September 6, 2013
I wrote this newsletter to update you on a few important matters including:
- Firm changes
- Scam alert!
- Due dates-important
- Tax updates-including new rules for same sex couples/DOMA
- Tax planning and new/additional taxes!
- IRS audits and projects; Massachusetts DOR audits
- Billing options available from us
1. Firm changes • We have implemented further enhancements to our secure online portal system (https://secure.netlinksolution.com). All clients have their own portal, including folders within their own portal for their family and related companies. We are now updating everyone’s data which includes 2011 and 2012 pdf copies of tax returns, and 2012 source documents, i.e. Forms W2, 1099, etc. Please do not be surprised if you get an email alerting you to a copy of tax work recently placed in your portal. We are striving to become more paperless each year. Remember, you can upload documents, QuickBook files, excel spreadsheets, and scans of all types. Easier than buying a stamp! We expect to complete all necessary upgrades and data uploads by sometime in November or December, before the next organizers are uploaded.
• We have hired Lori Anderson and Pam Keogh, CPA as our newest staff accountants. Both have solid experience and training and we welcome them! Matthew Doucette, Accounting Supervisor will also be seeing clients for office appointments for the upcoming 2014 tax season in addition to myself for your convenience. Just tell the front desk your preference when you schedule. I will still be reviewing each return before finalizing. We are also strengthening our bookkeeping positions to fully assist all clients in not only tax, but their office management and bookkeeping needs. The office is also currently being redesigned to accommodate the larger staff and clients comfortably to ensure the very best customer service and accuracy!
2. Scam alert!
Reports have recently described people pretending to be IRS officials calling taxpayers looking for information(scammers). Other scams use email. IRS is not permitted to use email for taxpayer correspondence for any reason. Agents do not telephone taxpayers either unless letters via US Mail have been in use and you were expecting the call. NEVER release any personal information! Scammers are looking for social security numbers, dates of birth, and banking/credit information. If you are concerned that the caller is really IRS, you can tell the caller that you are represented by this firm. Just contact us right away. You may also telephone IRS at 800-829-1040, but be prepared to wait on hold for 3 or more hours, if you can even get through. They have been short-staffed and overwhelmed.
3. Due Dates
All calendar year corporate, partnership & trust tax returns are due 09/15/13 (w/extension).
All individual tax returns are due 10/15/13 (w/extension).
If you have not yet provided us with your year-end information, or have a few items remaining on a list, please get us the information quickly. After 09/01 we cannot guarantee a timely filed return for corporates; after 09/15 we cannot guarantee a timely filed individual return. But we always use our resources in an effort to make all returns filed timely.
Only corporates that are fiscal year filers (i.e. October vs. December) are the exception.
4. Tax Updates
• You may be aware that the Supreme Court has ruled the “Defense of Marriage Act” unconstitutional. On Thursday, August 29 the IRS issued Revenue Ruling 2013-17 which states that the following are among the tax breaks newly available to legally married same-sex couples: (This does not include civil unions or registered domestic partners)
1) the right to file a joint return; 2)the opportunity to get tax free employer health coverage for the spouse; 3) the opportunity to transfer unlimited assets to the spouse tax free of gift or estate taxes; 4) the opportunity of the first to die estate to utilize the marital deduction (estate taxes) 5) other tax matters such as alimony deductibility, and innocent spouse provisions. You can read the entire IRS ruling by going to www.irs.gov.
What does this mean right now? Effective September 16, 2013 the IRS has ruled that 2013 tax returns will be prepared MFJ (married filing joint) generally saving big tax $$. Years 2010, 2011, and 2012 can also be amended. If 2012 is still on extension, that can be filed with the new MFJ status. Year 2009 is past statue (for amending) unless you were on extension that year. If so, you have until October 15, 2013 to file a 2009 amended return for refunds. If you would like us to examine your return(s) and calculate your tax savings for amending, please contact the office. The amended returns can be filed on or after September 16, 2013; our usual and customary fees will apply.
• Tax increases for individuals (including S-corporation and Partnership pass-thru amounts). Depends on filing status. Married filing separate- $125,000; Single $200,000; Married filing joint $250,000. These taxes are in effect now. Estimated tax payments and/or withholding should be adjusted if you fall into these categories. (Note-rates are rounded)
1. Additional 1% surtax on all earned income above the amounts listed above
2. Additional 4% surtax on all unearned/investment income (includes all gambling, rental profits and all taxable capital gains, interest, and dividends)
3. Reduction/elimination of exemptions (children and taxpayer/spouse)
4. Reduction to as low as 20% of all itemized deductions (including mortgage interest, donations, etc.)
5. After $400,000, the income tax rate increases to 39.6%
6. AMT remains as in past years (in case you were worried that you were still not paying in enough)
5. Tax Planning; new business taxes
We are booking rapidly for October 16 through December for 2013 tax planning. Many companies by this time have a pretty good idea where they might end up regarding profitability. With all the new taxes and regulations (and possibly more in the near future), please don’t hesitate to book at least an hour to review and see if any strategies can be utilized to minimize these increases. This year it’s not always about just buying another truck! Call the office anytime to schedule your appointment. And please remember—Any company (Schedule C to Corporation) that is able to have most of their books complete right after January 01 can help us get your work done earlier in 2014! Here are a few of the (per current law) changes effective 01/01/14:
• In 2013, companies can “write-off” assets up to $500,000 immediately that are placed in service. This ends on 12/31/13 and returns to the old $25,000 limit. (IRC 179)
• In 2013 “Bonus depreciation” was allowed, accelerating vehicle purchase deductions and improvements. Ends on 12/31/13.
• Many states will face an increase in federal (FUTA) unemployment taxes. They include our neighbors of CT, NY, and RI but not MA! We do such a great job with our taxes here, no need to raise those!
• Massachusetts new Sales and Use Tax on Computer Services (Effective 07-31-13) In summary, if your business is software/computer hardware consulting and configuration of systems and software, you now have to collect MA sales tax (6.25%) on your invoice and remit that to the DOR. Per Mass TIR 13-10 (MGL 64H $1) These services are defined as follows: “the planning, consulting, or designing of computer systems that integrate computer hardware, software, or communication technologies and are provided by a vendor or 3rd party.” “Services” shall be limited to the following items: telecommunications services, computer system design services, and the modification, integration, enhancement, installation, or configuration of standardized software. Please contact the office for further details or clarification.
6. More audits, triggers, and enforcement
• If you accept credit cards or pay-pal, the IRS is watching! Forms 1099-K, which appeared to be of no value at first are being used to send out warning letters (which require an explanation and proof that your are not under-reporting income) or audit notices if credit cards sales make up a large portion of your sales reported on your tax return, or exceed your reported revenue. We can discuss this further in detail at your next appointment.
• If you have not filed tax returns for a few years, you will likely be on the audit list. If this could be you, please call the office and let us help you get these cleaned up ASAP.
• Clubs and groups that service the military (American Legion, etc) and some church groups are being closely watched and many audited by IRS. We’ll see where this one goes.
• Mass DOR is now doing their own “substitute tax returns” gathered from IRS income transcripts to generate a bill if you are late with them. The state needs the cash, after all.
7. Office billing options for corporate accounts Some clients have indicated a preference to get a monthly bill that approximates their fees from us, rather than a larger bill when the work is complete. We can now do this with our new, updated billing system. We can start it for anyone whose 2012 work is complete and paid. Call Maureen Ehwa at the office if you are interested in this option or have any questions. ([email protected])
Henry C Kulik, Jr CPA .
CERTIFIED PUBLIC ACCOUNTANT,LLC
114 Merriam Ave; Suite 201
Leominster, MA 01453
Tel (978) 514-8829
Fax (978) 514-8820