Congress Passes Extenders Package

Nothing like waiting until the last minute, but Congress passed the Extenders Package of Tax Provisions this past week...but again for only one year-and a year that ends in just a few days. Nevertheless, these provisions apply retroactively to 2014.

A Quick Synopsis of what the extenders package contained:

Individual Extenders:

Expiring provisions that have been renewed for 2014 include:

Election to claim the State and Local sales tax deduction in lieu of State Income taxes;
Higher Education Deduction;
Teachers Classroom Expense Deduction;
Mortgage Debt Exclusion;
Mortgage Insurance Premium Deduction;
Charitable Distributions from IRA's for individuals over 70 1/2

Business Extenders:

There are numerous business extenders, the following is a list of some of the most used provisions:

50-percent bonus depreciation on new assets;
Section 179 expensing-dollar limits $500,000;
Research Tax credit;
Work Opportunity Tax Credit.


Remember to check your bank statements and credit card statements...

Unfortunately accompanying the growth of the electronic shopping era and electronic banking, is growth of fraud. And with many of us receiving online statements for our credit cards and bank statements it's easy not to review the statement each month. But be cautioned...check them.  I did this morning and found $2250.00 on my credit card statement in fraudulent charges-apparently unbeknownst to me I went on a computer buying spree!

I was surprised that when I reported the charges to the credit card company they didn't automatically cancel my credit card and re-issue a new number, I had to request it.  So be sure if fraud happens to you cancel that account and set-up a new one-you know the thieves have your information, why leave a door open for them?

And when you get that email for your monthly credit card or bank statement-take the minute or two it takes to open and save it-it might save you from a nasty surprise later on!


1099-misc slips

It's time to prepare your 1099 slips for the year 2013.

When are they due: You should have them mailed or delivered to the receipient by January 31.

Who do I issue them to?

Per the IRS:

File Form 1099-MISC for each person to whom you have paid in the course of business, at least $10 in royalties or broker payments in lieu of dividends or tax-exempt interest; at least $600 in rents, services (including parts and materials), prizes and awards, other income payments, medical and health care payments, crop insurance proceeds, cash payments for fish (or other aquatic life) you purchase from anyone engaged in the trade or business of catching fish, or, generally, the cash paid from a notional principal contract to an individual, partnership, or estate; any fishing boat proceeds, or gross proceeds of $600, or more paid to an attorney during the year.

Exceptions:Some payments do not have to be reported on Form 1099-MISC, although they may be taxable to the recipient. Payments for which a Form 1099-MISC is not required include all of the following.

  • Payments to a corporation except for payments for medical and health care payments (reported in box 6), purchases of fish for cash (box 7), attorneys fees (box 7), gross proceeds paid to an attorney (box 14), substitute payments in lieu of dividents or tax-exempt interest (box 8), payments to a federal executive agency for services (box 7)
  • Payments for merchandise, telegrams, telephone, freight, storage and similar items
  • Payments of rent to real estate agents. But the real estate agent must use Form 1099-MISC to report the rent paid over to the property owner. 
  • Wages paid to employees (report on Form W-2, Wage and Tax Statement).
  • Military differential wage payments made to employees while they are on active duty in the Armed Forces or other uniformed services (report on Form W-2).
  • Business travel allowances paid to employees (may bereportable on Form W-2).
  • Cost of current life insurance protection (report on Form W-2 or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.).
  • Payments to a tax-exempt organization including tax-exempt trusts (IRAs, HSAs, Archer MSAs, and Coverdell ESAs), the United States, a state, the District of Columbia, a U.S. possession, or a foreign government.
  • Payments made to or for homeowners from the HFA Hardest Hit Fund or the Emergency Homeowners' Loan Program or similar state program (report on Form 1098-MA).

A couple of notes: LLC's are NOT by default corporations. LLC's are actually by default a partnership, and partnership's should be issued 1099's.  LLC's can elect to be treated as corporations, so if you are not sure, request your vendor to complete a form W-9.

Veterinarian services are considered medical and health care payments so you should issue 1099's to all of your veterinarians who have received at least $600 for services.  See memorandum issued by IRS in October 2013 clarifying this point.


Happy new year!

Did you know that the new year brings with it expiration of several tax deductions? And a new Health Insurance Penalty?

Some expiring tax provisions (unless extended-don't count on it !)

  • $250.00 Teacher deduction for qualified classroom expenses
  • Itemized deduction: Deduction for state/local income general sales tax
  • Itemized deduction: Home mortgage insurance premium deduction
  • Tuition and fees deduction
  • 50% additional first year depreciation deduction

Health Insurance Penalty:

In 2014 those that don't have health insurance could be facing a tax penalty. Read up on the details here: