Court Temporarily Blocks Overtime Rule- Happy Holidays!

Court Temporarily Blocks Overtime Rule- Happy Holidays!

On Tuesday November 22,2016 a federal court issued a preliminary injunction to temporarily block the U.S. Department of Labor (DOL) from implementing and enforcing its Final Overtime Rule nationally, pending further review by the court.  What does this mean currently?

  • As a result of this ruling, employers do not need to comply by the original December 1 effective date
  • The injunction is temporary pending further review by the court
  • We have no additional information if or when the status of the regulations will change.
  • Balog+Tamburri CPAs will continue to monitor this situation and will keep everyone updated accordingly

Source :  Paychex.com/accounting-professionals

IRS De Minimis Safe Harbor Expensing Threshold

IRS De Minimis Safe Harbor Expensing Threshold

The IRS has increased the maximum threshold for expensing certain capital items under the De Minimis Safe Harbor from $500 to $2500.     The increase is in reponse to CPA comments that the $500 limitation was too low to effectively reduce the adminitrative burden of capitalizing the cost of many commonly purchased items such as furniture, computers, phones, and small equipment.   This rule goes into effect tax years on or after January 1, 2016.    Furthermore, if taxpayers are using a threshold higher than $500 but less than $2500 for tax years beginning after December 31, 2011 and ending before January 1, 2016 the IRS will not focus on this issue in an examination.    Please contact us if you have questions or want specifics to your situation.   This post is designed to provide a basic overview.

Free Money from the IRS?  Part I

Free Money from the IRS? Part I

As we review current tax law for late year changes we will be doing a series of blog posts to remind taxpayers that there are a few income sources which might impact your personal tax situation which remain completely tax-free to you (although some are reportable but not taxable)

How many people have heard about an urban legend in the tax code called “The Masters Exemption”? (think Augusta, GA)  The good news is this legend is true!   Situations where your property (primary or vacation home) is rented for 14 or fewer days is completely tax-free to the taxpayer (without any depreciation or maintainance deductions though) regardless of the amount!     Between the hot film industry in Georgia, combined with major sporting and music events these opportunities provide a major possible windfall to the homeowner.

Please note that the title of the blog post only mentions the IRS unfortunately.   Generally any short-term rental has state and local tax obligations and state governements continue to use better techonology to track these types of rentals.

Just a reminder these are rentals of your primary home or second/vacation home not considered an investment property

Next blog post we will talk about when selling your primary residence will result in a zero federal tax bill.

 

 

Small Business Tax Folklore

Small Business Tax Folklore

We just wrapped up tax extension season for 2014 partnership and corporate returns.    I thought it would be a good time to remind our readers common “themes” we see each year with business tax preparation.

  1.  All Start-Up Costs are Immediately Deductible-    Costs incurred before your business opens their doors range from advertising, travel, training etc.    These costs include organizational matters such as legal fees and state licensing.    Since tax year 2011, you are only allowed to deduct up to $5,000 of business start-up and $5,000 or organizational costs incurred after October 2004.   Each of these $5,000 amounts are reduced when your total start-up or organizational costs exceed $50,000.   All remaining costs must be amortized  Additionally,   equipment costs are recovered through depreciation or Section 179 expensing.
  2. Requesting an extension on your taxes includes an extension to pay-    This is one of our firm favorites, tax payments are always due April 15 of each tax year (or March 15 for C Corps).   Extensions are for paperwork only, penalties and interest accrue accordingly
  3. Incorporation enables the most deductions-     The answers here remain in understanding your business structure in the first place.   Countless clients walk in our doors and don’t have any clear rationale on why their business is a Schedule C, S Corp or LLC.   The plot thickens when we inform them that IRS doesnt recognize LLCs and through lack of planning, can potentially increase your accounting and tax expenses with little benefit e.g. have you factored in your future plans of adding members or shareholders and how profits and losses will be split?
  4. S Corps with no salary-     IRS code requires shareholders to take “reasonable compensation” as an employee of your corporation.   All distributions are a red flag for an audit.  Additionally track capital contributions and have paperwork for all loans booked accordingly on your software
  5. Business Use of your Auto-   A travel log of business miles must be maintained during the calendar year and this includes commuting and personal use of the auto/truck.   Second, you typically get to select between business mileage reimbursement under IRS guidlines or deductions of actual expenses (gas, deprecation, brake job) based on pro rata business use of your vehicle.     It matters whether your lease and typically its best to use the mileage allowance in year one for reasons beyond the scope of this blog post.

      Contact us with questions and start getting organized if your personal return is on extension!