FinCEN Form 114, Report of Foreign Bank and Financial Accounts (commonly referred to as FBAR) can be electronically filed or Individuals can file the FBAR by following BSA E-Filing instructions. FinCEN Form 114, formerly Form TD F 90-22.1, is not electronically filed with the IRS and is not part of Modernized e-File. FinCEN (Financial Crimes Enforcement Network) is a bureau of the United States Department of the Treasury. FinCEN Form 114 must be electronically filed through the FinCEN BSA (Bank Secrecy Act) E-Filing System on or before June 30, 2015 (see IR-15-092). Printed versions of the BSA c-Filing forms will not be processed by FinCEN. [Read more…]
Foreign Bank and Financial Accounts (FBAR) FinCEN Form 114 must be electronically filed by June 30, 2015
Here are some more helpful updates from the STERLING FINANCIAL TEAM on some Tax Extensions for 2014. It’s always smart to check your list twice………..
Mileage rates for 2015: 57.5 cents for business use, 23 cents for medical/moving, and 14 cents for charity.
Tax Extenders for 2014 include, but are not limited to the following:
- The deduction for mortgage insurance premiums.
- A provision allowing persons over age 70-1/2 to make tax-free withdrawals from their Individual Retirement Accounts (IRAs) to make charitable contributions.
- Debt Forgiveness exclusion for a personal residence.
- The educator expense deduction-adjustment to income of up to $250 for grade K-12 educators.
- Tuition and fees deduction-adjustment to income up to $4,000.
- Deduction for state and local general sales tax as an itemized deduction (Schedule A) for sales tax in lieu of state income tax.
- Nonbusiness energy property credit-up to $500 maximum lifetime credit for qualified energy efficient home improvements (windows, furnaces, etc.).
- Electric drive vehicle credits-the credit for two-and three-wheeled vehicles has been extended. (The provisions for low-speed electric vehicles expired).
- The credit for plug-in electric drive motor vehicles, such as the Nissan Leaf or Chevy Volt, is still available.
- Energy-efficient appliance credit.
Provisions affecting businesses:
- Bonus Depreciation allowing an additional first year deduction of 50 percent of the cost of new equipment.
- Enhanced Section 179 Expense Limitations allowing for the expense of $500,000 on acquired property for business use.
- New markets tax credit.
- Wage credit for employers of uniformed active duty service personnel.
- Work opportunity tax credit.
- Fifteen-year straight-line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements.
- Enhanced charitable deduction for contributions of food inventory.
- Incentives for biodiesel and renewable diesel.
- Alternative fuels excise credit.
TAX CREDIT FOR ADOPTIVE PARENTS! THE GOVERNMENT WANTS TO HELP COVER THE COSTS!
If you adopted a child in 2011, you could be eligible for up to $13,360 to cover the costs!
The Federal Affordable Care Act’s Adoption Tax Credit has recently been expanded to help adoptive parents cover the costs of adopting a child. This is great news for adoptive parents as the amount of the credit has been raised and the credit has been made refundable. This means that, even if your tax liability is zero, you can still receive the money you qualify for as a check sent to your mailbox!
Under the Credit’s guidelines, a parent(s) who adopted a child during 2011 is eligible to receive a refund on qualifying expenses relating to the legal process of adoption. These expenses could include the costs of paying for a lawyer, court costs, expenses related to travel, and, of course, the adoption fees themselves. To qualify, the child must be under 18 years of age, or mentally or physically unable to care for themselves. For 2012, you can still claim the credit, it just is no longer refundable.
If you welcomed a new member into your family in the past year, then just think of how many diapers $13,360 can buy!
PAYROLL TAX CUT EXTENDED! Well at least for now…
The US Congress just recently passed a two-month extension of the payroll tax cut on the employee side starting at the first of the year. This cut lowered the employee portion of the payroll tax from 6.2% down to 4.2%. The temporary extension was passed eight days before it was set to expire. Additionally, the extension also keeps in place expanded unemployment benefits and it suspends a reduction in Medicare payments to doctors through the end of February.
With the 2012 elections coming up, neither side wants to take the blame for lowering the net pay of voters everywhere. That would be political disaster. We can only hope in the next couple months when Congress reconvenes that they will be able to work out a longer solution or reorganization. Good ole bipartisanship at its best!
VETERANS – LISTEN UP! BUSINESSES WANT YOU!
On November 21, 2011, a new law was enacted that creates employment incentives designed to get unemployed veterans back to work after their service. This should create a much smoother transition for vets to getting back into the workplace and give the businesses that hire them an incentive to do so. Veterans’ experience can prove to be invaluable in private enterprise and combined with this new law, will give businesses an even greater advantage when employing a vet.
The law provides for a “Returning Heroes Tax Credit” for businesses hiring unemployed veterans. The tax credit provides:
- $2,400 maximum for vets unemployed for at least one month
- $5,600 maximum for vets unemployed for at least six months
The law retains the “Work Opportunity Credit” providing:
- Maximum credit of $4,800 for hiring unemployed veterans with service-related disabilities
Lastly, the law creates a “Wounded Warrior Tax Credit” providing:
- Maximum of $9,600 for hiring vets who have service-related disabilities and who have been unemployed for longer than six months
Get those resumes ready!
Inflation = Increased Tax Benefits? Yes for 2012!
Today’s economy sometimes makes us feel like the flower in the picture, which leaves us asking is there any benefit from the situation. Well I do have good news amongst all the bull (referring to the picture of course). Uncle Sam is increasing various tax breaks effective for the 2012 tax year including:
Each personal and dependent exemption will be $3,800, which is up $100 from this year.
The new standard deduction is $11,900 for married couples filing jointly, $5,950 for single individuals and those couples that are filing separate, and $8,700 for people filing as head of household. These increased by various amounts as much as $300 from this year.
Tax-bracket thresholds have increased for each filing status. This essentially means that more of the money you make will be taxed at more favorable rates. Most will not notice a huge difference in overall tax savings, but everything helps.
Additionally, many other deductions and credits have been adjusted for inflation as well. Among these is the Earned Income Credit which will increase by various amounts depending on filing status and amount of dependents claimed. The foreign income deduction, income thresholds for education benefits, and medical savings account deductible amounts will all rise slightly in 2012 just to mention a few. At least in these inflationary times we will see some benefit; however slight it might be in the overall picture!
Carpe Per Diem! IRS Raises Per Diem Rate!
Effective October 1, 2011, businesses may now pay themselves or their employees $242 a day for meals, lodging, and incidentals in 43 high-cost regions (surprise surprise…Sedona = one of those high-cost regions). In all other localities, it increased to $163. For solely meals and incidentals, the rate remains unchanged – $65 a day in high-cost areas and $52 elsewhere.
For self-employed individuals, the meals and incidental rate can be used in lieu of keeping receipts, but lodging expenses must be kept separately. Keep this in mind when planning your next business trip!
For information on the localities you can visit http://www.irs.gov/publications/p1542/ar02.html. Safe travels!
American Opportunity Credit – Refundable Tax Credit for Paying College Expenses?
The short answer? Yes! The American Opportunity Credit (AOC) replaced the Hope credit of previous years and is a great way to get a little money back from the ever-increasing amount of college expenses that are incurred every year. Here it is in a nutshell:
• Up to $2,500 for each of the first four years and up to $1,000 of the credit is refundable (meaning even if you owe zero tax, you still can get up $1,000 back)
• College students or parents claiming students as dependents are eligible for this credit
• Qualified expenses include:
o Required course material (books, supplies, and equipment needed for the course of study even if not purchased from the post-secondary education institution as a condition of enrollment or attendance)
o Tuition and fees
• Valid for the first four years of college
• Expires 12/31/2012 so take advantage of it while you can!
Of course there is fine print such as limitations, phaseouts, etc, but for the majority of people, it is typically a great way to help ease some of the burden of those mounting college expenses we have come to know.
Arizona is one of more than 30 states that borrowed money from the federal government after our states’ unemployment trust funds were sucked dry during the economic recession. This enabled us to keep paying unemployment benefits to those that qualified as required by federal law. What does this mean?
MORE TAXES – unfortunately.
A House Bill passed on July 20 of this year retroactively imposing a “Special Assessment” tax on all taxable wages paid in 2011 and 2012. The first three calendar quarters of 2011 is now due by October 31, 2011. The agency that will be collecting it is the DES Unemployment Insurance Tax Section from which you should be receiving a letter or notice shortly (if you haven’t already). Here are the details:
• All employers subject to Arizona UI Tax in 2011 and 2012 are also subject to the Special Assessment
• “Taxable Wages” are the first $7,000 of gross wages paid to each employee in the calendar year
• For 2011, it is .4% of taxable wages (max of $28 per employee)
• For 2012, it is estimated to be around .6% – .8% ($42 – $56 max per employee)
You already know the bad news… The small amount of good news? It is tax deductible as a cost of doing business.
We will continue to post updates so stay tuned for more info on how to not get like the little guy in the picture…
Want to know your chances of being audited by the Internal Revenue Service? New IRS statistics give the details on audits of individuals in fiscal year 2010. The overall exam rate for individual returns rose to 1.11%, the highest since 1997.
Taxpayers with incomes of $1 million or more got the most “attention.” The IRS audited 8.36% of these filers. That is an average of one out of every 12 returns.
Three other classes of taxpayers experienced significant audit heat as well, with audit rates more than twice the average:
Filers with incomes of at least $200,000 up to $1 million
Business returns with gross receipts of $25,000 and up, especially Schedule C filers
And taxpayer returns that claim the Earned Income Credit
Stay tuned, in future posts, we will help give you tips and hints on how to generally minimize this chance.
By the way….they will not give you a t-shirt if indeed you are audited .