Are You an Applicable Large Employer? Review Your Status AnnuallyYou are an applicable large employer if you averaged at least 50 full-time employees, including full-time equivalent employees, during the prior year.
Applicable large employers are subject to information reporting and the employer shared responsibility provisions of the health care law. Here are the steps to determine whether you are an applicable large employer:
• Determine how many full-time employees you had each month of the prior year. This provision defines a full-time employee for any calendar month as one who has, on average, at least 30 hours of service per week.
• Determine how many full-time equivalent employees you had each month of the prior year. To do this, combine the number of hours of service of all non-full-time employees for the month – but no more than 120 hours per employee – and divide that total by 120.
• For each calendar month, add your full-time and full-time equivalent employees for a monthly total. Add the monthly totals. Divide the sum of the monthly totals by 12. If the result is 50 or more employees, you are an applicable large employer. The law treats employers in an aggregated group as a single employer for determining applicable large employer status. You are part of an aggregated group if you have common ownership or are otherwise related to other employers.
For details about information about ALE information reporting requirements and the shared responsibility provisions, visit IRS.gov/aca.
For information about rules to determine who is a full-time employee and what counts as hours of service, see the ACA Information Center for Applicable Large Employers.
Exemptions and Dependents: TopTen Tax FactsMost people can claim an exemption on their tax return. It can lower your taxable income. In most cases, that reduces the amount of tax you owe for the year.
Here are the top 10 tax facts about exemptions to help you file your tax return.
1. E-file Your Tax Return. Easy does it! Use IRS E-file to file a complete and accurate tax return. The software will help you determine the number of exemptions that you can claim. E-file options include free Volunteer Assistance, IRS Free File, commercial software and professional assistance.
2. Exemptions Cut Income. There are two types of exemptions. The first type is a personal exemption. The second type is an exemption for a dependent. You can usually deduct $4,000 for each exemption you claim on your 2015 tax return.
3. Personal Exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return, you can claim one for your spouse, too. If you file a separate return, you can claim an exemption for your spouse only if your spouse: • Had no gross income, • Is not filing a tax return, and • Was not the dependent of another taxpayer.
4. Exemptions for Dependents. You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative who meets a set of tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim on your tax return. For more on these rules, see IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Get Publication 501 on IRS.gov. Just click on the Forms & Pubs tab on the home page.
5. Report Health Care Coverage. The health care law requires you to report certain health insurance information for you and your family. The individual shared responsibility provision requires you and each member of your family to either: • Have qualifying health insurance, called minimum essential coverage, or • Have an exemption from this coverage requirement, or • Make a shared responsibility payment when you file your 2015 tax return. Visit IRS.gov/ACA for more on these rules.
6. Some People Don’t Qualify. You normally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.
7. Dependents May Have to File. A person who you can claim as your dependent may have to file their own tax return. This depends on certain factors, like total income, whether they are married and if they owe certain taxes.
8. No Exemption on Dependent’s Return. If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person on your tax return. This rule applies because you can claim that person as your dependent.
9. Exemption Phase-Out. The $4,000 per exemption is subject to income limits. This rule may reduce or eliminate the amount you can claim based on the amount of your income. See Publication 501 for details.
10. Try the IRS Online Tool. Use the Interactive Tax Assistant tool on IRS.gov to see if a person qualifies as your dependent. Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.
In 2006 Congress Passed the Pension Protection Act. Included in that was the ability for Non-profit organizations to have their non-profit status revoked. Prior to 2006 small non-profit organizations had no filing requirements.
Under the new laws all registered non-profits, with the exception of churches and some auxiliary groups, have a filing requirement. Non-profits with less than $25k in gross receipts may file the form 990N postcard online to meet this requirement. Those organizations with gross receipts between $25k and $500K (starting 2010) must file either 990EZ or 990 and those with gross annual receipts of $500k or more must file form 990. While tax exempt organizations typically don’t pay tax, certain types of income may be taxable.
If a non-profit fails to file for three consecutive years there will be an automatic revocation of the non-profit status. No notice is sent to the organization from the Internal Revenue Service stating that the organization has been revoked. Once revoked the organization must then file to be reinstated or be forced to file form 1120 or 1041 showing taxable income. In order to be reinstated the organization must file form 1023 and pay a user fee, typically close to the cost of the non-profit initial application fee.
Once the non-profit status has been revoked the organizations name will appear on the www.irs.gov/Charities-&-Non-Profits website. There is a function on EO Select Check to check the status of any exempt organization. It is important that those donating to exempt organizations be sure to check the status of the organization prior to donating large sums of money, property etc. The deductibility of such donations may be in question if the organization has had its’ exempt status revoked.
Revised business-use-of-home publication clarifies new simplified deduction option
IRS has revised Publication 587, Business use of Your Home, for use in preparing 2013 returns. The revised publication clarifies important aspects of the new optional safe harbor method of computing deductions for business use of a home, including a new, comprehensive simplified deduction worksheet.
2014 Standard Mileage Rates
IR-2013-95, Dec. 6, 2013
WASHINGTON — The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
· 56 cents per mile for business miles driven
· 23.5 cents per mile driven for medical or moving purposes
· 14 cents per mile driven in service of charitable organizations
The business, medical, and moving expense rates decrease one-half cent from the 2013 rates. The charitable rate is based on statute.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51. Notice 2013-80 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
Do You Know the Difference Between Your Company's Disaster Risk and Its Preparedness Level?
WASHINGTON – Human nature—the tendency to believe that a natural or man-made disaster will never occur—often undermines the clear-headed work needed to create a business continuity plan. In a study done earlier this year by Staples, less than half of small businesses said they were prepared for severe emergencies.
IRS Announces 2014 Pension Plan Limitations; Taxpayers May Contribute up to $17,500 to their 401(k) Plans in 2014
IR-2013-86, Oct. 31, 2013
WASHINGTON — The Internal Revenue Service today announced cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014. Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014.
Tax Extenders Set to Expire
It’s the time of year to again start thinking about expiring tax provisions. Usually the first thing that comes to mind is the alternative minimum tax, but this particular issue was “fixed” in January of this year by the fiscal cliff bill. That still leaves a number of expiring provisions, according to Robert Kerr, senior director of government relations at the National Association of Enrolled Agents.
IRS Warns of Pervasive Telephone Scam
WASHINGTON — The Internal Revenue Service today warned consumers about a sophisticated phone scam targeting taxpayers, including recent immigrants, throughout the country.
Victims are told they owe money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, they are then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the caller becomes hostile and insulting.