Tag Archives: IRS

What Are The Top Six Home Office Deductions?

IRS Talks About Home Office Deductions

If you are one of our clients, you know how we handle your home office deductions.  But for those who aren’t our clients – yet – here are some tips from the IRS that you might find useful.

Issue Number:IRS Tax Tip 2015-42

If you use your home for business, you may be able to deduct expenses for the business use of your home. If you qualify you can claim the deduction whether you rent or own your home. If you qualify for the deduction you may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction.

1.Regular and Exclusive Use. As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:

  • Your principal place of business, or
  • A place where you meet clients or customers in the normal course of business, or
  • A separate structure not attached to your home. Examples could include a garage or a studio.

2.Simplified Option. If you use the simplified option, you multiply the allowable square footage of your office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. This option does not change the criteria for who may claim a home office deduction.

3.Regular Method. If you use the regular method, the home office deduction includes certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.

4.Deduction Limit. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.

5.Self-Employed. If you are self-employed and choose the regular method, use Form 8829, Expenses for Business Use of Your Home, to figure the amount you can deduct. You can claim your deduction using either method on Schedule C, Profit or Loss From Business. See the Schedule C instructions for how to report your deduction.

6.Employees. If you are an employee, you must meet additional rules to claim the deduction. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home. You can view, download and print IRS tax forms and publications on IRS.gov/forms anytime.

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Additional IRS Resources:

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Taxpayers May Be Asked For Verification By IRS

Taxpayers Receiving Identity Verification Letter Should Use IDVerify.irs.gov

WASHINGTON – The Internal Revenue Service today reminded taxpayers who receive requests from the IRS to verify their identities that the Identity Verification Service website, idverify.irs.gov, offers the fastest, easiest way to complete the task.

Taxpayers may receive a letter when the IRS stops suspicious tax returns that have indications of being identity theft but contains a real taxpayer’s name and/or Social Security number. Only those taxpayers receiving Letter 5071C should access idverify.irs.gov. Continue reading →

New IRS Healthcare Law Website for Individuals and Businesses

The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them.

small IRS logo for blogging

The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.

Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.

Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.

Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer – Healthcare Law Online Resources (Publication 5093).

Visit IRS.gov/aca for more information regarding the tax provisions of the Affordable Care Act.

Reduce Your Taxes with Miscellaneous Deductions

IRS Summertime Tax Tip 2013-15, August 5, 2013

small IRS logo for bloggingIf you itemize deductions on your tax return, you may be able to deduct certain miscellaneous expenses. You may benefit from this because a tax deduction normally reduces your federal income tax.  Here are some things you should know about miscellaneous deductions:

Deductions Subject to the Two Percent Limit.  You can deduct most miscellaneous expenses only if they exceed two percent of your adjusted gross income. These include expenses such as: Continue reading →

Latest News on Same-Sex Marriage & Income Tax

Treasury and IRS Announce That All Legal Same-Sex Marriages Will Be Recognized For Federal Tax Purposes; Ruling Provides Certainty, Benefits and Protections Under Federal Tax Law for Same-Sex Married Couples Continue reading →

Deadline for some same-sex marrieds is September 15, 2013

The IRS has released FAQs clarifying the Revenue Ruling 2013-17 .

Here is a link to the complete IRS FAQ. that make it clear that same-sex married couples must file extended 2012 returns by September 15, 2013, to file as single.

For tax year 2013 and going forward, same-sex spouses generally must file using a married filing separately or jointly filing status.

For tax year 2012 and all prior years, same-sex spouses who file an original tax return on or after Sept. 16, 2013 (the effective date of Rev. Rul. 2013-17), generally must file using a married filing separately or jointly filing status.

For tax year 2012, same-sex spouses who filed their tax return before Sept. 16, 2013, may choose (but are not required) to amend their federal tax returns to file using married filing separately or jointly filing status.

For tax years 2011 and earlier, same-sex spouses who filed their tax returns timely may choose (but are not required) to amend their federal tax returns to file using married filing separately or jointly filing status provided the period of limitations for amending the return has not expired.

A taxpayer generally may file a claim for refund for three years from the date the return was filed or two years from the date date the tax was paid, whichever is later.

For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html.the tax was paid, whichever is later.
For information on filing an amended return, go to Tax Topic 308, Amended Returns, at http://www.irs.gov/taxtopics/tc308.html.

 

Affordable Care Act Tax Provision for Large Employers – Beginning October 1, 2013

In 2015 large employers will have annual reporting responsibilities concerning whether and what health insurance they offered to their full-time employees.

Some of the provisions of the Affordable Care Act, or health care law, apply only to large employers, generally those with 50 or more full-time equivalent employees.

Coverage

  • Beginning Oct. 1, 2013, if you have 50 or fewer employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP).
  • To learn more about market reforms and various plan requirements, visit HealthCare.gov Reporting

Reporting

  • Effective for calendar year 2015, you must file an annual return reporting whether and what health insurance you offered your employees. This rule is optional for 2014. Learn more.
  • Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover.This rule is optional for 2014. Learn more.
  • Beginning Jan. 1, 2013, you must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000. Learn more.
  • You may be required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2.

Payment & Provisions

  • Effective for calendar year 2015, you may have to make a payment if you do not offer adequate, affordable coverage to your full-time employees, and one or more of those employees get a Premium Tax Credit. Learn more.
  • If you self-insure, you may be required to pay a fee to help fund the Patient- Centered Outcomes Research Trust Fund

Affordable Care Act Provisions for Small Employers, Beginning October 1, 2013

Some of the provisions of the Affordable Care Act, or health care law, apply only to small employers, generally those with fewer than 50 full-time employees or equivalents.

If you have fewer than 50 employees, but are a member of an ownership group with 50 or more full-time equivalent employees, you are subject to the rules for large employers.

Coverage

  • Beginning Oct. 1, 2013, if you have 50 or fewer employees, you can purchase affordable insurance through the Small Business Health Options Program (SHOP).
  • To learn more about how the Affordable Care Act may affect your business, visit HealthCare.gov.

Reporting

  • Effective for calendar year 2015, if you provide self-insured health coverage to your employees, you must file an annual return reporting certain information for each employee you cover. This rule is optional for 2014. Learn more.
  • Beginning Jan. 1, 2013, you must withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000. Learn more.
  • You may be required to report the value of the health insurance coverage you provided to each employee on his or her Form W-2.

Payments & Credits

 

IT IS IMPORTANT TO CHOOSE A TAX PROFESSIONAL, SUCH AS AN ENROLLED AGENT, WHO KEEPS UP WITH THE RULES AND REGULATIONS AND USES THIS EXPERTISE TO DO THE BEST JOB POSSIBLE FOR EVERY TAXPAYER. 

R. Patrick Michael, EA, continues to provide tax preparation and financial consultation services since 1978.  Pat can be reached at  619-589-8680

 

IRS Invites Public Comment on Recommendations for 2013-2014 Guidance Priority List

The Dept. of Treasury and IRS invite public comment on recommendations for items that should be included on the 2013-2014 Guidance Priority List.

The Treasury Department’s Office of Tax Policy and the Service use the Guidance Priority List each year to identify and prioritize the tax issues that should be addressed through regulations, revenue rulings, revenue procedures, notices, and other published administrative guidance. Continue reading →

IRS revises Guidance on W-2 reporting of Group Health Insurance Costs

Employers need to understand the latest IRS pertaining to the ACA, what their obligations are and have systems in place for tracking and calculating reportable costs. For many, the reporting requirement became effective for the 2012 tax year— but for qualifying small employers (filing less than 250 W-2’s) many of these obligations will take effect for the 2013 tax year.   Continue reading →

IRS Offers Businesses Voluntary Classification Settlement Program

Back in July we wrote about businesses that have treated workers as 1099 contractors (“Are you making a mistake with your 1099 Contractors?”), and pointed out that if the IRS determines that your workers are not 1099 contractors, but actually “employees”, you may be faced with unexpected payroll taxes and penalties. The IRS has created the VCSP program for businesses that want to voluntarily reclassify their workers as employees. Continue reading →

More Information on W-2 Reporting Requirements for Employers

Not sure what to report on W-2, optional or mandatory?

Our table is based on IRS Notice 2012-9, which, until further guidance, contains the requirements for tax-year 2012 and beyond. Items listed as “optional” are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance. Continue reading →

Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers

IRS Q&A Affordable Care Act Reporting Requirements

The Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan. To allow employers more time to update their payroll systems, Continue reading →

Informational Reporting of the Cost of Employer-Sponsored Group Health Care Plan Coverage

Not sure what to report on W-2, optional or mandatory?

This table is based on IRS Notice 2012-9, which, until further guidance, contains the requirements for tax-year 2012 and beyond. Items listed as “optional” are designated as such based on transition relief provided by Notice 2012-9, and their “optional” status may be changed by future guidance. However, any such change will not be applicable until the tax year beginning at least six months after the date of issuance of such guidance.

This table was created at the suggestion of and in collaboration with the IRS’ Information Reporting Program Advisory Committee (IRPAC). IRPAC’s members are representatives of industries responsible for providing information returns, such as Form W-2, to the IRS. IRPAC works with IRS to improve the information reporting process.

Form W-2 Changes

Social Security Changes Based on Life Expectancy

Social-Security-AdministrationThere are changes in Social Security. This affects everyone who is approaching retirement age.

Update:  Want to learn more on the latest from the Social Security Administration, see https://ssa.gov/planners/lifeexpectancy.html

Back on July 29, 2013 the Ways & Means Committee released bipartisan proposals which it stated were necessary to strengthen and protect Social Security. In an effort to engage stakeholders in a dialogue on the potential legislative solutions, the Committee is soliciting feedback. Such changes would include the controversial “chained consumer price index (CPI)”option, see Article 2141 and Article 2140.

Without action addressing the fiscal and structural challenges facing the entitlement programs, the Committee notes that Medicare will be bankrupt by 2026 and seniors will experience a 23% cut to their Social Security benefits in 2033.

As part of a bipartisan hearing series on entitlement reforms announced in April, the Committee is reviewing a variety of proposals to protect and preserve Medicare and Social Security that have been identified by President Obama, either in his budget or in other recommendations to Congress, as well as bipartisan ideas for entitlement reform from the President’s National Commission on Fiscal Responsibility and Reform (the “Simpson-Bowles Commission”) and the Bipartisan Policy Center Debt Reduction Task Force (“Domenici-Rivlin Task Force”).

Source:  https://cs.thomsonreuters.com/

Personal Home? Tax Home? What’s the Difference?

Did you know that your personal home is not your tax home? 

“Your tax deductions, tax strategies, and tax records hinge on the following federal income tax defined terms: Personal Home, Tax Home, Business Travel, Business Transportation.”¹

Do you know the definition and differences?   Continue reading →

Husband and Wife Business

One of the advantages of operating your own business is hiring family members. However, the employment tax requirements for family employees may vary from those that apply to other employees. Below, we point out some issues to consider when operating a husband and wife business. Continue reading →

Tips to Start Planning Next Year’s Tax Return

IRS Tax Tip 2013-62, April 24, 2013

For most taxpayers, the tax deadline has passed. But planning for next year can start now. The IRS reminds taxpayers that being organized and planning ahead can save time and money in 2014. Here are six things you can do now to make next April 15 easier. Continue reading →