Piper’s Tax Change Letter: 2019

Did you know that Felisha is required to take 72 hours of Continuing Education, over a three-year period, in order to maintain her Enrolled Agent status with the IRS? But Felisha highly values education, not only for herself, but also for her team here at Piper, as well as for you. Last year Felisha had 50 Continuing Education hours and so far, this year, just in January, she’s already taken 25! She sifted through all the tax updates and law changes for 2019 that would be most relevant to you, our client. See all the changes below.

Individual Taxpayer Changes

  • You can now opt-in for an Identity Theft Pin with the IRS. If you are worried about ID theft with your tax return, this is a great option. The IRS would issue you a new six-digit pin number each year that would be necessary to efile your tax return. It’s an additional level of protection for your identity.
  • Arizona has conformed to the Federal Tax Update. Beginning in 2020, Arizona income tax returns for tax year 2019 will include a matching federal standard deduction ($12,200 single, $18,350 head of household, $24,400 married filing joint), the exemptions for individuals and dependents have been removed, there is a $100 child tax credit for dependents under 17 years of age and $25 for dependents 17 and older, and it allows taxpayers to increase their standard deduction by 25% of the charitable deductions that would have been claimed as an itemized deduction.
  • The age for Required Distributions from your IRAs has changed from 70 ½ to 72 going forward. Meaning if you turn 70 ½ this year, you don’t need to worry about making the minimum withdrawal. If you turned 70 ½ in 2019, the old rule still applies.
  • There is no longer a max age for IRA contributions as long as you have income!
  • The new alimony rule is in effect for any divorces that happened after 12/31/2018. If you pay alimony to your ex or you receive alimony, it’s not longer a deduction to the payer or income to the receiver.
  • The medical deduction threshold is now permanently at 7.5%.
  • The health insurance shared responsibility payment penalty is gone!

Business Changes

  • If your company offers high-deductible health plans you can contribute to your employee’s Health savings accounts (HSAs). This benefit, which is tax-free to employees and exempt from employment taxes, is capped in 2019 at $3,500 for self-only coverage and $7,000 for family coverage. Proc. 2019-25 shows 2020 amounts as $3,550 single and $7,100 family.
  • If you aren’t subject to the employer mandate, you can reimburse employees for their individually obtained health coverage up to a set amount for the year through a Qualified small employer health reimbursement arrangements (QSEHRAs). In 2019, this is a maximum $5,150 for self-only coverage and $10,450 for family coverage.
  • Form W-4 for 2019, which is used by employees to indicate their withholding allowances, is essentially unchanged from the 2018 version. The value of a withholding allowance in 2019 is $4,200 (it was $4,100 in 2018). Employees do not need to submit new forms for this year unless they want to change their withholding allowances or claim exemption from withholding or if they didn’t change it from 2017.
  • In the aftermath of last year’s Wayfair US Supreme Court case allowing individual states to apply “nexus” rules to internet-based sales, the fall-out for small business continues for online retailers selling out of state. In most cases (24 states), the states have imposed a nexus application once sales have exceeded $100,000 OR 200 transactions. For the small business selling many inexpensive items this
  • nightmare of compliance may be one of the forbidding aspects of small business growth in our country’s history. Because 48% of our GDP comes from small business according to the SBA, the long-term negative effects of this legislation are chilling. One state, Washington, has become a leader in anti-small business activity with their $10,000 threshold! This is MAJOR law change and does effect everyone!
  • We can now efile your Arizona business tax return! No more mailing!

There is a lot more! But it’s too much to list here. Please make note of any questions you might have for us and we will answer all your questions at your tax appointment.

Arizona Tax Credits

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We all like to give back to our communities, each fall we are reminded to be thankful and value those around us through a spirit of generosity, but being altruistic isn’t always easy. Luckily Piper Accounting can help you to utilize the unpaid taxes you already owe the state so that you can support one of the many worthy charitable causes here in Arizona.

Through the Arizona Tax Credit program residents are able to donate funds that they would otherwise owe in state tax to designated charitable organizations of their choosing. Essentially, by donating to an eligible charitable organization or school, public or private, you are telling Arizona EXACTLY where you want your tax dollars to go!

You can contribute up to the amount of your expected Arizona tax liability. If you contribute more than your state tax amount, the credit can be carried forward for as many as 5 years. You must make your donations by April 15, 2020, to apply them to the 2019 tax year.

Finding an organization to donate to can sometimes be confusing, Piper Accounting Solutions is always ready with recommendations for our clients. If you have a specific organization in mind you can reach out to them for more information on how to donate and the credit eligible for the organization. Most organizations will be able to provide you with the details on how to donate as well as a receipt for your tax records. Remember always keep records of all your donations for the year! Having this information ready to tax season ensures you are getting all the credit you are eligible for!

See below a list of some of the credits available to Arizona residents!

  1. The Arizona Military Family Relief Fund Credit

    Amount eligible for credit: $200 for single filers/ $400 for joint.

    Contribute to this organization by going to their website. This donation must be made by December 31.

  2. Arizona Credit for Donations Made to Qualifying Charitable Organizations

    Amounts eligible for credit: $400 for single filers/ $800 for joint.

    The Arizona Department of Revenue provides a list of qualifying charitable organizations.

  3. Public School Credit

    • Private School Credit

      Amounts eligible for credit: $569 limit for single filers/ $1,138 limit for married filers.

    • Additional “PLUS” Private School Credit

      Amounts eligible for this additional credit: $566 for single filers or $1,131 for joint filers.

  4. Foster Care Charitable Organization

    Amounts eligible for credit: $500 for single filers/ $1,000 for joint filers.

    For more information on these tax credits and the list of qualifying organizations available for each category please visit the Arizona department of revenue website at https://www.azdor.gov/taxcredits.asp or if you already have an organization in mind we recommend calling them or visiting the website for additional information on how to donate.

    If you’re interested in maximizing your refund and minimizing the taxes you pay each year please call Piper Accounting Solutions today for information about how we can help you!

Tax Reform Bill in a Nutshell!

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The first major tax overhaul since Ronald Reagan was president was signed into law on December 24, 2017 and it has a lot of people wondering what is going to change. In case you need some perspective on the time – the year Ronald Reagan enacted his tax reform Top Gun was the highest grossing film of the year and the average cost of a new house in the USA was $89,430! This tax reform bill will affect everyone a little bit differently and it is a major change to how we will file taxes, so let’s dig in.

Piper Accounting Solutions has done some initial research into the bill and we have put together the following list of, what we think are, the most important pieces of the new legislation and how they might affect you.

  • The tax reform bill will NOT be in effect for the 2017 tax year! The bill is effective for tax year 2018 and the individual provisions are to expire in 2025. The corporate provisions will be permanent. (Which could be as permanent as long as the current administration lasts.)
  • There are still 7 tax brackets, but the bill lowers many of the individual rates that apply to: 10%, 12%, 22%, 24%, 32%, 35% and 37%.  Today’s rates are 10%, 15%, 25%, 28%, 33%, 35% and 39.6%. (They threw in a .6% for good measure!)
  • It will nearly double the standard deduction. For single filers, the bill increases the standard deduction from $6,350, currently, to $12,000; for married filers it increases it from $12,700 to $24,000. This will drop the number of filers who itemize dramatically, since the only reason to do so is if your deductions exceed your standard deduction.
  • It eliminates personal exemptions. Today there is a personal exemption allowable for yourself, your spouse and each of your dependents. For families with three or more kids, this could remove any tax relief they may have gotten through any other part of the tax reform bill.
  • It caps the state and local tax deduction. Currently you can deduct your state and local property taxes plus income or sales taxes with no limit. The new bill caps the deduction at $10,000.
  • The bill extends the child tax credit. The credit will be doubled to $2,000 for dependents under the age of 17. It is also available to high earners because the tax bill would raise the income threshold to $200,000 for single parents, currently it’s $75,000; and to $400,000 for married filers, currently $110,000.
  • Creates a new, temporary, credit for non-child dependents. This will allow filers to take a $500 credit for each non-child dependent they are supporting, such as children over age 17, an elderly parent or an adult child with a disability. (A big win, we must say.)
  • You can still deduct medical expenses. They expanded this provision for two years and they lowered the threshold from 10% to 7.5%, meaning you can deduct your major medical expenses that add up to more than 7.5% of your adjusted gross income.
  • The mortgage interest deduction has been lowered. The mortgage interest will only be deductible on the first $750,000 of mortgage debt, down from $1,000,000. Don’t worry if you already own a home, this is in effect for anyone buying a new home.
  • The tax deduction for alimony payments is gone. Currently, the person paying alimony to their ex-spouse can deduct the amount paid and the person collecting alimony must claim it as income. This provision of the new law will apply to divorces or legal separations effective after December 31, 2018. (This bill was originally to go into effect for divorces taking place after December 31, 2017 but a committee meeting was held to change it to 2018. I’m thinking you’re going to see a LOT of Congressmen divorcing this year!)
  • The individual mandate on health insurance has been eliminated. Obamacare has not been repealed but one of the key provisions of it is gone. This goes into effect in 2019. (Woohoo! No more penalty!)
  • Teachers can still deduct up to $250 of expenses they personally spent on classroom materials.
  • You can still deduct student loan interest, up to $2500 per year.
  • The deduction for moving expenses is gone.
  • The deduction for tax preparation fees is gone.

There is so much more to this bill than what I have covered here. A follow up blog about how the tax reform is going to affect Partnerships and Corporations will be posted soon! If you have any questions, please don’t hesitate to give us at Piper Accounting Solutions a call.

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The Government Shut Down – What you need to know

We’ve been fielding a lot of questions regarding the new tax reform and now the government shutdown
is a big topic of conversation. Look for a blog from Piper explaining all the major things YOU need to
know about the new tax reform on Monday, but for now, let’s talk shutdown!

According to the FY2018 Lapsed Appropriations Contingency Plan (During the Filing Season):

“…the IRS will need to continue return processing activities to the extent necessary to protect
Government property, which includes tax revenue, and maintain the integrity of the federal tax
collection process, along with certain other activities authorized under the Anti-Deficiency Act.”

What this means is that the opening of tax season is still officially Monday, January 29th , we will still be
able to e-file any tax returns starting that day.

While some activities will continue, like the processing of electronic returns systematically and
processing payment remittances, other activities will be furloughed. The processing of 1040X Amended
returns will halt; all audit functions, examinations of returns and processing of non-electronic tax returns
that do not include remittances will not be conducted; Taxpayer service sites that help to answer
Taxpayer questions will be closed; and tax refunds will NOT be issued.
If the shutdown extends beyond five business days, these activities will be reassessed and possibly
reinstated.

As much as we wish that the shutting down of the government would also stall our obligation to pay our
tax bill it is important to remember that the prevailing tax law remains in effect for all taxpayers and
everyone should still work on getting their returns filed and make sure to pay any outstanding liability
payments as due.

You can schedule an appointment to sit down with us about your 2017 tax return by calling the office at
520-297- 7676. If you have any questions please send us a message or email us at info@piperaccounting.com.

Nerf War to End All Nerf Wars!

Team Piper took some time when the office opened up after the holidays to shake off some post-vacation dust! THE Nerf war of the year went down.  We created a video for your viewing pleasure!  Follow us on Facebook, Instagram, and LinkedIn to keep up with useful information, but mostly with the awesome office shenanigans that occur on any given day at Piper Accounting Solutions!  Thank you for reading and enjoy.

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5 Reasons to Hire a Payroll Service

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A payroll service company handles a company’s employee payment and other financial obligations that a business is responsible for pertaining to their workers. A payroll service is not just a luxury you acquire when you have extra funding to spend, but a necessity if you want to ensure that your company and all its affairs run perfectly smooth and run into zero issues, because of inconsistent payment and errors involving Social Security, Medicare or taxes  that will lead you to trouble and you don’t have the time for. Here are 5 Reasons to Hire a Payroll Service.

 

1) Consistency

A paid payroll service is going to consistently manage all of your employee’s payroll payments without the worry of errors. Being as they have started a business surrounding this service, you should be able to expect consistent streamlined work from them. You will be able to rest easy knowing that there will be no scramble to access proper compensation nor any disgruntled employees who lost money on a paycheck. When you pay a professional to do the job, you pay for it to be done right, every time.

 

2) Experts

Payroll is not an easy task to manage, nor should it be treated as such. It is incredibly important to justly compensate everyone, as well as handle other financial obligations you hold with them. Having an expert specialized in doing so ensures efficiency, and they will be kept up to date with all new information regarding laws and regulations.

 

3) Avoidance of Fraud

By hiring a payroll service outside of your own business you have separated the people in control of the money from the people who stand to gain from the money. If you handle payroll within your own business you may be at higher risk of monetary theft. As well as all government rules and regulations be followed. Payroll services for hire stand to gain nothing from poor activity, other than losing a trusted and valued client.

 

4) Employee Benefits

As a small business it can be difficult to find the technology that provides services such as direct deposit. This is especially an issue as time passes because more and more companies are switching to electronic payment services, and employees are expecting the convenience from their employers. A payroll service will certainly be able to provide this and other benefits that employees will appreciate.

 

5) Peace of Mind

In the end the largest benefit from this and what you most likely are looking for when considering a payroll service is the peace of mind it will provide you. Managing a business is stressful, and it’s difficult enough keeping all your customers happy, so the last thing you need on your plate is unhappy employees and a whole lot of financial obligations and technical work you weren’t directly trained for handling. Hire somebody whose single goal is to ensure a smooth payroll experience, an experience that will maintain a happy relationship between employer and employee.

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What Changes in Your Life Might Change Your Tax Bracket

Life is a progression of changes. Childhood, college, marriage, and having kids are some of the biggest changes in life that the ordinary person goes through. Taxes are an inescapable fact of life. This means the IRS keeps track of your life and the events in it and makes corresponding changes to what you owe in taxes.

College

If you enroll for more than half the time a college course takes e.g. two years for a four-year course, you are eligible for tax credits known as American Opportunity Credits. If you apply for a loan, the student loan interest is deductible from your tax.

Job

Getting a job means you will start paying income tax based on the salary and other benefits you get. If you have to relocate more than 50 miles to take your new job you can claim the expenses incurred in moving. You can also claim tax relief if you purchase specialty clothing for a new job. Dues and fees paid when joining a labor union are also tax deductible.

Marriage

When you get married you have the option of filing tax returns jointly with your spouse. This will depend on your incomes. Two high-income people filing jointly will move up to a higher tax bracket while filing separately will mean you remain in your tax bracket.

Filing jointly will allow for higher charitable contribution limits as well as a jobless spouse to increase IRA contributions. .

Having kids

Expenses related to having a baby are tax deductible. In vitro fertilization, vasectomy reversal costs, and other medical costs are allowed to add to 10% of your gross adjusted income and counted as deductible medical expenses.

If you and your spouse are working and one of you quits to look after the kids, you are entitled to child care and dependent care credits which are counted per child under the age of 17 years.

Buying a house

If you buy your home with a mortgage, you are allowed to deduct the interest on the mortgage loan from your taxes. This also includes a second mortgage or home equity covering the loan.

Divorce

Any support received as alimony is considered income and is taxable. The person paying the alimony can claim it as a tax-deduction.

tucson

How To Give Back With Taxes

We all like to give back to our communities, each fall we are reminded to be thankful and value those around us through a spirit of generosity, but being altruistic isn’t always easy. Luckily Piper Accounting can help you to utilize the unpaid taxes you already owe the state so that you can support one of the many worthy charitable causes here in Arizona.

Through the Arizona Tax Credit program residents are able to donate funds that they would otherwise owe in state tax to designated charitable organizations of their choosing Essentially, by donating to an eligible charitable organization or school, public or private, you are telling Arizona EXACTLY where you want your tax dollars to go!

You can contribute up to the amount of your expected Arizona tax liability. If you contribute more than your state tax amount, the credit can be carried forward for as many as 5 years. You must make your donations by April 15, 2018, to apply them to the 2017 tax year. The donations can also help lower your federal tax liability if you itemize, but you must make the donation in 2017.

Finding an organization to donate to can sometimes be confusing, Piper Accounting Solutions is always ready with recommendations for our clients. If you have a specific organization in mind you can reach out to them for more information on how to donate and the credit eligible for the organization. Most organizations will be able to provide you with the details on how to donate as well as a receipt for your tax records. Remember always keep records of all your donations for the year! Having this information ready to tax season ensures you are getting all the credit you are eligible for!

 

See below a list of some of the credits available to Arizona residents!

  1. The Arizona Military Family Relief Fund Credit

Amount eligible for credit: $200 for single filers/ $400 for joint.

Contribute to this organization by going to their website. This donation must be made by December 31.

 

  1. Arizona Credit for Donations Made to Qualifying Charitable Organizations

Amounts eligible for credit: $400 for single filers/ $800 for joint.

The Arizona Department of Revenue provides a list of qualifying charitable organizations.

 

  1. Public School Credit

Amounts eligible for credit: $200 for single filers/ $400 for joint.

  1. Private School Credit
  • Private School Credit
    Amounts eligible for credit: $546 limit for single filers/ $1,092 limit for married filers.
  • Additional “PLUS” Private School Credit
    Amounts eligible for this additional credit: $543 for single filers or $1,085 for joint filers.

 

  1. Foster Care Charitable Organization

Amounts eligible for credit: $500 for single filers/ $1,000 for joint filers.

For more information on these tax credits and the list of qualifying organizations available for each category please visit the Arizona department of revenue website at https://www.azdor.gov/taxcredits.asp or if you already have an organization in mind we recommend calling them or visiting the website for additional information on how to donate.

If you’re interested in maximizing your refund and minimizing the taxes you pay each year please call Piper Accounting Solutions today for information about how we can help you!