Tag Archives: Accountant

What @CPAsteve says about New Hampshire business tax returns (Video)

CPAsteve explains how the Business Profit Tax, Business Enterprise Tax, and Interest/Dividends Tax all work in New Hampshire and whether your small business needs to be concerned about it.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Tax breaks when your New Hampshire Business meets disaster

Most small business owners are simply not prepared if disaster were to strike their business, whether it’s in New Hampshire or elsewhere. At least there are some tax breaks if disaster does strike, and that’s what we’ll discuss here.

 

Small businesses are particularly vulnerable to the effects of a catastrophic event such as a fire, flood, tornado, most recently landslides, or other natural disaster.  While business casualty and other types of insurance coverage are available, there will still be other losses that are not recoverable and leave your business facing a deficit.

 

Casualty covers a range of sudden, expected or unusual loss due to damage of property.  Some typical events can include natural disasters like hurricanes, as well as acts of vandalism, theft, car accidents and embezzlement. Events that are not deductible include deterioration due to age, weather, termites and drought.  Like any part of the tax code, there are a few exceptions including when a drought may be considered a casualty if the property damaged was used for a trade or business, or in a transaction for profit such as an investment in farmland,

 

Business inventory losses can be treated a few different ways.  According to IRS Publication 584-B – Business Casualty, Disaster, and Theft Loss Workbook, the loss can be considered as a casualty loss described above.  Conversely, the loss can be treated as part of the business’ goods sold. The loss against goods sold may help to reduce the business’ net income thereby reducing the amount of Self-Employment Contributions Act (SECA) taxes paid.

 

 

If the property was a total loss, then the value of the loss will depend on whether it was a business or personal property. If it was a business property, the calculation used must take the adjusted tax basis after the loss, minus any salvage value received. You’ll notice that FMV doesn’t come into the equation at all. Additionally, if more than one item was damaged by the casualty, each item must be calculated separately in order to take the deduction.

 

 

Once the calculations are done, be prepared to prove that your losses are: a) real (i.e. that you suffered a legitimate and provable loss), b) you had actual possession of the property, and c) any lack or insufficiency of reimbursement (typically by the insurance company) to cover the loss.  That means that you’ll want to keep receipts and considering that casualty usually involves some type of catastrophic event like a hurricane, keeping a digital off-site copy of receipts ‘in the cloud’ is a great way to ensure that you’ll still have a safe, legal paper trail well after the event. Acceptable proof of theft can include witness reports from those who saw your property taken, police reports, and even newspaper accounts of the event. 

 

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in helping small business owners with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Saving for your Kids Education? Read this!

We all would like to put money aside for our kids educations. Here are some nice techniques that can save you a little in taxes too…

 

Qualified Tuition Programs, commonly referred to as Section 529 plans (named after the section of the IRS Code that created them), are plans established to help families save and pay for college in a tax-advantaged way and are available to everyone, regardless of income. These state-sponsored plans allow you to gift large sums of money for a family member’s college education, while you maintain control of the funds. The earnings from these accounts grow tax-deferred and are tax-free if used to pay for qualified higher education expenses. 529 plans can be used as an estate-planning tool as well, providing a means to transfer large amounts of money without gift tax. With all these tax benefits, 529 plans are excellent vehicles for college funding.

 

Tax Benefits: There is no federal tax deduction for making a contribution, but taxes on the earnings within a 529 plan are not only tax-deferred while they are held in the account, but are tax-free when withdrawn to pay for qualified education expenses. This allows you to accumulate money for college at a much faster rate than you can with an account where you have to pay tax on the investment gains and earnings.  

 

How Much Can Be Contributed? Unlike the Coverdell Education Savings Accounts that limit the annual contribution to $2,000, Section 529 plans allow you to put away larger amounts of money. There are no income or age limitations for the Section 529 plans. The maximum amount that can be contributed per beneficiary is based on the projected cost of a college education and will vary between state plans. Some states base their maximums on an in-state, four-year education, while others base theirs on the costs of the most expensive schools in the U.S., including graduate studies. Most have limits in excess of $200,000. Generally, once an account reaches the plan-imposed cap, additional contributions cannot be made, but that doesn’t prevent the account from continuing to grow through investment earnings and growth.

 

How Much Should You Contribute? Although there is no contribution limit other than the plan’s limit based on the cost of the education, there are some gift tax limitations that may influence the amount of your contribution. Contributions to Section 529 plans are considered completed gifts and are subject to the gift tax rules. Under these rules, individuals can annually give away (gift) money to another individual, only up to an annual limit (double for a married couple), without triggering gift taxes or reducing their lifetime gifts and inheritance exclusions. The gift exclusion amount is inflation adjusted. For 2014, the gift tax exclusion is $14,000 per recipient.

 

Five-Year Option: Where contributions to a qualified tuition program exceed the annual gift exclusion amount, a donor may elect to take certain contributions to a Qualified Tuition Program (QTP) into account spread over a five-year period in determining the amount of gifts made during the calendar year. The provision applies only for contributions of up to five times the annual exclusion amount available in the calendar year of the contribution. Any excess may not be taken into account ratably and is treated as a taxable gift in the calendar year of the contribution. Thus, for 2014 an individual could contribute up to $70,000 (five times the 2014 annual exclusion amount), while a married couple could contribute twice that amount ($140,000) to the same individual. The gift would reduce the donor’s estate by the full amount of the gift by the end of the five-year period. Should the donor die before the five-year period elapses, any amount in excess of the allowable annual exclusions would revert back to the donor’s estate. Note: A gift tax return must be filed for the year of the contribution if it exceeds the annual gift tax exclusion and to claim this special exemption.

 

Don’t Overlook Additional Contribution Opportunities During The Five-Year Period: If in any year after the first year of the five-year period the annual exclusion amount is increased, the donor may make an additional contribution in any one or more of the four remaining years up to the difference between the exclusion amount as increased and the original exclusion amount for the year or years in which the original contribution was made.  

 

If you need assistance evaluating the benefits of a Section 529 plan or even figuring out how you can somehow integrate it with your business, give us a call.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

NH Small Business Owners Brace Yourself…Let’s talk Taxes in 2014

We have plenty of tax issues and challenges to reducing our taxes coming in 2014, particularly if you are a higher income taxpayer.

 

The following issues are concerns that may impact you and your company’s tax liability in the new year.

  • Small Business Health Insurance Credit – The tax credit to small employers (25 or fewer equivalent full-time employees) that provide an affordable health insurance plan for their employees and supplement at least half the premiums, will increase to 50% of the employer’s contribution in 2014, up from 35% in 2013. For non-profit employers, the credit will be 35% in 2014.

 

  • Net Investment Income Tax – As part of the Patient Protection & Affordable Care Act (the new health care legislation sometimes referred to as “Obamacare”), a new tax kicked in for 2013 and will continue in 2014 and beyond. It is a surtax levied on the net investment income of taxpayers in the higher-income brackets. And although it is perceived as an additional tax on higher-income taxpayers, it can affect even those who normally don’t have higher income if they have a large income from the sale of real estate, certain business assets, stocks, or other investments. This is on top of the 20% long-term capital gain tax rate now in effect for higher-income taxpayers.

 

  • Higher Tax Rates – Prior to the increase in 2013, there were six tax brackets: 10, 15, 25, 28, 33, and 35%. Beginning in 2013 and continuing for future years, a new top rate of 39.6% has been added for higher-income taxpayers.

 

  • Higher Capital Gains Rates – Beginning in 2013 and continuing for future years, the tax rate for long-term capital gains and qualified dividends has been increased to 20% (up from 15%) for taxpayers with incomes exceeding the threshold for their filing status.

 

  • Medical Adjusted Gross Income (AGI) Phase-out – Beginning in 2013 and continuing for future years, a taxpayer’s medical deductions will be reduced by 10% of their AGI, up from the previous 7.5% (but the 7.5% continues to apply to seniors through 2016).

 

  • Possibility of Lower Expensing Deductions – The Sec 179 business expensing allowance for business equipment drops from $500,000 per year to $25,000 in 2014 unless Congress extends the more liberal amount.(1)

 

  • Bonus Depreciation Expires – Beginning in 2014, the 50% bonus depreciation for tangible business assets will expire unless Congress extends it.(1) This also reduces the first-year maximum depreciation deduction for business autos and small trucks.

 

  • Individual Insurance Mandate – Beginning in 2014, the Patient Protection & Affordable Care Act will impose the new requirement that U.S. persons, with certain exceptions, have minimum essential health care insurance, or face a penalty.

 

  • Large Employer Mandatory Insurance Requirement – Originally scheduled to begin in 2014 but delayed until 2015 because the government did not have the reporting mechanisms in place, large employers, generally those with 50 or more full-time equivalent employees in the prior calendar year.

 

  • Simplified Home Office Deduction – Effective for tax years beginning in 2013 and continuing for 2014 and beyond, taxpayers can elect a simplified deduction for the business use of the taxpayer’s home. The deduction is $5 per square foot with a maximum square footage of 300. Thus, the maximum deduction is $1,500 per year. Eligibility qualifications are the same whether the simplified or regular deduction is claimed.

 

  • Increased Payroll and Self-Employment Tax – As part of the new health care legislation, higher-income taxpayers are faced with an additional 0.9% health insurance (HI) tax. Starting in 2013, and continuing for future years, this surtax is imposed upon wage earners and self-employed taxpayers whose wage and self-employment income exceeds $250,000 for married taxpayers filing jointly ($125,000 if filing separately) and $200,000 for all others.

 

  • Pease Limitations – The Pease limitation on itemized deductions that was reinstated in 2013 will continue for 2014. The Pease limitation phases out certain itemized deductions for higher-income taxpayers.

 

  • Phase-out of Exemptions – The phase-out of exemptions for higher-income taxpayers that was reinstated in 2013 continues for 2014.

 

  • Longer Depreciation Life for Leasehold and Restaurant Property – The current 15-year depreciable life will increase to 39 years in 2014.(1).

 

  • Qualified Small Business Stock Gain Exclusion – Beginning for qualified small business stock issued in 2014, the gain exclusion drops from 100% to 50%

 

  • Qualified Real Property Expensing – Congress temporarily permitted the use of the Sec 179 expensing deduction to write off certain leasehold improvements, and restaurant and retail property improvements. Without Congressional intervention, this provision will no longer be available in 2014.

 

(1) Congress, a few years back, engaged in brinkmanship with last-minute tax changes. Normally, they have managed to finalize tax law by year’s end. However, for 2013, they adjourned without addressing the issue of extending many tax breaks that were set to expire at the end of 2013. It is not known if these tax provisions will be extended or not.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

NH rules on Independent Contractors vs Employees

First, why do you care about whether your help is a sub or an employee? Because you can push the tax burden onto the contractor rather than deal with payroll and you can avoid having to pay workers compensation insurance on those contractors,  Or can you?

 

In a nutshell, here is what the state says:

In New Hampshire, the party you are HIRING is a subcontractor and NOT an employee if ALL of the following are TRUE:

1- The hired party possesses or has applied for a federal employer identification number or social security number

 

2- The hired party has control and discretion over the means and manner of performance of the work

 

3- The hired party has control over the time when the work is performed and the time of performance is not dictated by the employer. However, this shall not prohibit the employer from reaching an agreement with the person as to completion schedule, range of work hours, and maximum number of work hours to be provided, and in the case of entertainment, the time such entertainment is to be presented.

 

4- The hired party hires and pays the person’s assistants, if any, and to the extent such assistants are employees, supervises the details of the assistants’ work.

 

5- The hired party holds himself or herself out to be in business for themself or is registered with the state as a business and the person has continuing or recurring business liabilities or obligations.

 

6- The hired party is responsible for satisfactory completion of work and may be held contractually responsible for failure to complete the work, AND

 

7- The hired party is not required to work exclusively for the employer.

 

 

Are you confident the people you are hiring qualify as Independent Contractors? We deal with issues like this all the time and can give you some really good advice on how to survive a challenge. Let us help you get confidence today.

 

If you found this article useful, please share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Using a Payroll Service? Read this..

Many employers outsource their payroll and related tax duties to third-party payers such as payroll service providers (such as Appletree).

 

Reputable third-party payers can help employers streamline their business operations by collecting and timely depositing payroll taxes on the employer’s behalf and filing required payroll tax returns with state and federal authorities.

 

Here are some things you should know:

 

1) Are payroll taxes impounded by your payroll service, meaning are the tax monies pulled from your bank account and put into the payroll service’s bank account until due?

 

2) If you get a letter from the IRS about payroll taxes you believe you paid, you should contact the IRS YOURSELF; since this could indicate a much bigger problem.

 

3) Become familiar with the tax due dates that apply to employers of your size, try to keep track of these dates.

 

The key issue here is that you, the employer, are ultimately responsible for the payments even if the third party agent misappropriates the funds.

 

Are you certain about how your payroll taxes are being handled?

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Is your corporation really a hobby?

Wouldn’t it be great if you could deduct all the expenses for your hobby?

 

Well, unfortunately, you can only deduct losses on a hobby to the extent of your hobby income. But what happens if you decide to create a corporation for your hobby?

 

I have bad news. Operating the hobby activity within a corporation does NOT change the tax result.

 

Recently, a federal appellate court said that the net losses are not deductible. But, what’s even worse is that the owner of the corporation had dividend income based on the costs that the corporation incurred for the activity.

 

Make sure you understand the rules before you decide to deduct the expenses of your hobby.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Can you get Health Care tax Credits?

Businesses with fewer than 25 employees that pay at least 50% of the health care insurance premiums for their employees may be eligible for a tax credit for as much as 35% of the cost of the premiums. To qualify, the business must employ fewer than 25 full-time people with average wages of less than $50,000. For 2014, the maximum credit increases to 50% of the premiums the company pays, though to qualify for the credit, the insurance must be purchased through SHOP (or a broker authorized to offer SHOP insurance that is in compliance with the Affordable Care act).

 

As a practical matter, we’ve found very few of our clients actually qualify for this, but when we find one client that qualifies, they’ll usually end up with  thousands of dollars in tax credits.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

Taking advantage of employer tax benefits in your business

As a business owner in New Hampshire, make sure you’re getting these employer tax benefits benefits:

 

1) Dependent Care Benefits—If you incur childcare expenses so that you can work, you should check to see if your employer has a dependent care program. If dependent care benefits are provided by your employer under a qualified plan, you may be able to exclude up to $5,000 of child care expenses from your wages. 

 

2) Employer health care plans allow you to exclude the cost of insurance for you and your family from your wages.

 

3) If your NH employer has a 401(k) plan, you can elect to defer (pre-tax) a maximum of $17,500 for 2013. If you are 50 years or older, the maximum is increased to $23,000. These plans are especially beneficial when the employer provides a matching contribution. 

 

3) Flexible Spending Accounts—Some employers provide flexible spending accounts, which allow an employee to make contributions on a pre-tax salary reduction basis to provide coverage for up to $2,500 of medical and dental expenses. 

 

4) Tax-Free (income excludable) Employee Fringe Benefits—If the employer provides them, the law allows an exclusion from the employee’s taxable income for the following benefits:
 

(1) The cost of up to $50,000 of group-term life insurance.
 

(2) $245 (in 2013) per month for qualified parking.

 

(3) $245 (in 2013) per month for transit passes and commuter transportation.

 

(4) $20 per month for bicycle commuting expenses.

 

Are you getting all the tax free benefits you can out of your NH business? To learn more, check out Appletree Business Services’ Business Financial Confidence Map.

 

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.

New IRS Vehicle Mileage Rates out for 2014

It’s not often that we see the price of something go down, but the IRS has determined that it’s now costing us less to operate our cars, and so now we will start getting less to deduct when we use it for business.

 

Beginning on Jan. 1, 2014, the IRS Vehicle mileage rates for the use of a car (also vans, pickups or panel trucks) will be 56 cents per mile for business miles driven.

 

The rates decrease one-half cent from the 2013 rates. If you’re reimbursing employees based on the IRS rate, take note of this for the beginning of next year.

If you found this article useful, please do not keep this a secret. Share it with a friend.

 

Copyright 2014 by Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, a PASBA member accountant, located in Londonderry, New Hampshire, with more than twenty- five years experience on Federal and New Hampshire issues affecting small business, and specializes in keeping his clients OnTrack with bookkeeping, tax, and payroll services for a fixed monthly fee. Learn more about Steve’s exclusive SIX Step system developed for small businesses at www.appletreebusiness.com/map.