Welcome to the relaunch of Davidoff CPA’s monthly newsletter and thank you for taking the time to read it.
First, I want to take some time to talk about why we put this together and what we hope you get out of it. It came about because there are too many of our clients with whom we do not have enough contact. There are some great tax clients who we are very happy to see once a year, but it is just not enough. So consider this a chance to reach out, give some news, offer some tax tips and keep you up to date on the goings-on here at our company.
Second, much as we feel we want more interaction with more of our clients, we also want all of our clients to know more of what we do. Too often, those relationships get into a sort of rut, where even if both sides are thrilled with the business relationship, ways in which it can change and grow are not being evaluated. So if our words here inspire thoughts of new ways we can work together or new services we can offer you, then we want to have that conversation.
Also a note on how this will be set up. Each month we want to give a new little note like this to maintain our dialogue, even if in a virtual manner. We will also be highlighting topics that have been covered more in depth on our blog page and we invite you to read them if any of the topics pique your interest. (Or even if they don’t and you just happen to be as thrilled by tax and financial talk as we are … Hey, it’s possible.)
So we thank you again, and here are a few of those promised quick notes:
Healthcare.gov Open Enrollment Until December 15
Yes, the political debate surrounding the Affordable Care Act/Obamacare has certainly been inflamed (again) following the election of Donald Trump, and my limited psychic powers do not allow me to make any guess toward how the election will affect the program.
For now, though, it is still in play and it is the time to sign up for coverage if you shop for your insurance through the government marketplace. Of course, there are tax implications involved there (complete with more debate over whether they are fair or not) so if you need any help making decisions, please let us know.
New Rules Regarding W2s and 1099s
For those of you with employees, you probably already know that you were required to provide them W2 forms by January 31 every year. Nothing has changed there, but you are now required to also submit them to the IRS and Social Security Administration by the same date for 2017 (the 2016 reporting year).
This new deadline also applies to 1099-MISC forms that include amounts in Box 7 (Nonemployee Compensation), and that includes the majority of those forms. If there is not an amount in Box 7, however, the deadline for reporting has not changed (February 28 for paper filing and March 31 if filing electronically).
IRS Red Flags
The idea of this came up in our blog about the home office deduction, for some feel that this can trigger an audit. As I mentioned in that article – and as I will always counsel – we can never know the full rules of what will catch the IRS’s attention and trigger an audit. The key then is to make sure that all you are claiming on a tax return is legitimate; if you follow that rule, then facing an audit does not have to be that frightening an experience.
With that being said, though, there are some situations that one can conjecture will serve as a red flag to the IRS. These occur mostly because there are people who try to abuse these situations. If they legitimately apply to you, though, there is no reason you cannot put it on a tax return, but it is something you may want to be aware of ahead of time.
For example, you are allowed a deduction for the business use of your vehicle. This can become a rather large deduction, too, if you are someone who often drives to meet with your clients. If you claim that all the driving on a particular vehicle, though, was for business purposes, this will get attention. And realize that it is a rare case where that would ever apply, for commuting from your home to your principal place of business is not deductible … unless you maintain a home office at your home and claim it on your tax return.
Another area of misuse that could catch unwanted attention is a large amount of charity contributions. We definitely do not want to ever say you should not be contributing to charity, just be sure you can back up your claims. The IRS knows what the average household donates to charity based on average gross incomes, so if your number lies far outside that expected number, you will draw their attention. There are many real reasons why that situation could happen, though (let’s say you donated a large object, like a car), so just make sure you keep receipts to substantiate your number.
We will close there for this month. We hope that this newsletter can continue to grow as a way to keep in contact with all our clients. So to that end, please let us know if there is anything you would like to see covered in this space in the future.
Thank you for reading, and I hope the holiday season is treating your family well.