Small charities and the IRS' new streamlined exemption process. Organizations with annual gross receipts of $200,000 and assets of $500,000 or less seeking to qualify as tax exempt organizations may soon have an alternative to the current 26 page form for requesting such an exemption. The IRS is in the process of finalizing Form 1023-EZ which is anticipated to be a 2 page form that should simplify the filing and time required to receive approval of the requested exemption.
Are you the owner of a foreign account?
A U.S. citizen with a foreign account with a total value exceeding $10,000 at any time during 2013 is required to file FinCEN Form 114 no later than June 30, 2014. The form can only be filed electronically. The form is available at irs.gov. Filing Form 8938 with your 2013 tax return does not serve as a substitut for FinCen Form 114.
Do you qualify for a deductible Health Savings Account (HSA) contribution for 2014?
If your current health insurance plan has a minimum policy deductible of $2,500 for families or $1,250 for single coverage you may be eligible to make a tax deductible contribution to an HSA. If you qualifiy the contribution limits are $6,500 and $3,250 for family coverage and individual coverage, respectfully. If you were born prior to 1961 there is an additional $1,000 of permitted contribution.
Consider making qualified charitable distributions from IRAs if you are age 70 ½ or older. Taxpayers age 70 ½ or older may make tax-free IRA distributions to charities of up to $100,000. While an itemized deduction may not be taken for the contribution there is also no income recognized because of the IRA distribution. Additionally, qualified charitable distributions apply toward satisfaction of an individual’s required minimum distribution (RMD) for the year.
Charitable Contributions Deduction, Advance Child Tax Credit Payments and Economic Impact Payments
'2021 Tax Return filers who don't itemize may qualify for a contributions deduction of $600 for married filing joint filers and $300 for all other filers.
According to the IRS, Families receiving advance payments of the 2021 child tax credit will be sent a Letter 6419 reporting the total amount of advance child tax credit payments received in 2021. Letter 6419 should be kept and used in the preparation of the 2021 income tax return. The amount of advance payments received will be compared to the calculated amount at the time of preparation of the 2021 tax return. Taxpayers who received less than the eligible amount will receive the remaining amount upon filing their 2021 tax return.
Individuals who didn't qualify for the 3rd economic impact payment or did not receive the full eligible amount may still be eligible for the recovery rebate credit which is based on their 2021 tax information. The IRS will send Letter 6475 in early 2022 reporting the total amount of the 3rd economic impact payment and any additional payments paid to them.
Do you qualify for a deductible Health Savings Account (HSA) contribution for 2021?
If your current health insurance plan has a minimum policy deductible of $2,800 for families or $1,400 for single coverage you may be eligible to make a tax deductible contribution to an HSA. If you qualify the contribution limits are $7,200 and $3,600 for family coverage and individual coverage, respectfully. HSA holders 55 years and older may be eligible to contribute an additional $1,000.
Did you know?
IRS statistics show that for the 2018 tax year:
Top 1% (adjusted gross income of $540,009 or higher) paid 40.1% of federal income taxes.
Top 5% (adjusted gross income of $217,913 or higher) paid 60.3% of federal income taxes.
Top 10% (adjusted gross income of $151,935 or higher) paid 71.4% of federal income taxes.
Top 25% (adjusted gross income of $87,044 or higher) paid 87.00% of federal income taxes.
The bottom 50% (adjusted gross income below $43,614) paid 3.40% of total federal income taxes.
The top 1% of all taxpayers (taxpayers with AGI of $540,009 and above) earned 20.9% of all AGI in 2018 and paid 40.1% of all federal taxes. The top 1% accounted for more income taxes paid than the bottom 90 percent combined.
Information obtained from Tax Foundation
IRS Forms & Publications:
State of Florida sales tax:
State of Florida annual report:
Volusia County Property Appraiser:
Volusia County Clerk of Court:
Track My Refund:
Florida Law Change Effective October 1, 2021 requires Florida businesses to report Independent Contractors. In the past, Florida employers with 250 or more employees were required to report newly hired employees to the State of Florida. Florida Statute 409.2576 has been amended to apply to all Florida employers regardless of size and now include independent contractors who are paid $600 or more in a calendar year. More information can be found at servicesforemployers.floridarevenue.com/Pages/home.aspx.
Restaurant Business Meals
The Consolidated Appropriations Act has a temporary provision that allows a 100 percent deduction for meals expenses incurred after December 31, 2020 through December 31, 2022. The inclusion of this provision is meant to help spur businesses to buy meals in order to help the restaurant industry.
For this period, it will be important for businesses to make sure they are accounting for meals and entertainment separately in their chart of accounts. Entertainment expenses are still non-deductible during this time period, so separating out these expenses on your trial balance will make it easier to identify what is and what is not deductible between these commonly co-mingled expenses.