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Wednesday, December 26, 2018

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

Wednesday, December 12, 2018

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

Monday, December 10, 2018

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

Monday, December 3, 2018

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