GORDON H. ZiNK CPA BLOG
Tax Changes for 2018
Important Tax Changes for 2018
In 2018, a number of tax provisions are affected by inflation adjustments, including Health Savings Accounts, retirement contribution limits, and the foreign earned income exclusion. Many others have been revised or eliminated due to the TCJA.
While the tax rate structure, which now ranges from 10 to 37 percent, remains similar to 2017 in that there are seven tax brackets, the tax-bracket thresholds increase significantly for each filing status. Standard deductions also rise significantly; however, personal exemptions have been eliminated through tax year 2025.
In 2018, the standard deduction increases to $12,000 for individuals (up from $6,350 in 2017) and to $24,000 for married couples (up from $12,700 in 2017).
Alternative Minimum Tax (AMT)
In 2018, AMT exemption amounts increase to $$70,300 for individuals (up from $54,300 in 2017) and $109,400 for married couples filing jointly (up from $84,500 in 2017). Also, the phaseout threshold increases to $500,000 ($1 million for married filing jointly). Both the exemption and threshold amounts are indexed for inflation.
For taxable years beginning in 2018, the amount that can be used to reduce the net unearned income reported on the child's return that is subject to the "kiddie tax," is $1,050 (same as 2017). The same $1,050 amount is used to determine whether a parent may elect to include a child's gross income in the parent's gross income and to calculate the "kiddie tax." For example, one of the requirements for the parental election is that a child's gross income for 2018 must be more than $1,050 but less than $10,500.
For 2018, the net unearned income for a child under the age of 19 (or a full-time student under the age of 24) that is not subject to "kiddie tax" is $2,100.
Health Savings Accounts (HSAs)
Contributions to a Health Savings Account (HSA) are used to pay current or future medical expenses of the account owner, his or her spouse, and any qualified dependent. Medical expenses must not be reimbursable by insurance or other sources and do not qualify for the medical expense deduction on a federal income tax return.
A qualified individual must be covered by a High Deductible Health Plan (HDHP) and not be covered by other health insurance with the exception of insurance for accidents, disability, dental care, vision care, or long-term care.
For calendar year 2018, a qualifying HDHP must have a deductible of at least $1,350 for self-only coverage or $2,700 for family coverage and must limit annual out-of-pocket expenses of the beneficiary to $6,650 for self-only coverage and $13,300 for family coverage.
Medical Savings Accounts (MSAs)
There are two types of Medical Savings Accounts (MSAs): the Archer MSA created to help self-employed individuals and employees of certain small employers, and the Medicare Advantage MSA, which is also an Archer MSA, and is designated by Medicare to be used solely to pay the qualified medical expenses of the account holder. To be eligible for a Medicare Advantage MSA, you must be enrolled in Medicare. Both MSAs require that you are enrolled in a high-deductible health plan (HDHP).
Self-only coverage. For taxable years beginning in 2018, the term "high deductible health plan" means, for self-only coverage, a health plan that has an annual deductible that is not less than $2,300 (up $50 from 2017) and not more than $3,450 (up $100 from 2017), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $4,600 (up $100 from 2017).
Family coverage. For taxable years beginning in 2018, the term "high deductible health plan" means, for family coverage, a health plan that has an annual deductible that is not less than $4,600 and not more than $6,850 (up $100 from 2017), and under which the annual out-of-pocket expenses required to be paid (other than for premiums) for covered benefits do not exceed $8,400 (up $150 from 2017).
Penalty for not Maintaining Minimum Essential Health Coverage
Under the TCJA, the penalty for not maintaining minimum essential health coverage has been eliminated but only for months beginning after December 31, 2018.
AGI Limit for Deductible Medical Expenses
In 2018, the deduction threshold for deductible medical expenses is temporarily reduced (tax years 2018 through 2025) to 7.5% percent (down from 10% in 2017) of adjusted gross income (AGI).
Eligible Long-Term Care Premiums
Premiums for long-term care are treated the same as health care premiums and are deductible on your taxes subject to certain limitations. For individuals age 40 or younger at the end of 2018, the limitation is $420. Persons more than 40 but not more than 50 can deduct $780. Those more than 50 but not more than 60 can deduct $1,530 while individuals more than 60 but not more than 70 can deduct $4,160. The maximum deduction is $5,200 and applies to anyone more than 70 years of age.
The additional 0.9 percent Medicare tax on wages above $200,000 for individuals ($250,000 married filing jointly), which went into effect in 2013, remains in effect for 2018, as does the Medicare tax of 3.8 percent on investment (unearned) income for single taxpayers with modified adjusted gross income (AGI) more than $200,000 ($250,000 joint filers). Investment income includes dividends, interest, rents, royalties, gains from the disposition of property, and certain passive activity income. Estates, trusts, and self-employed individuals are all liable for the new tax.
Foreign Earned Income Exclusion
For 2018, the foreign earned income exclusion amount is $104,100, up from $102,100 in 2017.
Long-Term Capital Gains and Dividends
In 2018 tax rates on capital gains and dividends remain the same as 2017 rates (10%, 15%, and a top rate of 20%); however threshold amounts are different in that they don’t correspond to new tax bracket structure as they did in the past. For taxpayers in the lower tax brackets (10 and 12 percent), the rate remains 0 percent; however, the threshold amounts are $38,600 for individuals and $77,200 for married filing jointly. For taxpayers in the four middle tax brackets, 22, 24, 32, and 35 percent, the rate is 15 percent. For an individual taxpayer in the highest tax bracket, 37 percent, whose income is at or above $425,800 ($479,000 married filing jointly), the rate for both capital gains and dividends is capped at 20 percent.
Pease and PEP (Personal Exemption Phaseout)
Both Pease (limitations on itemized deductions) and PEP (personal exemption phase-out) have been eliminated under TCJA.
Estate and Gift Taxes
For an estate of any decedent during calendar year 2018, the basic exclusion amount is $11,200,000, indexed for inflation (up from $5,490,000 in 2017). The maximum tax rate remains at 40 percent. The annual exclusion for gifts increases to $15,000.
Individuals - Tax Credits
In 2018, a non-refundable (only those individuals with tax liability will benefit) credit of up to $13,840 is available for qualified adoption expenses for each eligible child.
Earned Income Tax Credit
For tax year 2018, the maximum earned income tax credit (EITC) for low and moderate income workers and working families rises to $6,444, up from $6,318 in 2017. The credit varies by family size, filing status, and other factors, with the maximum credit going to joint filers with three or more qualifying children.
Child Tax Credits
For tax years 2018 through 2025, the child tax credit increases to $2,000 per child, up from $1,000 in 2017, thanks to the passage of the TCJA.
The enhanced child tax credit, which was made permanent by the Protecting Americans from Tax Hikes Act of 2017 (PATH), remains under TCJA. The refundable portion of the credit increases from $1,000 to $1,400 so that even if taxpayers do not owe any tax, they can still claim the credit. Under TCJA, a $500 nonrefundable credit is also available for dependents who do not qualify for the child tax credit (e.g., dependents age 17 and older).
Child and Dependent Care Credit
The Child and Dependent Care Credit also remains under tax reform. If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses in 2018.For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher income earners the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.
Individuals - Education
American Opportunity Tax Credit and Lifetime Learning Credits
The American Opportunity Tax Credit (formerly Hope Scholarship Credit) was extended to the end of 2018 by ATRA but was made permanent by PATH in 2017. There was no change under TCJA. The maximum credit is $2,500 per student. The Lifetime Learning Credit remains at $2,000 per return; however, the adjusted gross income amount used by joint filers to determine the reduction in the Lifetime Learning Credit is $114,000, up from $112,000 for tax year 2017.
Interest on Educational Loans
In 2018 (as in 2017), the $2,500 maximum deduction for interest paid on student loans is no longer limited to interest paid during the first 60 months of repayment. The deduction is phased out for higher-income taxpayers with modified AGI of more than $65,000 ($135,000 joint filers).
Individuals - Retirement
The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government's Thrift Savings Plan increases to $18,500. Contribution limits for SIMPLE plans remain at $12,500. The maximum compensation used to determine contributions increases to $275,000 (up from $270,000 in 2018).
Income Phase-out Ranges
The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by an employer-sponsored retirement plan and have modified AGI between $63,000 and $73,000, up from $62,000 to $72,000.
For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by an employer-sponsored retirement plan, the phase-out range increases to $101,000 to $121,000, up from $99,000 to $119,000. For an IRA contributor who is not covered by an employer-sponsored retirement plan and is married to someone who is covered, the deduction is phased out if the couple's modified AGI is between $189,000 and $199,000, up from $186,000 and $196,000.
The modified AGI phase-out range for taxpayers making contributions to a Roth IRA is $120,000 to $135,000 for singles and heads of household, up from $118,000 to $133,000. For married couples filing jointly, the income phase-out range is $189,000 to $199,000, up from $186,000 to $196,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
In 2018, the AGI limit for the saver's credit (also known as the retirement savings contribution credit) for low and moderate income workers is $63,000 for married couples filing jointly, up from $62,000 in 2017; $47,250 for heads of household, up from $46,500; and $31,500 for married individuals filing separately and for singles, up from $31,000 in 2017.
Tips for Choosing a Tax Preparer
Happy New Year! As we all know, tax season is quickly approaching. During this time many taxpayers are searching for a professional tax preparer. If this is you, you may want to consider the following tips.
- Is the tax preparer qualified? By using the IRS Directory of Federal Tax Preparers, you can search listings of tax preparers to see their qualifications. Another option is to check their history and license status. For CPA’s, check with the State Board of Accountancy.
- Inquire about fees and e-filing. Avoid tax preparers who boast about bigger refunds than other tax preparers or base their fees on a percentage of a refund. Electronic filing of your tax return is the fastest way to submit your taxes and results in the quickest turnaround time when receiving a refund.
- Be sure your tax preparer is available. Search for a reputable tax preparer who is established in order to avoid fly-by-night preparers.
- Before signing…review it. Many choose to sign and submit their returns without first reading it. This is not recommended. Take time to review your return completely. If something is unclear, ask your tax preparer for further explaination. Be sure you receive your own copy of the return and that your bank routing and account information is correct in case of a refund.
- Confirm that your tax preparer signs and includes their PTIN on the tax return. All paid tax preparers must have a Preparer Tax Identification Number. Paid preparers, by law, must sign returns and include their PTIN.
If you are searching for a professional tax preparer, consider GORDON H. ZiNK CPA, P.A. The tax team at ZiNK CPA has been serving Southwest Florida since 1986, dedicating quality accounting services and year-round tax advice to corporations and individuals. Call us today for your FREE initial 30 minute consultation at (239)936-1120. We look forward to helping you.
The information on this page is taken from:
Protect Your Data
Here are some steps to keep your online data safe:
- Avoid unprotected Wi-Fi
- Shop only at familiar online retailers
- Use strong and unique passwords
- Encrypt data with a password
- Sign up for account alerts
Steps to take if you are victim of a data breach:
- Reset all passwords and online accounts
- Try to determine what information has been compromised
- Place a freeze on the account
- Consider using a credit monitoring service
Please consider these steps throughout the New Year, and especially during the holidays.
The team at ZiNK CPA has been in Southwest Florida for over 35 years dedicating quality accounting services and year-round tax advice to corporations and individuals. Contact us at 239.936.1120 for an appointment.
Estimated Taxes and Withholdings
The uncertainty of tax time can be stressful. Part of that uncertainty can result from not having enough federal tax withholding at the end of the year. Not paying enough tax throughout the year can lead to a larger tax bill and more penalties from the IRS.
Here are some tips which can help you avoid underpayment of tax throughout the year.
- Determine the amount to withhold. A withholding calculator can be found at IRS.gov. This calculator provides direction in determining an amount to withhold on Form W-4.
- Withhold more. If income with no withholding is present, increasing withholding on Form W-4 can offset additional taxes from this other income.
- Make estimated tax payments. For those who do not have any earned wages but have pass through income, investment income, and/or retirement income; estimated payments can be made to cover the related taxes, thereby avoiding any late penalties and interest.
- Use Form W-4P. With this form, retirees are able to withhold taxes directly from their pensions and annuity plans. Also, those collecting Social Security can also have taxes withheld from their monthly Social Security checks.
If you would like assistance on determining whether you have withheld enough taxes on your income, contact Gordon H. ZiNK CPA, P.A. at (239)936-1120 to set up your free initial 30 minute consultation. The team at ZiNK CPA can help you be ready and reduce the stress of tax time.
Gordon H. ZiNK CPA, P.A. is a proud member of the Florida Institute of Certified Public Accounts
Information on this page is from:
IRS Letter in the Mail...What Do You Do?
Does the thought cause you to break out into a cold sweat? Following are some tips to keep in mind if you do receive an IRS letter.
- Carefully read the entire letter. In the letter, most times there are specific instructions concerning what the IRS needs from you.
- Only reply if necessary. Often, an IRS letter is relaying information to you and a response is not required.
- Compare your IRS letter to your tax return. Any IRS changes should be compared to your filed tax return regarding the year which the letter represents.
- Hold onto the Letter. Be sure to keep the original. If mailing a response, include a copy of the IRS letter you received.
- Respond timely. Mail any correspondence to the address listed at the bottom of the letter. Include copies of documents or information to help clear up the matter.
If you do receive an IRS letter and you need guidance on how to handle the matter, do not hesitate to call Gordon H. ZiNK CPA, P.A. The team at ZiNK CPA has the professional experience and knowledge concerning how to conduct your dealings with the IRS. Call ZiNK CPA today at (239)936-1120 to schedule your free initial 30 minute consultation.
The information for this page is from:
Wishing you a happy and bountiful Thanksgiving! This is a day to remember everything in our lives small and large, and give thanks.
Happy Thanksgiving from Gordon H. ZiNK CPA, P.A.
What You Should Bring When You Meet with Your CPA
When you meet for your initial consultation with a CPA, it is best to be prepared. Whether you are meeting with us or another accountant, the below list will help you be more organized and help result in a most accurate tax return.
Bring these documents to the consultation:
- Copies of previous 2 year tax returns for the company and individual that had been filed with the IRS and state taxing authorities
- Current copy of financial statements printout and accounting software data files
- Copy of previous tax preparers “organizer” if available.
- Copies of current year tax related documents – receipts, expenses, 1099s, 1098s, and W-2 forms
- Retirement plan documents
Be ready to discuss the following items:
- Your income and expense profile
- Business and individual tax filing status and dependent information
- Any industry tax compliance issues
- Health care coverage
Other tips to consider:
- Use an organizing binder
- Be ready to schedule future tax planning sessions to allow the CPA to provide recommendations and advise
- Consider using a software program to keep organized such as QuickBooks or Quicken
If you are in need of a CPA or considering a CPA to prepare your taxes you should think of Gordon H. ZiNK CPA. The team at ZiNK CPA has been in Southwest Florida for over 35 years dedicating quality accounting services and year-round tax advice to corporations and individuals. Call us today for your free initial 30 minute consultation at 239-936-1120. We look forward to hearing from you.
Starting a Successful Start-Up
Starting a business is an adventurous pursuit. Decisions must be made which can shape the level of success throughout the course of the business. Before you open your doors for business, consider the following issues and determine which decisions are best for you.
- Choose a bookkeeping process. A strong commitment to record keeping will help you achieve more success by staying organized and allowing you to monitor progress.
- Decide what kind of business structure is best for you. Many factors need to be under consideration when choosing the best business structure for you. A helpful aid in this determination can be found at the following link : https://www.sba.gov/business-guide/launch/choose-business-structure-types-chart
- Determine your tax year accounting period. Most common is a calendar year; however you may find it more advantageous to choose a fiscal year end other than December 31st if your business is seasonal.
- Find out your tax responsibilities. Assuming you have employees, you will need to consider employment taxes and withholding responsibilities; self –employment tax if self-employed. Also, be aware of any excise or estimated taxes which may be due.
If you would like to discuss any of the aforementioned topics or have other questions regarding your start-up, know that Gordon H. ZiNK CPA can help. The team at ZiNK CPA has been in Southwest Florida for over 35 years dedicating quality accounting services and year-round tax advice to start-ups and new businesses. Call us today for your appointment at 239-936-1120. We look forward to helping you.
The information on this page is taken from:
Thank You to Our Veterans
Often, we do not dwell on the dangers that face our servicemen and women as they work to protect our freedom. But, it is there. We honor and celebrate those who are willing to put their lives on the line for millions of Americans through their service in our armed forces. We are grateful to each and every one of you.
Direction for Your Small Business
It can be overwhelming to keep your “to do list” under control when running a small business. One resource to consider when in need of some direction is the IRS. Here are some resources made available to you through the IRS:
- An IRS video portal – containing information regarding an array of business topics.
- Small business workshops and seminars
- A Form and Publications page with tax forms and instructions
- A tax calendar to help your business stay up to date.
Allow us to be another resource when in need of direction. With over 35 years of dedicated service to Fort Myers, Cape Coral and Southwest Florida; you can rely on the knowledge and personalized attention you will receive from ZiNK CPA to provide direction to your business success.
For all of your Tax and Accounting needs, call Gordon H. Zink CPA, P.A. and let us help you accomplish your business goals. Call us today for your appointment at 239-936-1120 or email firstname.lastname@example.org. We look forward to hearing from you.
Information on this page taken from:
Knock knock; who's there? The IRS...maybe
Have you received that phone call of someone claiming to be from the IRS, yet you suspect they may be a scammer? If you haven’t, it may only be a matter of time. Below are some points to keep in mind regarding the legitimate ways which the IRS may reach out to you.
- Most IRS contact is through regular mail using the United States Postal Service.
- You will not be asked to make a payment to anyone besides the U.S. Department of Treasury.
- IRS officers carry two forms of identification with serial numbers. You can ask to see both IDs.
- The IRS can and do use private debt collectors. However, this is only done after a written notice and the private debt collector will not visit your home or business.
- There are some instances in which the IRS will come to a home or business:
- The taxpayer has an overdue tax bill
- To tour the business regarding an audit or criminal investigation
- When the IRS needs to secure a delinquent tax return or employment tax payment
- IRS employees conducting audits may call taxpayers to set up appointments, but not without having first notified them by mail. Therefore, by the time the IRS visits a taxpayer at home, the taxpayer would be well aware of the audit.
If you believe someone is impersonating the IRS, you can report it to the IRS (visitIRS.gov). Know also, that Gordon H. Zink CPA, P.A. is here to help. Not sure if the IRS or a scammer is reaching out to you? Contact us and we can help you determine the legitimacy of the caller.
This along with more information is from:
How to save 1 million dollars?
How much home can I afford?
How soon can I eliminate my debts?
How can I save a million dollars?
How much do I need to fund my retirement?
If you need a starting point for these questions plus more, you may want to visit our calculator page.
We have calculators for you covering the following topics:
While these calculators are not a substitute for advice and information provided by a qualified professional, our calculators are a good starting point to begin your decision-making process.
Please note that these tools provide preliminary calculations, therefore any decision-making factors should be discussed with us based on your individual circumstances and situations.
We are here to help, do not hesitate to contact Gordon H. Zink CPA, P.A. We look forward to hearing from you.
Looking to 2018??
It’s natural to be thinking ahead to the New Year as we are rapidly approaching the end of the boardwalk for 2017. Before moving on too quickly though, you may want to consider what you can still do before year end to affect your 2017 tax return. Listed below are three actions you may want to consider.
- Make charitable contributions. Only those contributions made in 2017 can be deducted in 2017.
- IRA distributions. Those who are 70 ½ in 2017 can wait till April 1st of 2018 to receive their distribution. It may be beneficial to take the distribution before the year end of 2017 rather than taking two distributions in 2018.
- IRA contributions. Workplace retirement account contributions are typically made throughout the year or by year end. Keep in mind, a 2017 IRA contribution can still be made by April 17th of 2018.
If you have further questions about these suggestions or need other tax advice, do not hesitate to contact Gordon H. Zink CPA, P.A. Our staff is ready to help you with your 2017 tax questions.
The team at Zink CPA has been in Southwest Florida for over 35 years dedicating quality accounting services and year-round tax advice to corporations and individuals. Call us today for your appointment at 239-936-1120 or email email@example.com. We look forward to hearing from you.
The information on this page is taken from:
2017 Tax Filing Changes and Due Dates You Need to Know
2017 Tax Filing Changes and Due Dates You Need to Know
Deadline for filing a 2016 corporation or S corporation return or extension is March 15, 2017 and pay any tax due. Important New Deadline for filing 2016 Partnerships has been changed from prior due date of April 15 to new date of March 15, starting this 2017 tax season : File a 2016 tax return (Form 1065) by March 15, 2017. Provide each partner with a copy of Schedule K-1 (Partner’s Share of Income, Deductions, Credits, etc.) of Form 1065, or a substitute Schedule K-1.
- 54 cents per mile for business miles driven in 2016, down from 57.5 cents in 2015. For those planning ahead, the 2017 rate, for use on a 2017 return filed next year, is 53.5 cents per mile.
- 19 cents per mile driven for medical or moving purposes in 2016, down from 23 cents in 2015. The 2017 rate is 17 cents.
- 14 cents per mile driven in service of charitable organizations. This rate is set by law and is unchanged.
Taxpayers will have until Tuesday, April 18, 2017 to file their 2016 returns and pay any taxes due. That’s because of the combined impact of the weekend and a holiday in the District of Columbia. The customary April 15 deadline falls on Saturday this year, which would normally give taxpayers until at least the following Monday. But Emancipation Day, a D.C. holiday, is observed on Monday, April 17 giving taxpayers nationwide an additional day. By law, D.C. holidays impact tax deadlines for everyone in the same way federal holidays do.
Checklist for the End of Your Small Business’ Fiscal Year
Checklist for the End of Your Small Business’ Fiscal Year
Steps to Take Before the Last Day of the Fiscal Year
Your business’ profit and loss statements will help you get a snapshot of its financial performance. What does your revenue look like now that the year is almost through? Do you anticipate any other large expenses to hit your books? If not, evaluate how much money you have available, and see if it might be wise to make a larger purchase before the end of the year so that the item can depreciate.
It’s important to review the paperwork—including 1099s—associated with any of your vendors, as well as information relating to any current outstanding loans. Make sure all of your vendor 1099 forms are up-to-date and accurate. You also want to make sure the 1099 information has been inputted correctly into your accounting system so that it’ll populate the forms when printed.
If you sell products, conduct an inventory assessment and compare the results to your last inventory report. Make any necessary adjustments so that you have an accurate account of how much capital you have wrapped up in your current inventory. Even if you don’t sell products, it’s not a bad idea to take an inventory of elements in your office, such as equipment, computers, office supplies, etc. Make a list of any broken equipment or equipment in need of repair. If you lease any electronics, such as copiers, pull out the contract associated with it and make sure the terms are still appropriate for your situation.
As a business that issues W-2s, these benefits relate to the organization as a whole and can reflect things such as health and life insurance, transportation subsidies, educational reimbursement programs and more.
It’s never too early to plan. By reviewing your statements from the current year, you’ll start to see a pattern in the things you need to budget and plan for in the next year. By taking stock of your expenditures from the current year, you’ll have a better understanding of where to focus your efforts moving forward.
IRS Urges Taxpayers to Check Their Withholding
IRS Urges Taxpayers to Check Their Withholding; New Factors Increase Importance of Mid-Year Check Up
You Filed A 2015 Tax Extension Now What
You Filed A 2015 Tax Extension. Now What?
- Schedule your appointment with a professional tax consultant as soon as possible.
- Make a checklist of the items your CPA will need.
- Gather everything together and check it off the list as you go.
- Hiring a CPA translates into time and money saved for you.
- Expert advice allows you more time to focus on your business and what matters most to you. Your time is valuable.
- Expert help from accredited professionals keep you apprised of the many changing tax laws where the end results could mean solutions for you or your business.
- Enjoy the rest of your summer with the full knowledge you will meet the September 15th corporate extension deadline or the October 15th personal tax deadline.
Strategies To Help Reduce Next Years Tax Bill
Strategies To Help Reduce Next Years Tax Bill
How will extended tax provisions affect you and your family
How will extended tax provisions affect you and your family?
- 24(d) Enhanced American Opportunity tax credit is made permanent. Beginning in 2016, the provision requires the taxpayer claiming the American Opportunity credit to report the EIN of the educational institution to which the individual made tuition payments. Provision made permanent
- 25A Enhanced child tax credit is made permanent.
- 32(b) Enhanced earned income tax credit is made permanent.
- 62 $250 teacher supply deduction is made permanent. Beginning in 2016, the provision also indexes the $250 cap to inflation and includes professional development expenses.
- 163 Mortgage insurance premium deduction as mortgage interest is extended to Dec. 31, 2016.
- 170 Contributions of real property for qualified conservation purposes is made permanent.
- 222 Tuition deduction is extended to Dec. 31, 2016.
- 408 IRA transfers to charity in lieu of RMDs made permanent.
Independent Contractor or Employee
Independent Contractor or Employee?
Differences you need to know!
Your business is growing, you're happy you have the capital to hire more help. Stop. How do you correctly determine whether the individuals you'll be interviewing will be providing services as employees or independent contractors? It's critical as a business owner that you correctly identify a workers status prior to a verbal or written agreement between both parties. Understanding the factors in order to comply with IRS rules can be a complicated undertaking. To avoid confusion, fines or problems you need to familiarize yourself with the following information before you hire a worker. There is no single test but the following guidelines should be clearly understood.
To begin, employers aren't required to pay payroll taxes, Medicare, Social Security, or unemployment insurance when they use independent contractors instead of employees. Independent contractors also aren't entitled to the protections outlined in the Fair Labor Standards Act; such as minimum wage laws, overtime, vacation pay, and other benefits. But if you claim certain workers as independent contractors and the work they perform for you falls under the guidelines of employees, there can be expensive consequences.
How to Make a Determination
The IRS has three aspects to consider whether you or the worker has the right to control each one.
Behavioral control: If you direct and control how your workers accomplish their jobs, they are probably employees. Independent contractors, on the other hand, take on jobs and get them done using their own methods.
Financial control: An employee earns a regular wage, while an independent contractor is paid a flat fee per job, for time and materials, or, in some cases, by the hour. In addition, independent contractors are free to advertise their services to other businesses, while employees typically only work for one company.
Type of relationship. You should only provide insurance, pension plans, and vacation and sick pay to employees. And if you expect that the relationship will last indefinitely, rather than for just a project or set period, you likely have an employee. If workers provide services that are a key part of the life of your business, you probably direct and control those activities, which would make them employees.
When an employee classification is a concern for your company, don't take chances, contact The ZinkCPA tax team. We're here to help you determine your workers' status and assist with other related tax solutions.
We look forward to helping you. For more information call us today at (239) 936-1120 or email us at firstname.lastname@example.org
Gordon Zink CPA, PA is a proud member of the Florida Institute of Certified Public Accounts