Archive for the ‘Tax’ Category
by Jim Wagoner, CPA | Partner, Tax Services Group
The IRS released the standard mileage rates for use in 2012. Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile.
Business use of an automobile remains at 55½ cents per mile. For medical or moving expenses, it is 23 cents per mile (a half-cent decrease from the second half of 2011). For services to charitable organizations, the rate (which is set by statute) is 14 cents per mile.
Rather than using the standard mileage rates, taxpayers may instead use their actual costs if they maintain adequate records and can substantiate their expenses. The rules for substantiating these amounts appear in Rev. Proc. 2010-51.
For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2012 (it was 22 cents per mile for 2011).
by Brandon Cook, CPA | Partner, Tax Services Group
The way things are now: Under a tax law passed last year, the usual 6.2 percent OASDI rate for employees was reduced by 2 percent. A comparable tax break is available to self-employed individuals. However, employers aren’t eligible for any reduction. For employers, the 6.2 percent OASDI tax rate continues to apply to amounts up to the wage base. The Medicare rate of 1.45% for employees, and 1.45% for employers continues to apply to all earnings, without a cap.
Continue reading “Social Security Employee Tax Reduction will Last at Least Another Two Months” »
by Marie Jett, CPA | Manager, Tax Services Group
Back on November 21, President Obama signed into law P.L. 112-56, “3% Withholding Repeal and Job Creation Act”. Back in 2005, Congress passed a law that would require federal, state, and local governments to withhold 3% from payments made to entities providing services or goods to those governments. Since then Congress has pushed back the start date of the withholding requirement with the updated date for payments made after 2011. This latest law has totally repealed the withholding requirement.
Continue reading “Repeal 3% Withholding Requirement and Credit for Hiring Veterans” »
by Melissa Merrick and Marie Jett, CPA | Team Members of the Tax Services Group
In the October 13 issue of our enewsletter, we reviewed with you the tax deductions that are scheduled to sunset in 2011. There are also several tax credits that are scheduled to end in 2011. A tax credit is a direct dollar for dollar reduction in the amount of tax that you owe. Specific tax credits that are scheduled to expire in 2011 include the research credit, the work opportunity tax credit, and the new energy efficient home credit.
Continue reading “2011 Sunsetting Business Tax Provisions – Part 2: Tax Deductions” »
by Melissa Merrick and Marie Jett, CPA | Team Members of the Tax Services Group
Many tax breaks currently available to businesses will become unavailable after December 31, 2011. With other political policies taking higher priority, the extension of these tax provisions may not occur. The following article provides detail on tax deductions that are scheduled to expire after 2011.
Continue reading “2011 Sunsetting Business Tax Provisions – Part 1: Tax Deductions” »
President Barack Obama submitted his American Jobs Act to Congress on Monday, and among its provisions are several tax items, including a temporary payroll tax cut, a limit on itemized deductions for certain high-income taxpayers, and a proposal to tax carried interests as ordinary income rather than capital gains.
The proposed bill follows the president’s pledge last week in a speech to a joint session of Congress to create more jobs. He has asked Congress to take up the measure promptly, but its fate in Congress is unknown.
Specific tax breaks in the proposal include the following:
Temporary payroll tax cut for employers, employees, and the self-employed: The current temporary reduction in payroll taxes would be expanded. For 2012, the employee’s portion of Social Security tax would be 3.1%; the employer’s portion would also be 3.1%, up to the first $5 million of wages paid by the employer. The tax on self-employed workers would be reduced to 6.2%.
Temporary tax credit for increased payroll: From Oct. 1, 2011, through Dec. 31, 2012, the proposed bill would provide a payroll tax credit to offset the employer portion of Social Security tax due to wage increases over the corresponding period in the prior year.
Extension of temporary 100% bonus depreciation for certain business assets: The proposal would extend 100% bonus depreciation under IRC § 168(k) through the end of 2012.
Delay in application of withholding on government contractors: The measure would delay the effective date of the 3% withholding requirement on payments to government contractors until after 2013.
Returning heroes and wounded warriors work opportunity tax credits: The measure would double the section 51(b) credit available for hiring certain unemployed, disabled veterans. It also would create two new credits: One for hiring veterans who have been unemployed for at least four weeks and another for hiring veterans who have been unemployed for at least six months.
Long-term unemployed workers work opportunity tax credits: Another credit would be available for employers who hire individuals who have been unemployed for at least six months.
Revenue Raisers
The proposal also contains a number of tax-related revenue raisers:
28% limitation on certain deductions and exclusions: This provision would limit the value of deductions and exclusions to 28% of the taxpayer’s taxable income. This would apply to joint filers with adjusted gross income over $250,000 and single filers with adjusted gross income over $200,000.
Tax carried interest in investment partnerships as ordinary income: This provision would change the rules regarding partnership interests transferred in connection with performance of services and would add a new Code section with special rules for partners providing investment management services to partnerships. The effect would be to tax carried interests at ordinary income rates instead of as capital gains.
Buffett Tax Increase: Last week the President also proposed a tax increase for individuals making more than $1,000,000. The timing is controversial, and even though it makes sense to look at this, it should be done as part of a tax overhaul.
Change corporate jet depreciation: Under this provision, corporate jets would be depreciated over the same seven-year period as other aircraft.
Repeal oil subsidies: Various deductions and credits available to oil and gas producers would be repealed.
The bill also would make changes to the foreign tax credit rules and the treatment of taxes paid on foreign oil and gas income.
If you have any questions about the specific tax breaks or other tax questions, please do not hesitate to contact our office at 317.241.2999.
Source: Journal of Accountancy, September 12, 2011
by John Keller, CPA and Amanda Meko, CPA | Team Members of the Not-for-Profit Services Group
Sponsorships can be mutually beneficial to both the organization and its sponsor. The organization gets funding for its event while the sponsor can use the event as a platform to gain more public exposure. The sponsor can have its name, logo, website address or telephone number prominently displayed at the event and even can sell its products at the event (as long as sales are not conducted by the organization itself).
The written sponsorship agreement sets the terms of payment and the obligations the organization has to fulfill in recognizing the sponsor. If the terms satisfy the IRS rules for Qualifying Sponsorship Payments (QPS) then none of the revenue generated will be considered Unrelated Business Taxable Income (UBTI).An organization, however, must carefully consider what it is promising to perform in the sponsorship agreement as the line between QSP and UBTI can be blurry.
Continue reading “When Does Sponsorship Income Become Advertising?” »
by Melissa Merrick and Marie Jett, CPA | Team Members of the Tax Services Group and the Manufacturing & Distribution Services Group
The Indiana Department of Revenue offers numerous tax deductions and credits. One such tax credit is the Hoosier Business Investment Tax Credit. Taxpayers are eligible for this credit when making qualified investments to directly expand Indiana’s workforce.[1]
Continue reading “Is Your Company Eligible for the Hoosier Business Investment Tax Credit?” »
by Melissa Merrick and Marie Jett, CPA | Team Members of the Tax Services Group
When it comes to taxes, reaching age 70 ½ is an important milestone. That’s because you have to start taking minimum annual distributions from most retirement plans when you reach age 70 ½. And if you’ve already retired from your company, at 70 ½ you must also begin making withdrawals from your company’s retirement plan. Not taking these distributions means you could get hit with a 50% penalty tax!
Last week the Indiana Department of Revenue began issuing more than 90,000 tax bills to individuals who filed a 2010 tax return and have not paid the tax due yet. If you’re among those folks receiving a tax bill, you owe more than $100, and you cannot pay that amount in full, you now can get online 24/7 and set up a payment plan.
Here are some things you need to know:
- Your bill has to be for $100 or more (if you owe less than $100 call 317-232-2165 to see if you qualify for a special-case payment arrangement for a duration of three months).
- You must pay 10 percent down.
- You can take up to 12 months to pay (if you owe more than $500, you can extend that to 24 months).
- Penalty and interest charges apply.
- Monthly payments have to be paid electronically.
- If your bill is for a tax year other than 2009 or 2010 and you do not have a Case ID number, call the Department at 317-232-2165 for payment plan arrangements. Once set-up, you can manage the account and make payments online.
If you want to take advantage of this option, or to learn more about it, go to www.intaxpay.in.gov If you find you need to extend the payment timetable to fit your life circumstances, this online tool is for you. Check it out today, take control of your tax obligation, and begin breathing easier.