Thursday, July 30, 2015

Ohio Tax Budget - The Impact on Your Wallet

Cathy A. Robinson, CPA
Senior Manager
Chances are you pay income taxes to the state that you reside in. For individual taxpayers and businesses in the state of Ohio, there's good news. 

On June 30th, 2015, Governor John Kasich signed into law, the Biennial Budget Bill. So how exactly does this bill affect you?

If you are just an individual taxpayer, the bill reduces the personal income tax rates 6.3 percent for all tax brackets. This means the new top marginal bracket for individuals is 4.997 percent.

Attention shoppers: if you're a fan of shopping, you will be happy to know the state sales tax rate was not increased. It still remains at the current rate of 5.75 percent.

If you own an S Corporation, partnership, limited liability or a sole proprietorship in Ohio, there's even better news for you.  For fiscal year 2015, you will be able to deduct 75 percent of your Ohio apportioned business income up to $250,000. Also beginning in 2015, the excess business income will be subject to a three percent flat tax. The tax will be effective for 2015 and going forward. 

As a business owner, you should also be aware there are two tax credits that may now be able to save your company taxes since the law has changed the calculation. These credits are the Jobs Creation Tax Credit and the Jobs Retention Tax Credit.

For those who file the CAT tax, there's good news for you as well since the CAT tax rate was not increased due to the law.

If you have any questions in regards to the bill and how it will affect you, contact your accounting professional.

Thursday, July 23, 2015

One Crucial Tip For Business Property Owners

Cathy A. Robinson, CPA
Senior Manager

Attention business owners: do you own property? Do you know what a cost segregation study is? If you don't, you should.  As a taxpayer, you can increase your cash flow significantly by segregating property costs.

Cost segregation studies are a tax planning tool that can help companies or individuals, who have constructed, purchased, expanded or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions.

When you purchase property, it does not just include a building, but it includes various components of the interior or exterior. These components, such as a parking lot, wiring, carpet, and electrical outlets may all qualify to be depreciated quicker than 39 years by the owner. The purpose of a cost segregation study is to identify all of the potential property related costs that could possibly be depreciated over five, seven or fifteen years.

The best time to have a cost segregation study completed is during the year of construction, purchase or remodel.  However, it still can be completed at a later date.  It is important to also consult your accounting professional when considering a cost segregation study as they will work closely with the professional who will be performing the study. 

In the end, a cost segregation study is a valuable and effective planning tool available to any owner of real estate property.  It offers the owner the opportunity to defer taxes, reduce overall tax burden and free up capital thus improving cash flow.  As a taxpayer who owns, renovates or constructs real estate,  you stand to benefit from having a cost segregation study performed on your property.  

Thursday, July 16, 2015

Working Parents: Are you affected by the Nanny Tax?

Cathy A. Robinson, CPA
Senior Manager
If you are a working parent you understand just how hard it can be to find someone who can help take care of your children. While many working parents may place their kids in a daycare facility, others hire people to come into their homes to take care of their children. What some people may not understand is that hiring a nanny means you may have to pay the Nanny Tax, and you have a household employee.


 If the annual wages are over $1,900, you are required by the IRS to withhold and pay social security and Medicare taxes.   However, there are some exceptions to those whose wages are subjected to these taxes.  You should check with your tax advisor on the exceptions.


Another tax that will be paid is Federal Unemployment Tax (FUTA).  This tax is .06 percent on cash wages and only the first $7,000 in wages is subject to this tax.  FUTA is not a tax that you withhold from the nanny’s pay.  It is a tax that is paid by you.


Depending on the state where you live, you will also need to look into filing and paying state unemployment tax and workers’ compensation.  You will need to complete applications for both of these items.


It is important to also note that paying the nanny tax is required if you are the employer. This means even if you used an agency to find your nanny, you are still required to pay the tax. If you are the employer,  you will also need to ensure that your nanny or in-house sitter fills out an I-9 form, a W-4 and a state income tax withholding form (if you live in a state with income taxes.)


The nanny tax is reported on Schedule H of your Form 1040.

Wednesday, July 8, 2015

Plan Now, Save Later: What To Do After Your Child Graduates

Cathy A. Robinson, CPA
Senior Manager
Do you have a child that recently graduated from college? Maybe you have a child who will be graduating within the next year.  Did you know that your taxes could be impacted?

Once a child is no longer a full-time student, you may not be able to claim them as a dependent. If you’re a single parent that claims head of household filing status, this is especially important for you.   Should your child find a job within six months of graduating you are no longer able to claim them and use the head of household filing status as they will most likely have earned more than $4,000. Your tax filing status will go from head of household to single and the credits you normally could qualify for will no longer apply. In order to make sure you don’t end up owing at the end of the year, be sure to talk to your accountant about making the necessary adjustments to your withholding and estimated tax payments should this situation apply to you.  

This doesn’t necessarily mean that you can’t continue to claim them after they graduate college. This is when the support test comes into effect. If the child cannot provide half of his or her own support then you can claim them. They’re considered a relative dependent. If the child’s gross income for the year is only $4,000, you can claim them. 

Thursday, July 2, 2015

How Will Same-Sex Marriage Affect Taxes?

The Supreme Court ruling in favor of same-sex marriage is a hot topic at the forefront of everyone’s minds.


How will the recent Supreme Court ruling in favor of same-sex marriage affect taxes? Does this ruling affect you?


Cathy A. Robinson, CPA
Senior Manager

Since the June 26th ruling, individuals will see a change to tax filing requirements at the state level.  


Before the decision was made, same-sex couples were able to file joint returns at the federal level.  However, there was a catch to this method: most states did not recognize same-sex couples, and they were required to file individually or as head of household.


With the new ruling, there will be a streamlined process using the same filing status at the state returns. States will also begin to issue tax guidance on how same-sex couples can file their returns. In fact, Sen. Ron Wyden, a Democrat from Oregon and a member of the Senate Finance Committee, plans to introduce legislation this week that will provide gender neutrality for spouses. This bill will be called the Marriage Equality for All Taxpayers Act and would eliminate gender-specific references in the current tax code.


Tax guidelines are also expected to change to include treating all same-sex couples equally in regards to estate tax and other inheritance issues as married couples.


Under federal tax regulations, couples who live in states that currently do not recognize same-sex marriages will be now be able to:

·         Make unlimited gifts to one another without gift tax implications

·         Leave property to one another without survivor having to pay estate taxes

·         Leave IRA to surviving spouse as a "rollover" IRA

·         Be able to qualify as surviving spouse with Social Security benefits