Tax

Tax

Tax Due Dates for October 2016

October 11

Employees who work for tips – If you received $20 or more in tips during September, report them to your employer. You can use Form 4070.

October 17

Individuals – If you have an automatic 6-month extension to file your income tax return for 2015, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due.

Electing Large Partnerships – File a 2015 calendar year return (Form 1065-B). This due date applies only if you timely requested a 6-month extension of time to file the return.

Employers Nonpayroll withholding. If the monthly deposit rule applies, deposit the tax for payments in September.

Employers Social Security, Medicare, and withheld income tax. If the monthly deposit rule applies, deposit the tax for payments in September.

October 31

Employers – Social Security, Medicare, and withheld income tax. File form 941 for the third quarter of 2016. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until November 10 to file the return.

Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2016 but less than $2,500 for the third quarter.

Employers – Federal Unemployment Tax. Deposit the tax owed through September if more than $500.

Business Tax

Small Business Health Care Tax Credit: The Facts

As a small employer, you may be eligible for a tax credit that lets you keep more of your hard-earned money. It’s called the small business health care tax credit, and it benefits employers that:

  • offer coverage through the small business health options program, also known as the SHOP Marketplace
  • have fewer than 25 full-time equivalent employees
  • pay an average wage of less than $50,000 a year ($51,800 in 2016 as adjusted for inflation)
  • pay at least half of employee health insurance premiums

Here are five facts about this credit:

  • The maximum credit is 50 percent of premiums paid for small business employers and 35 percent of premiums paid for small tax-exempt employers.
  • To be eligible for the credit, you must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program Marketplace, or qualify for an exception to this requirement.
  • The credit is available to eligible employers for two consecutive taxable years beginning in 2014 or later. You may be able to amend prior year tax returns to claim the credit for tax years 2010 through 2013 in addition to claiming this credit for those two consecutive years.
  • You can carry the credit back or forward to other tax years if you do not owe tax during the year.
  • You may get both a credit and a deduction for employee premium payments. Since the amount of your health insurance premium payments will be more than the total credit, if you are eligible, you can still claim a business expense deduction for the premiums in excess of the credit.

Contact the office today if you’d like more information about the small business health care tax credit page.

Tax

Bitcoins Treated as Property for Tax Purposes

Many retailers and online businesses now accept virtual currency for sales transactions. Despite IRS issuing a set of FAQs last year regarding virtual currency, the U.S. federal tax implications remain relatively unknown to many retailers. If you’re a retailer who accepts virtual currency such as bitcoins for transactions, here’s what you need to know.

Sometimes, virtual currency such as bitcoins operate like “real” currency, i.e. the coin and paper money of the United States or of any other country that is designated as legal tender, circulates, and is customarily used and accepted as a medium of exchange in the country of issuance.

But bitcoins do not have legal tender status in any jurisdiction. If you’ve been paid in virtual currency, you should be aware that virtual currency is treated as property for U.S. federal tax purposes. In other words, general tax principles that apply to property transactions also apply to transactions using virtual currency. Among other things, this means that:

  • Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, and are subject to federal income tax withholding and payroll taxes.
  • Payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
  • The character of gain or loss from the sale or exchange of virtual currency depends on whether the virtual currency is a capital asset in the hands of the taxpayer.
  • A payment made using virtual currency is subject to information reporting to the same extent as any other payment made in property.

If you’re a business or individual with questions about virtual currency such as bitcoins, don’t hesitate to call the office for assistance.

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