. 








IRS NEWS ITEM

AFR Rates

November 28, 2016

I've updated the Applicable Federal Rates (AFR) to December, 2016.








IRS NEWS ITEM

2017 COLA

October 23, 2016

Social Security Administration released the cost of living adjustment (COLA) for 2017 on October 18. There will be a 0.3% increase for 2017.

This means the 2017 Social Security wage base will also change as it is tied to COLA. The Social Security tax maximum will rise more than 7% to $127,500, which is a large increase over last year's $118,500.

The maximum amount of SS tax increases to $7,886.40 from $7,347.

The Department of Health and Human Services has not yet released the 2017 changes for Medicare premium. However, there is a provision that ensures your net Social Security benefit is not reduced for approximately 70% of the beneficiaries.

You can read the announcement at the Social Security Press Office (www.ssa.gov/pressoffice)> Press Releases> October 18, 2016> Social Security Announces 0.3 Percent Benefit Increase for 2017.

This also means the optional methods for calculating self-employment income will also change for 2017 at $1,314.40. The lower and upper limits under optional methods for computing self-employment tax are as follows:

The “lower limit” for 2017 will be $5,257.60 ($1,314.40 x 4). The “upper limit” is 150% of the lower limit. For 2017, it will be $7,886.40 ($5,257.60 x 1.5).

I have updated the Self Employment Tax table to reflect the 2017 changes as well as the FICA Employee Payroll Taxes Table.


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


2016 COLA

October 15, 2015

Social Security Administration has released the cost of living adjustment (COLA) for 2016 today. There is no increase for 2016.

This means the 2016 Social Security wage base will not change as it is tied to COLA. The Social Security tax maximum will remain at $118,500.

The Department of Health and Human Services has not yet released the 2016 changes for Medicare premium. However, there is a provision that ensures your net Social Security benefit is not reduced for approximately 70% of the beneficiaries.

You can read the announcement at the Social Security Press Office (www.ssa.gov/pressoffice)> Press Releases> October 15, 2015> Law Does Not Provide for a Social Security Cost-of-Living Adjustment for 2016.

This also means the optional methods for calculating self-employment income will not change for 2016 at $1,220. The lower and upper limits under optional methods for computing self-employment tax are as follows:

The “lower limit”, for 2016 it will be $4,880 ($1,220 x 4). The “upper limit” is 150% of the lower limit. For 2016, it will be $7,320 ($4,880 x 1.5).

I have updated the Self Employment Tax table to reflect the 2016 changes as well as the FICA Employee Payroll Taxes Table.



2015 COLA

October 22, 2014

Social Security Administration announced today that the cost of living adjustment (COLA) will increase 1.7% for 2015.

The 2015 Social Security wage base will also change as it is tied to COLA. The Social Security tax maximum will increase to $118,500 from the current $117,000.

The Department of Health and Human Services site says the 2015 changes for Medicare premium will remain unchanged from 2014. See medicare.gov> Your Medicare Costs> Medicare 2014 & 2015 costs at a glance ...  for more information.

You can read the announcement at the Social Security Press Office (www.ssa.gov/pressoffice)> Press Releases> October 22, 2014> Social Security Announces 1.7 Percent Benefit Increase for 2015 .

This also means the optional methods for calculating self-employment income will change for 2015 at $1,220 from the current $1,200. The lower and upper limits under optional methods for computing self-employment tax are as follows:

The “lower limit”, for 2015 it will be $4,880 ($1,220 x 4). The “upper limit” is 150% of the lower limit. For 2015, it will be $7,320 ($4,880 x 1.5).



2015 COLA Estimate

July 2014

The 2014 Trustee Report released on June 18, 20154 contains a 10 year forecast for COLA. 2015 COLA is estimated to be 2.0%.

The actual COLA for 2015 is released in October and is calculated using the average consumer price index of the third quarter of 2013 and the third quarter of 2014.


Source: SSA.gov> Office of the Chief Actuary> Trustee Reports> Assumptions


2014 COLA

October 31, 2013

Social Security Administration announced yesterday that the cost of living adjustment (COLA) will increase 1.5% for 2014.

The 2014 Social Security wage base will also change as it is tied to COLA. The Social Security tax maximum will increase to $117,000 from the current $113,700.

The Department of Health and Human Services announced the 2014 changes for Medicare premium this week and remain unchanged from 2013. See medicare.gov> Your Medicare Costs> Medicare 2013 & 2014 costs at a glance ...  for more information.

You can read the announcement at the Social Security Press Office (www.ssa.gov/pressoffice)> Press Releases> October 30, Social Security Announces 1.5 Percent Benefit Increase for 2014 .

This also means the optional methods for calculating self-employment income will change for 2014 at $1,200 from the current $1,160. The lower and upper limits under optional methods for computing self-employment tax are as follows:

The “lower limit”, for 2014 it will be $4,800 ($1,200 x 4). The “upper limit” is 150% of the lower limit. For 2014, it will be $7,200 ($4,800 x 1.5).




October 15, 2013

The release of 2014 cost of living adjustment (COLA) will likely be delayed due to the government shutdown. This means the 2014 social security wage base figures will also be delayed as they are dependent upon current COLA rates.







IRS NEWS ITEM

2017 Deposit Requirements for Employment Taxes

October 3, 2016


The IRS has updated Notice 931, Deposit Requirements for Employment Taxes, to reflect the tax deposit rules for the 2017 tax year. These rules do not apply to FUTA. See Form 940 instructions for depositing FUTA.

If you file Form 941, Employer's Quarterly Federal Tax Return, your lookback period for 2017 begins July 1, 2015 and ends June 30, 2016.

You are a monthly depositor if you report $50,000 or less of Form 941 taxes for the lookback period ... and a semiweekly depositor if you report more than $50,000 of Form 941 taxes.




PREVIOUS IRS NEWS RELATED TO THIS TOPIC


March 16, 2011

2011 Form 941

The IRS now has the 2011 Form 941 with instructions available on their website.

Form 941 is the Employer's Quarterly Federal Tax Return form.

The notice discusses electronic deposit requirements that came into effect on January 1, 2011. The IRS announced in IR-2010-02 that the Treasury would no longer maintain the Federal Tax Deposit Coupon (Forms 8190 and 8109-B) system after December 31, 2010. As of January 1, 2011, federal tax deposits, including FUTA, are all made using electronic funds transfer payment system (EFTPS).

You may also want to look at (and perhaps subscribe to) the Social Security Administration's (SSA) / IRS Spring 2011 publication for employers called SSA/IRS Reporter. There is a one page article on page 4 outlining the Tax Changes for Small Businesses.

It covers:

  • Health Insurance Deduction Reduces Self-Employment Tax
  • General Business Credit for Employers
  • Small Businesses Can Benefit from Higher Expensing/Depreciation Limits
  • Depreciation Limits on Business Vehicles
  • 50 or 100 Percent Bonus Depreciation
  • Small Businesses To Use EFTPS for Deposits Beginning in 2011

There is also a good article on Spring Cleaning of Your Payroll Records by the American Payroll Association (APA). The APA will be holding a one day course between June 13 and June 24 this year in cities across the country.

Lots of other information in this quarterly newsletter.








IRS NEWS ITEM

2017 Special Per-Diem Rates Released Effective October 1, 2016

September 28, 2016 --- 2017 CONUS Rates; Notice 2016-58

If you are self employed and travel overnight for business, you will be interested in these rates released today.

If you find the rules for business travel deductions very complicated ... and who doesn't ... take a look at this flowchart which simplifies the complicated.

Now for the per-diem rate IRS news update ...

CONUS Item High Cost Area Low Cost Area Standard Rate
Per diem allowance$282$189$142
Lodging Component$209$127$91
Meals and Incidentals$68$57$51
Incidentals Component$5$5$5

2017 Simplified Per-Diem Rates Released Effective October 1, 2016

August 30, 2016 --- 2017 CONUS Rates; FTR Bulletin 17-01

The GSA made 2017 rates available in early August. They come into effect on October 1, 2016 with the standard CONUS per diem rate increasing from 2016. There were some changes to the nonstandard areas. Visit the GSA's per diem "search map" to determine if you are in a nonstandard area.

The standard CONUS per diem rate of $142 is made up of three allowances - lodging @ $91, meals @ $46 and incidentals expenses @ $5.


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


2016 Simplified & Special Per-Diem Rates Released Effective October 1, 2015

September 18, 2015 --- 2016 CONUS Rates; Notice 2015-63

The per-diem rate IRS news update ...

CONUS Item High Cost Area Low Cost Area Standard Rate
Per diem allowance$275$185$140
Lodging Component$202$123$89
Meals and Incidentals$68$57$51
Incidentals Component$5$5$5

August 30, 2015

The GSA made 2016 rates available in early August. They come into effect on October 1, 2015 with the standard CONUS per diem rate increasing from 2015. There were some changes to the nonstandard areas. 

The standard CONUS per diem rate of $140 is made up of three allowances - lodging @ $89, meals @ $46 and incidentals expenses @ $5.


2015 Per Diems

September 19, 2014 --- 2015 CONUS Rates; IRB 2014-??, Notice 2014-57

If you are self employed and travel overnight for business, you will be interested in these rates released today.

CONUS Item High Cost Area Low Cost Area Standard Rate
Per diem allowance$259$172$129
Lodging Component$189$115$83
Meals and Incidentals$65$52$41
Incidentals Component$5$5$5

August 30, 2014

The GSA made 2015 rates available on August 6. They come into effect on October 1, 2014 with the standard CONUS per diem rate remaining unchanged from 2014. There were some changes to the nonstandard areas. 

The standard CONUS per diem rate of $129 is made up of three allowances - lodging @ $83, meals @ $41 and incidentals expenses @ $5.

2014 Per Diems

October 29, 2013 --- 2014 CONUS Rates; IRB 2013-42, Notice 2013-65

If you are self employed and travel overnight for business, you will be interested in these rates released today.

CONUS Item High Cost Area Low Cost Area Standard Rate
Per diem allowance$251$170$129-$154*
Lodging Component$181$113$83
Meals and Incidentals$65$52$46-$71*
Incidentals Component$5$5$5

2014 Simplified Per-Diem Rates Released Effective October 1, 2013

August 30, 2013

The GSA made 2014 rates available. They come into effect on October 1, 2013.

The CONUS per diem rate of $129 is made up of three allowances - lodging @ $83, meals @ $41 and incidentals expenses @ $5.



Simplified Per-Diem Rates Remain Unchanged for 2013

October 1, 2012 --- 2013 CONUS Rates; IRB 2012-37, Notice 2012-63

The IRS simplified per-diem rates will remain at fiscal year 2012 rates. Rates are set by fiscal year, effective October 1.

Here is the information summarized in table format effective October 1, 2012:

CONUS Item High Cost Area Low Cost Area Standard Rate
Per diem allowance$242$163$123-$148*
Lodging Component$177$111$77
Meals and Incidentals$65$52$46-$71*
Incidentals Component$5$5$5

*depends on location

Current per diem rates are now located on the GSA website at under Policy & Regulations> Travel, Transportation & Relocation> Travel Management> Per Diem.

Prior to May 21, 2012, these rates were published in IRS Publication 1542 Per Diem Rates (For Travel Within the Continental United States).

"This revenue procedure [...] provides rules for using a per diem rate to substantiate [...] the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers are not required to use a method described in this revenue procedure. A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence." IRS Revenue Procedure Bulletin at http://www.irs.gov/publications/p1542/ar02.html. See also http://www.irs.gov/uac/Publication-1542,-Per-Diem-Rates.

You can find information on business standard mileage rates on the U.S. Self Employment Income page.



October 1, 2011 --- 2012 CONUS Rates Lowered


The IRS simplified per-diem rates were increased for post September 30 business travel.

The CONUS low-cost area per-diem allowances increase $3 to $163 ($111 for lodging and $52 for meals and incidental expenses) while the high-cost area per-diem rates increase $9 to $242 ($177 for lodging and $65 for meals and incidental expenses).

Here is the information summarized in table format effective October 1, 2011 [and also effective October 1, 2012 and 2013 - see Notice 2012-63]:

CONUS Item High Cost Area Low Cost Area
Per diem allowance$233$160
Lodging Component$168$108
Meals and Incidentals$65$52
Incidentals Component$5$5

Here is the information summarized in table format for October 1, 2010 to September 30, 2011:

CONUS Item High Cost Area Low Cost Area
Per diem allowance$242$163
Lodging Component$177$111
Meals and Incidentals$65$52
Incidentals Component$5$5





IRS NEWS ITEM

Some Refunds Delayed in 2017

September 2016

A major change for 2017:

"Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the agency more time to help detect and prevent fraud."

Source: IR-2016-117 






IRS NEWS ITEM

Business Returns Due September 15th

September 1, 2016

Corporations and partnerships who filed for extensions have income tax returns that are due Thursday September 15.

IRS has three ways it can hit your pocket where it hurts when a return isn't filed on time. They are late payment penalties, interest charges and late filing penalties.

If you filed for an extension but have a balance due ... bad news ...

Interest charges and late payment penalties began on March 15 for corporations and April 15 for partnerships for any return with a balance due.

If you have no tax due and don't file your return by the deadline, you will be assessed a late filing penalty.

The late filing penalty is steep ... $195 for each month or part of month the return is late ... up to 12 months. But wait ... there is more. That figure is multiplied by the number of partners or shareholders in the business. Yikes! So if you file just one day late and there are two partners, the late filing penalty would be $390! Just one day late!

Source: www.irs.gov> businesses> small business/self-employed








IRS NEWS ITEM

September 1, 2016

A reminder that there are new filing dates for 1099s. Beginning in 2017, the forms must be submitted to the SSA by January 31 instead of February 28 for paper filing and March 31 for electronic filing.

These new deadlines also apply to W-2 and W-3 forms.


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


Credit Card Payments and the 1099-K Form

January 13, 2016

As filing time for 1099s is fast approaching, there continues to be confusion on what must be reported on the 1099-MISC. Check out Kelly Phillips Erb's article in Forbes magazine that explains the 1099_MISC should not include credit card payments. Let's look at how that might work.

If you have an IC that you paid $1500 in 2015 where $200 was paid by cheque and the remainder was paid through a merchant service (i.e. credit card, Amazon, PayPal, Square), then to be safe you would issue a 1099-MISC for $200 not the $1500. The remaining $1300 may get reported on a 1099-K ... but may not if your IC received under $20,000 through third party payments AND there were less than 200 transactions. 

To be clear, ICs need to report ALL their income whether or not they receive a 1099-MISC or a 1099-K.



Form 1099-K and The IRS Matching Program

August 27, 2013

Beyond415's November 19, 2012 Tax Alert, reported that the IRS began matching Form 1099-Ks to business returns to find underreported income.

20,000 Notification of Possible Income Underreporting letters are expected to be mailed out to small businesses.

If you receive letter 5035, review the accuracy of your filed return and respond if necessary.

If you receive letter 5036 or 5043, respond to the IRS within 30 days with an amended return reporting additional gross receipts, or a reconciliation between the Form 1099-K and reported gross receipts, or an explanation of the inaccurate Form 1099-K information.

If you receive letter 5039, respond to the IRS within 30 days by completing Form 14420 with your response. It is expected it will take 4-6 hours to complete the form.

The IRS site has updated their information about these notices. Search their site for "New Notices Related to Form 1099-K".



1099-Misc and New 1099-K Form

January 11, 2012


IRS introduced new regulations for Form 1099-MISC and a new form 1099-K. Some payments that were previously included on the 1099-MISC are now reported on 1099-K and must be excluded from your 1099-MISC.

You can find a short article by Andrew Chow of findlaw.com discussing the new form and how it affects your 1099-MISC form. You can find the article at:

http://blogs.findlaw.com/free_enterprise/2012/01/your-2011-1099-forms-including-new-form-1099-k-due-this-month.html

The article explains that Form 1099-K is "required for small businesses that sell more than $20,000 in goods or services through at least 200 transactions with any single payment processor [...] Payment processors like Amazon, PayPal, banks, and credit-card companies must send out 1099-K forms to small-business merchants. [...] Small businesses should be receiving 1099-K forms from credit-processing companies by the end of January."

Intuit also has a webcast available from yesterday's webinar on what you need to know and how QuickBooks' new wizard can help you process your 1099-MISC forms this year to remain in compliance with the new regulations. You can find the recording at:

http://community.intuit.com/posts/updated-recording-of-the-1099-misc-regulation-changes-webinar-is-now-available

Page down until you get to the link for the recording instead of the live event.

Both forms must be mailed by January 31 and reported to the IRS by February 29th.



April 11, 2011

1099 Corporate Information Reporting Requirements Repeal Passed by Congress

Sorry, I'm late in reporting this. If you haven't heard already, Congress has passed the bill to repeal the 2012 corporate reporting requirements as well as the 2011 reporting changes related to income from real estate.

The President is expected to sign the bill into law.



March 17, 2011

1099 Corporate Information Reporting Requirements Repeal Update

The bill to repeal the 2012 corporate reporting requirements has passed the House of Representatives. The bill is now in the Senate.

See previous posting on 1099 information reporting.



November 30, 2010

Senate Rejects Form 1099 Reporting Requirements Repeal

The senate vote to repeal the Form 1099 information reporting requirements set to begin in January 2011 for payments of goods ... and in January 2012 for payments to corporations. (Sc. 9006)

Under current law, only payments for services to any person engaged in business or trade that aggregated to $600 plus per year are reported.








IRS NEWS ITEM

2016 Depreciation Limits For Vehicles
2015 Revised Limits

April 1, 2016

The IRS released the depreciation deduction limits for vehicles first placed into service in 2016 in Revenue Procedure 2016-23. Bonus limits for 2015 were retroactively applied for 2015 (see 2015 table revisions below).

Dollar limits were adjusted for inflation. Light trucks and vans were increased by $100 in year two while passenger vehicles remained unchanged from last year.

First year bonus depreciation limits is $8,000 higher than the general non-bonus limits.

These limits must be prorated for business use of your personal vehicle when it is less than 100%. You must use the straight line ADS method if your business use is below 50%. In other words, this means you would not be eligible for bonus depreciation.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,160$5,100$3,050$1,875
Auto Bonus Rules$11,160$5,100$3,050$1,875
Light Truck, Van
No Bonus Rules
$3,560$5,700$3,350$2,075
Light Truck, Van
Bonus Rules
$11,560$5,700$3,350$2,075

PREVIOUS IRS NEWS RELATED TO THIS TOPIC


2015 Depreciation Limits For Vehicles - REVISED

June 23, 2015 (Revised April 1, 2016)

Okay, I dropped the ball here. Back in February, the IRS released the depreciation deduction limits for vehicles first placed into service in 2015 in Revenue Procedure 2015-8. 

Dollar limits were adjusted for inflation. Light trucks and vans were increased by $100 in year two while passenger vehicles remained unchanged from last year.

First year bonus depreciation amounts were not included initially because they were not in effect. April 1, 2016 the Protecting Americans From Tax Hikes Act of 2015 (PL 114-113) retroactively extended bonus depreciation for 2015. The first year limits for 2015 are increased by $8,000.

These limits must be prorated for business use of your personal vehicle when it is less than 100%. You must use the straight line ADS method if your business use is below 50%. In other words, this means you would not be eligible for bonus depreciation.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,160$5,100$3,050$1,875
Auto Bonus Rules$11,160$5,100$3,050$1,875
Light Truck, Van
No Bonus Rules
$3,460$5,600$3,350$1,975
Light Truck, Van
Bonus Rules
$11,460$5,600$3,350$1,975

A good article that explains the depreciation guidelines for vehicles was written by Scott Mills on February 2, 2015 for The Tax Advisor. You can find the article at:

www.aicpa.org/Publications/TaxAdviser/2015/February/Pages/Tax_Trends_01.aspx



2014 Depreciation Limits for Vehicles

February 27, 2014 (Updated December 2014 for bonus depreciation)

The IRS released the depreciation deduction limits for vehicles first placed into service in 2014 in Revenue Procedure 2014-21.

Dollar limits were adjusted for inflation. Light trucks and vans were increased by $100 while passenger vehicles remained unchanged from last year.

First year bonus depreciation amounts were not included in February 2014 because they were not in effect. In December 2014, The Tax Increase Prevention Act of 2014 extended the 50% special allowance. This means the first year limit is increased by $8,000 and not adjusted for inflation.

These limits must be prorated for business use of your personal vehicle when it is less than 100%. You must use the straight line ADS method if your business use is below 50%. In other words, this means you would not be eligible for bonus depreciation.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,160$5,100$3,050$1,875
Auto Bonus Rules$11,160$5,100$3,050$1,875
Light Truck, Van
No Bonus Rules
$3,460$5,500$3,350$1,975
Light Truck, Van
Bonus Rules
$11,460$5,500$3,350$1,975

Toni Nitti, a contributor to Forbes, explains that bonus depreciation isn't always what you expect due to the definition of "luxury autos" ... unloaded gross weight of 6,000 pounds or less ... not price.

Luxury vehicles are subject to Section 280F limits. A luxury cars can now start at $15,000. A luxury car is not what it used to be!

Mr. Netti notes that vehicles over 6,000 pounds are not considered luxury vehicles and have no limitations when it comes to deducting bonus depreciation.


2013 Depreciation Limits for Vehicles

February 25, 2013

The IRS released the depreciation deduction limits for vehicles first placed into service in 2013 in Revenue Procedure 2013-21.

Dollar limits were adjusted for inflation and are the same as last year except for light trucks and van in years two forward.

These limits must be prorated for business use of your personal vehicle when it is less than 100%. You must use the straight line ADS method if your business use is below 50%. In other words, this means you would not be eligible for bonus depreciation.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,160$5,100$3,050$1,875
Auto Bonus Rules$11,160$5,100$3,050$1,875
Light Truck, Van
No Bonus Rules
$3,360$5,400$3,250$1,975
Light Truck, Van
Bonus Rules
$11,360$5,400$3,250$1,975

U.S. Senate/Congress Extends Bonus Depreciation One Year

January 7, 2013

The American Taxpayer Relief Act was voted on in Congress on January 2 and passed into law by President Obama the same day.

Find more details on this Act in The Bookkeeper News.


January 1, 2013

U.S. Senate bill which includes extending bonus depreciation for one year and Section 179 expensing will go to Congress later this week.

Accelerated bonus depreciation was set to expire at the end of 2012.



2012 Depreciation Limits for Vehicles
2011 Depreciation Limits for Vehicles

March 8, 2012


The IRS released the depreciation deduction limits for vehicles first placed into service in 2012 in Revenue Procedure 2012-23.

Changes made to the dollar limits are generally $100 higher this year over last year.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,160$5,100$3,050$1,875
Auto Bonus Rules$11,160$5,100$3,050$1,875
Light Truck, Van
No Bonus Rules
$3,360$5,300$3,150$1,875
Light Truck, Van
Bonus Rules
$11,360$5,300$3,150$1,875

You can find more in depth details in Revenue Procedure 2012-23 at http://www.irs.gov/pub/irs-drop/rp-12-23.pdf.

Please note, bonus depreciation is set to expire at the end of 2012 unless Congress acts to extend the bonus.

2011 Depreciation Limits for Vehicles

I subscribe to the free IRS publication e-News for Small Business. In Issue Number: 2011-5, it announced that the IRS released the depreciation deduction limits for vehicles first placed into service in 2011 in Revenue Procedure 2011-21.

Changes were made to the dollar limits for vans and light trucks and luxury autos. There is no change from last year to auto placed in service this year.

Limits Year One Year Two Year Three Remaining Years
Auto No Bonus Rules$3,060$4,900$2,950$1,775
Auto Bonus Rules$11,060$4,900$2,950$1,775
Light Truck, Van
No Bonus Rules
$3,260$5,200$3,150$1,875
Light Truck, Van
Bonus Rules
$11,260$5,200$3,150$1,875

You can find more in depth details in Revenue Procedure 2011-21 at http://www.irs.gov/pub/irs-drop/rp-11-21.pdf.

The NACPB Federal Tax Update Newsletter to March 2, 2011 mentions that these limits must be prorated for business use of your personal vehicle when it is less than 100%.

IRS News originally posted the 2011 rates on March 2, 2011







IRS NEWS ITEM

Employer Provided Vehicles - 2016 Maximum Values

February 5, 2016


The IRS released the maximum value of company owned vehicles first made available for employee use in 2016. These values are used when calculating the taxable fringe benefits due to personal use of the employer provided vehicle.

Valuation Vehicle 2016
Maximum
2015
Maximum
Cents-per-milepassenger vehicle$15,900$16,000
Cents-per-miletruck or van$17,700$17,500
Fleet Averagepassenger vehicle$21,200$21,300
Fleet Averagetruck or van$23,100$22,900

Reference: Rev. Proc. 2016-12







IRS NEWS ITEM

New Due Dates in 2017 For W2 and W3

January 25, 2016

Under the heading "What's New" in the instructions for W-2s and W-3s, a new due for 2017 is released. Beginning in 2017, the forms must be submitted to the SSA by January 31 instead of February 28 for paper filing and March 31 for electronic filing.

The number of slips issued before you must efile is also changing in some states. Some are 50, others are 10 before mandatory filing kicks in.

These new deadlines also apply to 1099s.



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


Affordable Care Act 101 

October 8, 2013

The SBA.gov is offering free webinars every Thursday at 2 pm ET throughout the month of October. The webinar is help small business owners learn what the Patient Protection and Affordable Care Act means for your business.

Topics to be discussed include:

  • Small business tax credits (available to businesses and tax-exempt non-profits)— who’s eligible for them and how to claim them
  • Marketplace updates
  • Shared responsibility
  • Cost containment
  • Tools and resources available for small businesses interested in learning more about the law

You can register here.

While there, check out their articles explaining how the Act affects you if you:

  • are self-employed
  • have less than 25 employees
  • have up to 50 employees
  • employ 50 plus employees

At the end of each article you will find a link to an interactive tool to help you find and compare health plans.


Reporting Requirements for Health Coverage Released

September 16, 2013

Section 6055 (Reg-132455-11) requires providers of minimum essential health coverage to report information verifying the taxpayer is covered. Reporting for 2014 is voluntary.

Section 6056 (Reg-136630-12) provides requires large employers (over 50 employeees) are subject to reporting to the employees and IRS the coverage offered to full-time employees. Reporting for 2014 is voluntary.


You may also be interested in Notice 2013-54Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements. This notice cover health reimbursement options (HRAs); group health plans that reimburse the employee; and health flexible spending arrangements (health FSAs).



IRS Issues Final Regulations on Individual Health Care

August 28, 2013


The IRS issued final regulations this week for shared responsibility payment - Section 5000A (Reg-148500-12). A penalty is applied on individuals who do not have basic minimum health insurance coverage. It goes into effect in 2014.

Under the Affordable Health Care Act, individuals now share responsibility for health care coverage with the government, insurers, and employers. Exemptions are explained along with shared payment responsibility payment upon filing an income tax return.

You can find more information in The Treasury Deparment's Fact Sheet: Individual Shared Responsibility for Health Insurance Coverage and Minimum Essential Coverage Final Rules.



W2 Information Reporting Break

October 25, 2012

A reminder that businesses with less than 250 W-2s in 2011 are exempt from the W-2 reporting requirements for health insurance. This reporting exemption remains in effect until the IRS rescind it.

See Notice 2012-9 Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage (issued January 23, 2012) for the 2012 reporting requirements. This notice supersedes Notice 2011-28.

The best way to deal with this publication is to make a table while your are reading; list what needs to be reporting, what doesn't need to be reported and what is optional reporting.



August 7, 2011

I'm just looking at the AIPB quiz (based on their June 2011 The General Ledger publication) in the August 1, 2011 Bookkeeping Tips free enewsletter ... wow that was a mouthful!

It mentions that small employers (those with fewer than 250 Form W-2) have been given a break.

They do not need to comply with W-2 reporting requirements until further notice. This reporting break is referring to the transitional relief for employee information reporting requirements on the cost of an employeee's health care benefits (employer provided health care coverage).

See IRS Notice 2011-28 Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage for more details. This notice provides interim guidance that generally applies to Forms W-2 beginning with 2012.

You might also want to visit the IRS News notice titled Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers. See Question 4 for information on this particular small employer break.

IRS Notice 2010-69 Interim Relief with Respect to Form W-2 Reporting of the Cost of Coverage of Group Health Insurance Under § 6051(a)(14) also discusses this break.



October 19, 2010

2011 W-2 Health Insurance Reporting Optional

The IRS news wire IR-2010-103 released the draft W-2 form for 2011 on Oct 12, 2010. Employers use the W-2 form to report wages and employee tax withholding. The draft W-2 form has the codes required to report health insurance coverage.

The new requirement for employers to report the cost of coverage under an employer-sponsored group health plan has been made optional for 2011. The amounts reportable are not taxable.

Read more on the IRS website at Newsroom> IRS Releases Draft W-2 Form for 2011; Announces Relief for Employers



Claiming New Health Care Tax Credit

December 2, 2010 Update

The IRS Newswire IR-2010-117 released the final version of Form 8941 as well as Instructions for Form 8941 and Notice 2010-82 Section 45R – Tax Credit for Employee Health Insurance Expenses of Small Employers.

Notice 2010-82 expands on Notice 2010-44, 2010-22 I.R.B. 717.



September 8, 2010

Yesterday, the IRS Newswire IR-2010-096 released a draft of Form 8941 so that small businesses can claim the new health care tax credit. The final version is expected later this year.

The amount calculated on the form will be part of your general business credit on your income tax return.

This credit is "designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees."

More information and a link to the draft form can be found on the IRS website www.irs.gov> Newsroom

You will also find a step by step guide on the Small Business Health Care Tax Creditat http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf .







IRS NEWS ITEM

2016 Standard Mileage Rate

December 18, 2015

The IRS announced yesterday that most rates will be lower by 3.5 cents than in 2015.

The standard mileage rate for business miles driven has fallen to 54.0 cents per mile.

Medical / moving rates decreased by 4 cents but charitable rates continued to hold steady. See the IRS news for more information:

https://www.irs.gov/uac/Newsroom/2016-Standard-Mileage-Rates-for-Business-Medical-and-Moving-Announced

REMINDER You will need your business mileage and total mileage for 2015 tax preparation. Make a note to get your odometer reading as close to December 31 as possible.


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


2015 Standard Mileage Rate

December 10, 2014

The IRS announced today that most rates will be up one and a half cents per mile.

The standard mileage rate for business miles driven has increased to 57.5 cents per mile effective January 1, 2015.

Medical / moving rates decreased half a cent for the second year in a row but charitable rates continued to hold steady. See the IRS Notice 2014-79 on the IRS website for more information.



December 9, 2011

2012 Standard Mileage Rate

The IRS announced today that most rates will be staying the same as in July.

The standard mileage rate for business miles driven remains unchanged from the mid-year adjustment at 55.5 cents per mile.

Medical / moving rates decreased 0.5 cents but charitable rates continued to hold steady. See the IRS drop box for more information:

http://www.irs.gov/pub/irs-drop/n-12-01.pdf

REMINDER You will need your business mileage and total mileage for the two periods (Jan-Jun and Jul to Dec) for 2011 tax preparation. Make a note to get your odometer reading as close to June 30 AND December 31 as possible.



June 23, 2011 (Updated July 5, 2011)

Standard Mileage Rate Increase

The IRS announced today they are increasing the standard mileage rate 4.5 cents to 55.5 cents from 51.0 cents for the period July 1 to December 31, 2011. This special adjustment is being made to reflect the recent increases in the price of gas.

Medical / moving rates also increase 4.5 cents but charitable rates remain unchanged. See the IRS drop box for more information:

http://www.irs.gov/pub/irs-drop/a-11-40.pdf

Renee Daggett of Admin Books explains in their July 5th newsletter that you will need to log your auto mileage from January to June AND July to December. You will need your business mileage and total mileage for both periods for 2011 tax preparation. So if you haven't already, get your odometer reading NOW or as close to June 30 as possible. Renee calls this an action item.










IRS NEWS ITEM

Safeguarding Taxpayer Data

October 12, 2015

This may be interesting to attend even for Canadian bookkeepers. 

IRS 90-minute Oct. 20 webinar “Data Thefts and Protecting Client Information.” The broadcast will include:

  • The dangers of data theft for tax professionals and clients
  • Legal requirements and best practices to better protect taxpayer information 
  • New steps tax professionals should take if they suffer a loss of taxpayer data 
  • A first-hand account from a practitioner who experienced a theft 
  • A live Q&A with IRS Executives, Subject Matter Experts and guest CPA

Certificates of completion are being offered. Earn 1 CE credit – Federal Tax. Register here: https://www.webcaster4.com/Webcast/Page/445/10887

The IRS also has a published guide on the topic see ... Safeguarding taxpayer data is a top priority for the IRS. Publication 4557 "Safeguarding Taxpayer Data-A Guide for Your Business" has been updated to include information on identity theft, references and important links. This revised Publication 4557, replaces the October 2008 edition.

Source: e-News for Tax Professionals Issue Number: 2015-40


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


IRS Small Business Items of Interest

July 5, 2012 - Updated February 2016


IRS has an online webinar that covers business taxes for the self-employed. There are 9 lessons. It covers Schedule C, paying taxes electronically, retirement plans, hiring employees and contractors, payroll, tax deposits, hiring people who live in the US but aren't citizens. You can watch the archived webinar at irsvideos.gov> Small Business Taxes: The Virtual Workshop.

You can also find an archived webinar on Day Care businesses. It covers recordkeeping, business use of home, computing and reporting depreciation. You can watch it at irsvideos.gov> Tax Related Guidance for Child Care Providers.

Rev. Rul. 2012-18 provides guidance on the tax treatment of tips vs. service charges. It is worth a quick read. Rev. Rul. 2012-18 supersedes the guidance in Rev. Rul. 95-7, 1995-1 C.B. 185. See IRB 2012-26 for the details.

Source: e-News for Small Business Issue Number: 2012-14








IRS NEWS ITEM


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


Sole Proprietor Returns Due October 15

September 29, 2015

Sole proprietors, who filed for the automatic 6 month extension on IRS Tax Form 4868, have income tax returns that are due on Thursday, October 15.

It is not IRS news that the IRS has three ways it can hit your pocket where it hurts when a return isn't filed and/or paid on time. They are late payment penalties, interest charges and late filing penalties.

Interest charges and late payment penalties began on April 15 for sole proprietors on any return with a balance due. The extension was only for filing the tax return ... not on balances owing.

If you have a balance due and don't file your return by October 15, you will also face late filing penalties.

If you have no tax due and don't file your return by October 15, there will NOT be a late filing penalty because the penalty is calculated on tax owing. However, Wayne Davies of Make Your Life Less Taxing, often reminds his readers that you only have three years to file to obtain any refund owing ... otherwise the amount owed to you is lost.



IRS 2014 Tax Season Opens January 20

January 1, 2015

The IRS will begin accepting 2014 tax returns on January 20, 2015 following Extenders Legislation.



2013 Tax Season To Open Late

January 3, 2014

Tax season will be starting January 31, 2014.


October 22, 2013

The IRS has announced that due to the recent government shutdown, the 2014 tax season will open late. Processing of 2013 returns will begin sometime between January 28 and February 4, 2014 instead of the planned date of January 4, 2014.

For more details, see IRS Newswire IR-2013-82.


IRS Now Accepting All 2012 Forms

March 5, 2013

Over the weekend, the IRS completed reprogramming and testing of its systems for tax-year 2012 including all remaining updates required by the American Taxpayer Relief Act (ATRA) enacted by Congress in January.

It is now accepting all 2012 forms.



IRS To Accept Tax Returns with Education Credits, Depreciation Next Week

February 11, 2013

Yesterday, the IRS began processing tax returns that contain Form 4562, Depreciation and Amortization.

On February 14, the IRS plans to start processing Form 8863, Education Credits.

It will start accepting the remaining forms affected by the January legislation arising from The American Taxpayer Relief Act the first week of March.



Tax Season Opens Late for 1040 Filers

January 11, 2013 (Updated January 18, 2013)


While the IRS announced Tuesday that they were opening the tax season for 1040 filers on January 31, 2013, that won't be the case if you file forms 3800, 4562, or 5695. The tax law changes from late legislation (see The American Taxpayer Relief Act) means they need time to do programming changes and testing.

You can expect to be able to file sometime late February / early March.

The 2013 tax tables and adjustments for inflation were also released today. See Rev. Proc. 2013-15.

Farmers and fishermen's deadline has been extended from March 1 to April 15.


IRS News Source: IRS Newswire IR-201302







IRS NEWS ITEM

2013 Social Security Wage Base

2015 Withholding Tax Tables Available Now

December 10, 2014

In late November / early December, 2014, the IRS revised Notice 1036 - Early Release Copies of the 2014 Percentage Method Tables detailing the 2015 withholding payroll taxes and new income tax withholding tables (see Notice 1036). It now includes the cut in payroll taxes even though Congress is still discussing the matter. 

The employer rate remains unchanged at 6.2%. The wage base increased to $118,500. Medicare rates remains at 1.45% for both employee and employee with no wage base limit. The additional medicare tax withholding of 0.9% for employees earning in excess of $200,000 remains in place. Income tax rates from recent years remains in effect.

Income tax rates were increased by COLA. MoneyChimp.com has a great tool showing you the different federal tax brackets by year.

Publication 15, (Circular E) will be revised and released later in December, 2014.


PREVIOUS IRS NEWS RELATED TO THIS TOPIC


New 2013 Withholding Tables Available

January 7, 2013

In early January 2013, the IRS revised Notice 1036 - Early Release Copies of the 2013 Percentage Method Tables detailing the revised 2013 withholding payroll taxes and new income tax withholding tables. It now includes the changes from The American Taxpayer Relief Act.

The payroll tax cut rates from the past two years were not extended; therefore social security tax rate for 2013 will increase to 6.2% for the employee with the employer matching this.

As I mentioned in the December newsletter ... Medicare tax has a new wrinkle effective January 2013. Rates will remain at 2.9% of wage income, split evenly between the employer and employee. However a new threshold has been introduced whereby high income individuals will pay a extra tax of 0.9%. This additional tax is to be borne 100% by the employee. The employer does NOT pay any of the extra tax.

The Medicare tax was also expanded to cover investment income in addition to wage income for high income individuals. High income individuals are defined as $200,000 for individual filers and $250,000 for joint filers.

To summarize ...

The wage base increased to $113,700. Medicare rates remain unchanged at 1.45% for both employee and employee with no wage base limit however there is an additional medicare tax withholding of 0.9% for employees earning in excess of $200,000. This tax does not apply to the employer. The employee bears 100% of this additional tax.

Income tax rates from recent years were increased for those earning over $400,000.

Publication 15, (Circular E) will be revised and released later in January, 2013.



New 2012 Withholding Tables Available

January 5, 2012

In early December, 2011, the IRS revised Notice 1036 - Early Release Copies of the 2012 Percentage Method Tables detailing the revised 2012 withholding payroll taxes and new income tax withholding tables (see Notice 1036). It now includes the cut in payroll taxes even though Congress is still discussing the matter.

If Congress does not extend the tax cut rates, social security tax rate for 2012 will be 6.2% for the employee. Notice 1036 now says to use 4.2% assuming Congress will extend the cut.

The employer rate remains at 6.2%. The wage base is $110,100. Medicare rates remain unchanged at 1.45% for both employee and employee with no wage base limit. Income tax rates from recent years remains in effect.

Publication 15, (Circular E) will be revised and released in early January, 2012.



December 23, 2010

The payroll tax holiday for 2011 makes up for the loss of the Making Work Pay Credit that ends in 2010.


December 20, 2010

On December 17, the IRS issued IR-2010-124 detailing the revised 2011 withholding payroll taxes and new income tax withholding tables (see Notice 1036). The instructions help employers implement the 2001 cut in payroll taxes.

Publication 15, (Circular E) will be revised sometime this week.

This means the Making Work Pay Credit expires on December 31, 2010.

Social security tax rate for 2011 is 4.2% for the employee. The employer rate remains at 6.2%. The wage base is $106,800. Medicare rates remain unchanged at 1.45% for both employee and employee with no wage base limit. Income tax rates from recent years remains in effect.




December 17, 2010


Making Work Pay Credit

In Accounting Today, a December 16th article titled 13.4M People May Owe More Taxes Because of Making Work Pay Credit, it mentions that "the Making Work Pay Credit is likely to be replaced next year by a 2 percentage point decrease in Social Security payroll taxes, from 6.2 to 4.2 percent".

The Making Work Pay Credit "is advanced to taxpayers by their employers through withholding reductions, which results in an increase in taxpayers’ take-home pay. The credit has been effective for tax years 2009 and 2010, but expires at the end of this year."

The article explains that taxpayers may end up owing taxes if they are in any of these situations:

  • single taxpayer with more than one job
  • joint filers where both spouses work
  • joint files where one of both have more than one job
  • taxpayer who receives pension payments
  • Social Security recipients who receive wages

This group of taxpayers were advanced more of the credit than they were entitled to claim, resulting in taxes owing and incurring penalties.

Accounting Today for the WebCPA is found at www.accountingtoday.com



September 24, 2010

More Than IRS News For Small Business
2011 Employer Withholding Taxes

The CPA Daily News (www.alcpas.org) released an an article today titled Employee Withholding Taxes Likely to Increase in 2011.

Some of the reasons discussed are:

  • making work pay credit - this credit expires after 2010 tax year
  • advance earned income credit - this credit has been repealed starting with the 2011 tax year
  • supplemental wage rates - amounts like bonuses, commissions, severance pay will increase. under one million increases to 28% from 25% and over one million increases from 35% to 39.6%
  • backup withholding - increases from 28% to 31% for non-wage payments to payees with incorrect or missing TIN
  • employer-provided educational assistance - the fringe benefit under IRC §127 ends with the 2010 tax year
  • higher tax brackets - 10% disappears making 15% the lowest tax bracket, size of 15% tax bracket for joint filers and qualified surviving spouses will be 167% instead of 200%, and the top brackets rise (see table below)

See December 10, 2010 update above.

Tax Bracket Rate Proposed 2011 Rate
25%28%
28%31%
33%36%
35%39.6%





IRS NEWS ITEM

Comparing Regular vs. Simplified Home Office Deduction

June 4, 2014

The Tax Advisor has an excellent article by Cherie Hennig, Ph.D., CPA; Allison Evans, Ph.D., CPA; and John Everett, Ph.D., CPA on how to compare the regular versus simplified home office deduction to determine which is the better choice for you.

It gives a detailed example walking you through the analysis and how to evaluate the data; as well a summary of the advantages and disadvantages of the simplified safe harbour method is discussed.

There is also a link to an Excel spreadsheet you can download. It works through the example of actual cost (regular home office deduction), safe harbour (simplified home office deduction), and the comparison between the two.

A link to a previous article by Michaele Morrow, Ph.D., CPA, Timothy Rupert, MST, Ph.D., and Ronald C. Zullo, CPA, MST has a very nice exhibit on the ordering of the deduction of expenses under the two methods; they are different.

Regular Method - Actual Expenses Ordering:

  1. Business expenses not related to use of home
  2. Home expenses that are deductible elsewhere
  3. Home expenses not deductible elsewhere
  4. Depreciation
  5. Excess carried over

Simplified Method - Safe Harbor Ordering:

  1. Business expenses not related to use of home
  2. Safe harbor amount ... $5/sq.ft., limited to 300 square feet
  3. Excess carried over




PREVIOUS IRS NEWS RELATED TO THIS TOPIC


Simplified Home Office Deduction Option

IRS simplified home office deduction for home based businesses

January 18, 2013

On Tuesday, the IRS announced a safe harbour option for claiming home based businesses to claim the home office deduction. This is good news as this deduction is frequently scrutinized.

Let's start with the definition of safe harbour. Wikipedia defines safe harbour as "a provision of a statute or a regulation that reduces or eliminates a party's liability under the law, on the condition that the party performed its actions in good faith or in compliance with defined standards."

Now before you get too excited, this option is not available until you file your 2013 tax return in early 2014. To clarify, this option is not available when filing your 2012 tax return this year (in 2013).

Currently, to claim your home office deduction, the detailed IRS Form 8829 is completed. You need an area (not necessarily a whole room) you use in your home exclusively and regularly for business to make this claim. See the IRS Tax Tip 2011-53 Work From Home? Consider the Home Office Deduction for the criteria to make this deduction.

How does this new home office deduction option work? You can now claim $5 per square foot up to a maximum claim of $1,500 (300 square feet).

Under the new simplified option, you will still complete Form 8829 but you no longer have to track your expenses. The existing option will still be available to calculate the deduction for those who exceed the limits. You may want to calculate the home office deduction both ways to see which is better for your situation.







IRS NEWS ITEM

Electronic Signatures

May 16, 2014

The IRS approved electronic signatures for Form 8879 on March 11, 2104.

The CPA Advisor has a great article on this at cpapracticeadvisor.com/news/11357868/irs-approves-e-signatures-on-form-8879.







IRS NEWS ITEM

Guidance Issued Related to Repair Regs

January 27, 2014

Guidance has been been issued relating what dollar value can be expensed in relation to repair work and what must be capitalized. The rules are effective January 1, 2014. See Rev. Proc. 2014-16.

Small businesses for the most part have been using GAAP guidelines of $500 regardless of useful life (sometimes up to $1000 was used as the limit) when determining what to expense with regards equipment purchases, small tools and supplies.

You can wade through the IRS procedures but Renee Daggett over at AdminBooks simplified it in her blog / newsletter issue #126.

She explains that the limit for expensing materials and supplies (tangible property) has now been set at $200. A supply is generally defined as an item that has:

  1. an economic life (is consumed) within 12 months; OR
  2. cost $200 or less.

All other non-consumable purchases (economic life is greater than 12 months) such as printers, routers, phones must now be capitalized (placed on the balance sheet to be depreciated over the life of the asset) and tracked separately.

She discusses two exceptions to the $200 limit. You can find her article in the newsletters archives at adminbooks.com> Resources> 2014 Newsletter Archive> January 28, 2014 New IRS Rule for Expenses and Assets.



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


Repair Regs Delayed

December 17, 2012

The IRS has delayed the repair regs around tangible property expense to January 1, 2014. You can, however, elect to apply them to tax years on or after January 1, 2012.


BACKGROUND

A proposal for temporary regs came into effect on January 1, 2012 outlined when to capitalize and when to expense tangible property used in business excluding inventory.

The general rule is you can expense items for $100 or less regardless of their useful life.

After that, it gets complicated and you need to read the regs. T.D. 9564. The Tax Advisor published an article in May 2012 outlining the regs. It was titled Tangible Property Regulations by Nathan P. Clark CPA.


You can find the article on the AICPA website under Publication> The Tax Adviser> 2012> May> Tangible Property Regulations.







IRS NEWS ITEM

US Shutdown and How It Affects IRS

October 1, 2013

The IRS released this special notice earlier today:

"Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal."



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


IRS Closing Due to Budget & Sequester

May 15, 2013,

The IRS announced the following today:

"... additional details about the closures planned for May 24, June 14, July 5, July 22 and Aug. 30, 2013.

Due to the current budget situation, including the sequester, all IRS operations will be closed on those days. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service and the agency’s nearly 400 taxpayer assistance centers nationwide, will be closed on those days. IRS employees will be furloughed without pay. No tax returns will be processed and no compliance-related activities will take place.

The IRS noted that taxpayers should continue to file their returns and pay any taxes due as usual.

... Where the last day for responding to an IRS request falls on a furlough day, the taxpayer will have until the next business day."

Wikipedia explains that sequestration refers to budget cuts to particular categories of federal spending that began on March 1, 2013 as an austerity fiscal policy.


Source: IRS Newswire






IRS NEWS ITEM

Search Warrants

May 25, 2013

The IRS announced this past week that they will now obtain search warrants when looking for email communications stored by your internet service provider. For more information, see IRS Policy Statement 4-120.







IRS NEWS ITEM

How To Claim Retroactive Transportation Fringe Benefits

January 17, 2013

IRS has released the procedures to retroactively refund the FICA tax paid on 2012 excess transit benefits prior to the reinstatement of parity rates in The American Tax Relief Act. See IRS Notice 2013-8 Application of Retroactive Increase in Excludible Transit Benefits.

If you are interested in simpler instructions than the IRS Notice, JOA has a good article (January 16, 2013) on this by Sally P. Schreiber titled "Retroactive procedures implement qualified transportation fringe benefits parity for 2012".

The JOA article explains:

  1. The special rules for employers that have not yet filed their final Form 941 for 2012.
  2. The rule for employers that already filed final fourth quarter Form 941 for 2012.
  3. Special instructions for Forms W-2.

You can find my Employee Fringe Benefits table here.

 







IRS NEWS ITEM

2013 IRS Forms and Publications

January 7, 2013

Just a general note to let you know that the IRS will have the following forms and/or publications available for 2013 later this month:

  • Publication 15-B Employer's Tax Guide to Fringe Benefits
  • Form W-4 Employee's Withholding Allowance Certificate - your employees should be submitting new ones to you if any of their circumstances have changed ... and you should process them prior to doing your first 2013 payroll

The release of the 2013 forms has been delayed due to the late passage of The American Taxpayer Relief Act.

See the Social Security Online's User Handbook for Tax Year 2012 for all of your 2012 W-2 electronic filing options.

The free W-2/W-3 online filing application for the 2012 tax year became available on the Social Security website in late November 2012. You can file 50 W-2's for each W-3 submittd ... and you can now also submit for the 2010 and 2011 tax year if you are delinquent. SSA also has a webacst on how to file your W-2's online.

You can also download AccuWage software (free Social Security software) to check your W2 report for errors so you can locate and fix errors BEFORE filing your W-2/W-3 reports.



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


December 22, 2011

2012 IRS Forms and Publications


Just a general note to let you know that the IRS has the following forms and/or publications available for 2012:

  • Publication 15-B Employer's Tax Guide to Fringe Benefits
  • Form W-4 Employee's Withholding Allowance Certificate - your employees should be submitting new ones to you if any of their circumstances have changed ... and you should process them prior to doing your first 2012 payroll

The free W-2/W-3 online filing application for the 2011 tax year became available on the Social Security website on December 5th.








IRS NEWS ITEM

2013 Tax Figures for US Bookkeepers

October 19, 2012

For bookkeepers who prepare taxes for their clients, and who have registered with the IRS for their PTINs (IR 2010-106), you will find 2013 cost of living adjustments (COLA) for retirement and non-retirement plans on the IRS website. Search for "2013 cola" to find the latest IR news.

Update January 11, 2013 - Due to The American Taxpayer Relief Act released early in 2013, see also Rev. Proc. 2013-15.


Your 2013 reference is IR-2012-77, Rev Proc 2012-41, 2012-45 IRB.

Your 2012 reference is IR-2011-103, Rev Proc 2011-52, 2012-45 IRB.

Your 2011 references are IR 2010-108, Rev Proc 2010-40, 2010-46 IRB.








IRS NEWS ITEM

IRS Power Outage Notice

August 22, 2012

Here is a heads up! The IRS shut down will affect the online payment agreement application, the employer identification numbers and other systems from 1:00 a.m. Thursday August 30 to noon Tuesday September 4.

A computing center is having their electrical replaced and upgraded.








IRS NEWS ITEM

IRS Website Redesign

August 22, 2012

The new IRS website platform will go live on August 30. The look and feel of the site has also given the site a face lift.

If you have any links and/or references to the site, make sure you go in and check them after August 30.

Their news information says, "The new platform will allow IRS to deliver services at a faster pace to keep up with demands for online services."








IRS NEWS ITEM

IRS Recordkeeping Requirements for Small Business Owners

August 10, 2012


The IRS sent out a Summer Tax Tip regarding recordkeeping documents for small business owners:

"Typically, keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Also, keep records documenting gross receipts, proof of purchases, expenses and assets. Examples include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices, credit card charges and sales slips, Forms 1099-MISC, canceled checks, account statements, petty cash slips and real estate closing statements. Electronic records can include databases, saved files, e-mails, instant messages, faxes and voice messages."


Source: IRS Tax Tips Issue Number: 2012-16



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


November 23, 2010.

IRS Phone Forum on Recordkeeping - December 1, 2010

This free phone forum will discuss why small businesses need to keep adequate books and records ... and how to maintain them. The IRS examination process will also be presented.

Listen to the archived recording at irsvideos.gov> small business> video portal> all phone forums> Recordkeeping Phone Forum

... or you can find the link through irs.gov> Businesses> Small Business and Self-employed Center> IRS Video Portal.








IRS NEWS ITEM

IRS Reporting Rental Real Estate

August 10, 2012

IRS News For Small Business

The IRS released guidance on reporting rental real estate activity correctly:

"Individuals who are not real estate professionals are generally subject to passive activity loss limitations even if they materially participate in the rental. Real estate professionals report rental real estate activities in which they materially participated as non-passive. But, real estate professionals who do not materially participate in the rental activity are generally subject to passive activity loss limitations. Publication 925, Passive Activity and At-Risk Rules, includes information on who qualifies as a real estate professional and passive activity limits."

Source: e-News for Tax Professionals Issue Number: 2012-32








IRS NEWS ITEM

Temporary Payroll Tax Cut Continuation Act of 2011
The Middle Class Tax Relief and Job Creation Act of 2012

December 23, 2011 (Updated February 23, 2012)


February 23, 2012 Update

IRS released a revised Form 941 which will enable the reporting for the extended payroll tax cut under The Middle Class Tax Relief and Job Creation Act of 2012.

In the IRS Newswire Number IR-2012-27, it also stated that ...

"The new law also repeals the two-percent recapture tax included in the December legislation that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture tax does not apply."

The Temporary Payroll Tax Cut Continuation Act of 2011 was set to expire at the end of February, 2012.

Click here to go to the revised Form 941.
Click here for access to the news release.



Original Post December 23, 2011

IRS announced today the extension of the reduced payroll tax rate that has been in effect for 2011.

I have updated the Self Employment Tax table to reflect the 2012 changes as well as the FICA Employee Payroll Taxes Table to reflect The Temporary Payroll Tax Cut Continuation Act of 2011.

Employers have until January 31, 2012 at the latest to implement the new tax rate.

IRS-2011-124 explains that the Congress negotiated a NEW recapture provision.

"[The recapture provision] applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision."




PREVIOUS IRS NEWS RELATED TO THIS TOPIC


December 7, 2010 (Updated December 17, 2010)

IRS News For Small Business
Tax Cuts To Be Extended
2010 Tax Relief Act Passed By Congress

The President has agreed to extend tax cuts for two years for the middle class (individuals earning less than $200,000 and families earning less than $250,000) and the rich, extend unemployment benefits for 13 months, as well as payroll tax reduction on Social Security contributions for one year.

Also to be extended are the earned income tax credit, child care credit, and the American Opportunity Tax Credit for students.

Businesses will see an enhanced first-year depreciation deduction and a two-year AMT (alternative minimum tax).

The proposed one year payroll tax decrease would be 4.2% from the current 6.2% as a way to increase employee's take home pay.

This list is not exhaustive but just gives you an idea of what is included. This agreement means it is unlikely taxes will increase on January 1, 2011.

Update December 17, 2010 - The Senate passed the tax cuts be extended on December 15, and the House followed on December 16.







IRS NEWS ITEM

IRS Webinar - Small Business Tax Compliance Priorities

December 16, 2011


Mark this one on your calendar.

The IRS are holding a free webinar on January 11, 2012 11:00 Pacific Time to explain IRS Small Business/Self-Employed (SB/SE) Division top compliance priorities (i.e. what they will be looking for when auditing) in 2012 and challenges for 2012. An overview discussions of priorities by the IRS Compliance Director will cover:

-SB/SEs approach to compliance and working with tax professionals
-Exam’s National Research Project, field audit coverage plans and new pilot programs
-Collection’s Fresh Start initiatives and new operating unit
-Campus Compliance plans for improving Automated Under Reporter (AUR) and their Centralized Offer-in-Compromise programs

You can register at:

http://www.visualwebcaster.com/IRS/83902/reg.asp?id=83902




PREVIOUS IRS NEWS RELATED TO THIS TOPIC


June 17, 2011

Examination Process for Employment Tax Returns

The IRS are holding a free one hour webinar to explain what to expect from an employment tax examination. It will cover the examination process and results, statute of limitations, taxpayer and appeal rights as well as settlement agreements and payment options.

You can register at:

http://www.visualwebcaster.com/IRS/78923/reg.asp?id=78923




March 2, 2011

Business Taxes For The Self-Employed

It's been awhile since I found anything I thought would be of interest to small business owners. This news might be of interest to you.

The IRS is offering a free webinar of March 29, 2011 on the basics of business taxes for the self-employed. It will provide an overview of reporting profit or a loss, business expenses, business record keeping requirements and estimated tax payments.

You can register here:

http://www.visualwebcaster.com/IRS/77024/reg.asp?id=77024




October 28, 2010

IRS Webinar Common Employment Tax Issues

In the most recent edition of e-News for Small Business, the IRS invites small business owners to a November 3 webinar. Items to be discussed are:

Employment Tax National Research Project
Worker Classification
Fringe Benefits
Compensation for Sub S Corporation Officers
Back-up Withholding



September 8, 2010 (Updated August 16, 2013)

IRS Audit Process

What do you do if you receive an IRS audit notice?

The IRS released a new video series in August called Your Guide to an IRS Audit. The series takes you through the three different types of audits ... correspondence, office and field ... showing you step by step what you need to do.

It is broken into 10 lessons so you don't have to watch it all in one sitting.

It explains:

  • the different audit notices
  • the selection process
  • how to organize your records for the auditor
  • what happens at your first appointment
  • what happens if you do or don't agree with the audit findings

... and more. You can find the videos at www.irsvideos.gov/audit

You may also want to watch the YouTube video of Tax Tips:Record Keeping deals data retention requirements as well as organizing the receipts themselves. Common Tax Return Mistakes is another YouTube video you may want to check out.

The IRS also has various audit technique guides by industry on their site.

Bloomberg Businessweek reported on July 17, 2013, that Daniel Werfel, the new head of IRS would tell Congress their criteria for selecting small businesses for audit: "Tax returns are run through a computer program and scored for compliance risk, and filers deemed most likely to have run afoul are selected for audits".







IRS NEWS ITEM

Highway Use Tax Returns Due Nov. 30

November 18, 2011


The IRS is reminding truckers that their July, August, September and/or October 2011 Form 2290 is due to be filed by November 30.

The IRS says that "you will not be liable for any late filing penalty or interest if you meet this due date. Beginning November 1, 2011, we will provide a stamped (receipted) Schedule 1 to those who file and pay their tax."

As of July 1, 2011, an authorized e-filer can e-file your 2011 Excise tax.

Visit the IRS Trucking Tax Center at www.irs.com for more information.



PREVIOUS IRS NEWS RELATED TO THIS TOPIC


July 18, 2011

Heavy Highway Vehicles Get a Tax Break

The IRS announced last Friday that they are giving truckers a 3 month extension on their highway use tax return.

Form 2990 for the tax periods that fall between July 1 and September 30th, should NOT be filed and payments should NOT be made prior to November 1, 2011.

For vehicles brought into use during the July to November period, they are not required to have proof that the tax was paid if it can be shown that it was purchased during the previous 150 days.

For more information, go to the IRS website and locate Businesses> Newsroom> IRS Gives Truckers Three-Month Extension; Highway Use Tax Return Due Nov. 30 .








IRS NEWS ITEM

FUTA Surtax Expires

June 11, 2011 (Updated July 5 and August 18, 2011)


August 18, 2011 update

IRS has more information on the expiration of the FUTA surcharge in Headliner Volume 312 at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Reminds-Taxpayers-that-FUTA-Surcharge-has-Expired .

Keep an eye out for a revised Form 940 that will provide space for the two different rates. It is expected the form will be available before the January 31, 2012 due date.



July 5, 2011 Update

Renee Daggett of Admin Books explains in their July 5th newsletter that the IRS did in fact lower the FUTA rate to 6.0% from 6.2% as of July 1, 2011.



June 11, 2011

Google/Bing "FUTA surtax expires" and a lot of articles come up but nothing on the IRS website. Near the top of Google's search list CCHGroup.com (a Wolters Kluwer business) reports that the 0.2% surtax is set to expire on June 30, 2011. If congress doesn't take action, the FUTA tax rate would drop to 6% from 6.2% on July 1, 2011.

The President has proposed to make the FUTA surtax permanent.

I am a member of the National Association of Certified Professional Bookkeepers (NACPB). Their latest payroll tax update report* - June 10, 2011 explains thatemployers need to track the pre and post June 30 FUTA taxable wages if legislation is not enacted.

Form 940 will be revised if the surtax is not extended.

The same update says employers will not be penalized if their 3rd and 4th quarters omit the 0.2% surtax if the tax is retroactively reinstated after the fourth quarter.

So why can't you find anything on the IRS website? It seems this information is dissemanted in payroll industry conference calls. There is a note under "What's New" in the Instructions for Form 940 that the tax rate is scheduled to decrease. (See August 18th update for IRS link.)

*P.S. NACPB has a number of newsletters that are free when you visit their website or sign up. Look under "Tips" on their menu bar.

**The AIPB recommends that in addition to tracking FUTA wages periods separately, continue to accrue 0.8% for your third quarter just in case Congress retroactively imposes an extension.



December 28, 2010

IRS News For Small Business
U.S. Payroll Reminder - EITC

A reminder that EITC (Earned Income Tax Credit) has been eliminated for 2011. Do not make any more EITC payments to employees after December 31, 2010.

This also means the W-5 Form - Earned Income Credit Advance Payment Certificate is eliminated.

Reference: AIPB Free Newsletter Bookkeeping Tips dated December 27, 2010



December 7, 2010

IRS News For Small Business
Federal Tax Return Preparers - New Rules

If you are looking for up-to-date information regarding the new rules for federal tax return preparers, I recommend you head on over to The National Association of Registered Tax Preparers (NARTP) at www.nartp.org.

Once there, click on News > New IRS Requirements for Tax Return Preparers for a comprehensive reference on what you need to know.

You'll find the PTIN requirements at IRS website www.irs.gov> Tax Professionals> PTIN Requirements.

IRS has also published FAQs that are very helpful. You'll find it at www.irs.gov> Tax Professionals> PTIN Requirements> Get Help (right hand side mid way down)> Read the FAQ's.

Questions 7 and 8 under Scenarios deal with bookkeepers who prepare Forms W-2, Forms W-3, and Forms 941. So for example if you are a bookkeeper who prepares Form 941, you may need a PTIN. The answer depends on whether you get to exercise any discretion or independent judgement.

December 6, 2010

IRS News For Small Business
Tax Deposit Reminder

This is a reminder that "deposits made at an authorized financial institution will no longer be accepted after December 31, 2010. Instead, deposits can be made using EFTPS online with a computer or by telephone. For making deposits by telephone call 1-800-555-4477 (business), 1-800-316-6541 (individual), or TDD 1-800-733-4829."

October 30, 2010

IRS News For Small Business
Tanning Tax Due Nov. 1

Tanning service providers are being reminded by the IRS that November 1 is the due date for the first payment of the new 10% tanning tax.

You make payment on Form 720 Quarterly Federal Excise Tax Return.

The IRS announcement says, "The tax went into effect on July 1. Providers of indoor tanning services collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720."

If you need or want more information, go to www.irs.gov> businesses> Small Business/Self-Employed> Articles> Excise Tax on Indoor Tanning Services Frequently Asked Questions.

Reference: IR-2010-73 June 11, 2010

October 28, 2010

IRS News For Small Business
IRS Accepts Taxpayer e-Records

The most recent edition of e-News for Small Business says the IRS will begin accepting taxpayer books and records in electronic format. The IRS agents have recently been trained in QuickBooks software.

As it is now standard business practice to keep books using accounting software, the IRS is responding to 2008 Tax Forums where tax professionals and small business owners requested this change.

"Electronic files should be provided on a CD, DVD, or flash/jump drive to ensure security of the files. E-mail should not be used to transmit the electronic records."

You can read more on auditing accounting records in electronic format at www.irs.gov> businesses> small business/self-employed> more topics> IRS stakeholder partners' headliners> IRS Headliner Volume 303 released October 15, 2010 IRS Begins Accepting Taxpayer Records in Electronic Format



September 24, 2010

IRS News For Small Business
Tax Package Mailing Ends

IRS e-News announced this week that business (and individual) tax mailing packages ends due to the growth of e-File and as a way to reduce costs. Look for a postcard in early October with instructions on how get your online forms and how to file your tax return(s).

Forms that will no longer be mailed include include packages 1040, 1065, 1120, 1120S and publication 393




P.S. I rarely do live links any more to government sites as the links seem to move around at times. If I give you the path to cut and paste into your browser, you should still be able to search for the item if it was moved for some reason. Few things bug me more than clicking on links that no longer work.





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