Category Archives: Business Advice

New IRS Resource Helps Employers Understand the Health Care Law

The new ACA Information Center for Applicable Large Employers (ALE) page on IRS.gov features information and resources for employers on how the health care law may affect them if they fit the definition of an applicable large employer. Visitors to the new page will find links to forms, instructions, publications, health care tax tips, flyers, videos, as well as detailed information about tax provisions including information reporting requirements for employers.

Although the majority of employers won’t be affected, you should determine if you’re an applicable large employer. If you averaged at least 50 full-time employees during 2014, including full-time equivalent employees, you’re most likely an ALE for 2015. If you have fewer than 50 full-time employees, you may be considered an ALE if you share a common ownership with other employers.

In 2016, ALEs must file an annual information return and provide a statement to each full-time employee, reporting whether they offered health insurance, and if so, what insurance they offered their employees.

If you will file 250 or more information returns for 2015, you must file the returns electronically through the ACA Information Reports system. Review the draft Publication 5165, Guide for Electronically Filing Affordable Care Act (ACA) Information Returns, for information on the communication procedures, transmission formats, business rules and validation procedures for returns that you must transmit in 2016.

The new page can be accessed on www.irs.gov/Affordable-Care-Act/Employers/ACA-Information-Center-for-Applicable-Large-Employers-ALEs. If you want more information or help in determining if you’re an applicable large employer, please contact us.

For more information, contact Padgett Business Services in Bothell, Washington at (425) 408-1695. We handle your bookkeeping, accounting, tax (personal & business) and payroll needs – so you can focus on what makes you money. Serving Bothell, Lynnwood, Kenmore, Mill Creek and surrounding areas.

 

Do you have a Capitalization Policy?

In an attempt to alleviate past confusion, the IRS issued new regulations clarifying which costs are classified as repairs and maintenance and deductible in the current year. This is versus those fixed asset expenditures that have to be capitalized and depreciated over a number of years.

General Rule: Taxpayer must capitalize and depreciate all costs that facilitate the acquisition or production of property. Improvements to property that better a unit of property, restore it, or adopt it to a new and different use must also be capitalized.

The regulations provide circumstances for when certain items can be expensed, rather than capitalized.

  1. De Minimis Safe Harbor: Supplies and Materials that are $200 or less per item, per invoice OR have a useful life of 12 months or less can be expensed in the current year.
  2. Routine Maintenance Safe Harbor: Repairs and maintenance that keep business property in ordinarily efficient operating condition, such as inspection, cleaning, testing, and replacement of worn or damaged part can be expensed.
  3. Per Building Safe Harbor for Small Businesses: Taxpayers with average annual gross receipts of $10 million or less in the three preceding tax years can deduct improvements made to a building with an unadjusted basis of $1 million or less. The deduction is limited to $10,000 or 2% of the building’s unadjusted basis. This election is made annually on a timely filed return and is on a building-by-building basis.

Exceptions to the General Rule:

  1. A Capitalization Policy establishes the threshold (minimum cost) for capitalization and depreciation of fixed assets. Taxpayers that have a written policy for accounting procedures in place by the beginning of the tax year can deduct up to $500 per item, per invoice (instead of $200). The $500 de minimis safe harbor election can be made by attaching a statement to a timely filed federal income tax return. This election is not considered a Change in Accounting Method and therefore Form 3115, Application for Change in Accounting Method, is not required. For businesses that had a written Capitalization Policy in place at 1/1/2014, the $500 threshold can be applied on the 2014 Federal return. For businesses that did NOT have a policy in place can still make the election for 2015 by establishing accounting procedures for the 2015 tax year before January 1st.
  2. The IRS has hinted at flexibility in the dollar ceilings where the taxpayer has the burden of showing that such treatment clearly reflects income. If you think your business model can support a higher de minimis threshold, consider filing Form 3115, Application for Change in Accounting Method, with the tax return for the year the change is to be effective.

These regulations are lengthy and complex, so contact your local Padgett office for assistance, as these new provisions will affect every business, even yours!

For more information, contact Padgett Business Services in Bothell, Washington at (425) 408-1695. We handle your bookkeeping, accounting, tax (personal & business) and payroll needs – so you can focus on what makes you money. Serving Bothell, Lynnwood, Kenmore, Mill Creek and surrounding areas.

News from the IRS – Scams and Email Phishing

Scam Phone Calls: The Internal Revenue Service issued a consumer alert providing taxpayers with tips to protect themselves from telephone scam artists calling and posing as the IRS. These callers may demand money or may say you have a refund due in hopes of tricking you into sharing private information.

Don’t be fooled, as these con artists can sound convincing and may know a lot about you. They usually alter the caller ID to make it look like the IRS is calling and use fake names and bogus IRS identification badge numbers. The IRS reminds people that identifying a fake IRS caller is relatively easy; below are five things the scammers often do but the IRS will never do:

  1. Call you about taxes you owe without first mailing you an official notice.
  2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount.
  3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
  4. Ask for credit or debit card numbers over the phone.
  5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

If you get a phone call from someone claiming to be from the IRS and asking for money, the IRS advises you to do the following:

  • If you know you owe taxes or think you might owe, call the IRS at 1.800.829.1040.
  • If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration (TIGTA) at 1.800.366.4484 or at www.tigta.gov.
  • If you’ve been targeted by this scam, also contact the Federal Trade Commission and use their “FTC Complaint Assistant” at FTC.gov. Please add “IRS Telephone Scam” to the comments of your complaint.

Email Phishing Scam: The IRS has been alerted to a new email phishing scam in which the email will appear to be from the IRS and include a link to a bogus website intended to mirror the official IRS website. These emails contain the direction “you are to update your IRS e-file immediately”. Although these emails may seem legitimate and mention USA.gov and IRS.gov, don’t get scammed! These emails are not coming from the IRS, as the IRS never initiates contact with taxpayers by email, texting, or any social media.

Taxpayers who get these messages should not respond to the email or click on the links. Instead, they should forward the scam emails to the IRS at phishing@irs.gov . For more information, visit the IRS’s Report Phishing web page.

IRS2Go Mobile App: The 2014 Version of the IRS2Go is now available! This new version has a brand new look and feel with new added features. The app is available in both English and Spanish and allows you to check the status of your federal income refund or request your tax return or account transcript through your smartphone. You can even use it to help you locate an IRS Volunteer Income Tax Assistance (VITA) site near your home. If you have an Apple iPhone, iPad, or iPod Touch, you can download the free IRS2Go app by visiting the iTunes app store. If you have an Android device, you can visit Google Play to download the free IRS2Go app.

For more information, contact Padgett Business Services in Bothell, Washington at (425) 408-1695. We handle your bookkeeping, accounting, tax (personal & business) and payroll needs – so you can focus on what makes you money. Serving Bothell, Lynnwood, Kenmore, Mill Creek and surrounding areas.

12 Common Business Management Mistakes

Having a strong leader or management team not only adds value to the company today, but also provides a foundation to generate growth in the future.

As a small business owner, managing the day to day operations of a company can be challenging. Below are a few common business mistakes that are often overlooked but can be easily avoided.

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Padgett in Washington, D.C. – What Are We Doing for Small Businesses?

As a small business owner, you are undoubtedly already aware of the many services Padgett Business Services provide that simplify and streamline your business and increase your profitability. But, did you know that in addition to providing tax preparation, payroll, financial reporting and business advice, Padgett also serves as your advocate in Washington?

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