Online Advisor
Timothy W. Tuttle & Associates

Volume 12 Edition 2                     Please email comments to                   Feb 2016

Major Tax Deadlines:

For February 2016

* February 1 - Employers must provide 2015 W-2 statements to employees.

* February 1 - Payers must provide 2015 Forms 1099 to payees. (Brokers have until February 16 to provide Form 1099-B and consolidated statements to customers.)

* February 1 - Employers must generally file Form 941 for the fourth quarter of 2015 and pay any tax due.

* February 1 - Employers must generally file 2015 federal unemployment tax returns and pay any tax due.

* February 29 - Payers must file 2015 information returns (such as 1099s) with the IRS. (Electronic filers have until March 31 to file.)

* February 29 - Employers must send 2015 W-2 copies to the Social Security Administration. (Electronic filers have until March 31 to file.)

Coming up in MARCH

* March 1 - Farmers and fishermen who did not make 2015 estimated tax payments must file 2015 tax returns and pay taxes in full.

* March 31 - Deadline for providing a copy of Form 1095-C to the recipient of health insurance coverage.

Note: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of FICA taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.

What's New in Taxes:

Are you overlooking the domestic production activities deduction?

If you manufacture, produce, grow, or extract products in the U.S., you may be eligible to claim a tax deduction for domestic production activities. You can deduct up to 9% of your qualified activities. The amount is computed based on the lesser of income related to your domestic production or your taxable income, and is generally limited by Form W-2 wages paid. The deduction has been available since 2005 to a variety of businesses, including manufacturers, farmers and architects. The IRS issued clarifying regulations over the summer that you can choose to apply to your 2015 federal income tax return.

Be sure to use updated tax numbers in your 2016 planning

By law, the IRS must adjust certain tax numbers for inflation each year. For 2016, due to a low inflation rate, many of the numbers are unchanged or change only slightly from 2015 amounts. Here are some of the tax numbers to use in your 2016 tax planning.

* The maximum individual retirement account contribution you can make in 2016 remains unchanged - $5,500 if you're under age 50 and $6,500 if you are 50 or older.

* The maximum amount of wages employees can put into a 401(k) plan remains $18,000. The 2016 maximum allowed for SIMPLE plans is $12,500. If you are 50 or older, you can contribute up to $24,000 to your 401(k) and $15,500 to your SIMPLE plan.

* For 2016, the maximum amount you can contribute to a health savings account is $3,350 for individuals and $6,750 for families. The catch-up contribution when you're age 55 or older is $1,000.

* The "nanny tax" threshold is $2,000 in 2016, up from $1,900 for 2015. If you pay household employees $2,000 or more during the year, you're generally responsible for payroll taxes.

* The "kiddie tax" threshold remains $2,100 for 2016. If your child (under-age 19 or under age 24 for students) has more than $2,100 of unearned income (such as dividends and interest) this year, the excess could be taxed at your highest rate.

* The maximum earnings subject to social security tax in 2016 is $118,500, unchanged from 2015. The $15,720 earnings limit for those under full retirement age is also unchanged. If you've reached full retirement age, there is no earnings limit.

Contact us for additional information about these and other inflation-adjusted tax numbers.

New Business:

Is your capitalization policy up-to-date?

Establishing a written capitalization policy for your business can ensure the current deductibility of certain purchases of tangible property. That can mean tax savings - and is especially true under the "repair regulations" that became effective in January 2014. Those IRS regulations explain the federal income tax treatment of expenditures you make for materials and supplies, repairs and maintenance, and business property you buy, produce, or improve.

The initial repair regulations provided a "de minimis" safe harbor of $500 for expensing certain costs for businesses without a required financial statement (generally a financial statement issued as a result of a certified audit conducted by a CPA). However, the IRS recently issued a notice increasing the safe harbor for these businesses. Beginning January 1, 2016, the new "de minimis" safe harbor is $2,500 per invoice or item with a supporting invoice.

If you established a company policy in 2014 to take advantage of the safe harbor, you'll want to review and update it. Give us a call for more information. We're here to help.

Make customer service more than mere talk

Your sales staff knows that good customer service leads to repeat sales and referrals, which lead to higher revenues and profits. Their results are directly affected by customer perceptions. But employees in support and back office functions may not think of themselves as serving the customer. Yet every employee has an impact, direct or indirect, on customer experience. An incorrect shipment, a late delivery, or a mistake on an invoice, all result in poor service.

How can you teach every employee that a goal of your business is to meet, and preferably exceed, customer expectations as often as possible? Here are four ways to help employees understand that customer service is part of everyone's job.

* Communicate. Explain the role each of your employees plays in providing good service. Consider posting measures of sales for all to see. If appropriate, develop measures of accuracy or error-free performance, and track and share the results.

* Educate. Provide training to every employee with customer contact and emphasize the importance of customer service to the business as a whole. Instill a service-minded culture so all employees are aware of the ways cooperation and teamwork can contribute to good service.

* Good management. As the owner or manager, your actions and your priorities set the tone for the company. Employees follow your lead and pay attention to what you consider important. Look for ways to measure customer satisfaction and show your employees that you're monitoring it. And remember the other way to improve customer service - minimizing what goes wrong. Make sure you're aware of errors and complaints. Set goals for improved performance and hold people to them.

* Involve your employees. Make it clear that better service is a shared goal and ask for suggestions. You might be surprised how quickly good customer service becomes more than mere talk.

What's New in Finances:

Ask your employer about identity protection services

After hearing about data breaches of government and business records, are you worried about having your personal financial information stolen? You may want to talk to your employer about providing identity protection services as an employee benefit.

The IRS released guidance last year regarding the tax treatment of identity protection services offered to you as a victim of identity theft. In that guidance, the IRS said free-to-you identity protection services were not included in your gross income or wages when offered by the company from whom your information was stolen, or by your employer if the theft was a result of a breach of your employer's data.

Now the IRS says your employer can offer tax-free identity protection services even if no data breach has occurred. The new rule does not apply when your employer gives you cash to pay for your own identity protection service, or to proceeds you receive under an identity theft insurance policy.

Take charge of your debt

Looking for ways to manage your debt? Here are seven practical suggestions.

1. Stop adding to your debt burden. Some debt is unavoidable or is considered "good" debt, such as the mortgage on your home. But a mountain of debt created by purchasing luxuries you clearly can't afford does not fall into that category. Watch your spending and take a hard-line approach to new purchases.

2. Get a clear picture of all your debts. Put the data in a spreadsheet or other easily accessible ledger. Your credit history report can get you started with a listing of your outstanding accounts.

3. Create a payment calendar. Get familiar with due dates. Use your smartphone or other technology to provide reminders.

4. Make payments on time. If you miss a due date or skip a payment, you'll be stuck with a late fee in addition to what you already owe. Those fees make a bad situation worse.

5. Give 'til it hurts. At the very least, pay the minimum amount required. If you can stand the pain of paying more, you'll save time and money over the long term.

6. Prioritize your debts. Does your credit card charge sky-high interest rates? Pay that balance down first by putting any additional amount you can afford toward the principal. Devise a system for identifying and paying the debts that cost the most.

7. Set up an emergency fund. Although you'd like to use excess cash to pay off debt, you also need some "wiggle room." Stash funds in an easily accessible account so you can avoid adding to your debt if an emergency occurs.

Debt is a four-letter word that practically no one wants to hear. Nevertheless, with sound money-management techniques, you can take charge of what you owe. Give us a call for more suggestions that will help.

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The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.

Timothy W. Tuttle & Associates