Wednesday, January 16, 2019

IRS Guidance on Tax Withholding for 2019

The beginning of the year is always a good opportunity to review w-4 withholdings for employees. On Tuesday, November 27, 2018, the IRS issued guidance on withholding questions for 2019 in Notice 2018-92. It states that the rules will mostly continue to be in effect from 2018 through 2019, including a similar Form w-4. Minor adjustments incorporate the changes to tax liability and withholding resulting from the Tax Cuts and Jobs Act (TCJA), P.L. 115-97. A new Form w-4 is expected to be released in 2020.
The Notice also announced that the IRS intends to develop further regulations for the TCA, specifically under Secs. 3401 and 3402, as amended by Section 11041 of the TCJA. These include:
Withholding allowances: This term has replaced the previously used “withholding exemptions.” This is due to the elimination of personal exemptions by the TCJA (at least until 2025).
Change in status: Any time that an employee’s circumstances result in a change in their withholding allowance (e.g., birth, death, marriage, etc.), that employee is required to notify the employer within ten (10) days. The Notice eliminates any requirement for the employee to notify the employer only if that change is the result of the TCJA. The requirement in such an event is that the employee provide a new Form w-4 to the employer on or before May 10, 2019.
Failure to provide Form w-4: Employees must provide a Form w-4 to their employer. In the event that they fail to do so, the Notice states that the employee may be treated as single, but entitled to the number of allowances computed pursuant to the Commissioner’s IRS Publication 15 (Circular E), Employer’s Tax Guide.
Estimates of Sec. 199A deduction: Much has been made of this significant component of the TCJA. With regard to employees, the Notice does allow a taxpayer to estimate the allowable Section 199A deduction in conjunction with calculating any additional Sec. 3402(m) allowance.
Withholding calculator: The IRS has provided an online withholding calculator and published further guidance in Publication 505, Tax Withholding and Estimated Tax. The Notice advises that the IRS will be working to enact regulations permitting the use of the calculator rather than relying on the tables provided with the Form w-4.
Combined withholding tables: The Notice states that these are marked for elimination for Federal Insurance Contributions Act (FICA) withholdings under Reg. Secs. 31.3402(h)(4)-1(b) due to complexity.
Written notice: Previously, an employer was required to send written notice to the IRS where an employee for whom the IRS had previously issued a letter locking in his or her maximum number of allowances left the employment (either voluntarily or involuntarily). That requirement has been suspended.
While the comment period remains open through January 25, 2019, the guidance affords employees and employers alike an opportunity for an annual review.

Tuesday, November 27, 2018

Attorney Client Relationship

There are many important qualities in maintaining relationships that clients need when hiring a law firm.  Clients are looking for confidence, trust worthiness, respectfulness, active listeners as well as excellent negotiations.  The law firm needs to be a strong advocate for their legal issues.  Attorneys need to keep their clients updated on a regular basis, with strategies and plans of action.  Together the attorney and the client can achieve a resolution to their legal needs.

Tuesday, November 13, 2018

When should you do taxes on your own or hire a Tax professional?

Taxes can be stressful, especially if you have a business, investments or IRS issues. Most people want to get through the tax season with little out of pocket or worrying about an IRS audit. The expense of filing taxes can be costly depending on what you own (businesses, Investments, Rental Property etc...). In determining, whether you do your taxes yourself or hire a tax professional here are some things to consider.

When to hire a Tax professional
  • ·         Taxes are complicated
  • ·         Owning your own business
  • ·         Rental property or taxable investments
  • ·         Foreign income
  • ·         Life changes ( Marriage, divorce, retirement, inheritance ,birth ,property sale)
  • ·         New tax Laws
  • ·         Tax Planning

When to do them yourself
  • ·         You understand the Tax laws
  • ·         You don’t have any property or investments
  • ·         Your taxes are straight forward with the usual deductions (normal W2)

Keep in mind, having a tax professional has its Pros. A tax professional can represent you with the IRS and generally insures your returns are prepared correctly.  The next time you want to prepare your own tax return remember there are options that should be considered.

Friday, November 2, 2018

Movie to Watch

If you get tired of the same old action hero or cartoon character movies, why not look into viewing the best courtroom legal drama ever made.  Many best of lists have this film at the top.  It is, To Kill a Mockingbird.  It is an old movie, 1962, and it's filmed in black and white. Gregory Peck portrays a Depression-era lawyer in the South.  The courtroom scenes are very powerful.  He is also a widowed father of two and the bond with his children is wonderful.  Give it a chance and I know you'll agree, it's one of the best.

Wednesday, October 3, 2018

Cash Vs. Accrual Vs. Modified Cash Accounting Methods

Starting a new business involves a lot of planning.  The accounting is a very important part of managing your business.  You must consider the accounting method.  There are three options to choose from.

The Cash Basis Method
This accounting method records income and expenses as received and paid out.  Expenses are recorded only when bills are paid.  This method is advantageous for smaller businesses as it is a simple method that accounts for cash paid or received.

The Accrual Method
With this method, income is accounted for when it is earned.  You may deliver a product or service to a customer and not have been paid for it, yet consider it income. Expenses are recorded the day you receive the bill or goods from a vendor or supplier.  Accrual method does include accounts receivable and accounts payable on the balance sheet.

The Modified Cash Basis Method
This Modified Cash Basis combines elements of the above two accounting methods.  It is not accepted on official financial statements.  Income is recorded as received but expenses are put into two categories.  Long-term liabilities are treated as accounts payable as in the accrual method.  Short term expenses are recorded as paid, as in the cash method.

IRS Guidance on Tax Withholding for 2019

The beginning of the year is always a good opportunity to review w-4 withholdings for employees. On Tuesday, November 27, 2018, the IR...