Tax

May 10

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

Employers – Social Security, Medicare, and withheld income tax. File Form 941 for the first quarter of 2014. This due date applies only if you deposited the tax for the quarter in full and on time.

May 15

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

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

• By Leon Clinton
• May 1, 2014

There are a few tax rules that affect everyone who files a federal income tax return. This includes the rules for dependents and exemptions. These seven facts about dependents and exemptions will help you when you file your taxes this year.

1. Exemptions lower your income. There are two types of exemptions: personal exemptions and exemptions for dependents. You can usually deduct $3,900 for each exemption you claim on your 2013 tax return.

2. Personal exemptions. You can usually claim an exemption for yourself. If you’re married and file a joint return you can also claim one for your spouse. If you file a separate return, you can claim an exemption for your spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.

3. Exemptions for dependents. You can usually claim an exemption for each of your dependents. A dependent is either your child or a relative that meets certain tests. You can’t claim your spouse as a dependent. You must list the Social Security number of each dependent you claim. If you don’t have a social security number, special rules apply, so don’t hesitate to give us a call if this is your situation.

4. Some people don’t qualify. You generally may not claim married persons as dependents if they file a joint return with their spouse. Again, there are some exceptions to this rule, so call us if you have any questions about this.

5. Dependents may have to file. People that you can claim as your dependent may have to file their own federal tax return. This depends on many things, including the amount of their income, their marital status and if they owe certain taxes.

6. No exemption on dependent’s return. If you can claim a person as a dependent, that person can’t claim a personal exemption on his or her own tax return. This is true even if you don’t actually claim that person as a dependent on your tax return. The rule applies because you have the right to claim that person.

7. Exemption phase-out. The $3,900 per exemption is subject to income limits. This rule may reduce or eliminate the amount depending on your income. Please call us if you need additional information about the exemption phase-out.

Questions about dependents and exemptions? Give us a call. We’re here to help you!

• By Leon Clinton
• April 30, 2014

If you’re one of the more than 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction), don’t forget about the new simplified option available for taxpayers starting with 2013 tax returns being filed now.

The new optional deduction is capped at $1,500 per year based on $5 a square foot for up to 300 square feet. It is expected to reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually.

Currently, taxpayers claiming the home office deduction are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method. Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible.

Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

If you need more details about the new simplified home office deduction for tax year 2013 (or 2014), don’t hesitate to give us a call. We’re here to help.

• By Leon Clinton
• April 29, 2014