Rebella Accountancy | 507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236

       

 

 

Monica Rebella, CPA/IAR - President

Rebella Accountancy

 

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Feature Articles

 

- President signs Highway Bill revising return due dates, making other compliance change

- Busy tax agenda awaits Congress’ return after August recess

- Developments continue to impact the mortgage interest deduction

- FAQ: When must individuals pay estimated taxes?

- How Do I? Form a partnership for tax purposes

- September 2015 tax compliance calendar

 

 

 

 

 

 

 

First Look at 2015 Year-End Tax Planning + Congress Returns and Takes up Some Tax Bills + Compliance Calendar


 

The approach of year-end 2015 makes it tax planning season.

Tax law developments in 2015 can affect, for example, the deduction of costs and expenses, the treatment of contributions to tax-favored accounts, and the inclusion of certain benefits in income.

 

Traditional year-end planning techniques for investments and retirement are also important. Small businesses also have some tools for year-end tax planning.

 

Although it may seem early to contemplate year-end planning, the remaining weeks of 2015 will pass quickly and taxpayers need to be proactive.

Investments

Taking inventory of gains and losses at this time to map out a year-end buy, sell or hold strategy later makes particular sense. Investors should note that immediate losses in the stock markets do not necessarily translate into tax losses. The fact that assets purchased several years ago may still yield taxable gains because of low basis, and the existence of the wash sale rule if a stock is purchased within 30 days before or after a sale, should be considered in assessing current tax positions.

Taxpayers should also remember the higher tax rate environment that is now in its third year. Not only has the top rate jumped to 39.6 percent for ordinary income (and short-term capital gains) but the rate for long-term capital gains and qualified dividends has increased from 15 to 20 percent. Furthermore, a 3.8 percent net investment tax applies to taxpayers with income above a non-inflation-adjusted threshold ($250,000 for married taxpayers filing jointly; $125,000 for married taxpayers filing separately; and $200,000 for all other taxpayers).

Saving for Retirement

Although most IRA contributions for a particular year may be made until the filing date for that year, other deadlines are at year end, such as contributions to 401(k) plans and Roth conversions and re-conversions. Required minimum distributions for retirees and those over age 70 ˝ also generally carry a year-end distribution date beyond which a penalty applies. One exception allows an individual turning age 70 ˝ to delay starting distributions until April 1 of the year following the year in which the individual turns 70 ˝.

Small Businesses

Many small businesses have relied on the generous Section 179 deduction, which is now up for renewal as part of the extenders legislation, to gain an immediate write-off for equipment, rather than follow depreciation schedules. One alternative now available to many businesses is the de minimis safe harbor threshold amount under the final so-called "repair regs." Currently, a de minimis safe harbor under the repair regulations allows taxpayers to deduct certain items cost $5,000 or less (per item or invoice) and that are deductible in accordance with the company's accounting policy reflected on their applicable financial statement (AFS). IRS regulations also provide a $500 de minimis safe harbor threshold for taxpayers without an applicable financial statement.

New Tax Laws

So far this year, Congress has passed and President Obama has signed several tax bills. Two new laws impact tax planning for public safety officers. The Don't Tax Our Fallen Public Safety Heroes Act clarifies that both federal and state benefits for public safety officers fallen or injured in the line of duty are treated the same in the tax code and are not taxable. The Defending Public Safety Employees' Retirement Act affects retirement planning. Generally, taxpayers who receive an early distribution from a qualified retirement plan are subject to a 10 percent penalty, unless an exemption exists. The Defending Public Safety Employees' Retirement Act expands the exemption to include certain federal law enforcement officers, federal firefighters, customs and border protection officers, and air traffic controllers.

Late last year, Congress passed the legislation creating A Better Life Experience (ABLE) accounts. States are now enacting enabling legislations, which along with federal law, will allow ABLE accounts to be set up for qualified individuals with disabilities (who became disabled before age 26) for tax years beginning after December 31, 2014. Contributions in a total amount up to the annual gift tax exclusion amount, currently $14,000, can be made to an ABLE account on an annual basis, and distributions are tax-free if used to pay qualified disability expense

One bill that has not yet passed is legislation to extend the so-called tax extenders. The Tax Increase Prevention Act of 2014 (TIPA) only extended these popular but temporary tax breaks for 2014. The expired extenders include the state and local sales tax deduction, higher education tuition deduction, transit benefits parity, research tax credit, the work opportunity tax credit, and many others. The extenders are likely to be renewed for 2015 but Congress may wait till December to pass a bill. Our office will keep you posted of developments.

If you have any questions about year-end tax planning, please contact our office. We can develop a personalized year-end tax planning strategy.

 

A while back in USA Today I was quoted in 2 articles on tax topics & if you missed it you can download the articles below.  Monica

9 Commonly Overlooked Tax Breaks by Jeff Reeves - Special to USA Today (click here to download) 9 Tax Tips For The Self Employed by Jeff Reeves - Special to USA Today (click here to download)

 


 

Congress Returns and Takes up Some Tax Bills

 

After a five week recess, lawmakers returned to work in September and took up several tax bills.

While some tax bills moved out of committee, their ultimate passage by both the House and Senate before year-end is unclear. Congress has only a finite number of days in which to complete work on a number of tax bills including the tax extenders, possible reforms to the Affordable Care Act (ACA), and energy legislation.

Tax Extenders

The House Ways and Means Committee continues to pass permanent extensions of some of the tax extenders in stand-alone bills. In September, the Ways and Means Committee approved five tax measures in stand-alone bills that are typically part of an extenders package. The extenders moved by the committee include the Educator Tax Relief Bill of 2015 (HR 2940), which would make permanent the above-the-line deduction for classroom expenses of schoolteachers; the Restaurant and Retail Jobs and Growth Bill (HR 765), which would make permanent the 15-year depreciation schedule for leasehold improvements, restaurant improvements and new construction, and retail improvements; HR 2510, which would make permanent bonus depreciation; and HR 961, which would permanently extend the Subpart F exemption for active financing income.

The full House has not yet scheduled a vote on these five stand-alone bills. Earlier this year, the full House approved stand-alone bills extending permanently the state and local sales tax deduction, the research tax credit, and a handful of other extenders. The Senate has not, to date, taken up any of the House bills. The Senate Finance Committee has approved a two-year extension of many of the extenders in one bill.

At this time, Congress appears on track to extend the extenders, as in past years, in year-end legislation. Late tax legislation always makes tax planning more complex and imposes burdens on the IRS, which must reprogram its processing systems for the coming filing season to reflect the legislation. Our office will keep you posted of developments.

Health Care

The ACA modified the definitions of qualified medical expenses for health flexible spending arrangements (FSAs), health savings accounts (HSAs), and health reimbursement arrangements (HRAs). As a result, only prescribed medicines or drugs (including over-the-counter medicines and drugs that are prescribed) and insulin (even if purchased without a prescription) are considered qualifying medical expenses. In September, the House Ways and Means Committee approved the Restoring Access to Medication Bill of 2015 (HR 1270). The bill would allow individuals to use health FSA, HSA and HRA dollars purchase over-the-counter medicines.

The ACA also imposes a new excise tax on high-dollar health insurance plans (sometimes called "Cadillac plans.") Under current law, the excise tax is scheduled to begin after 2017. In September, a bipartisan bill was introduced in the House to repeal the excise tax. Prospects for repeal this year are uncertain. Although the bill could pass in the House, Democratic leaders in the Senate have not signed-on to repeal of the excise tax.

Energy

In September, Senate Democrats introduced a comprehensive energy bill with tax measures. The American Energy Innovation Act would extend and enhance some popular energy tax incentives. The bill refines the Production Tax Credit and provides that the credit would be available for 10 years after a facility is placed in service. For homeowners, the bill provides an investment tax credit for onsite power generation (such as rooftop solar or small wind turbines) as well as overhauling existing incentives. The more energy-efficient a residence is, the greater the tax credit (generally up to a maximum of $3,000). The bill also reauthorizes the advanced energy manufacturing credit and incentives for alternative fuels.

In a significant change, the bill would make oil companies generally ineligible to claim the Code Sec. 199 domestic production activities deduction. The Senate's GOP leadership has not scheduled a vote on the bill.

If you have any questions about these tax bills or other tax legislation, please contact our office.

 



October Compliance Calendar

 

October 2: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates September 26–29.
October 7: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates September 30–October 2.
October 9: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 3–6.
October 13: Employees who work for tips. Employees who received $20 or more in tips during September must report them to their employer using Form 4070.
October 15: Individuals. Individuals with automatic 6-month extensions to file their 2014 income tax returns must file Form 1040, 1040A, or 1040EZ, and pay any tax, interest, and penalties due. Partnerships. Electing large partnerships that obtained a 6-month extension for filing the 2014 calendar year return (Form 1065-B) must now file the return. Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 7–9.
October 16: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 10–13.
October 21: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 14–16.
October 23: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 17–20.
October 28: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 21–23.
October 30: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 24–27.
November 4: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 28–30
November 6: Employers. Semi-weekly depositors must deposit employment taxes for payroll dates October 31–November 3.

 


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

 


 

 

   

click here to listen to this video update on:

click here to listen to this video update on:

   
 
   

To read this & my other articles online go to www.MyDentalCPA.com or www.RebellaCPA.com and click on the Newsletter section.

 


 

As always you can call me at 714-619-0667 if you have any questions about investing, retirement or any other tax & accounting related issues. 

 

Regards, Monica Rebella, CPA/IAR

President, Rebella Accountancy

 
Disclaimer:  The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. With any investment you should carefully consider the investment objectives, potential risks, management fees, and charges and expenses before investing.  Past performance is not a guarantee of future results. The investment return and principle value of any investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.

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Monica Rebella, CPA/IAR | President - Rebella Accountancy | Certified Public Accountants
507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236
Email: mrebella@rebellacpa.com | www.RebellaCPA.com | www.MyDentalCPA.com