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The Indiana Department of Revenue will once again employ their Identity Protection Program for the 2017 tax filing season. This program is designed to stop fraudulent refund claims. The Department uses an automated identity verification service to help confirm the identities of all Indiana taxpayers due a refund. Per the Department approximately 95% of all returns are confirmed through this service and are moved on to the processing stage. The other 5% of taxpayers will receive a letter from the Indiana Department of Revenue asking them to take an Identity Confirmation Quiz.
The Identity Confirmation Quiz is a 4 question quiz that may be taken online or by calling the Department. The questions are designed to have answers that would only be known to the taxpayer. Please note that if you receive this letter and the information listed is not correct or if you have not yet filed your tax return, do NOT complete the Identity Confirmation Quiz, instead call the Indiana Department of Revenue at the phone number indicated on the letter.
For identity protection tips you can visit the Department of Revenue’s Stop ID Theft website at http://www.in.gov/dor/4794.htm. You can also visit the Indiana Attorney General’s website at www.in.gov/attorneygeneral and click on the Theft Prevention Toolkit under the Online Resources menu.
August 16, 2016
On May 18, 2016, the Department of Labor published a notice to update and modernize the regulations governing the exemption of executive, administrative, and professional (“EAP”) employees from the minimum wage and overtime pay protections of the Fair Labor Standards Act (“FLSA” or “Act”). The new rules will take affect December 1, 2016.
The Key provisions of the final rule focus primarily on updating the salary and compensation levels needed for EAP workers to be exempt. Specifically, the Final Rule:
1.) Increases the threshold below which salaried workers are eligible for time-and-a-half overtime pay if they work more than 40 hours a week. The threshold is rising from $23,660 to $47,476 (that’s from $455 to $913 a week). Workers earning above that amount, along with managers, are exempt. The rule will automatically update every three years.
2.) Updates the total annual compensation level above which most highly compensated employees will be ineligible for overtime from the current $100,000 to $134,004.
3.) Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption.
Additionally, the Final Rule amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level.
The new rule does not make any changes to the “duties test” that determines whether white collar salaried workers earning more than the salary threshold are ineligible for overtime pay. You can see the current exemption rules at https://www.dol.gov/whd/overtime/fs17a_overview.pdf.
If you have any questions regarding above please call at 219-662-2727.
Assumptions for this Company:
•For profit entity.
•Less than 50 full time equivalent employees.
•Not member of an ownership group which has a total exceeding 50 full time employees.
Must report value of health care coverage in Box-12 of Form W-2 with Code DD to identify the amount. The amount reported should include portion paid by both employee and employer. You are not required to issue a Form W-2 solely to report the value of the health care coverage for retirees or former employees to whom the employer would not otherwise provide a Form W-2.
Might be eligible for tax credit if at least 50 percent of full time employee’s premium cost is covered by employer and fewer than 25 full time employees. You must also have average annual wages of less than $50,000 per employee. Insurance must be purchased through the SHOP (Small Business Health Options Program) Marketplace.
You have to withhold and report an additional 0.9 percent on employee wages or compensation that exceed $200,000.
Note: For individuals/families, starting January 1st, 2014, minimum essential coverage is required. This includes employee-sponsored coverage, health insurance purchased from an insurance company directly, Medicare Part A, Medicare Advantage, and most Medicaid plans. Failure to have coverage without an exemption results in fines in the greater of 1% of your household income above your filing threshold or $95 per adult ($47.50 per child) limited to a family maximum of $285.
Information reporting requirements are first effective for coverage provided in 2015. This means filing of information returns to the IRS in 2016 to report coverage information for the calendar year 2015. The fee for not having coverage in 2015 is the greater of 2% of your household income above your filing threshold or $325 per adult ($162.50 per child) limited to a family maximum of $975.
For a more detailed explanation and a list of exemptions or a list of what qualifies as minimal essential coverage, please see me or go to https://www.healthcare.gov/fees-exemptions/.
Below you will find the 2017 W-4's, WH-4's (for Indiana employers), IL-W-4's (for Illinois employers), NC-4's (for North Carolina Employers), and I-9's. Print copies of the attached forms and have all new employees fill out the W-4 and the appropriate state form. We will need copies of these forms for our files as soon as possible. Please note that North Carolina employees may fill the NC-4.
All new employees must also fill in the I-9 form and we will need a copy of this form for our files. The I-9 form needs to be completed by the employee and the employer. The instructions that come with this form give you the guidelines to follow. Please make sure the employees have filled this form out completely and that you have verified their identification against the form.
If these forms have not been filled out completely or information has changed, a new form needs to be completed. Please feel free to call us if you have any questions.
IR-2016-169, Dec.13, 2016
WASHINGTON — The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
53.5 cents per mile for business miles driven, down from 54 cents for 2016
17 cents per mile driven for medical or moving purposes, down from 19 cents for 2016
14 cents per mile driven in service of charitable organizations
The business mileage rate decreased half a cent per mile and the medical and moving expense rates each dropped2 cents per mile from 2016. The charitable rate is set by statute and remains unchanged.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating anautomobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements are described in Rev. Proc. 2010-51. Notice 2016-79, posted today on IRS.gov, contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.
The IRS has issued final regulations regarding whether or when taxpayers must capitalize expenses related to the acquisition, production, or improvements of tangible assets. These regulations are effective as of January 1, 2014. The regulations include clarification of the following items: materials and supplies, repairs and maintenance, and amounts paid to acquire, produce, or improve tangible property.
Materials and supplies
Materials and supplies are generally defined as tangible property that are used or consumed in operations, are not classified as inventory, and that either have a cost of $200 or less or a useful life of 12 months or less. Items determined to be materials and supplies are deductible in the year paid. A taxpayer may elect to substitute their own capitalization threshold on an annual basis. This election is called the de minimis election. In order to make the election the taxpayer will need to have a capitalization policy in place for the year stating their threshold amount. The maximum threshold is $500 per invoice for taxpayers who do not have an audited financial statement. A taxpayer with an audited financial statement may choose to expense materials and supplies up to a maximum threshold of $5,000 per invoice.
On the other side, taxpayers may choose to elect to capitalize the costs of rotable spare parts, temporary spare parts, or stand-by emergency spare parts. The election to capitalize must be made on a timely filed tax return, including extensions, for the year the part is placed in service. The election is revocable only through a favorable private Letter Ruling from the IRS.
Repairs and maintenance
The general rule for routine maintenance is that the cost may be expensed and does not need to be capitalized. The regulations include a routine maintenance safe harbor rule that states than an amount paid may be deducted if it is for recurring activities performed to keep a unit of property in efficient operating condition. An activity is deemed routine if the taxpayer reasonably expects to perform the activity more than once during the class life of the property.
In terms of maintenance for buildings, the activity will only be deemed routine if the taxpayer reasonably expects to perform said activity more than once during a 10 year period beginning when the structure is placed in service.
For maintenance of property other than buildings, the activities are expected to be performed at any time during the useful life of the property. Examples of routine maintenance include the inspection, cleaning, or testing of the structure or building system and replacement of worn or damaged parts.
Taxpayers may elect to capitalize repairs and maintenance on an annual basis by attaching a statement to a timely filed Federal tax return.
Amounts paid to acquire or produce property
In general, taxpayers must capitalize amounts paid to acquire or produce a unit of real or personal property, which include leasehold improvements, buildings, machinery, equipment, furniture, fixtures, land, and land improvements. Costs paid to facilitate the acquisition of the property and costs for work performed prior to the date the property is placed in service also must be capitalized. Basically, any amount paid towards purchasing a piece of property that you ultimately do acquire must be included in the basis of the property and, therefore, be capitalized.
Amounts paid to improve a unit of property
In general, taxpayers must capitalize amounts paid for improvements made to a unit of property that they own. Improvements include betterments to the property, restoration of the property, and adaptation of the property to a new or different use. A unit of property includes all components that are functionally interdependent, which means that one component placed in service is dependent on the placing in service of another component. The regulations have established special rules for buildings, leased property, plant property, and improvements. Any improvements you make will be studied on a case by case basis to see if these special rules apply.
Implementing the rules
While most of the safe harbor rules and elections are implemented by filing a statement of treatment with a timely filed Federal tax return, some items are considered to be changes in accounting methods. In these cases, the taxpayer will need to file Form 3115, Application for Change in Accounting Method. For example, taxpayers who wish to implement the de minimis rules for materials and supplies will file an election statement with their Federal tax return. A taxpayer who wishes to adopt the spare parts provision of the materials and supplies regulation will need to file Form 3115.
The new regulations will have some effect on all taxpayers who own tangible property. We will assess each taxpayers situation as we are working on their information. If you have any questions, please call us at (219)662-2727.
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Below, you'll find a download for the Individual Tax Organizer. Click the icon to open the document.