Read This if You Have a Household Employee Part 1

Read This if You Have a Household Employee

Part 1

It is becoming more common to have a household employee to help with child care or senior caregivers.  If you hire someone on your own then understanding employment tax rules will help you avoid tax pitfalls if you are a household employer.  If you pay an agency for finding and supplying the individual that provides this service, then this does not apply.

If you hire someone and control what hours are worked and where and how the work is performed, then you have a household employee.  There are Labor Law and payroll tax responsibilities associated with having a household employee and we will address the Labor law aspect in this blog.

You must make sure that your employee is legally allowed to work in the United States.  You must have a completed form I-9 with acceptable documents to establish identity and employment eligibility which are listed on the I-9.  Keep this form for your records.

As a New York employer, you need to provide your employee with a NY Wage Notice, detailed paystubs, and file for NYS unemployment insurance.  If your employee works 40+ hours per week for you, then you must provide workers compensation and disability insurance.

Honorine M. Campisi, CPA

NYS Sales Tax: Computer Software

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 focuses on Computer Software.

Prewritten computer software includes any computer software that is not designed and developed to the specifications of a particular purchaser.

The sale of prewritten computer software is taxable, whether it is sold as a part of a package or separately, regardless of how the software is conveyed to the purchaser.  Therefore, prewritten computer software sold on a disk, by electronic transmission, or by remote access will be taxable.

However, services related to computer software are exempt from sales tax. Some of these services are:

•       Training
•          Consulting
•          Troubleshooting
•          Programming

The sale of an upgrade of prewritten software is subject to sales tax. Also, the sale of a license to remotely access software is subject to state and local sales tax.

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

By Renee Greenspan

Tax Debt - Can I Really Pay Pennies on the Dollar?!

Have you have run into tax troubles and owe the IRS big money?  The reasons so many taxpayers incur a big tax bill vary from simply avoiding filing tax returns, to being self-employed and underestimating the amount of income and self-employment tax you will owe at year end.  It can start one year and then just keep piling up to the point where you have trouble catching up.

There are commercials out there that hawk “Settle your IRS debt for pennies on the dollar!”  This sounds great – but it is not as attainable as it sounds.  These ads are referring to Offers in Compromise, agreements with the IRS for taxpayers that have a large balance due and cannot afford to pay it back in full. 

The IRS does not write off debts unless they are pretty certain they will not be able to collect the full debt within a given time period, or if to do so would cause an undue hardship on the taxpayer.  It 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 also be spread over a few payments.  The process from application to end can take several months and sometimes up to a year.

More commonly used is an agreement to pay your tax debt over time.  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.

Both of these options require that you stay compliant, meaning that all tax filings are filed and paid on time in the future.  

Honorine M. Campisi, CPA

Sales Tax: Admission Charges to a Place of Amusement

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 focuses on Admission Charges to a Place of Amusement.

An admission charge is any amount that is paid to gain entry to any place of amusement. This includes cover charges, service charges, and any other charges to entertainment. A place of amusement is any facility where entertainment, amusement, or sports are provided.

Taxable admission charges are subject to a state sales tax of 4% and local sales tax based on the location of the place of amusement.

Examples of taxable admission charges are as follows:

•       Professional or college sporting events
•          Amusement parks
•          Beaches
•         Museums, zoos, and aquariums

Examples of nontaxable admission charges are as follows:

•          Motion picture theaters,
•          Live dramatic, choreographic, or musical arts performances
•          Live circus performances

Season tickets to taxable events are taxed on the total selling price of the ticket regardless of the price for admission to each event.

Box seats are taxable based on the amount for which a similar box or seat is sold for each taxable performance or event.

This is just a brief overview of the sales tax laws regarding admission charges to a place of amusement. Feel free to give our office a call for more information.

By Renee Greenspan

Is Your Paycheck Withholding Enough?

Is Your Paycheck Withholding Enough?

Tax season is over for most and the results were hard to swallow for some.  If you are one of the taxpayers that had a large tax bill for 2018, this post is for you.

There were several changes in play that resulted in the unexpected tax bill that many taxpayers faced this year.  The tax law changes that the TCJA brought, reduced deductions for many and eliminated exemptions for all.  Further compounding the problem was the change to federal withholding tables that employers use to calculate how much tax to withhold from your paycheck each pay period.  The amounts required to be taken from your check decreased and resulted in less taxes credited to filers at tax time.

The fix for 2019?   Call your CPA and ask them to review your paystubs for changes you can make to withholding now.  You will still have 6 months of paychecks to reduce next year’s tax bill.

Honorine M. Campisi, CPA

Hotel and Motel Occupancy

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 focuses on Hotel and Motel Occupancy.

The term hotel includes: hotels, motels, inns, and bed and breakfast establishments.

Hotel occupancy is the use, or right to use, a room in a hotel.  The room rate, that everyone hates to pay, is the amount that guests must pay to stay in the hotel room.  The room rate is taxable at the full state and local sales tax rate.

If you stay in a hotel in New York City there is an additional hotel unit fee that hotels must charge. The hotel unit fee is an extra $1.50 per unit per day, in addition to state and local sales tax.  This fee is separately stated on the invoice that customers receive.  Certain localities charge a bed tax, which is also shown separately on the customer's invoice.

 

There are certain charges that do not require sales tax to be collected.  These charges are as follows:

•  Cancellation fees are not taxable because the customer never has the right to occupy the room.
• Hotel guests that are permanent residents do not have to pay sales tax on their room rates.  A permanent resident is when a guest must stay in the hotel for at least 90 consecutive days without interruption.
• A complimentary room does not require any sales tax due.  This is because the hotel is allowing the guest to stay in a room for no charge.

This is just a brief overview of the sales tax laws regarding hotel and motel occupancy.  Feel free to give our office a call for more information.

By Renee Greenspan

Improving Your Residence

Improving Your Residence

When tax time rolls around, we often hear from clients that they “did work to their home and that must be good for their taxes, right?”  Well…

Much of the improvement you do to your home is good from a tax perspective, but you won’t see an immediate tax benefit (except for solar discussed below).  Major home improvements like additions, new windows or exterior doors, new roof or siding, HVAC, kitchen or bathroom updating, or landscaping will increase the cost basis of your home.  This is important when you sell the home for a profit that exceeds the primary residence exclusion which is currently $250,000 for single or married filers filing separately, and $500,000 for married taxpayers filing jointly.  In order to calculate your basis in the home when you sell, you should keep your closing documents from the home’s original purchase, along with all documentation relating to the improvements you make over the years.

Qualified energy improvements are still eligible for a federal tax credit in 2018.  The Bipartisan Budget Act of 2018 signed into law in February 2018, extended the tax credit for residential energy property for qualified solar electric and solar water heating property through 2021.  The credit for 2018 is equal to 30% of costs including labor cost for installation.

Honorine M. Campisi, CPA

NYS SALES TAX-CLOTHING AND FOOTWEAR

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 Clothing and Footwear.

Clothing and footwear that is sold for less than $110 per item or pair and items used to make or repair this clothing are exempt from the NYS 4% sales and use taxes.

Examples of exempt purchases are:

• Aerobic clothing
• Athletic uniforms
• Blouses
• Coats
• Dresses
• Shirts
• Shoes
• Sleepwear

The sales tax exemption also applies to most fabric, buttons, zippers and items that are used to repair clothing.  However, if items are made from pearls, jewels or metal, even if sold for less than $110, is still subject to NYS 4% sales tax.

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

By Renee Greenspan

Itemized Deductions & Your Home

The new tax law known as the Tax Cuts and Jobs Act will impact some taxpayers who itemized deductions relating to home ownership.

First, you may have heard that there is a change to mortgage interest deduction allowed for 2018 returns.  If you have a pre-existing mortgage (acquired before December 15, 2017), then you can still deduct mortgage interest on a mortgage associated with acquisition indebtedness of up to $1 million.  If you entered into a mortgage after the December 15, 2017 date, you can only deduct mortgage interest on up to $750,000 of home acquisition indebtedness.

It is also worth noting changes to deductibility of home equity loan interest for 2018.  Prior to the TCJA, homeowners could deduct home equity interest regardless of what the funds were used for.  TCJA changed that and now only home equity interest on funds used to acquire, build or substantially improve your home is deductible

. 

Lastly, taxpayers who have been able to deduct private mortgage insurance premiums in the past, may not be able to do so in 2018.  The provision for that deduction expired at the end of 2017, and has not yet been extended.  However, there may still be hope, as the 2017 provision was not extended until AFTER the start of 2017 tax filings in February 2018.

Honorine M. Campisi, CPA

NYS SALES TAX-FOOD AND BEVERAGES SOLD FROM VENDING MACHINES

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 focuses on Food and Beverages sold from Vending Machines.

An item that is generally taxable when sold in a food store is also taxable when sold in a vending machine.  In addition, an item that is exempt from sales tax when sold in a food store is also exempt when sold in a vending machine.  There are some exceptions to the general rule however.

The exceptions to the general rule regarding sales tax on food and beverages sold in vending machines are as follows:

• ·       Hot beverages that are sold from a vending machine are always exempt from sales tax.
• ·       Certain items that are taxable when sold by food stores are exempt when they are sold from        a vending machine for $1.50 or less.

Taxable food and beverage items when sold from a vending machine are as follows:

·        

•        Sandwiches
• ·         Bottled water
• ·         Any food that is heated by or kept warm in the vending machine

Any unheated foods and unheated beverages are exempt from sales tax when sold from vending machines.

The certain items that are taxable when sold by food stores, but are exempt when sold for $1.50 or less from a vending machine are:

• ·         Candy and confectionery
• ·         Soda

If sold for more than $1.50, the above items are taxable.

If taxable food or beverages are sold, sales tax must be collected.  In order to do this, the amount of the sales tax should be included in the selling price of the item and the sales tax rate in the local taxing jurisdiction where the machines are located should be used.

This is just a brief overview of the sales tax laws regarding the sale of food and beverages sold from vending machines.  Feel free to give our office a call for more information.

By Renee Greenspan

Home Equity Loans and the TCJA

Home Equity Loans and the TCJA

Do you have a home equity loan?  Be ready at tax time when your CPA asks you how you used those loan proceeds.  Thanks to the new tax law known as the Tax Cuts and Jobs Act (TCJA), the deductibility of interest on home equity loans and lines of credit has changed.  

Prior to the TCJA, homeowners could deduct home equity interest on loans up to $100,000 regardless of what the funds were used for.  TCJA changed that and now only home equity interest on funds used to acquire, build or substantially improve your home is deductible.

So…if you took out a home equity loan or home equity line of credit and used the proceeds to finance college, a trip, or consolidate bills, you cannot deduct the interest paid on your 2018 income tax return.

You will need to give your CPA a breakdown of how you spent the loan proceeds if part of a home equity loan or line was used to acquire, build or substantially improve your home, and part was used for something else.

   

Honorine M. Campisi, CPA

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