Tax Reform

Tax Reform and How it May Affect You

As of today, the House and Senate have each passed their own versions of the tax bill.  They will have to hammer out differences between the plans before a final bill can be approved and signed by President Trump.

Here are a few pros and cons that we see in the current bills.  Although not yet final, these changes are expected in some degree in the final legislation, which would become effective for 2018 tax returns.

Pro:  The standard deduction will be increased depending on your filing status to $12,200 for single and $24,400(House) and $24,000(Senate) for married filing jointly. 

Con:  The personal and dependent exemptions will no longer be available.  They were worth $4,050 per person last year.  A family of four would lose $16,200 in personal exemptions. 

   

Pro:  Both plans call to increase the amount of the child tax credit and increase the income level at which that credit is phased out.

Con:  Homeowners beware:  Both proposed versions of the bill cap the real property tax deduction to $10,000.  

Con:  Deductions for state and local income taxes would be eliminated. 

Con:  The mortgage interest deduction limits the deduction on new mortgages ($500,000 principal).

Con:  No mortgage interest deduction on vacation homes.

Con:  Repeals the deduction on home equity interest. 

Con:  Miscellaneous deductions will be eliminated.  This includes tax preparation fees, union dues, unreimbursed employee expenses, investment expenses…

Pro:  Everyone’s favorite Alternative Minimum Tax would be gone under the House bill, whereas the Senate bill would keep the AMT (boo!) but raise the exemption and phase-out thresholds.

Con: Tax rates would change under both plans – The House version has just 4 tax brackets compared to the Senate’s 7 brackets.  Fewer tax brackets mean a bigger jump between brackets.

Pro: Partnerships and S-Corps taxed as pass-throughs would see a reduction in tax rate on that income under both plans, although the details differ.

What to do:  CONTACT YOUR CPA RIGHT AWAY!  Consider paying for expenses before year end that are a deduction in 2017 but will be limited or eliminated in 2018 such as real property taxes, state and local estimates, tax preparation fees, etc. 

Note:  This is only a brief listing of the potential changes to be made.  Stay tuned to learn more. 

Honorine M. Campisi, CPA

Year-End Tax Tips

Year-End Tax Tips

1. Review your portfolio.  Consider taking a loss if you have substantial capital gains.
2. Max out your retirement plan contributions.  2017 maximum IRA contribution is $5,500 (plus $1,000 if age 50 or over).  2017 maximum 401(k) contribution is $18,000 (plus $5,500 if age 50 or over).
3. Consider contributing to a 529 Plan if you have children or grandchildren.  For example, New York allows a deduction up to $5,000 (or $10,000 for married filing joint filers) for contributions made by an account owner to an account belonging to New York’s 529 College Savings Plan.
4. Consider increasing your withholding if you anticipate owing tax.  This can help you to avoid an underpayment penalty since the government considers withholding to have been paid evenly throughout the year.  
5. Save receipts for medical supplies and equipment such as prescriptions, doctor co-pays, dental expenses, insulin testing supplies, canes, braces, orthotics, eyeglasses, contact lenses and hearing aids, etc.  Medical expenses that exceed 10% (or 7.5% for those 65 and over) of AGI are deductible. 
6. If you’re self-employed, try bunching expenses before year end.  Stock up on supplies or pre-pay some expenses.
7. Pay your 4th quarter 2017 estimated state and/or local taxes by December 31, rather than the January 15, 2018 due date. However, if you are subject to AMT speak to your CPA first.
8. Make charitable donations and be sure to get a receipt.  Both cash and non-cash donations to a registered charity will get you a deduction.  Make sure you have documentation, receipts and acknowledgements as necessary.                                                                                                 
9. Volunteer!  It’s good for your spirit and your taxes if you keep records.  If you use your vehicle for volunteering and keep good records, you can deduct $.14 per mile or the actual cost of gas.  Tolls and parking are deductible whether you take a per-mile or actual cost deduction, too.
10. If you are 70 ½ years old or older this year, make sure you take your required minimum distribution from your traditional IRA.  You do have the option to defer your first RMD until April 1 of the following year, but if you do so, you will need to take 2 RMDs in one year for 2018.

By: Honorine M. Campisi, CPA

NYS Sales Tax - Caterers and Catering Services

Welcome to the latest installment of our monthly blog “What are the rules for NYS Sales tax for my profession?”  

Every month we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is not only to provide helpful information for the business owners but the consumers as well!

This month’s industry is 

Caterers and Catering Services

To start it is important to know exactly who is a caterer.  A caterer provides prepared food, beverages, and various other services for events.  These events can take place at a banquet facility, hotel or restaurant or a customer’s home or other location.  Party planners and those who coordinate events also qualify as caterers if they make sales of food and beverages.

Generally all charges by a caterer related to the event are taxable.  This includes:

1. All food and beverages that have been prepared or served. This includes food found in the deli department – for example, cold cuts, fruit salads, cheese platters, etc.  
2. Hotel and banquet facilities charges for the rental of a room that is part of the charge for the event is taxable.   It is important to note that if a customer rents a room for the event and hires a separate caterer then the room rental is not taxable.
3. Tips that a customer leaves voluntarily are not taxable. Mandatory gratuities that are automatically added to the bill are not taxable if all of the following apply: 

• The charge is shown separately on the bill 
• The charge is identified as a tip 
• All the money collected is given to the employees 
• Service charges are subject to sales tax.

This is just a brief overview of the sales tax laws regarding Catering and Catering Services.   

For more information, call 516-409-1120.  

By Christine A. Murphy

Do You Owe the IRS? What Now?

What To Do If You Owe the IRS

So you receive a letter from the IRS in the mail and they have figured out that you have been less than truthful when filing your tax returns.  They have recalculated your tax and now you have a bill.  Or maybe, you filed your return on time, but did not have the funds to pay the amount due to the IRS.  If you are like many of the people with IRS tax issues, you likely want to run and hide – hoping the problem will go away.

We see this very often and I am telling you that your problem will not go away on its own.  You need to face it and take steps to resolve your IRS debt. 

The first step is making sure your tax returns were filed correctly, and you need to know how much you owe the IRS for all years that are unpaid.

  

The IRS offers installment payment plans depending on the amount you owe.  This option allows you to pay your overdue tax bill monthly until it is paid off.

If you have a large balance due and you cannot afford to pay it back, you may consider an Offer in Compromise.  This is an option for people who truly cannot and will not be able to pay off their debt in the near future.  If the IRS accepts you into this program, you will agree to pay a smaller amount of tax to settle the debt.  This sum is usually paid in one lump sum, but may be spread over a few payments.

Honorine M. Campisi, CPA

NYS Sales Tax - Florists and the Sales of Flowers

Welcome to the latest installment of our monthly blog “What are the rules for NYS Sales tax for my profession?”  

Every month we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is not only to provide helpful information for the business owners but the consumers as well!

This month’s industry is:

 Florists and the Sales of Flowers

Direct sales and sales using a florist’s wire service are the two ways flowers are usually purchased.  There are different rules that apply depending on how the flowers are purchased. 

•       Direct Sales:  These are sales that don’t involve wire service.  They can include direct sales or the deliveries of flowers.   Sales tax must be charged in the jurisdiction where the flowers are delivered to the customer or at the rate where the customer directs the flowers to be delivered.  The taxable amount includes shipping and/or delivery.

It is important to note that if you call a toll-free number or visit a website to order the flowers these are considered direct sales if they are not completed using a florist’s wire service.  The seller contacts a local florist near the delivery point to complete the order.  If the toll-free number or website is a registered New York State vendor they must collect sales tax on all sales where the delivery of the flowers is within New York State.  Tax is charged on the whole price charged – flowers plus delivery, fees and shipping.  The local florist that is fulfilling the order does not charge sales tax. 

•       Florist’s Wire Service:  Sales of flowers using a wire service are taxed in the jurisdiction where the order is first received from the customer.  It does not matter where the flowers are being delivered to.  

•         Sales of Flowers to Caterers:  If a florist sells flowers to a caterer, he or she does not have to collect sales tax as long as the florist receives a properly completed Resale Certificate.

This is just a brief overview of the sales tax laws regarding the sale of flowers.  Feel free to give our office a call for more information. 

By Christine A. Murphy

Is Your Data Secure?

Is Your Data Secure?

If you think your data is secure, read on to see if you are doing all you can to protect it.  Any business, in in any industry that keeps electronic records should be concerned with the safety of their electronic files.  Hacking has become a profitable business for criminals, making it more important than ever to safeguard yourself.

Here are several quick and easy steps you can take to bolster your resistance to an attack.

1. The first is simple, make sure your workstations go to “sleep” when inactive for more than a few minutes.
2. Clean your desk at the end of the day. Put all files in a locked cabinet or file room.
3. If you offer Wi-Fi to your clients, consider using a second network just for them. Keep the network used for your workstations separate and protect it with a password.
4. Back up your files regularly! This is good practice to safeguard against data loss from other sources, too.
5. Do you work from home? Make sure laptops and files are secured whenever they are out of the office.
6. Do you send sensitive data via email? Email can be accessed by hackers before arriving at its destination, so consider what you are sending. 
7. Review your security standards at least annually and make any necessary improvements.
8. Finally, we all should be checking our personal and business credit reports for signs of trouble, or mistakes that need correcting at least annually.

Honorine M. Campisi, CPA

How to Solve IRS Tax Problems

How to Solve IRS Tax Problems

Are you one of the millions of people who owe the IRS back taxes?  Do you avoid answering the phone or opening the mail?  Are you losing sleep, waiting for the IRS to confiscate your house or bank account?  Well worry no more.  There are solutions to your problem. 

Following are some options available to clear up your tax debt:

•   File all delinquent tax returns and pay in full
•    Make payments through an Installment Agreement
•   Have the IRS place you into Currently Not Collectable (CNC) status
•   File for an Offer in Compromise
•    File for bankruptcy

           

Every situation is different.  Contact our CPA firm today to find out which option is best for you.  Our qualified staff will review your situation free of charge to see what you may qualify for.  Contact us at 516-409-1120 or visit our website at www.sgjcpa.com. 

Sandra G. Johnson, CPA, EA, CFE

NYS Sales Tax for Household Movers and Warehouses

Welcome to the latest installment of our monthly blog “What are the rules for NYS Sales tax for my profession?”  

Every month we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is not only to provide helpful information for the business owners but the consumers as well!

This month’s industry is:

 Household Movers and Warehouses

There are several services provided by Household Movers and Warehouses.  

1. Storage of permanent containers  

This refers to property stored at a facility by the storage provider for a period of time.   It does not refer to property that is stored temporarily between moves.   This storage is taxable with conditions. When these storage services are provided within NYS they are taxable.  The taxability depends on where the storage provider receives possession of the property to be stored.  If the storage provider takes possession in NYS (even if it is physically stored outside the state) then the service is taxable. Any labor, delivery or pickup charges associated with this storage is also taxable.  The provider must charge sales tax based on the jurisdiction where the property is picked up – NOT stored.  It can be picked up in NY but stored in any other state and would still be taxable. 

2. Sale of Storage Services vs. Rental of Real Property

Charges for the rental or lease of property used for storage are not subject to sales tax.  It is a lease if the tenant contracts for an amount of footage in a specific location, has unlimited control of access to the space, is allowed to supply racks etc. for their use of the space and the owner of the facility does not provide any additional services.  In order to show exclusive use of the space there would be a lock on the space under control of the tenant.  If the space is not under the control of the tenant and the facility provides additional services such as handling, storing or receiving the property then that is a taxable service as long as the tenant is not present at the time of service.  If tenant is present then it is deemed not taxable. 

3. Portable Storage and Moving Containers

If you rent a portable storage container to be used on your personal property located in NYS it is taxable.  The charges for the delivery of the empty container and the pick- up of the container when it is done being used is part of the rental charge subject to sales tax.

4. Moving Services

Moving Services include moving household goods to and from any destination.  Moving your office is treated the same as a household move.  These moves, whether local, interstate or international, are not subject to sales tax.  

This is just a brief overview of the sales tax laws regarding movers.  Feel free to give our office a call for more information.  Happy Moving!

By Christine A. Murphy

Received a Tax Notice?

I Got a Tax Notice – Now What?!

Every year, the number of notices sent out by both federal and state tax authorities seems to increase.  The sight of that envelope can send shivers down your spine, but don’t panic!

First, if you had a CPA prepare your taxes, ask them to review the notice. Your CPA can let you know what the taxing authority is looking for and what steps, if any, you need to take.

Next, submit the information requested by the date provided in the letter.  Never let the deadline pass without contacting the sender, as your account may be adversely adjusted or your refund may be delayed.

There are many reasons that you may receive a notice.  As identity theft is on the rise, we are seeing more letters that request information from the taxpayer in an effort to confirm the information provided in the tax return is correct and that the return has indeed been filed by the taxpayer before a refund is issued.

Most importantly, never ignore a notice.   Take action immediately and use your CPA as a resource, we are here to help you!

Honorine M. Campisi, CPA

NYS Sales Tax For Beauty Salons and Barbershops

Welcome to the latest installment of our new monthly blog – 

“What are the rules for NYS Sales tax for my profession?”

Every month we will highlight another industry with a few of the broad guidelines to follow!  Our hope is not only to provide helpful information for the business owners but the consumers as well!

This month’s industry is:

                                                      Beauty Salons and Barbershops

Sales of beauty salon and barbershop services are not taxable.  Examples of these services are haircuts and colors, blow drying, hair extensions, hair restoration, etc.

If your shop is located in NYC the rules are different.   The services are exempt from NYS sales tax but not local NYC sales tax. They would be subject to 4.875% tax.  There is one exception – Hair restoration performed by a licensed physician is not taxable regardless of where the business is located.  

Does your shop sell shampoos, conditioners or other styling products directly to the consumer?  The sale of those products are taxable.  There is an exception here as well – the sale of dandruff preparations or a hair regrowth treatment used by those who have thinning or hair loss are not taxable. 

As a shop owner if you purchase shampoos, conditioners or other styling products for resale you will not pay sales tax.  You must have the appropriate ST-120 Resale Certificate.  If the products are not used for resale but rather for use in your shop then you are required to pay sales tax.  

The purchase of all equipment used in the shop are subject to sales tax.  Types of equipment included are scissors, combs, brushes, etc.

If you rent space from a shop you are not required to pay sales tax on the rental of that space.

Remember that this is just a broad guideline and more research might be necessary for more complicated issues. 

Can You Get Money Back on Summer Day Camp?

Summer Day Camp Costs a Fortune – Can You Get Some $$ Back? 

Did you know that costs for summer camp may qualify for a tax break via the Child and Dependent Care Credit?!  This credit is available for parents who pay for child care so that they can work or look for work.  Read on for great tips!

1. Filing status counts – if you are married, you must file jointly to get the credit.  You are not eligible if you are married and file separately.  There are exceptions if you are legally separated or live apart from your spouse.                                                                                                        
2. Camp costs must be for your dependent child or children, who are under age 13 at time of care.  
3. Camp costs must be incurred while you and your spouse are working or looking for work.  One spouse can be treated as working for any month that they are a full time student.                          
4. You and your spouse must each have earned income from wages, salaries, tips or self-employment net earnings.                                                                                                                        
5. You will need the name, address and taxpayer identification number of the camp provider.  You should save your receipts or other proof of payment to make it easier to claim the credit on your tax return.                                                                                                                                 
6. The amount of the tax credit is between 20% - 35% of your allowable expenses.  Your applicable percentage is based on your income.                                                                              
7. There is a limit on allowable expenses of $3,000 for one qualifying child and $6,000 for two or more qualifying children.                                                                                                                 
8. The following costs do not qualify for the credit: costs for overnight camps or summer school tutoring costs, care provided by a spouse or your child who is under age 19, or care given by a person you can claim as your dependent.                                                                                         
9. Receiving dependent care benefits from an employer will reduce the amount of your allowable expenses.

Honorine M. Campisi, CPA

NY State Passes the Paid Family Leave Act

New York State Passes the Paid Family Leave Act!

Starting January 1, 2018 all businesses with at least one employee are required to provide Paid Family Leave coverage to its eligible employees. This act was passed in order to provide wage replacement to employees so that they can bond with a child, care for a close relative with a serious health condition or to relieve pressure when someone is called to active military duty.

The employees who take this leave will be guaranteed that they can return to their job after their leave is up and will continue to have health insurance while they are on leave and when they return.  You must pay your portion of the premium while out on leave.

The coverage for this leave will be included in the employer’s disability insurance policy.  Every employee will be required to pay their share of the policy with a paycheck deduction from each weekly paycheck. 

Who is Eligible?

Every full time employee (must be employed for 26 weeks) and part time employee (must be employed for 175 days) are eligible to take the Family Leave.

What can I use the Leave for?

• ·         Maternity or paternity leave after a child is born, fostered or adopted.
• ·         Must be used within the first 12 months of a child being born, fostered or adopted.
• ·         Caring for a relative with a serious medical condition.  The relative must be a spouse, domestic partner, child, parent, parent-in-law, grandparent or grandchild.
• ·         Serious medical condition covers inpatient care in a hospital, hospice or residential health care facility or continuing treatment or continuing supervision by a health care provider.
• ·         Active Military Deployment leave for families eligible for the time off under the military provisions in the federal Family Medical Leave Act when a spouse , child, domestic partner or parent of the employee is on active duty or has been notified of an impending call or order of active duty.

How much will the Family Leave Insurance cost the employee?

The leave deduction from each weekly paycheck will be 0.126% of their weekly wages up to but not exceeding the statewide average weekly wage.  For 2017 the average weekly wage is $1305.92.  So in other words it is 0.126% of the employee’s weekly salary up to the $1305.92/week cap.

How long are the benefits for and how much will the employee’s receive?

2018      8 weeks paid leave at 50% of the average weekly wage

2019       10 weeks leave at 55% of the average weekly wage

2020       10 weeks leave at 60% of the average weekly wage

2021       12 weeks leave at 67% of the average weekly wage

If you make $1000/week you will be eligible for $500/week paid family leave for 8 weeks in 2018 at a weekly cost to the employee of $1.26.  If you make $2000/week you will be eligible for $652.96 (50% of the NYS Average if $1305.92) at a cost of $1.65/week to the employee.

By: Christine Murphy

Wedding Season and Taxes

Wedding Season and Taxes

We are approaching wedding season, and a wedding means changes in your tax situation.  So after the honeymoon, you should take some time to think about what your recent wedding means for your taxes.

Filing Status

Whether you are planning a spring, summer, fall or winter wedding, if you are married on December 31, the IRS considers you married for the whole year!  That limits your filing choices to either married filing jointly or married filing separately.  Married couples who file separately lose out on many tax breaks.  Most of our clients have a lower tax bill if they file jointly.

Changing your Name?

If you plan to change your name after marriage, make sure Social Security knows about it!  Avoid problems when you file your tax return with your new name.  Complete and file Form SS-5 – Application for a Social Security Card with your new name.  Get the form from your local Social Security Office or go to https://www.ssa.gov to download it online. 

Withholding Tax and Your Paycheck

Your new Filing Status means different withholding rates.  Consider contacting your CPA and asking for a tax projection.  Be ready to provide copies of your latest pay stub, as well as your new spouse’s paystub.  You may also need to provide copies of prior year tax returns if your current CPA did not prepare that return.  Let your CPA know if you bought a house, had a child or anything else that may impact your taxes.  Your CPA can estimate the changes in your tax bill and help you adjust the taxes withheld from your paychecks.  This can help avoid a huge unexpected tax bill in April!

Health Insurance

Weddings mean reevaluating your health insurance coverage.  Getting married is a life event that may afford you the opportunity to make changes to your health coverage without having to wait for the open enrollment period.  If either of you have health insurance through the Health Insurance Marketplace, you must log in to your account and Report Changes in Circumstances as soon as possible.   If both of you have plans through your employers, compare plan costs to see which will offer you the best coverage at the best price.

By: Honorine M. Campisi, CPA

First Installment of New Monthly Sales Tax Blog

Welcome to the first installment of our new monthly blog –

“What are the rules for NYS Sales Tax for my profession?”

Every month we will highlight another industry with a few of the broad guidelines to follow!  Our hope is not only to provide helpful information for the business owners but the consumers as well!

This month’s industry is: 

Auto Repair and Body Shops

What exactly is considered Auto Repair by NYS?  You might be surprised to know that it is not just repair of cars, it also includes repairs of trucks, RVs, snowmobiles, motorcycles, etc.  As a general rule sales tax must be collected on charges for parts and labor on repair services. If the shop also sells parts directly, for example oil, windshield wipers or fluids, those are also taxable. 

If a vehicle needs to be towed to the shop those towing services are taxable.  If you charge for the storage of the vehicle if it is in the shop long term that service is also taxable.

NYS Inspection fees are free from NYS sales tax!

If work is done under a warranty then the warranty company is charged directly. No sales tax is charged to the warranty company provided they give you form ST-120 Resale Certificate. If work is done under an insurance claim however, all work is charged sales tax to the insurance company the same as a consumer. 

If you purchase parts or supplies for a repair with the appropriate Resale Certificate, you are not required to pay sales tax on those purchases.  The supplies and parts must be directly used in the repair.  General shop supplies used on multiple repairs are not free from sales tax as they are not directly passed on to the consumer. 

Remember this is just a broad guideline and more research might be necessary for more complicated issues. 

Rainmaker

How to be a Rainmaker in 2017

Rain·mak·er – An executive with exceptional ability to attract clients.

Many people believe that rainmakers have special talents.  In some cases that may be true but the skills needed to be a rainmaker are easily learned. 

Step 1 – Write a Marketing Plan

•          Who is my target market?  Be specific.  Define age, income level, industry…
•          What products or services will I provide? 
•          When should I market my business? 
•          Where shall I network?  Where will I advertise?  Where will I get published?
•          How will I get my name out to the public?

Step 2 – Know Your Competition

•          Locate your competition by expertise and/or geographic area
•          Determine what sets you apart from your competition and be prepared to exploit that difference
•         Which of your competitors is more successful than you?  Why?  What are they doing that you are not?  Learn from them. 
•          Form relationships with your competition.  Often competitors can become referral sources. 

Step 3 – Create Your Image

•          Dress for success
•          Get involved with the right organizations
•          Have the proper credentials
•          Evaluate the look and location of your business

Step 4 – Set Yourself Apart as an Expert

•          Lecture
•          Teach a class or seminar
•          Write an article or book
•          Get quoted

Step 5 – Develop an Internet Presence

•          Create a website
•          Participate in social media
•          Write a blog
•          Post your newsletter
•         Communicate with your clients, colleagues, vendors and prospects through regular email blasts

Step 6 – Network, Network, Network

•          Research the meeting you plan to attend.  Will the right people be in attendance?  Who do you want to speak to?
•          Don’t monopolize anyone’s time
•          Focus on the person you’re speaking with.  Don’t scan the room for your next target.
•          Be generous.  Be willing to give a lead before getting one. 
•          Follow up within 24 hours

Step 7 – Track Your Results

•          Create a referral file
•          Ask every person who calls, “How did you hear about us?”
•          Don’t waste your time on meetings, people, advertising, etc. that do not bring in results

Finally…

•          Be consistent
•          Learn from others
•          Update your marketing plan periodically
•          Market 365 days a year
•         Market everywhere you go
•          Make marketing a way of life
•          Have fun! 

Sandra G. Johnson, CPA

February 2017

On the Side

A Little Something on the Side

More and more, I’m hearing about people who have started “doing something on the side” to help bridge the income gap.  I admire their enthusiasm, ingenuity and hard work.  And then I think about income taxes.  Record keeping for income taxes is not usually at the forefront of the thought process when someone makes the decision to start their side business.

When we earn money, the government wants a piece.  We have to include income from these side businesses, but we can also deduct the expenses incurred to generate income, but only if good records are kept.  Assuming you’re in it to make a profit, you will likely need to file a schedule C with your personal income taxes. 

You may receive a form 1099-MISC from companies or individuals who paid you $600 or more.  Even if you do not, you need to report your income.  Consider keeping a list or spreadsheet to track income and expenses. 

Expenses that are both ordinary and necessary for your business can be deducted from the income you generate.  Keep a record of all expenses and keep your receipts in one folder or box.  Depending on the nature of your side business, expenses may include supplies, travel, dues & subscriptions, insurance, telephone, etc.  If you use your car for deliveries or sales calls, keep a log of dates, destinations, mileage, repairs & maintenance, insurance and purpose of each drive.  As your side business grows, consider establishing a separate bank account for use only by the business.  Depositing all business income and paying all expenses from one account can make tax time that much easier.

As always, let your CPA know about any changes in your income so they can keep you informed and up to date on your tax filings!  We encourage our clients to reach out to us during the year – better to be informed and meet all filing requirements, than to incur additional penalties and interest later.

Honorine M. Campisi, CPA

Check's in the Mail

The Check’s in the Mail

It’s that time of year again; the cooler weather, snow days and the Property Tax Credit Checks.  Yes, you read that right!

If you own a home in New York State and your taxing district has complied with certain requirements, you may be receiving a check to offset the increase in your property tax bill.  This year, New York will include the $130 or $185 property tax relief credit in the same check.  Sorry New York City residents, this doesn’t apply to you, since you aren’t subject to the tax cap.

Will I get a check?

To be eligible for the Property Tax Freeze / Relief check, you must:

1    1.   Receive the STAR exemption

2    2.  Be located in a tax jurisdiction that remained under the NYS property tax cap and has an approved

           Government Efficiency Plan that reduces costs.

3    3.  Live in applicable counties (not NYC)

4    4.  Have income of $275,000 or less

How much will I get?

This is what everyone really wants to know.  The amount of the check is generally equal to the increase in your tax bill.  If there was no increase,  the State will multiply the previous year’s bill by an inflation factor (but no more than 2%), to determine the amount.  Your property tax relief credit, either $130 or $185 will be included as well.  The amount is $130 for Nassau, Suffolk, Orange, Putnam, Rockland Westchester, and Dutchess counties.  All other counties (except New York City) receive $185.

When will I receive my check?

Be on the look out this winter for your check, according the the State.  In past years, some homeowners received checks into January and beyond.

Tax time hint

Save that tiny stub that is attached to your check with your income tax documents, and note the date you received it.  Your CPA will need that information at tax time.

Honorine M. Campisi, CPA

Potential Tax Changes for Individuals in 2017

Potential Tax Changes for Individuals in 2017

As of 12/31/2016, there are certain tax provisions set to expire.  Some of the expiring provisions that will affect the average individual taxpayer are:

·         Credit for certain nonbusiness energy property

·         Credit for residential energy property

·         Discharge of indebtedness on principal residence excluded from gross income of individuals

·         Premiums for mortgage insurance deductible as interest that is qualified residence interest

According to most sources, President-elect Trump is likely to pursue the following individual tax legislation in 2017:

·         Reduce the individual marginal tax rate to three rates: 12, 25, 33% (2016 tax rates are 10, 15, 25, 28, 33, 35, 39.6%)

·         Top tax rate on capital gains and dividends 20%

·         Increase the standard deduction to $15,000 for singles and $30,000 for joint filers (2016 standard deduction is $12,600 for MFJ and QW, $9,300 for HOH and $6,300 for S)

·         Eliminate the deduction for personal exemptions (2016 personal exemption amount is $4,050 for the taxpayer, spouse and each qualified dependent, subject to limitation)

·         Eliminate the Head of Household filing status

·         Repeal and replace the Affordable Care Act (Eliminating the 3.8% tax on net investment income, the additional 0.9% Medicare tax on wages and SE income, penalties for failure to obtain health insurance and the premium assistance credit.)

·         Create a new above-the-line deduction for child and dependent care expenses

·         Increase the earned income credit for working parents through a spending rebate

·         The creation of Dependent CARE Savings Accounts with individual contributions matched 50% by government contributions

·         Impose a cap on the amount of itemized deductions that could be claimed on a tax return at $100,000 for single filers and $200,000 for joint filers

·         Eliminate the Alternative Minimum Tax

Sandra G. Johnson, CPA, EA, CFE

January 2, 2017