Contact Us: 716-634-1100

TAX ORGANIZERS

January 15, 2018

We have started mailing out the 2017 income tax organizers to individual clients. We believe the tax organizer will not only assist you in organizing your records as it contains a questionnaire that acts as a “memory jogger” and it shows the amounts reported on your previous year’s tax return, but it will also assist us in streamlining the flow of tax returns in our office and will allow for better follow up questions and quicker turn-around time for completed returns.

As always, we are available for questions you may have about the organizer and information you have received from third parties that may or may not be applicable to your tax return.

It is essential that you submit all of your tax information to us BEFORE APRIL 1, 2018. If information is received after this date, we may have to file an extension and additional fees may be imposed.

HIGHLIGHTS OF THE 2018 TAX CUTS AND JOBS ACT

January 1, 2018

Generally, the provisions of the Tax Cuts and Jobs Act take effect January 1, 2018. Most of the provisions affecting individuals are temporary and will sunset after 2025; the majority of the business provisions are permanent. The key changes that will affect most of our clients are highlighted below:

Individual Tax Changes

  1. There are still seven individual tax brackets but for 2018-2025, the rates are lowered to 10%, 12%, 22%, 24%, 32%, 35%, and 37% (indexed for inflation by a chained CPI). Look for withholding guidance from the IRS in January. In the meantime, employers and payroll service providers should continue to use the existing 2017 withholding tables and systems.
  2. The Standard Deduction is nearly doubled to $12,000 for single filers and $24,000 for joint filers. The additional standard deduction for the elderly and blind are retained.
  3. Personal exemptions are eliminated.
  4. The following itemized deductions have been modified or repealed:
    a) For 2018 & 2019, the threshold for deducting medical expenses is reduced from 10% to 7.5% of AGI.
    b) The state and local tax deduction is limited to $10,000 annually for any combination of state and local property taxes, state and local income taxes, and/or state and local sales tax. The law also prohibits pre-payment of future year taxes (unless assessed in the current year).
    c) Mortgage interest deductions are grandfathered in for existing debt incurred prior to December 15, 2017. The new law limits the mortgage interest deduction to interest paid on the first $750,000 of acquisition debt. The deduction for interest paid on home equity loans is deductible as long as the loan or line of credit is used to buy, build or substantially improve a home.
    d) All itemized deductions subject to the threshold of 2% AGI, including but not limited to unreimbursed employee expenses, union dues, investment management fees, certain legal fees, etc., are eliminated.
    e) The deduction for casualty and theft losses is eliminated but preserved, with certain modifications, for losses incurred in federal disaster areas.
  5. The alternative minimum tax (AMT) exemption increases from $54,300 to $70,300 for single filers and from $84,500 to $109,400 for joint filers.
  6. The list of qualifying expenses for Section 529 plans is expanded to include up to $10,000 in tuition at private and religious K-12 schools. Home schooling expenses are also considered qualifying expenses.
  7. The rule permitting taxpayers to recharacterize a Roth IRA back into a traditional IRA after a conversion is repealed.
  8. The Child Tax Credit increases from $1,000 to $2,000 per child and is refundable up to $1,400. The law also increases the income phase-out limitations and allows a $500 nonrefundable credit for non-child dependents.
  9. The law does not repeal the Affordable Care Act but does repeal the individual mandate requirement starting in 2019.
  10. For divorce decrees entered into or revised after December 31, 2018, alimony is no longer tax deductible to the payer and the associated income is no longer taxable to the recipient.

Business Tax Changes

  1. The Corporate tax rate structure is now converted to a flat 21% rate. The corporate AMT is completely repealed.
  2. Pass-through entities (S Corps, partnerships, LLCs, and sole proprietors) can claim a 20% deduction on earnings, subject to special rule restrictions. The deduction is not available to higher-income personal service providers.
  3. The new law doubles the maximum Section 179 allowance from $500,000 to $1,000,000. It also increases the phase-out threshold for Section 179 deductions from $2,000,000 to $2,500,000.
  4. The Domestic Production Activities Deduction is repealed.
  5. The cap on the depreciation deduction allowed under the “luxury car” rules for passenger vehicles is increased.
  6. The Act disallows a deduction for an activity generally considered to be entertainment, amusement, or recreation as well as membership dues for any club organized for business, pleasure, recreation, or other social purposes. Businesses can still generally deduct 50% of the cost of qualified business meals.

PAID FAMILY LEAVE

August 1, 2017

On April 4, 2016, Governor Cuomo signed into law a new Paid Family Leave policy. Starting January 1, 2018, ALL private employers will be required to offer their full- and part-time employees job-protected, paid leave that can be used to care for a new child, care for a loved one, including a child, grandchild, spouse, domestic partner, parent, or grandparent with a serious health condition, or to help relieve family pressures when someone is called to active military service. Employees are guaranteed the right to return to their jobs and continue their health insurance.

Paid Family Leave will phase in over the next 4 years with gradually increasing benefits:

Paid Family Leave Chart

Employees may take the maximum benefit length in any given 52-week period. The 52-week clock starts on the first day the employee takes Paid Family Leave.

Paid Family Leave coverage will be included under the disability policy all employers must carry. The premium will be funded solely by employees through payroll deductions. Beginning January 1, 2018, the maximum employee contribution rate will be set at 0.126% of an employee’s wage up to and not to exceed the statewide average weekly wage (currently $1,305.92). A maximum employees’ contribution rate will be established each year. Participation in the program is not optional for employees.

Employees who work a regular schedule of 20 or more hours per week are eligible after 26 weeks of employment. Employees who work a regular schedule of less than 20 hours per week are eligible after 175 days worked.

For more information, please contact your disability insurance provider or call our office at (716) 634-1100.

IRS SCAMS

July 17, 2017

The IRS is reminding taxpayers to remain alert to aggressive and threatening phone calls by criminals impersonating IRS agents using fake names and bogus IRS identification badge numbers. These scammers may possess information pertinent to their targets, and they usually alter the caller ID to make it appear as though the IRS is calling.

The IRS has issued warnings regarding the following scams:

A scam linked to the Electronic Federal Tax Payment System (EFTPS) has been reported nationwide. The caller claims to be from the IRS and says that two certified letters mailed to the taxpayer were returned as undeliverable. The scammer threatens arrest if a payment is not made immediately via a specific prepaid debit card they claim is linked to the EFTPS, but is actually controlled by the scammer. Victims are warned not to talk to their tax preparer, attorney or the local IRS office until after the payment is made.

The IRS does not make “robo-calls” leaving prerecorded, urgent messages asking for a call back. In this tactic, scammers tell victims that if they do not call back, a warrant will be issued for their arrest. Those who do respond are told they must make immediate payment either by a specific prepaid debit card or by wire transfer.

The IRS recently began sending letters to a relatively small group of taxpayers whose overdue federal tax accounts are being assigned to one of four private-sector collection agencies. The IRS-authorized firms will only be calling about a tax debt the person has been aware of for years. The IRS would have previously contacted taxpayers about their tax debt.

According to their website, the IRS and its authorized private collection agencies will never:

  • Call to demand immediate payment using a specific payment method such as a prepaid debit card, gift card or wire transfer. The IRS does not use these methods for tax payments. Generally, the IRS will first mail a bill to any taxpayer who owes taxes. All tax payments should only be made payable to the U.S. Treasury and checks should never be made payable to third parties.
  • Threaten to immediately bring in local police or other law-enforcement groups to have the taxpayer arrested for not paying.
  • Demand that taxes be paid without giving the taxpayer the opportunity to question or appeal the amount owed.
  • Ask for credit or debit card numbers over the phone.

*IF YOU OR A LOVED ONE HAS RECEIVED THIS TYPE OF PHONE CALL, PLEASE CONTACT OUR OFFICE IMMEDIATELY TO HELP YOU.

NEW DUE DATES FOR CERTAIN TAX RETURNS

January 3, 2017

Below is a list of the new federal and New York due dates generally applicable for 2016 tax returns (2017 filing season).

March 15 (Extensions Until Sept. 15)

  • Form 1065, U.S. Return of Partnership Income; and
  • Form 1120S, U.S. Income Tax Return for an S Corporation.

Note: This is the due date for the tax return and also for the Schedules K-1 that the entity must provide to its owners.

April 15 (Extensions Until Oct. 15, Unless Noted Below)

  • Form 1040, U.S. Individual Income Tax Return;
  • Form 1041, U.S. Income Tax Return for Estates and Trusts (extensions until Sept. 30);
  • Form 1120, U.S. Corporation Income Tax Return (extensions until Sept. 15)
  • FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)

May 15 (Extensions Until Nov. 15)

  • Form 990, Return of Organization Exempt From Income Tax

July 31 (Extensions Until Oct. 15)

  • Form 5500 for employee benefit plans.

INCREASED MINIMUM WAGE AND SALARY REQUIREMENTS

December 31, 2016

As of 12/31/2016, the basic minimum wage increased to $9.70 per hour and the fast food minimum wage increased to $10.75 per hour in most of New York State.

As of 12/31/2016, the minimum salary for exempt executive and administrative employees in upstate New York increased to $727.50 per week ($37,830 annually).

There are different minimum wage rates for Long Island, Westchester County, and large and small employers in New York City.

The nationwide preliminary injunction blocking the new overtime rules that would increase the minimum salary for exempt employees to $913 per week (described below) is still in effect.

Preliminary Injunction

November 23, 2016

Yesterday a Federal Judge in Texas issued a nationwide preliminary injunction blocking the new overtime rules scheduled to take effect on December 1. These rules would have increased the minimum salary for most exempt employees to $47,476.

The decision indicates that it is likely the Judge will ultimately issue a permanent injunction.

It remains to be seen whether the Trump administration would appeal this action.

We will keep you informed as to all further developments.

New Overtime Rules

The Fair Labor Standards Act (FLSA) requires that employers pay eligible non-exempt employees an overtime premium of at least 1.5 times their regular rate of pay for hours worked over 40 in a work week. Now, the U.S. Department of Labor (DOL) has extended overtime protections to far more employees by approving a revision to the federal overtime regulations, and an increase to the salary threshold for the executive, administrative, and professional white-collar exemptions from the overtime provisions.

Effective December 1, 2016, the weekly salary threshold doubles from $455 ($23,660 annually) to $913 ($47,476 annually), for the executive, administrative, and professional white-collar exemptions under the FLSA.

Certain types of businesses that tend to have a significant number of exempt managers who currently make more than $23,660 annually, but less than $47,476 annually — such as restaurants, daycare facilities, manufacturers, and retailers — could be affected most by the rule. Due to this new rule, businesses may face increasing payroll costs and the potential for expanded recordkeeping requirements for certain employees. Please contact us so that we can help you address these rules.

Welcome New Partner

Bronsky & Company is pleased to announce that David K. Hanley, CPA, CFE, MBA has joined the Firm as a partner with an expertise in merger and acquisition and asset based lending due diligence, forensic accounting services, business interruption insurance claim services, and profitability analysis. He has experience in various industries including, but not limited to, manufacturing, technology, telecommunications, natural resources and metals, distribution, retail, and healthcare.

Announcing A New Strategic Alliance

Bronsky & Company announces that it has entered into a strategic alliance with Michael Brummer & Associates Consulting (MBA). The ability to integrate the long-standing, successful turnaround consulting of MBA with Bronsky & Company’s proven track record of excellence in auditing and field examinations will provide the marketplace with a combination of skills and experience that is expert as well as highly efficient!

Visit Michael Brummer & Associates