Month: September 2016

IRS Waiver of 60-day IRA Rollover Period

Posted on by Craig Mathias

Source: IRS Rev Proc 2016-47

Generally, once per year, you can take money out of a retirement plan and roll into an IRA or other qualified retirement plan within 60 days.

Under this new procedure, the IRS allows missing the 60 day period for cause under specific circumstances. Those reasons are:

  1. Error by the financial institution receiving the contribution
  2. The distribution check was misplaced and not cashed
  3. The distribution was deposited into a new account thought to be an eligible retirement plan (but it wasn’t)
  4. The taxpayer’s residence was severely damaged
  5. A member of the taxpayer’s family died
  6. The taxpayer or a member of his/her family was seriously ill
  7. The taxpayer was incarcerated
  8. Restrictions were imposed by a foreign country
  9. A postal error occurred
  10. Two other circumstances as described in the Revenue Procedure.

30 day safe harbor: The contribution must be placed into a qualifying account within 30 days after the reason listed above no longer exists.

This certification is made in a written statement to the plan administrator or an IRA trustee, custodian, or issuer using the pattern letter in the Procedure. Administrators will likely develop forms for this purpose in short order.

This is great news for taxpayers which will keep them from having to seek an IRS Private Letter Ruling when extenuating circumstances regarding the 60-day rollover period exist.

 

2016 Year-end Planning: Section 179 Depreciation

Posted on by Craig Mathias

Source: IRS Publication 946 & Rev Proc 2016-48

With the passage of last year’s PATH Act, many parts of IRC Section 179 were made permanent.  Simply stated, an election can be made to expense most business property placed in service in 2016 (up to $500,000) as long as total property place in service doesn’t exceed $2 million in the year. Most clients are familiar with this rule as it relates to machinery, computers and equipment.  Here are some other areas that may qualify for your business:

  1. Qualified leasehold improvement property
  2. Qualified restaurant property
  3. Qualified retail improvement property

PLEASE CONTACT US TO DISCUSS HOW THESE AREAS APPLY TO YOUR BUSINESS.

Also, know that:

  1. The property has to be place in service during the year but NOT paid for.  Example: A business delivery vehicle purchased in December 2016 where only $500 was placed as a down payment.  The entire purchase price qualifies.
  2. The asset doesn’t need to be new… only new to your business.

2016 Form 1099 filing deadline 1/31/2017 NEW

Posted on by Craig Mathias

 

The IRS has changed their deadline when Forms 1099 must reach them for the year 2016 to JANUARY 31, 2017.  The deadline used to be February 28.

 

THEY WILL CHARGE PENALTIES FOR LATE FILINGS.

 

Because of this, start sending us names, addresses and tax identification numbers (either SSN or IRS business ID) for all contractors where we will be preparing forms 1099 NOW.

 

Thanks for helping us to help you avoid costly penalties.

2017 Medical Floor Change for Seniors > Age 65

Posted on by Craig Mathias

Source: Affordable Care Act

Since 2013, seniors who itemize on their tax returns have been allowed to deduct health care expenses (e.g., medical, dental, chiropractic, pharmacy, etc) when the total exceeds seven and one-half percent (7.5%) of their adjusted gross income.

Starting in 2017: Seniors NO LONGER GET A BREAK. Under this under-planned and ruthless law, they will now join the rest of the taxpayers and be able to deduct only when the total exceeds ten percent (10%) of their adjusted gross income.

Example: A senior making $60,000 adjusted gross income and in the 15% tax bracket would pay $225 more in federal tax when applying this new law (assuming that he/she had enough deductible medical-type expenses and itemized under the old 7.5% rule).