Schaffer & Layher, PLLC
Certified Public Accountants
Newsletters
Tax Alerts
Tax Briefing(s)





Since passage of the Affordable Care Act, several key requirements for employers have been delayed, including reporting of health coverage offered to employees, known as Code Sec. 6056 reporting. As 2015 nears, and the prospects of further delay appear unlikely, employers and the IRS are preparing for the filing of these new information returns.


As the 2015 filing season approaches, IRS Commissioner John Koskinen is bracing taxpayers for more reductions in customer service unless the agency receives more funding. According to Koskinen, the IRS is facing its biggest challenge in recent years. Koskinen, who spoke at the annual conference of the National Society of Accountants in August, also predicted that taxpayers will have to wait until after the November elections to learn the fate of many popular but expired tax incentives.


The net investment income (NII) tax under Code Sec. 1411 is imposed on income from investments, certain sales of property, and income from passive activities. NII includes net gains from the sale of property, unless the property is held in a non-passive trade or business. If the property sold is a non-passive interest in a partnership or S corporation, gain from the sale of the interest is NII only to the extent that income from a deemed sale of the entity's property would be NII. The IRS totally rewrote the regulations for the disposition of interests in a partnership or S corporation, and reissued them in the 2013 proposed regulations. Certain issues nevertheless remain as the NII enters its second tax year, having first been effective in 2013.


In certain cases, moving expenses may be tax deductible by individuals. Three key criteria must be satisfied: the move must closely-related to the start of work; a distance test must be satisfied and a time test also must be met.


No. Participatory wellness programs do not require a specific outcome in order for a participant to receive a reward.


As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of September 2014.


The IRS has some good news for you. Under new rules, you may be able to gain a partial tax break on the full $250,000 capital gain exclusion ($500,000 if you file jointly with your spouse), even if you haven't satisfied the normal "two out of five year test" necessary to gain that tax benefit. You may qualify for an exception.


As a business owner you have likely heard about the tax advantages of setting up a retirement plan for you and your employees. Many small business owners, however, have also heard some of the horror stories and administrative nightmares that can go along with plan sponsorship. Through marketing information that you receive, you may have learned that a simplified employer plan (SEP) is a retirement plan you can sponsor without the administrative hassle associated with establishing other company plans, including Keoghs.


Q. My husband and I are thinking of starting a business. Can we operate it as a sole proprietorship?

A. No. When two or more people own a business and share in the profits, they are partners. Only one person can own a sole proprietorship. However, if either you or your husband is the sole owner, and the other is an employee, a "sole proprietorship" under the tax law is allowed.


Although taxes may take a back seat to the basic issue of whether refinancing saves enough money to be worthwhile, you should be aware of the basic tax rules that come into play. Sometimes, you can immediately deduct some of the costs of refinancing.


If you want to withdraw funds from either your company retirement plan or your individual retirement account, there is a 10% additional tax (penalty) if you make withdrawals before the age of 59 ½. There is an exception to this rule if you make withdrawals from your account of a series of "substantially equal periodic payments."


A new IRS ruling confirms that HRAs are entitled to significant tax breaks. Properly structured, they can provide a deduction for the business, tax-free benefits for employees, and more direct and personal control over health care costs…a classic "win-win" situation, compliments of the tax code.


Generally, if you do volunteer work for a charity, you are not entitled to deduct the cost of services you perform for the charity. However, if in connection with the volunteer work you incur out-of-pocket expenses, you may be entitled to deduct some of those expenses.


Q: What tax deductions am I entitled to as an investor?

A: Certain investment-related expenses are deductible, others are specifically restricted. Still others won't get you a deduction, but you will be able to add them to your tax basis in the underlying investment, or net them from the amount you are otherwise considered to have received on its sale.


New IRS rules substantially simplify the computation of required minimum distributions (RMDs). In addition, Congress has forced the IRS to adopt new life expectancy tables that reflect longer life expectancies, resulting in distributions to be made over a longer time-period and for the RMD to be smaller than would have been required in previous years. You could realize some significant tax savings.

Making gifts is a useful, and often overlooked, tax strategy. However, when thinking about whether to make a gift, or gifts, to your children or other minors, the tax consequences must be evaluated very carefully. Many times, though, the tax consequences can be beneficial and lower your tax bill.


Q. My husband and I have a housekeeper come in to clean once a week; and someone watches our children for about 10 hours over the course of each week to free up our time for chores. Are there any tax problems here that we are missing?


Have you ever thought about distributions of property dividends (rather than cash dividends) from your corporation?  In some situations, it makes sense to distribute property in lieu of cash for a variety of reasons. However, before you make the decision as to the form of any distributions from your company, you should consider the various tax consequences of such distributions.


You have just been notified that your tax return is going to be audited ... what now? While the best defense is always a good offense (translation: take steps to avoid an audit in the first place), in the event the IRS does come knocking on your door, here are some basic guidelines you can follow to increase the chances that you will come out of your audit unscathed.


Employers are required by the Internal Revenue Code to calculate, withhold, and deposit with the IRS all federal employment taxes related to wages paid to employees. Failure to comply with these requirements can find certain "responsible persons" held personally liable. Who is a responsible person for purposes of employment tax obligations? The broad interpretation defined by the courts and the IRS may surprise you.


When it comes to legal separation or divorce, there are many complex situations to address. A divorcing couple faces many important decisions and issues regarding alimony, child support, and the fair division of property. While most courts and judges will not factor in the impact of taxes on a potential property settlement or cash payments, it is important to realize how the value of assets transferred can be materially affected by the tax implications.


Raising a family in today's economy can be difficult and many people will agree that breaks are few -- more people mean more expenditures. However, in recent years, the IRS has passed legislation that borders on "family-friendly", with tax credits and other breaks benefiting families with children. Recent legislation also addresses the growing trend towards giving families a break.


Q. I have a professional services firm and am considering hiring my wife to help out with some of the administrative tasks in the office. I don't think we'll have a problem working together but I would like to have more information about the tax aspects of such an arrangement before I make the leap. What are some of the tax advantages of hiring my spouse?


All of us will, at one time or another, incur financial losses - whether insubstantial or quite significant -- in our business and personal lives. When business fortunes head South -- either temporarily or in a more prolonged slide, it is important to be aware of how the tax law can limit the actual amount of your losses and your ability to deduct them. Here are some of the types of losses your business may experience and the related tax considerations to keep in mind in the event of a business downturn.


An attractive benefit package is crucial to attract and retain talented workers. However, the expense of such packages can be cost-prohibitive to a small business. Establishing a tax-advantaged cafeteria plan can be an innovative way to provide employees with additional benefits without significantly adding to the cost of your overall benefit program.


Keeping the family business in the family upon the death or retirement of the business owner is not as easy as one would think. In fact, almost 30% of all family businesses never successfully pass to the next generation. What many business owners do not know is that many problems can be avoided by developing a sound business succession plan in advance.


If you use your home computer for business purposes, knowing that you can deduct some or all of its costs can help ease the pain of the large initial and ongoing cash outlays. However, there are some tricky IRS rules that you should consider before taking - or forgoing - a deduction for home computer costs.


Q. My wife and I are both retired and are what you might call "social gamblers". We like to play bingo and buy lottery tickets, and take an occasional trip to Las Vegas to play the slot machines. Are we required to report all of our winnings on our tax return? Can we deduct our losses?


The rise of paperless processing and remote access to computer systems has made increased computer security imperative. Establishing an effective password system can help keep your data secure while allowing you greater control over the access to your company's vital information.


Maintaining good financial records is an important part of running a successful business. Not only will good records help you identify strengths and weaknesses in your business' operations, but they will also help out tremendously if the IRS comes knocking on your door.


After your tax returns have been filed, several questions arise: What do you do with the stack of paperwork? What should you keep? What should you throw away? Will you ever need any of these documents again? Fortunately, recent tax provisions have made it easier for you to part with some of your tax-related clutter.


What do amounts paid for new swimming pools, Lamaze classes, lunches with friends, massages, and America Online fees have in common? All of these costs have been found to be legitimate tax deductions under certain circumstances. As you gather your information for the preparation of your tax return, it may pay to take a closer look at the items you spent money on during the year.


If you use a Windows 95 computer and any version of Microsoft's Internet Explorer, do not use it for transmitting sensitive information (e.g., credit card numbers) on the internet! Secure Communications with Windows 95 are open to hacking.

Microsoft has finally issued a fix for the perplexing problem where Outlook Express does not respond to links designed to initiate a new email (to the recipient represented by the link).