Sales Tax on Advertising Services

Welcome to the latest installment of our blog “What are the rules for NYS Sales tax for my profession?”  In this blog we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is to not only provide helpful information for the business owners, but the consumers as well!

This blog’s industry is Advertising Services.

An advertising service is a service that consists of the following:

•  Consultation and development of advertising campaigns; and
•  Placement of advertisements with the media

The sales of these services are not subject to sales tax.  In addition, materials created by an advertising agency that are conveyed to its customers digitally or in any other electronic format are also not subject to sales tax.

The area of advertising services that is subject to sales tax is as follows:

• If an advertising agency sells layouts or art work, for example, to the customer before showing them to the media, the advertising agency is making a sale that is subject to sales tax.  Any other outright sales of tangible personal property by an advertising agency are subject to sales tax.
• In addition, any purchases by an advertising agency for use to perform its services are purchases at retail that are subject to sales tax.

There are sales tax exemptions that may apply to the purchases made by advertising agencies.  The following purchases that if made by an advertising agency are exempt from sales tax:

• ·         Producing television and radio commercials and advertisements; or
• ·         Developing and producing printed promotional materials

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

By Renee Greenspan

New Jersey Offers Tax Amnesty

New Jersey Offers Tax Amnesty

For a limited time, the State of New Jersey is offering a tax amnesty program to give delinquent taxpayers a chance to catch up on filing and payment and save on penalties and half the interest due.  The program runs until January 15, 2019.

 

Returns administered by the New Jersey Division of Taxation that were due on or after February 1, 2009 through September 1, 2017 are eligible for the program.  Property taxes and payroll taxes are not eligible.  The program helps taxpayers avoid most penalties, collection fee costs, and ½ of the interest that would otherwise be due!  Civil fraud penalties and criminal penalties are not waived.

To qualify under this program, all required tax returns and any associated tax amnesty payments must be received by the State by January 15, 2019.  There are no extensions to that date.

After the amnesty period, all penalties and interest will apply along with an ADDITIONAL 5% penalty.

To see what taxes are and are not covered, visit the NJ Tax Amnesty webpage at https://www.taxamnesty.nj.gov/guidelines.shtml.

Honorine M. Campisi, CPA

IRA Qualified Charitable Distributions

IRA Qualified Charitable Distributions

If you are at least 70 ½ and taking required minimum distributions (RMD) from an IRA and make charitable contributions, you should know about IRA Qualified Charitable Distributions (QCD).

Due to the tax law changes under the Tax Cuts and Jobs Act passed last year, many older Americans who itemized in prior years will no longer do so.  That means they will lose the benefit of their charitable contributions on their tax returns.

Qualified Charitable Distributions allow you to direct part of your annual RMD from the IRA trustee directly to a charity recognized by the IRS.  This part of your distributions counts toward your minimum required distribution, but is not included in income.

 

The reduction of your adjusted gross income by the amount of any QCD carries to other areas of your return.  The lower AGI may reduce the impact of taxable Social Security benefits, lower Medicare Part B and prescription drug premiums, and lower threshold for deductible medical expenses if you do itemize. 

Honorine M. Campisi, CPA

New York State after the TCJA (New Tax Law)

New York State after the TCJA (New Tax Law)

The new tax law known as the Tax Cuts and Jobs Act (TCJA) made changes to federal income taxes that we have written about throughout this past year.

New York State, however, has decided not to follow all the changes in the TCJA.   Since New York and the IRS are playing by different rules, there are a few pieces of information that your CPA will need to prepare your New York State return even though you thought the federal changes made them obsolete.

Alimony – the TCJA says that if you sign a divorce or separation agreement after December 31, 2018, alimony payments are not deductible by the payor and are not included in income of the payee.  All alimony payments under agreements finalized prior to that date will still be deductible on the tax return of the spouse who paid alimony, and reported as income on the return of the spouse who received the alimony.

On your New York return, ALL alimony payments are deductible by the payor and are included in income of the payee.

529 Plan distributions for K-12 tuition – the TCJA allowed 529 Plan distributions to be used towards Kindergarten through twelfth grade private school tuition without tax or penalty.

On your New York return, all 529 distributions that are used for K-12 tuition are considered non-qualified distributions and will be subject to both income tax and a 10% penalty.

Itemized Deductions – the TCJA removed itemized deductions for unreimbursed business expenses, lowered the threshold for medical expenses to 7.5% of AGI and limited the deductions for state and local income and real estate taxes to $10,000.

On your New York return, you will now be allowed to itemize your deductions even if you claim the standard deduction on your federal return.

New York State itemized deduction for real estate taxes will not be limited, so if you paid $15,000 in property tax in 2018 you can deduct the full $15,000.

Since New York is not following the TCJA, the threshold for medical expense deductions on the State return is still 10%.

New York will allow miscellaneous deductions in excess of the 2% floor as in past years.

Honorine M. Campisi, CPA

What are the rules for NYS Sales tax for my profession? Nail Salons (Manicure and Pedicure Services)

Welcome to the latest installment of our blog “What are the rules for NYS Sales tax for my profession?” In this blog we are highlighting another industry with a few of the broad guidelines to follow!  Our hope is to not only provide helpful information for the business owners, but the consumers as well!

This blog’s industry is Nail Salons (Manicure and Pedicure Services)

The sales of manicure and pedicure services are exempt from state and local taxes everywhere in New York State outside of New York City.  Sales of manicure and pedicure services are subject to New York City local sales tax when they are sold in New York City.

If any nail products are sold to customers, these are sales of tangible personal property subject to tax throughout New York State.  There is an exemption for products that are designed to treat a medical nail problem.  Sales of these products are exempt from sales tax if the product contains a recognized drug or medicine.

Any purchases of equipment for use in the business, such as chairs, soaking tubs and bowls are subject to sales tax at the time of the purchase.

In addition, utilities used to provide these services are subject to sales tax.

This is just a brief overview of the sales tax laws regarding businesses that sell manicure and pedicure services.  Feel free to give our office a call for more information.

By Renee Greenspan

Do you use Quickbooks Online?

Do you use QuickBooks Online? 

QuickBooks Online has a free mobile app that allows you access from any of your mobile devices to your account! 

You can access from your Apple or Android device:

• ·         Your customer information
• ·         Add customers/vendors or import them from your contacts
• ·         Add notes to customers and transactions
• ·         Create, view or email invoices and estimates
• ·         Convert estimates to invoices
• ·         Receive payments
• ·         Take pictures of your receipts and attach them to your expenses
• ·         Track expenses
• ·         Download bank transactions
• ·         Reconcile your bank statements
• ·         Call your customers directly from the app on your phone
• ·         Print your documents/invoices from your phone to a wireless printer
• ·         View/add vendor information
• ·         Get directions to your customers/vendors directly from the app

Anything that you do on the app shows up automatically in your online account right away.  The app carries the same online security as your online account. 

With all of these new advances you might want to consider switching to QuickBooks Online.

Call our office for more information.

Christine A. Murphy

Accounting Manager

DIVORCE AND THE TCJA

The new tax law known as the Tax Cuts and Jobs Act will impact married taxpayers who divorce after December 31, 2018.  Like they say, “timing is everything,” and that is certainly the case here.

Before the TCJA, alimony was deductible on the tax return of the spouse who paid alimony, and reported as income on the return of the spouse who received the alimony.  The TCJA changed that.  If you sign a divorce or separation agreement after December 31, 2018, alimony payments are not deductible by the payor and are not included in income of the payee.

So, if you are in the process of a divorce and will be paying alimony, hurry up and sign those papers!  If you will be on the receiving end of those alimony payments, you’ll want to move more slowly. 

Consider using the loss of the tax deduction to negotiate a lower payment if you will be paying alimony.

If you are currently paying or receiving alimony from an agreement that was signed before December 31, 2018, you may still deduct payments of alimony and must include alimony payments received in income on your return.

Honorine M. Campisi, CPA

What do the changes in Business Expense Deductions for Meals and Entertainment mean for your business?

The IRS has recently issued new guidelines for these deductions:

• Any expense related to activities generally considered entertainment, amusement or recreation have been eliminated and are no longer deductible.
• Businesses can continue to deduct 50% of the cost of business meals.  An employee or the taxpayer must be present and the food and beverages cannot be considered lavish
• The meals must be provided to a potential or current business customer, consultant, client or similar business contact.
• Food and beverages purchased during an entertainment event will not be considered entertainment if it is purchased separately.

The IRS expects to publish proposed regulations clarifying when business meals are deductible and what constitutes entertainment.

Stay tuned for further guidance on these issues!

Christine A. Murphy

Accounting Manager

What are the rules for NYS Sales tax for my profession? --This blog’s industry is Interior Decorating and Design Services.

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

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

This blog’s industry is Interior Decorating and Design Services.

First, it is important to know what an interior decorating and design service is.  An interior decorating and design service is any service that generally relates to the planning and design of interior spaces. Such services include:

·         Preparation of layout drawings pertaining to the planning and design of interior spaces

·         Furniture arranging

·         Staging

·         Interior floral design

·         Any similar services

Any interior decorating or design service is taxable if those services are delivered in New York State or if they have a place of business in New York State.  Interior decorating and design services do not include services that consist of the practice of architecture or engineering.  However, if a drawing or plan is sold to a licensed architect or engineer, that is a taxable service.  If an engineer or architect uses an interior decorating or design service, the use of that service is subject to a use tax.  The tax rate for an interior decorating and design service depends on where the service is delivered or used. In other words, the sale of an interior decorating or design service is taxable where the plan was delivered to the purchaser.  For example, a plan that is purchased in Nassau County is subject to the Nassau County sales tax rates, regardless of where the property that is subject of the plan is located. On the other hand, a plan that is purchased in Delaware is not subject to New York State and local sales tax since the plans were delivered outside of New York State.  This is just a brief overview of the sales tax laws regarding the sale of interior decorating and design services.  Feel free to give our office a call for more information.

By Renee Greenspan

Watch Out for These Warning Signs of Small Business Fraud!

Watch Out for These Warning Signs of Small Business Fraud!

A business owner wears many hats.  One of those hats should be fraud detective because small businesses are by far the most vulnerable to employee fraud.  While you may want to believe the best about your employees, you should be proactive to prevent someone from taking advantage of you.

1. Is the person who takes payment from customers the same person to make a bank deposit and reconcile receivables?   These tasks should be split among employees to prevent one person from having unlimited access.

2. Who approves expenditures and writes checks for payables?  Make sure you review invoices and recognize all the vendors or purchases you write or sign checks for each month.  Are all checks accounted for each month?  Do you have a signature stamp laying around the office unsecured?  Make sure that you have division of these duties and safeguard checks in order to prevent opportunity and temptation.

3. Do your employees seem to spend more than they make?  If there doesn’t seem to be a good explanation for this, you may want to pay closer attention.

4. Do you require employees to take vacation every year?  Many frauds are detected when an employee is away and someone else is performing his/her duties.

5. Are you paying employees for time they did not work?  Review employee timecards and compare against work schedules to discourage an employee from claiming and being paid for more hours than they actually worked.    

Honorine M. Campisi, CPA

Tax Reform Impact of Moving Expenses

The moving expense deduction used to mean less taxes for those who made a qualified move for employment.  If you met the required time and distance tests, you were able to deduct costs to pack, transport and store belongings, as well as reasonable transportation and lodging expenses for you and your family while moving.

Additionally, in the past when you received reimbursement for moving expenses from your employer, the reimbursement was not included in taxable income as long as certain conditions were met.

The Tax Cuts and Jobs Act suspended these moving expense rules beginning in 2018 and continuing through 2025.  There is one exception to the suspension, and that is for active duty Armed Forces members and their families who move due to a military order requiring a permanent change of station.

 

Honorine M. Campisi, CPA

Tax Reform Impact Meals & Entertainment Deduction

Tax Reform Impact Meals & Entertainment Deduction

The Tax Cuts and Jobs Act made changes to meals and entertainment expenses that businesses are allowed to deduct.  Going forward from January 1, 2018, businesses are no longer able to deduct most business entertainment expenses including; tickets to sporting events and theater, private boxes for sporting events, golf dues and golf outing for clients.  Meals with clients are still 50% deductible if business owner is present, business is conducted and the expense is not lavish or extravagant.  If the taxpayer is not present, or no business is conducted, then there is no deduction available. Overtime employee meals, meals provided for employer convenience are now only 50% deductible, as long as they are excluded from the employee’s income as a de minimis fringe benefit.

Do you provide coffee, water or snacks for your employees while at work?  Those expenses are also now only 50% deductible.

    

Honorine M. Campisi, CPA

Tips for Renting Your Vacation Home This Summer

Tips for Renting Your Vacation Home This Summer

One of the ways to defray the costs of owning and maintaining a vacation home, is to rent it out when you are not using it.  Income earned from those rentals may be reportable on your income tax return. For income tax purposes, a vacation home may include a house, apartment, condo, mobile home, boat, or similar property.  In order to be considered a “home”, the vacation property must have basic living accommodations, such as sleeping space, a toilet, and cooking facilities.  Read on for some helpful tips.

1. Income and expenses related to renting a vacation home are reported on Schedule E of your personal income tax return.
2. As long as you (or your family) also use the home, your rental expenses cannot exceed the rent you receive (meaning you cannot claim a loss.)
3. Special rules must be followed when you rent out a home that you also use personally.  Expenses must be allocated based on the number of days the unit is rented or available for rent, and the number of days it is used by you and your family.  Any expenses that cannot be deducted on Schedule E, may be deducted on Schedule A.
4. If you you rent a vacation home for less than 15 days a year, you are not required to report the rental income on your tax return.  In this case, any mortgage interest or real estate taxes for the home would be deducted on Schedule A.

If you are currently renting, consider owning your own vacation home!  See https://www.oceanfronthhi.com/stop-renting-and-buy-home/ for some reasons why!

By: Honorine M. Campisi, Senior Tax Manager

Tax Reform Impact on Itemized Deductions

The Tax Cuts and Jobs Act made changes to expenses that taxpayers are allowed to deduct if they itemize.  Among these changes are: a reduction on the mortgage balance for which interest may be deducted, reduction of state and local taxes deduction, elimination of miscellaneous expense deductions, casualty losses (except in the case of federal disaster declarations).

The mortgage interest deduction has been changed for mortgages taken out after December 15, 2017.  Any new mortgage after that date must be $750,000 or under for the interest to be fully deductible.  New mortgages that exceed $750,000, will be only partially deductible.  The previous limit was $1 million.

Beginning with 2018, the state and local tax deduction is limited to $10,000.  The $10,000 limit is applied to the combination of income taxes and real estate taxes.  So, if you pay $12,000/ year in real estate taxes and pay $6,000 of state income tax, instead of taking the total deduction of $18,000 – you will be limited to $10,000.

Also beginning with 2018, the miscellaneous expense deduction is gone.  In the past, miscellaneous expenses that exceeded 2% of your adjusted gross income were deductible.  This included expenses such as: unreimbursed employee expenses, union dues, job search expenses, tax preparation fees, investment advisory fees and safe deposit box rental fees.

Finally, casualty losses are no longer deductible unless they are a result of an event that is declared a federal disaster.  That means your flooded basement, fire damaged home, and theft losses are no longer deductible.

 

Honorine M. Campisi, CPA

NEW SALES TAX RULING BY THE SUPREME COURT AND ITS EFFECTS ON INTERNET BUSINESS

The Supreme Court of the United States recently ruled on a sales tax case - South Dakota vs Wayfair, Inc.  The Supreme Court ruled in favor of South Dakota allowing them to collect sales tax on out of state transactions even when the seller has no physical presence in the state. In the past if a company did not have a physical presence in the state than it was not required to collect sales tax for that state.  With this ruling that will no longer be a guideline. Your economic presence will now be the indicator. If you sell in a state than you must collect sales tax for that state if you meet the collection/filing thresholds. This will have a large impact on businesses doing online sales as well as interstate sales. The South Dakota ruling now says that if you have 200 sales transactions in the state of South Dakota regardless of the dollar amount of each transaction or $100,000 in sales per year than you have to collect and remit sales tax to the state. There are 21 other states that have similar rules in their doctrine and they were just waiting on the ruling of this court case to start enforcing them. This has huge implications for ALL businesses that sell to other states. You will be required to know the rules for collection and keep track of the limits and know when you have met them and would be responsible for the collection of sales tax. This is just a brief overview of the changes coming to Sales Tax. Feel free to give our office a call for more information. 

By Christine A. Murphy

New York State Tax Credits

There are many state tax credits available in New York, many that you may have never heard about.  We thought we would highlight just a few that you may not be aware of:

Clean Heating Fuel Credit – You may be entitled to this refundable credit if you or your business purchased bioheating fuel to be used for space heating or hot water production for residential purposes within NYS.  The credit is equal to one cent for each percent of biodiesel per gallon of bioheating fuel purchased before 1/1/2020.

Volunteer Firefighters’ and Ambulance Workers’ Credit – You may be entitled to claim this credit if you were an active volunteer firefighter or volunteer ambulance worker for all of the tax year and you were a resident of NYS for all of the tax year.  The credit amount is $200.

Automated External Defibrillator Credit – You may be entitled to this nonrefundable credit if you or your business purchased an automated external defibrillator(s) during the tax year.  The credit is equal to the purchase cost of the unit, or $500, whichever is less. 

Nursing Home Assessment Credit – You may be entitled to this refundable credit if you paid the nursing home assessment imposed on a NYS nursing home.  You can find the amount of this assessment on the billing statement from the nursing home.  The assessment amount is not the amount of expenses paid.  The credit is equal to the 6% base-rate portion of the assessment that you directly paid during the year. 

If you think you may be entitled to any of these credits, contact our office immediately for a free consultation at 516-409-1120. 

Sandra G. Johnson, CPA, EA, CFE

Retirement or College Savings

Retirement or College Savings

We hear from so many clients that they have reduced their retirement savings so that they can put something away for their children’s college fund.  It is understandable that parents have a feeling of obligation to provide for their child’s education.  In a perfect world, you would max out your retirement contributions and still be able to save for college.  Of course, if you are living paycheck to paycheck – this is not possible.

We view retirement as the priority when you must choose between the two, and this is why.  There is no financing for retirement.  Unless you have a pension to look forward to, it will be up to you to make up the gap that Social Security does not fill.  That is why saving for your retirement is imperative.  You may plan to work part-time during retirement, but that plan may change as you age and desire the freedom to do other things.  The goal is to build up enough of a nest egg, that you do not exhaust it before you’re done spending!

When it comes to college, however, there are options.  Perhaps the biggest way to manage college spending is to limit choices to those that are financially achievable.  Once the field is narrowed, you can look to financial aid packages, scholarships (from schools and other organizations), work-study programs, grants and loans to make up the difference. 

One thing is sure – when it comes to retirement or college savings – start early to maximize the magic of compounding!

 

Honorine M. Campisi, CPA