IRS Tax Filing Deadlines for 2015

If you have been putting it off, or simply lost track of time… the deadline for filing a corporate tax return is Monday, March 16th. If you need to file individual tax return are due by Wednesday, April 15th.

We need your financial documents as soon as possible to avoid failure-to-file penalties and file extensions on your behalf. This is our busiest time of year, so the longer you wait, the higher your chance of needed an extension becomes. Don’t wait! Call us today to make sure you don’t miss the deadline.

If you simply cannot get everything together before the deadline, we can easily file an extension on your behalf. Doing so will provide you with an additional six months to file your taxes, but you must let us know soon to avoid penalties.

TAX UPDATES FOR 2014

checklist

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.

 

HAPPY HOLIDAYS

TAX BREAKS EXTENDED FOR 2014

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Tuesday evening, The Senate voted 76 – 16 to approve a bill that would extended the expired tax breaks to the end of the year. This bill essentially is a retroactive extension of tax breaks for the full 2014 year even though it only lasts through

the end of the month. However, this will enable many people and businesses to claim these tax breaks on their 2014 tax returns.  These breaks mainly impact larger corporations, small business owners, teachers, struggling homeowners and

people who live in states without a state income tax and include:

 

  • Deduction for teacher’s expenses (up to $250)
  • State and local sales tax deduction
  • Tuition deduction (up to $4,000)
  • Deduction for mortgage insurance premiums
  • Income exclusion for mortgage debt that has been forgiven
  • Tax-free IRA withdrawals for charity
  • Also introducing a tax-free savings account for people with disabilities
    • People who become disabled before the age of 26 can establish an account where they and their family and friends can dump up to $14,000 a year into and have it grow tax free while not disqualifying them from receiving federal assistance like Medicaid and SSI as long as it is used to pay for housing, transportation, education, and wellness.

 

 

2014 TAX PREPARATION 12/04/14

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With the holiday season in full effect, we at Sterling Financial Services know that it is easy to become overwhelmed with the endless party invitations, gift shopping, bills and all the holiday hype. However, it is important to take a deep breath and collect oneself, knowing that we are here to help! With 2014 quickly coming to an end, why not get a jump start on compiling all pertinent information that we will need to prepare your personal and/or business taxes as well!

We will be ramping up our social media side with updates as there are many consistent changes in tax law that have been and will be happening that affect all of us.  This is especially true in regards to the constantly changing healthcare situation and tax code – so stay tuned!

Here is a quick and informative checklist to prepare for your 2014 personal or business taxes:

NOTE:  Similar to 2013, year-end tax planning will have its challenges as several key tax breaks were extended only through 2013.  Currently, it is unclear whether many of these tax breaks will be extended or made permanent to 2014 and beyond.  We do know the 3.8% Medicare surtax on net investment income will require special attention (as discussed below).  Net investment income includes taxable interest, dividends, and capital gains, as well as passive income, such as income from rental activities that do not constitute a trade or business. Sterling Financial Services can assist with strategies to minimize or eliminate this additional tax.

 

Year-End Moves for Individuals:

Adjust your tax withholding. If you’ve gotten married, divorced or had kids in 2014, then you probably need to update your withholding with your employer.

Check your beneficiaries. You can check the beneficiaries on your retirement accounts or insurance policies at any time, but it’s a good idea to do this at least annually when tax planning.

Take your required minimum distributions (RMD). In the year following the year you reach age 70 ½, you must take required minimum distributions from your IRA(s) by April 1.

Donate to charity. Dec. 31 is the deadline for most all charitable contributions you plan to deduct from your 2014 tax return.  These can be in the form of cash or non-cash, e.g. household goods & clothing, being sure to get receipts.

Max out retirement plan and/or education plan contributions. You have until you file your tax return next spring to make a 2014 contribution to an individual retirement account (IRA), but 401(k) contributions are only deductible when made in the same calendar year.  States often provide state tax breaks when education plan contributions are to a State sponsored plan.

Use up FSA money. If you still have money set aside in a flexible spending account for health care expenses, see if you can order new glasses or schedule that dental work you’ve been putting off.

Defer income and accelerate expenses. Income that arrives in 2015 is taxable in 2015, so in some instances, it might make sense to delay that income, e.g. bonuses, to delay the tax bill.

Consider realizing losses on the sale of stock.  Such losses offset other large capital gains (from the sale of stock, sale of a principal residence in excess of the exclusion amount, sale of investment property, etc.) and minimize the burden of the 3.8% Medicare surtax on net investment income, assuming your adjusted gross income is in excess of $200,000 ($250,000 if married filing joint).

Same sex couples should meet with your tax advisor.  Recent changes in State and Federal laws have resulted in personal and estate tax advantages.

 

Year-End Moves for Business Owners:

Meet with your tax advisor to make a 2014 Year-End estimated tax payment.  Payments made by January 15, 2015 avoid potential tax underpayment penalties.

Meet with your tax advisor if you are adding Payroll.  The Work Opportunity Tax Credit (WOTC) is available for targeted demographic groups and ranges from $2400 to $9600.  (This is an employer tax break still being debated by Congress for extension but assumed to be extended at least for 2014)

Meet with your tax advisor to ensure compliance with the Affordable Care Act (ACA and fondly referred to as ‘Obamacare’).  Understanding obligations to either provide qualifying health coverage (as a larger employer) or at least providing required notifications to employees (smaller employer) will avoid future penalties.

Consider Placing Business Property in service before Year-End.  Placing new business equipment and/or machinery in service before Year-End qualifies for the 50% bonus first year depreciation allowance.  It is assumed Congress will extend this provision thru 2014 but there are no guarantees for 2015.

Consider placing leasehold improvements in service before Year-End.  Currently there is a 15-year recovery period tax provision available (compared to a 39-year historical recovery period).  It is assumed Congress will extend this provision thru 2014 but there are no guarantees for 2015.

 Defer income and accelerate expenses.  Defer billings to January 1, 2015 and pay expenses (even if not due) before December 31, 2014 using a credit card if necessary and cash flow permitting to help reduce tax liability.

Reimburse Yourself for Out-of-Pocket Business Expenses.  You will need to keep an Expense Report — these count as an expense to the business in the current year.

 

Never hesitate to give us a call or to send your designated tax preparer an email. Also please look on our website for our many helpful resources!

TAX CREDIT FOR ADOPTIVE PARENTS!

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…

 

Payroll Tax Cut

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!

Businesses Want You!

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!

 

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!

AZ MINIMUM WAGE INCREASES! Hourlies and Business Owners Listen Up!

AZ MINIMUM WAGE INCREASES! Hourlies and Business Owners Listen Up!

On October 13th, 2011, the Industrial Commission of Arizona bumped up the minimum wage by $.30 to $7.65/hour starting on Jan 1, 2011.  Tipped employees, who make $3 below the standard minimum wage, will also receive the raise.  For a full-time wage worker, that is $624 more next year.

This is partially due to fact that the U.S. Bureau of Labor Statistics reported that the year-to-year cost of living for all urban areas went up 3.8% from August 2010.  With the upcoming change in minimum wage, AZ will be above the federal rate of $7.25/hour.  Enjoy it or hate it, it is going in effect starting 2012!

CARPE PER DIEM! IRS Raises Per Diem Rate!

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!