W. Edward Newton Jr., CPA, CFP (R) | 13850 Ballantyne Corporate Place, Suite 500 | Charlotte, NC 28277 | 704-552-8689

 

Home Office Deduction + Don't Be Fooled by IRS Scams + 7 Tax Tips For Employers


 

If you use your home for business, you may be able to deduct expenses for the business use of your home.

 

If you qualify, you can claim the deduction whether you rent or own your home. You may use either the simplified method or the regular method to claim your deduction. Here are six tips that you should know about the home office deduction:

1. Regular and Exclusive Use. As a general rule, you must use a part of your home regularly and exclusively for business purposes. The part of your home used for business must also be:

- Your principal place of business, or
- A place where you meet clients or customers in the normal course of business, or
- A separate structure not attached to your home. Examples include a garage or a studio.

2. Simplified Option. If you use the simplified option, multiply the allowable square footage of your office by a rate of $5. The maximum footage allowed is 300 square feet. This option will save you time because it simplifies how you figure and claim the deduction. It will also make it easier for you to keep records. This option does not change the rules for claiming a home office deduction.

3. Regular Method. This method includes deducting certain costs that you paid for your home. For example, if you rent your home, part of the rent you paid may qualify. If you own your home, part of the mortgage interest, taxes and utilities you paid may qualify. The amount you can deduct usually depends on the percentage of your home used for business.

4. Deduction Limit. If your gross income from the business use of your home is less than your expenses, the deduction for some expenses may be limited.

5. Self-Employed. If you are self-employed and choose the regular method, use Form 8829, Expenses for Business Use of Your Home, to calculate the amount you can deduct. You can claim your deduction using either method on Schedule C, Profit or Loss From Business. See the Schedule C instructions for how to report your deduction.

6. Employees. You must meet additional rules to claim the deduction if you are an employee. For example, your business use must also be for the convenience of your employer. If you qualify, you claim the deduction on Schedule A, Itemized Deductions.

For more on this topic, see Publication 587, Business Use of Your Home. You can view, download and print IRS tax forms and publications on IRS.gov/forms anytime.

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

Reminder: Tax Filing this year is April 18th but don't wait until the last minute to get your tax return information to us!

 

Call me at 704-552-8689 to get started on your taxes! Ed


 



Don't be Fooled; IRS Scams Continue to Pose a Serious Threat

The Internal Revenue Service had some advice for taxpayers this April Fool's Day that may prevent them from being the victim of a tax scam: Don't be fooled by scammers.

 

Stay safe and be informed. Here are some of the most recent IRS-related scams to be on the lookout for:

Telephone Scams. Aggressive and threatening phone calls by criminals impersonating IRS agents remain an ongoing threat. The IRS has seen a surge of these phone scams in recent years as scam artists threaten taxpayers with police arrest, deportation, license revocation and more. These con artists often demand payment of back taxes on a prepaid debit card or by immediate wire transfer. Be aware of con artists impersonating IRS agents and demanding payment.

Note that the IRS will never:

- Call to demand immediate payment over the phone or call about taxes owed without first having mailed you a bill.
- Threaten to immediately bring in local police or other law enforcement groups to have you arrested for not paying.
- Demand that you pay taxes without giving you the opportunity to question or appeal the amount due.
- Require you use a specific payment method for your taxes, such as a prepaid debit card.
- Ask for credit or debit card numbers over the phone.

Scammers Change Tactics. The IRS is receiving new reports of scammers calling under the guise of verifying tax return information over the phone. The latest variation on this scam uses the current tax filing season as a hook. Scam artists call saying they are from the IRS and have received your tax return, and they just need to verify a few details to process it. The scam artists try to get personal information such as a Social Security number or personal financial information, such as banking and credit card numbers.

Tax Refund Scam Artists Posing as TAP. In a new email scam targeting taxpayers, people are receiving emails that appear to come from the Taxpayer Advocacy Panel, a volunteer board that advises the IRS on issues affecting taxpayers. Do not respond or click the links in these emails. If you receive an email that appears to be from TAP regarding your personal tax information, forward it to phishing@irs.gov.

E-mail, Phishing and Malware Schemes. The IRS has seen an approximate 400 percent surge in phishing and malware incidents so far in the 2016 tax season.

The emails are designed to mislead taxpayers into thinking these are official communications from the IRS or others in the tax industry, including tax software companies. The phishing schemes can ask taxpayers about a wide range of topics. Emails can seek information related to refunds, filing status, confirming personal information, ordering transcripts and verifying PIN information.

Variations of these scams can be seen via text messages, and the communications are being reported in every section of the country.

When people click on these email links, they are taken to sites designed to imitate an official-looking website, such as IRS.gov. The sites ask for Social Security numbers and other personal information, which could be used to file false tax returns. The sites also may carry malware, which can infect your computer and allow criminals to access your files or track your keystrokes to gain information.

If you get a 'phishing' email, the IRS offers this advice:

- Don't reply to the message.
- Don't give out your personal or financial information.
- Forward the email to phishing@irs.gov. Then delete it.
- Don't open any attachments or click on any links. They may have malicious code that will infect your computer.

More information on how to report phishing or phone scams is available on IRS.gov.
 



The Small Business Health Care Tax Credit: 7 Tax Tips for Employers

Do you own a small business or run a tax-exempt organization with fewer than 25 full-time equivalent employees?

If you do, the Small Business Health Care Tax Credit can help you provide insurance to your employees.

You may be able to save on your taxes if you paid for at least half of their health insurance premiums. Here are seven tax tips about this credit:

1. Maximum Credit. The maximum credit is 50 percent of premiums paid by small business employers. The maximum credit is 35 percent of premiums paid by small tax-exempt employers, such as charities.

2. Number of Employees. You must have fewer than 25 full-time employees, or a combination of full-time and part-time employees. For example, two half-time employees equal one full-time employee for purposes of the credit.

3. Average Annual Wages. For 2015, the average annual wages of your employees must have been less than $52,000. The IRS will adjust this amount for inflation each year.

4. Half the Premiums. You must have paid a uniform percentage, at least 50%, of the cost of premiums for all enrolled employees.

5. Qualified Health Plan. Generally, you must have purchased a qualified health plan from a Small Business Health Options Program, or SHOP, Marketplace. There are limited exceptions to this requirement.

6. Two Year Limit. As of 2014, an eligible employer may claim the credit only for two consecutive taxable years.

7. Tax Forms to Use. Employers use Form 8941, Credit for Small Employer Health Insurance Premiums, to calculate the credit. Small business employers claim the credit on the annual income tax return. Small tax-exempt employers claim it on Form 990-T, Exempt Organization Business Income Tax Return.

If you are a small business employer and the credit is more than your tax liability for the year, you can carry the unused credit back or forward to other tax years. If you are a small tax-exempt employer, the credit is refundable, so even if you have no taxable income you may receive a refund (as long as it does not exceed your income tax withholding and Medicare tax liability for the year).

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


While these articles outline important tax issues for 2016, additional changes in tax law are more than likely to arise during the year ahead.  Don't hesitate to call us if you need help or want to get started on tax planning for 2016!

If you have comments or questions on the information in these articles, as usual feel free to call our offices.


 

 

 


 

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As always you can call our offices if you have any questions about these or any other accounting, tax, financial planning or Quickbooks related issues, at 704-552-8689. 

 

Regards, W. Edward Newton Jr., CPA

Certified Public Accountant

 

 

 

 

W. Edward Newton Jr., CPA | Certified Public Accountant

13850 Ballantyne Corporate Place, Suite 500 Charlotte, North Carolina 28277 Phone: (704) 552-8689 | Email: ednewton@ednewtoncpa.com