Tips to Protect Your Personal Information While Online

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The IRS, the states and the tax industry urge you to be safe online and remind you to take important steps to help protect your tax and financial information and guard against identity theft. Treat your personal information like cash – don’t hand it out to just anyone.

Your Social Security number, credit card numbers, and bank and utility account numbers can be used to steal your money or open new accounts in your name. Every time you are asked for your personal information think about whether you can really trust the request. In an effort to steal your information, scammers will do everything they can to appear trustworthy.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.

Here are some best practices you can follow to protect your tax and financial information:

Give personal information over encrypted websites only. If you’re shopping or banking online, stick to sites that use encryption to protect your information as it travels from your computer to their server. To determine if a website is encrypted, look for “https” at the beginning of the web address (the “s” is for secure). Some websites use encryption only on the sign-in page, but if any part of your session isn’t encrypted, the entire account and your financial information could be vulnerable. Look for https on every page of the site you’re on, not just where you sign in.

Protect your passwords. The longer the password, the tougher it is to crack. Use at least 10 characters; 12 is ideal for most home users. Mix letters, numbers and special characters. Try to be unpredictable – don’t use your name, birth date or common words. Don’t use the same password for many accounts. If it’s stolen from you – or from one of the companies with which you do business – it can be used to take over all your accounts. Don’t share passwords on the phone, in texts or by email. Legitimate companies will not send you messages asking for your password. If you get such a message, it’s probably a scam. Keep your passwords in a secure place, out of plain sight.

Don’t assume ads or emails are from reputable companies. Check out companies to find out if they are legitimate. When you’re online, a little research can save you a lot of money and reduce your security risk. If you see an ad or an offer that looks too good, take a moment to check out the company behind it. Type the company or product name into your favorite search engine with terms like “review,” “complaint” or “scam.” If you find bad reviews, you’ll have to decide if the offer is worth the risk. If you can’t find contact information for the company, take your business and your financial information elsewhere. The fact that a site features an ad for another site doesn’t mean that it endorses the advertised site, or is even familiar with it.

Don’t overshare on social media – Do a web search of your name and review the results. Mostly likely, the results while turn up your past addresses, the names of people living in the household as well social media accounts and your photographs. All of these items are valuable to identity thieves. Even a social media post boasting of a new car can help thieves bypass security verification questions that depend on financial data that only you should know. Think before you post!

Back up your files. No system is completely secure. Copy important files and your federal and state tax returns onto a removable disc or a back-up drive, and store it in a safe place. If your computer is compromised, you’ll still have access to your files.

Save your tax returns and records. Your federal and state tax forms are important financial documents you may need for many reasons, ranging from home mortgages to college financial. Print out a copy and keep in a safe place. Make an electronic copy in a safe spot as well. These steps also can help you more easily prepare next year’s tax return. If you store sensitive tax and financial records on your computer, use a file encryption program to add an additional layer of security should your computer be compromised.

Our clients can have a peace of mind as we have secured online cabinet file for them and they can have access to their information 24/7 from where ever they are.

As always we hope this information is valuable to you and to the ones you will share with. Please do not hesitate to contact with us in case of any needs.

 310.820.1080 or info@onts9.com

Why the Number of Your Employees Matters

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Employer benefits, opportunities and requirements under the health care law are dependent upon the employer’s workforce size.

The vast majority of employers fall below the workforce size threshold for applicable large employers. Generally, an employer with 50 or more full-time employees or equivalents will be considered an applicable large employer. Applicable large employers can find a complete list of resources and the latest news at the Applicable Large Employer Information Center on IRS.gov/aca.

If you have:

Fifty or more full-time equivalent employees, you will need to file annual reporting whether and what health insurance you offered your full-time employees. In addition, you are subject to the Employer Shared Responsibility provisions.

Fifty or fewer employees, you are generally eligible to buy coverage through the Small Business Health Options Program. Learn more at HealthCare.gov.

Fewer than 25 full-time equivalent employees, you may be eligible for a Small Business Health Care Tax Credit to help cover the cost of providing coverage.

Regardless of size, all employers that provide self-insured health coverage to their employees must file an annual return reporting certain information for each employee they cover.

For More Information contact our office by calling 310.820.1080 or email us @ info@onts9.com

General Employment Tax Issues

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The Internal Revenue Service reminds business owners how critical it is to understand the various types of employment-related taxes they may be required to deposit and report.

This fact sheet provides information on some of the more common employment tax topics posed by business owners, including:
Worker Classification
Voluntary Classification Settlement Program
Fringe Benefits
Officer Compensation
• Backup Withholding and Information Return Penalties

Worker Classification
A common error is not correctly classifying a worker.
The IRS classifies workers as either independent contractors or employees. Tax responsibilities are different based on how the worker is treated; an employee requires employment tax withholding and matching by the business on wages paid to them while payments made to an independent contractor do not.
Contractors and subcontractors who are engaged in an independent trade, business or profession, in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts and circumstances of each case.

Voluntary Classification Settlement Program
Worker classification can greatly affect a business well beyond the initial determination. The Voluntary Classification Settlement Program, commonly called VCSP, is a program that allows taxpayers to voluntarily reclassify their workers as employees for future tax periods for federal employment tax purposes and to obtain partial relief from the federal employment taxes due during the misclassified periods of employment.
The VCSP process is simple. To participate, the taxpayer must meet certain eligibility requirements, apply to participate in the VCSP and, if accepted, enter into a closing agreement with the IRS.
Taxpayers should file Form 8952, Application for Voluntary Classification Settlement Program at least 60 days before the date that they want to begin treating their workers as employees. In order for their application to be considered, taxpayers must attach a list of names and Social Security numbers of all workers to be reclassified as part of the VCSP agreement.

Fringe Benefits
A fringe benefit is a form of payment for the performance of services. Businesses provide fringe benefits to all types of workers, including employees, independent contractors, partners and directors. Any fringe benefit is taxable and must be included in the worker’s income unless the law specifically excludes it or the recipient pays for the benefit.

Officer Compensation
Corporate officers are, by statute, employees. Although the statutes are clear, many S Corporations and closely held C Corporations fail to treat payments to their officers for services as wages. Instead, they improperly treat the payments as corporate distributions, loans and payments of personal expenses.

Most businesses use Form 1099-MISC to report payments to non-employees to the IRS. The Internal Revenue Code (IRC) requires a business to report payments to the IRS for services rendered by non-employees if the business paid the non-employee $600 or more during the calendar year.

A business should always secure the Taxpayer Identification Number, commonly called TIN, for any workers to whom the business makes reportable payments, so they can properly report those payments on Form 1099-MISC. A TIN is often, though not always, a Social Security number. Businesses can use Form W-9, Request for Taxpayer Identification Number and Certification, to obtain the worker’s TIN.

As always we hope you find this information valuable and in case of any questions call our office at 310.820.1080 or email us at info@onts9.com

Seven Steps for Making Identity Protection Part of Your Routine

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The theft of your identity, especially personal information such as your name, Social Security number, address and children’s names, can be traumatic and frustrating. In this online era, it’s important to always be on guard.

The IRS has teamed up with state revenue departments and the tax industry to make sure you understand the dangers to your personal and financial data. Taxes. Security. Together. Working in partnership with you, we can make a difference.

Here are seven steps you can make part of your routine to protect your tax and financial information:

1. Read your credit card and banking statements carefully and often – watch for even the smallest charge that appears suspicious. (Neither your credit card nor bank – or the IRS – will send you emails asking for sensitive personal and financial information such as asking you to update your account.)

2. Review and respond to all notices and correspondence from the Internal Revenue Service. Warning signs of tax-related identity theft can include IRS notices about tax returns you did not file, income you did not receive or employers you’ve never heard of or where you’ve never worked.

3. Review each of your three credit reports at least once a year. Visit annualcreditreport.com to get your free reports.

4. Review your annual Social Security income statement for excessive income reported. You can sign up for an electronic account atwww.SSA.gov.

5. Read your health insurance statements; look for claims you never filed or care you never received.

6. Shred any documents with personal and financial information. Never toss documents with your personally identifiable information, especially your social security number, in the trash.

7. If you receive any routine federal deposit such as Social Security Administrator or Department of Veterans Affairs benefits, you probably receive those deposits electronically. You can use the same direct deposit process for your federal and state tax refund. IRS direct deposit is safe and secure and places your tax refund directly into the financial account of your choice.

Year End Tax Tips for Individuals

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Individual income tax rates of 10, 15, 25, 28, 33, 35 and 39.6 percent remain in place for filing next April. The more you made, the greater your percentage. The standard deduction for 2016 income will stay the same: $6,300 if you file your taxes using the status single or married filing separately. Married joint filers still receive a $12,600 deduction; head of household filers’ deduction jumps $50, to $9,300.

Year end tax-saving tactics include spreading recognition of your income between years by postponing year end bonuses and maximizing both deductible retirement contributions and allowable retirement distributions for this calendar year, coordinating capital losses against the sale of appreciated assets, postponing redemption of U.S. Savings Bonds, and delaying your year end billings and collections.

You may also want to defer corporate liquidation distributions (full cash-value payment for all a company’s stock you hold) until 2016, pay your last state estimated tax installment in 2015 and pre-pay real estate taxes or mortgage interest.

Life changes: Did you get married or divorced? Have a child? Buy a home? Change jobs or retire? A change in employment, for example, may bring severance pay, sign-on bonuses, stock options, moving expenses and COBRA health benefits, among other changes that affect your taxes.

Additionally, try to predict any life events in 2016 that might trigger significant income or losses, as well as a change in your filing status.

Retirement savings: You can contribute up to $5,500 to an individual retirement account or Roth IRA for 2015 and, if you’re 50 or older, $1,000 more in catch-up contributions. You also have until April 15, 2015, to make an IRA contribution for 2015.
One tax move in this area: Delay until 2016 converting your traditional IRA to a Roth IRA, which incurs taxes.

Giving: You can still make tax-free gifts of $14,000 per recipient (a total of $28,000 in the case of married couples).

Tax-free distributions, up to a maximum of $100,000 per taxpayer each year from IRAs to public charities, have been allowed as an alternative to reporting the income and taking an itemized deduction. You must be 70½ or older to do this.

High Earners
if your income is six figures or more, you should anticipate possible liability for the 3.8 percent net investment income (NII) tax calculated on net investment income in excess of your modified adjusted gross income (MAGI). Threshold MAGIs for the NII tax are $250,000 in the case of joint returns or a surviving spouse, $125,000 for a married taxpayer filing a separate return, and $200,000 in any other case.

Keeping income below the thresholds is worth exploring, as is spreading income out over a number of years or offsetting the income with both above-the-line and itemized deductions. Of course, planning for the NII tax requires a very personalized strategy.

The tax rate on net capital gain is no higher than 15 percent for most taxpayers. Net capital gain may not be taxed if you’re in the 10 or 15 percent income tax brackets. A 20 percent rate on net capital gain can apply if your taxable income exceeds the thresholds set for the 39.6 percent rate ($413,200 if you file single, $464,850 for married filing jointly or as a qualifying widow(er), $439,000 for head of household and $232,425 for married filing separately).

Wash sale rules: These cover sales of stock or securities in which your losses are realized but not recognized for tax purposes because you acquire substantially identical stock or securities within 30 days before or after the sale.

Alternative minimum tax: The AMT is now “patched,” which permanently increases the exemption amounts and indexes those amounts for inflation. For 2015, the exemption amounts are $53,600 for single individuals and heads of household, $83,400 for married couples filing a joint return and surviving spouses and $41,700 for married couples filing separate returns.

You can take several steps to reduce the AMT’s effect on your tax liability. Avoid certain deductions, including the accelerated depreciation deduction on real property or expensed research, among others. You might also avoid exercising incentive stock options in a year in which you’re subject to AMT.

Pease limitation: This reduces a higher-income taxpayer’s allowable itemized deductions by 3 percent of the amount (up to 80 percent), with the reduction kicking in after certain income thresholds. For 2015, Pease thresholds are $309,900 for married couples and surviving spouses, $284,050 for heads of households, $258,250 for unmarried taxpayers and $154,950 for married taxpayers filing separately.

Related to the Pease limitation is the personal exemption phase-out (PEP). The threshold income amounts for the PEP are the same as those for the Pease limitation.

May take an above-the-line deduction for qualified unreimbursed expenses up to $250 paid during the year.

Year-End Tax Tips for Businesses

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Consider several general strategies, such as use of traditional timing techniques for income and deductions and the role of the tax extenders, as well as strategies targeted to your particular business. As in past years, planning is uncertain because of the Affordable Care Act and the expiration of many popular but temporary tax breaks.

Filing Changes

Recent legislation changed filing deadlines for some entity tax returns for 2016: Partnership tax returns will be due on March 15, not April 15 (for calendar year partnerships), and c-corporation returns will be due on April 15, not March 15 (for calendar year C Corporations). Returns for s-corporation will continue to be due on March 15.

Expensing and Bonus Depreciation

Many businesses use enhanced Code Sec. 179 expensing as a key component of year-end tax planning. Sec. 179 property is generally defined as new or used depreciable tangible property purchased for use in a trade or business. Software was also recently included, as was qualified leasehold improvement property, qualified restaurant property and qualified retail improvement property.
(Congress has not renewed the enhancements to Sec. 179 expensing for 2015, but they likely will be renewed. Year-end planning should reflect both the likely extension and the possibility of no extension.)

Similarly, bonus depreciation has been a valuable incentive for many businesses. Fifty percent bonus depreciation generally expired after 2014 (with limited exceptions for certain types of property).

Qualified property for bonus depreciation must be depreciable under the Modified Accelerated Cost Recovery System (MACRS) and have a recovery period of 20 years or less for a wide variety of assets.

Year-end placed-in-service strategies can provide an almost immediate cash discount for qualifying purchases.

Although you should factor a bonus-depreciation election into year-end strategy, you don’t have to make a final decision on the matter until you file a tax return. Also, bonus depreciation isn’t mandatory: you might want to elect out of bonus depreciation to spread depreciation deductions more evenly across future years.

Another potentially useful strategy involves maximizing benefits under Sec. 179 by expensing property that doesn’t qualify for bonus depreciation, such as used property, and property with a long MACRS depreciation period.

Section 199 Deduction

Year-end planning benefits from the release of guidance on the Code Sec. 199 domestic production activities deduction is an often under-utilized potential break. The guidance provides many examples of what business activities qualify; recent Internal Revenue Service guidance highlights manufacturing, construction, oil-related work, film production, agriculture, and many other pursuits.

Work Opportunity Tax Credit

if your business is considering expanding payrolls before 2015 ends, take a look at the Work Opportunity Tax Credit (WOTC). (Although the WOTC, under current law, expired after 2014, Congress is expected to renew the WOTC for 2015 and possibly for 2016).
Generally, the WOTC rewards employers that hire individuals from certain groups, including veterans, families receiving certain government benefits, and individuals who receive supplemental Social Security Income or long-term family assistance. The credit is generally equal to 40 percent of the qualified worker’s first-year wages up to $6,000 ($3,000 for summer youths and $12,000, $14,000, or $24,000 for certain qualified veterans). For long-term family-aid recipients, the credit is equal to 40 percent of the first $10,000 in qualified first-year wages and half of the first $10,000 of qualified second-year wages.

Repair-Capitalization Rules

Currently, a de minimis safe harbor under the so-called “repair regs” allows you to deduct certain items costing $5,000 or less that are deductible in accordance with your company’s accounting policy reflected on your applicable financial statement (AFS). IRS regulations also provide a $2,500 de minimis safe harbor threshold if you don’t have an AFS.

Routine Service Contracts

If you’re an accrual-basis taxpayer (meaning you have a right to receive income as soon as you earn it), you have a new tool for planning. The IRS has provided a safe harbor under which accrual-basis taxpayers may treat economic performance as occurring on a ratable basis for ratable service contracts—perhaps particularly useful in connection with your regular services that extend into 2016. If your business meets the safe harbor for ratable service contracts, you may be able take a full deduction in the current tax year for certain 2015 payments even though you may not perform the services until next year.

Affordable Care Act

For large businesses, the ACA imposes many new requirements, including the employer shared responsibility provision (also known as the employer mandate). Small businesses, although generally exempt from this mandate, need to review how they deliver employee health insurance.
Many small businesses have provided a health benefit to employees through a health reimbursement arrangement (HRA). Following passage of the ACA, the IRS described certain types of HRAs as employer payment plans – therefore subject to the ACA’s market reforms, including the prohibition on annual limits for essential health benefits and the requirement to provide certain preventive care without cost sharing. Failure to comply with these reforms triggers excise taxes under Code Sec. 4980D.

Pending legislation in Congress would allow small employers (that is, those with fewer than 50 full-time and full-time equivalent employees) to have stand-alone HRAs and reimburse expenses without violating the ACA’s market reforms.

Small employers also should review the Code Sec. 45R credit. If your business has no more than 25 full-time equivalent employees, you may qualify for a special tax credit to help offset your costs of employee health insurance. You must pay average annual wages of no more than $50,000 per employee (indexed for inflation) and maintain a qualifying health care insurance arrangement. (Generally, health insurance for employees must be obtained through the Small Business Health Options Program, part of the Health Insurance Marketplace.)

Bonus checks

Please be advised that bonus checks to your employees are like payroll checks and payroll taxes should be deducted and paid. So before writing the bonus checks please email us the gross or net amount of bonus checks and we will provide you with the copy of bonus checks.

Please call us at (310)820-1080 if you have any questions or email us @ info@onts9.com

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Four Things to Know about Advance Payments of the Premium Tax Credit

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When you enroll in coverage through the Marketplace during Open Season, which runs through Jan. 31, 2016, you can choose to have monthly advance credit payments sent directly to your insurer. If you get the benefit of advance credit payments in any amount, or if you plan to claim the premium tax credit, you must file a federal income tax return and use a Form 8962, Premium Tax Credit (PTC) to reconcile the amount of advance credit payments made on your behalf with the amount of your actual premium tax credit.  You must file an income tax return for this purpose even if you are otherwise not required to file a return.

Here are four things to know about advance payments of the premium tax credit:

• If the premium tax credit computed on your return is more than the advance credit payments made on your behalf during the year, the difference will increase your refund or lower the amount of tax you owe. This will be reported in the ‘Payments’ section of Form 1040.

• If the advance credit payments are more than the amount of the premium tax credit you are allowed, you will add all or a portion of the excess advance credit payments made on your behalf to your tax liability by entering it in the ‘Tax and Credits’ section of your tax return.  This will result in either a smaller refund or a larger balance due.

• If advance credit payments are made on behalf of you or an individual in your family, and you do not file a tax return, you will not be eligible for advance credit payments or cost-sharing reductions to help pay for your Marketplace health insurance coverage in future years.

• The amount of excess advance credit payments that you are required to repay may be limited based on your household income and filing status.  If your household income is 400 percent or more of the applicable federal poverty line, you will have to repay all of the advance credit payments. The repayment limits are listed in the table below.

Repayment Limitation Table

  Household Income Percentage of
  Federal Poverty Line

Limitation Amount for Single

Limitation Amount for all other filing statuses

Less than 200%      $300        $600
At least 200%, but less than 300%      $750        $1,500
At least 300%, but less than 400%      $1,250        $2,500
400% or more      No limit      No limit

 

 

Understanding Form 1095-C, Employer-Provided Health Insurance Offer and Coverage

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Employers with 50 or more full-time employees, including full-time equivalent employees, in the previous year use Form 1095-C, Employer-Provided Health Insurance Offer and Coverage, to report the information required about offers of health coverage and enrollment in health coverage for their employees.  Form 1095-C is used to report information about each employee.

Employers that offer employer-sponsored self-insured coverage also use Form 1095-C to report information to the IRS and to employees about individuals who have minimum essential coverage under the employer plan and therefore are not liable for the individual shared responsibility payment for the months that they are covered under the plan. An employer must furnish a Form 1095-C to each of its full-time employees by January 31 of the year following the year to which the Form 1095-C relates.

Employers will meet the requirement to furnish Form 1095-C to an employee if the form is properly addressed and mailed on or before the due date. If the regular due date falls on a Saturday, Sunday, or legal holiday, employers may file by the next business day. The Form 1095-C that employers send may include only the last four digits of the employee’s social security number, replacing the first five digits with asterisks or Xs.

Forms 1095-C must be sent on paper by mail or hand delivered, unless the employee consents to receive the statement in an electronic format. The consent ensures that the employee can access the electronic statement. If mailed, the statement must be sent to the employee’s last known permanent address, or if no permanent address is known, to the employee’s temporary address.

Individuals who worked for multiple employers that are required to file Form 1095-C may receive a Form 1095-C from each employer.

 

 

Tax Credits & Deductions for Individuals

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Credits for Individuals

Family & Dependents
• Earned Income Tax Credit
• Child and Dependent Care Credit
• Adoption Credit
• Child Tax Credit
• Credit for the Elderly or Disabled

Health Care
• Premium Tax Credit (Affordable Care Act)
• Health Coverage Tax Credit

Income and Savings
• Earned Income Tax Credit
• Saver’s Credit
• Foreign Tax Credit
• Excess Social Security and RRTA Tax Withheld
• Credit for Tax on Undistributed Capital Gain
• Nonrefundable Credit for Prior Year Minimum Tax
• Credit to Holders of Tax Credit Bonds

Education
• Lifetime Learning Credit
• American Opportunity Tax Credit

Homeowners
• Mortgage Interest Credit
• Residential Energy Efficient Property Credit
• Non-business Energy Property Credit
• Low-Income Housing Credit (for Owners)

Electric Vehicle Credit
• Plug-in Electric Drive Motor Vehicle Credit
• Plug-in Conversion Credit
• Alternative Fuel Vehicle Refueling Property Credit
• New Qualified Fuel Cell Motor Credit

Deductions for Individuals

Work-Related
• Deductible Business Expenses
• Standard Mileage Rates
• Home Office
• Business Use of Car
• Business Travel Expenses
• Bad Debt
• Business Entertainment Expense
• Depreciation and Amortization

Investments
• Sale of Home
• Individual Retirement Arrangements (IRAs)
• Capital Losses

Education
• Student Loan Interest
• Tuition and Fees Deduction
• Work-Related Educational Expenses
• Teacher’s Educational Expenses

Health Care
• Medical and Dental Expenses
• Health Savings Account (HSA)

Itemized Deductions
• Standard Deduction
• Deductible Taxes
• Property Tax
• Real Estate Tax
• Sales Tax
• Charitable Contributions
• Gambling Loss
• Miscellaneous Expenses
• Interest Expense
• Home Mortgage Interest
• Union/Club Expenses
• Moving Expenses

Miscellaneous Deductions
• Alimony Paid
• Casualty, Disaster and Theft Losses