Payments to Employees Affected by the Local Fires

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During these tragic times businesses may want to help employees affected by the local fires.  The purpose of the following information is to highlight some tax efficient opportunities to help employees affected by the local fires which were declared a qualified disaster by President Trump.  IRC section 139 allow employers to provide qualified disaster relief payments to employees that have incurred unreimbursed expenses due to a qualified disaster (such as the local fires) and have those payments excluded from the employees gross income and included as deductible expense for the business making the payment.   For the payments to be considered qualified disaster relief payments, they should be for either items i. or ii. below, but only to the extent not already covered by insurance.

  1. Reasonable and necessary personal, family, living, or funeral expenses incurred as a result of a disaster. This would include expenses related to loss of use.
  2. Reasonable and necessary expenses incurred for the repair or rehabilitation of a personal residence or repair or replacement of its contents to the extent that the need for such repair, rehabilitation, or replacement is attributable to a qualified disaster.

Other items to point out:

To […]

By |October 19th, 2017|business, Community, disaster, relief, tax|0 Comments

Tips for Tax Payers Traveling for Charity

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During the summer, some taxpayers may travel because of their involvement with a qualified charity. These traveling taxpayers may be able to lower their taxes.

Here are some tax tips for taxpayers to use when deducting charity-related travel expenses:

  • Qualified Charities.  For a taxpayer to deduct costs, they must volunteer for a qualified charity. Most groups must apply to the IRS to become qualified. Churches and governments are generally qualified, and do not need to apply to the IRS. A taxpayer should ask the group about its status before they donate. Taxpayers can also use the Select Check tool on IRS.gov to check a group’s status.
  • Out-of-Pocket Expenses.  A taxpayer may be able to deduct some of their costs including travel. These out-of-pocket expenses must be necessary while the taxpayer is away from home. All costs must be:
    • Unreimbursed,
    • Directly connected with the services,
    • Expenses the taxpayer had only because of the services the taxpayer gave, and
    • Not personal, living or family expenses.
  • Genuine and Substantial Duty.  The charity work the taxpayer is involved with has to be real and substantial throughout the trip. The taxpayer can’t deduct expenses if they only have nominal duties or do not […]
By |July 28th, 2017|charity, deduction, tax|0 Comments

Trump’s 2017 Tax Reform Unveiled

The White House  issued President Trump’s goals and key features for tax reform, including cut corporate tax rates, flattened individual marginal income tax brackets, and repeal of the estate and alternative minimum taxes. He outlined these proposals in a one page bulletin which you can see below. The individual and business tax reform highlights include the following:

Proposed individual tax provisions:

  • Down from the current seven tax rates to three- 10%, 25% and a top rate of 35% (down from 39.6%).
  • Elimination of the Estate Tax.
  • Elimination of itemized deductions outside of mortgage interest and charitable contributions.
  • Repeal of the Alternative Minimum Tax (AMT).
  • Repeal of the 3.8% tax on net investment income.
  • Doubling of the standard deduction for married couples and individuals.
  • Tax relief for families and dependent care expenses.

Proposed business tax provisions:

  • Decreasing the top corporate tax rate to 15% (current top tax rate is 35%).
  • The 15% tax rate would apply to business income of pass-through entities such as partnerships, S corporations and limited liability companies.
  • A one time tax on business profits (at an unspecified tax rate) in foreign countries repatriated to the United States.
  • Introduction of a territorial tax system in place of the current worldwide tax regime.

Below is the one page bulletin released from the White House. […]

By |May 4th, 2017|tax, tax planning|0 Comments

Tax Deadline is Around the Corner, So Here’s Some Humor to Help You Through It…

So April 15th is just a few days away, and yes, we know the real deadline is the 18th, but we’re telling our clients it’s the 15th (we don’t want to get shoeboxes of receipts next Monday afternoon). To help ease the stress that sometimes is associated with this time of the year, it seems some humor might be appropriate. We hope you enjoy and remember, no dropping off boxes of receipts on the 18th; boxes of chocolate on the other hand… they will be accepted.

“Two things you need to know about taxes. They’ve extended the deadline to April 18, and when you write your check, just make it out to China.” –David Letterman

“Tax day is the day that ordinary Americans send their money to Washington, D.C., and wealthy Americans send their money to the Cayman Islands.” –Jimmy Kimmel

“Because of a holiday, the deadline for taxes is April 18, so you have three extra days to dig through restaurant dumpsters for receipts.” –Jimmy Kimmel

“Worried about an IRS audit?  Avoid what’s called a red flag.  That’s something the IRS always looks for.  For example, say you have some money left in your bank account after […]

By |April 14th, 2016|accounting, Linkenheimer, tax, tax time|0 Comments

Challenging Tax Environment

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Taxpayers and their advisers engaged in year-end tax planning for 2015 are challenged by the uncertain fate of “extender legislation.” In previous years, a number of “temporary” tax rules, i.e., those having a termination date specified in the Code, routinely were extended for one or two years, but this year, Congress has yet to act on a host of important provisions that expired at the end of 2014. Some or all of these expired provisions may be retroactively reinstated, thereby opening up some truly last minute year-end tax planning opportunities, but there’s no way of knowing if that will take place.
The tax breaks that expired at the end of 2014 include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the line- deduction for qualified higher education expenses; tax-free IRA distributions for charitable purposes by those age 70-1/2 or older and the exclusion for up-to-$2 million of mortgage debt forgiveness on a principal residence. For businesses, tax breaks that expired at the end of last year and may be retroactively reinstated and extended include: 50% bonus first year depreciation for most new machinery, equipment and software; the $500,000 annual expensing limitation; the […]

By |December 1st, 2015|tax|0 Comments

TOT (Transient Occupancy Tax: Hotel, Motel, Campground or Bed Tax) Program

Do you offer, or will you be offering, lodging in unincorporated Sonoma County for a fee? TOT applies to any structure, or any portion of any structure, which is occupied or intended or designed for occupancy by transients for dwelling, lodging, or sleeping purposes for 30 days or less. Collecting TOT is mandatory if you are providing short-term rentals. (Sonoma County Ordinance No. 5823). The property must be registered with the Tax Collector and a valid TOT Certificate obtained. If you are within the city limits please contact your respective city. For further information, please call 707/565-7133 or visit www.sonoma-county.org/tax/tot.

By |November 18th, 2015|tax|0 Comments

California Tax Relief Available for Taxpayers Affected by Wildfires

The California State Board of Equalization (SBE) has announced that taxpayers impacted by the Butte Fire in Amador and Calaveras counties and the Valley Fire in Lake and Napa counties may request an extension to file their returns, relief from penalties and/or interest on some taxes and fees, or to replace copies of records lost to damage. (California SBE News Release No. 76-15-G, 09/17/2015.)

Requesting relief and taxes and fees for which relief is available. Taxpayers and fee payers can go online to request relief from penalty and/or interest, and an extension of time to file a tax/fee return. Any taxpayer or feepayer can use the online system to make their request; those without Internet access may call the SBE Customer Service Center at 1 (800) 400-7115.

Relief from penalty and interest is available for the following taxes and fees: sales and use taxes; fire prevention fee; alcoholic beverage tax; cigarettes and tobacco products excise taxes; energy resources surcharge; emergency telephone users surcharge; natural gas surcharge; timber yield tax; fuel taxes (diesel fuel tax, interstate user tax, use fuel tax, motor vehicle fuel tax, aircraft jet fuel tax); underground storage tank maintenance fee; oil spill prevention […]

By |September 22nd, 2015|tax|0 Comments

April 15th- Some Tax Day Fun

While for some, April 15th conjures up feelings of stress, writing large checks and general anxiety. Or if you’re a CPA, utter relief and celebration… The world of taxes is a complex maze to navigate. Regarded by some as the smartest man who ever lived, even Albert Einstein was no fan of figuring out his taxes, once remarking, “The hardest thing in the world to understand is the income tax.”

But it’s not all bad news, here’s some fun to hopefully liven up your Tax Day.

Freebies and Deals (in case your refund hasn’t arrived or if you’re one of the lucky few writing a check):

  • Stop by any Ben and Jerry’s today (April 14th) for a free ice cream cone between 12-8pm.
  • Cinnabon is back again for 2015, giving customers a free bite (actually two bite sized cinnamon rolls) to eat on April 15th from 6:00 p.m. to 8:00 p.m. at participating locations.
  • Whole Foods, yep – you read that correct, WHOLE FOODS, will be waiving sales tax on April 15th on purchases at participating locations.

Fun Facts for Tax Day:

  • Perhaps we shouldn’t even call April 15 tax day. Refund day might be better, since three out of every four families in […]
By |April 14th, 2015|tax|0 Comments

IRS Automatically Extends Filing for Certain Estates Electing Portability

In estate planning, the concept of “portability” of a deceased spouse’s unused exclusion (DSUE) amount is relatively new. For decedents dying after December 31, 2010, if a first-to-die spouse has not fully used the estate tax exclusion, the DSUE amount can be transferred to the surviving spouse. This was originally passed as a two-year temporary provision until it was made permanent in the American Taxpayer Relief Act of 2012. Estate tax returns are usually required to be filed within 9 months of death to make the deceased spousal unused exclusion election. The IRS released Revenue Procedure 2014-18, providing an automatic extension for certain estates of decedents dying in 2011, 2012 and 2013 to elect portability. The extension applies to estates that would otherwise not have had a filing requirement, and allows the estates to file a return to elect portability until December 31, 2014. It includes the estates of same-sex decedents who were not eligible to elect portability until after the Windsor decision (United States v. Windsor recognized same-sex marriages for purposes of determining marital status of taxpayers under the Internal Revenue Code, the IRS has issued Revenue Procedure 2014-18 to grant limited relief for late elections).

This revenue procedure applies only […]

By |October 28th, 2014|estate, extension, tax|0 Comments

Year-end tax planning with checklists and tips

Year-end tax planning could be especially productive this year because timely action could nail down a host of tax breaks that won’t be around next year unless Congress acts to extend them, which, at the present time, looks doubtful. These include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line deduction for qualified higher education expenses; and tax-free distributions by those age 70-1/2 or older from IRAs for charitable purposes. For businesses, tax breaks that are available through the end of this year but won’t be around next year unless Congress acts include: 50% bonus first-year depreciation for most new machinery, equipment and software; an extraordinarily high $500,000 expensing limitation; the research tax credit; and the 15-year write-off for qualified leasehold improvements, qualified restaurant buildings and improvements and qualified retail improvements.

High-income-earners have other factors to keep in mind when mapping out year-end plans. For the first time, they have to take into account the 3.8% tax surtax on unearned income and the additional 0.9% Medicare (hospital insurance, or HI) tax that applies to individuals receiving wages with respect to employment in excess of $200,000 ($250,000 for […]