Archive for January, 2016

Monthly Newsletter for February 2015

by in Newsletter on Jan. 26, 2016

Six Reasons to E-file your Taxes in 2016

IRS Tax Tip 2016-01, January 19, 2016

Are you one of the few tax filers who still file a paper return? If so, now may be the best time to switch to e-file. Last year almost 129 million taxpayers filed their taxes electronically. They chose to e-file because it’s the fastest and safest way to file.

Here are the top six reasons why you should file electronically in 2016:

  1. Accurate and Easy.IRS e-file is the best way to file an accurate tax return. The tax software helps you avoid mistakes by doing the math for you. It guides you through each section of your tax return. It is much easier than doing your taxes by hand and mailing paper tax forms.
  2. Safe and Secure.IRS e-file meets strict security guidelines. It uses modern encryption technology to protect tax returns. The IRS has processed more than 1.5 billion e-filed tax returns to date. This year, the IRS is working with states and tax industry leaders to protect your tax return from identity theft refund fraud. This new effort has put strong new safeguards in place to make tax filing safer than ever before.
  3. Convenient and Often Free. You can e-file for free throughIRS Free File. Free File is only available on IRS.gov. You may qualify to have your taxes e-filed for free through IRS volunteer programs. Volunteer Income Tax Assistance, or VITA, offers free tax preparation if you earned $54,000 or less. Tax Counseling for the Elderly, or TCE, generally helps people who are age 60 or older. You can buy commercial tax software to e-file or ask your tax preparer to e-file your tax return. Most paid preparers are required to file their clients’ returns electronically.
  4. Faster Refunds.In most cases, e-file helps get your refund faster. That’s because there is nothing to mail and your tax return is virtually mistake-free. The fastest way to get your refund is to combine e-file with direct deposit into your bank account. The IRS issues more than nine out of 10 refunds in less than 21 days.
  5. Health Care Tax Reporting.IRS e-file can help with tax provisions of the health care law. The software will walk you through the lines on the tax forms that relate to the Affordable Care Act.
  6. Payment Options.If you owe taxes, you can e-file early and set up an automatic payment on any day until the April 18 deadline. You can pay electronically from your bank account with IRS Direct Pay. You also have many other options to pay, including electronic funds withdrawal or payment by debit or credit card. Visit gov/payments for details.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

IRS Sends Corrected Letter for Identity Protection (IP) Pin

by in Newsletter on Jan. 18, 2016

The IRS has begun mailing follow-up letters to taxpayers noting that the Identity Protection (IP) PIN they received in a prior mailing is valid despite the incorrect reference to the year. Please be aware the IP PIN listed on the CP 01A notice dated Jan. 4, 2016, is valid for use on individual tax returns filed in 2016. The earlier notice incorrectly indicates the IP PIN issued is to be used for filing the 2014 tax return when it should be used for the 2015 tax return.

Monthly Newsletter for January 2016

by in Newsletter on Jan. 5, 2016

During January

 

All Employers:  Give your employees their copies of Form W-2 for 2015 by February 1, 2016.

All Businesses:  Give annual information statements to recipients of certain payments you made during 2015.  You can use the appropriate version of Form 1099 or other information return.  Payments that may be covered include the following:

Cash Payments for fish or other aquatic life purchased from anyone engaged in the trade or business of catching fish.

Compensation for workers who are not considered employees.

Dividends and other corporate distributions.

Interest, Rent, and Royalties.

Payments of Indian gaming profits to tribal members.

Profit-sharing distributions, Retirements plan distributions, Original issue discount, prizes and awards.

Medical and health care payments.

Debt cancellation (treated as payment to debtor).

Cash payments over $10,000.

 

                                  New Year, New Tax Guidelines

Every New Year brings at least a few new IRS guidelines and 2016 is no different.  Brown Jenkins & Oneyear, PA, has put together a list of the most noteworthy changes.  While this list is not comprehensive, it will help most businesses and individuals understand the major changes.

 2016 Tax Quick Reference Table

Mileage Rates:                                     2015                                                            2016

                Business                                   57.5                                                   54.0 cents per mile

     Charitable                               14.0                                                  14.0 cents per mile

Medical & Moving                23.0                                                  19.0 cents per mile

Estate and Gift Tax Basic Exclusion Amount                                        $5,450,000

Gift Tax Annual Exclusion per Donee                                                     $14,000

Social Security Withholding Tax Wage Base                                        $118,500.

Medicare Withholding Tax Wage Base                                                  Unlimited

Federal Unemployment Tax Wage Base                                                               $7,000

NC Unemployment Tax Wage Base                                                         $22,300.

Threshold for Nanny Tax                                                                              $2,000.

Maximum 401(k)/403(b) Salary Deferral                                               $18,000; $24,000 if age 50

Maximum SIMPLE Plan Salary Deferral                                                  $12,500; $15,500 if age 50

Maximum IRA Annual Contribution Limitation                                  $5,500; $6,500 if age 50

Profit-Sharing Contribution Limitation                                                  $53,000

Annual Compensation Limitation                                                            $265,000

for Defined Contribution Plan

Social Security Cost of Living Adjustment                                            No increase for 2016

   (COLA) for Social Security Beneficiaries

Earning Ceilings for Social Security:

Below Full Retirement Age (FRA)                                            $15,720 Lose $1 for $2 earned

Year FRA is Attained                                                                      $41,880 Lose $1 for $3 earned

After FRA is Attained                                                                     Unlimited