Timothy W. Tuttle &
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Major Events This Month:
†- SIMPLE IRA plan
individual and C-corp tax return filing deadline
Autumn's in full swing, meaning it's time to start
preparing for the busy months ahead. You can get ready by learning about the
Form 1040 updates you'll see this 2019 tax season, as well as the new
Marketplace Facilitator sales tax laws for anyone that sells through Amazon or
eBay. You can also brush up on your rights if a bill collector ever harasses
Call if you would like to discuss how this information
relates to you. If you know someone who can benefit from this newsletter, feel
free to send it to them.
Another Year, Another 1040
In 2018, the government attempted to ďsimplifyĒ the
tax-filing process by drastically shortening Form 1040. The result was six new
schedules that created a lot of confusion. Now the IRS is attempting to ease
some of that pain by revising the form and removing some schedules. Will it
help? Here is what you need to know:
information on the main form. To make it easier for
the IRS to match pertinent information across related tax returns, new
fields have been added on the main Form 1040. For example, thereís now a
spot for your spouseís name if you choose the married filing separate
status. In addition, there's a separate line for IRA distributions to more
clearly differentiate retirement income.
schedules are gone. What was your favorite memory of
Schedules 4, 5 and 6? Was it the unreported Social Security tax on
Schedule 4? Or the credit for federal fuels on Schedule 5? While those
schedules will no longer exist, those lines (and many others) have found a
new home on one of the first three schedules. Less paperwork, but still
the same amount of information.
can keep your pennies! For the first time, the IRS is
eliminating the decimal spaces for all fields. While reporting round
numbers has been common practice, itís now required.
changes on the way. The current versions of
Form 1040 and Schedules 1, 2 and 3 are in draft form and awaiting comments
on the changes. Because of the importance of the 1040, the IRS is
expecting to make at least a few updates in the coming weeks (or months)
before they consider it final. Stay tuned for more developments.
How to prepare for the changes
The best way to prepare is to be aware that 1040 changes
are coming. The information required to file your taxes will remain the same,
but some additional hunting will be necessary to find the shifting lines and
fields on the modified form.
Remember, changes bring uncertainty and potential for
delays, so getting your tax documents organized as early as possible will be
key for a timely tax-filing process.
Bill Collector Calling? Know your Rights
Maybe you're behind on paying your bills because of
circumstances outside of your control. Or perhaps there's been an error in
billing. Either way, these scenarios may lead to a run-in with a debt
collector. Fortunately, there are strict rules in place that forbid any kind of
collector harassment in the U.S. If you know your rights, you can deal with
debt collection with minimal hassle. Here's what to remember:
have a right to details ó without harassment. When
a debt collector calls, they must be transparent about who they are. They
need to tell you: "This is an attempt to collect a debt, and any
information obtained will be used for that purpose."
In addition, debt collectors cannot use abusive language, or threaten you
with fines or jail time. The most a debt collector can truthfully threaten
you with is that failure to pay will harm your credit rating, or that they
may sue you in a civil court to extract payment.
don't have to put up with 24/7 calls. Debt
collectors may not contact you outside of "normal" hours, which
are between 8 a.m. and 9 p.m. local time. They may try to call you at
work, but they must stop if you tell them that you cannot receive calls
Keep in mind that debt collectors may not talk to anyone else about your
debt (other than your attorney, if you have one). They may try contacting
other people, such as relatives, neighbors or employers, but it must be
solely for the purpose of trying to find out your phone number, address or
where you work.
can tell them to stop. Whether you dispute the
debt or not, at any time you can send a "cease letter" to the
collection agency telling them to stop making contact. You don't need to
provide a specific reason. They will have to stop contact after this
point, though they may still decide to pursue legal options in civil
can dispute collection. If you believe the debt
is in error in whole or in part, you can send a dispute letter to the
collection agency within 30 days of first contact. Ask the collector for
their mailing address and let them know you are filing a dispute. They
will have to cease all collection activities until they send you legal
documentation verifying the debt.
If a debt collection agency is not following these rules,
report them. Start with your state's attorney general office and consider
filing a complaint with the U.S. Federal Trade Commission and the Consumer
Financial Protection Bureau, as well.
Amazon and eBay Sales Tax ALERT!
If you or your business sells product on Amazon using the
Fulfillment by Amazon (FBA) service, you are well into the multi-state sales
tax mess ... even if you are not aware of it. You may be asking yourself:
- Do I now need to
register my business with every state and collect tax on their behalf?
- Do I really have
physical nexus? What about economic nexus? What is nexus?
The old sales tax standard required you to collect and
remit sales tax only in states that you have a physical presence (also known as
physical nexus). The recent South Dakota vs. Wayfair, Inc. decision by the
Supreme Court then legitimized the concept of economic nexus. This means your
business could be required to collect and remit sales tax based on where you
ship a product and not whether you ever set foot in a particular state
The bigger mess
States were quick to jump on the bandwagon and actively
identify Amazon, Ebay and Walmart sellers to demand sales tax for website
sales. Some states, like California, got even more aggressive and decided that
FBA sellers actually have physical presence because Amazon may put your product
in a warehouse in their state. They got seller lists from Amazon and sent out
threatening letters to small sellers demanding back sales tax, even though
businesses have no way to retroactively collect the tax because the customers
are Amazon customers.
Marketplace facilitator to the rescue?
To help address this mess and alleviate the need for
small businesses to collect and remit sales tax forms to 50 states, many states
acknowledged the problem and have passed what is called Marketplace Facilitator
In short, itís on the facilitator, NOT you. States with
these laws require Amazon, Ebay and similar companies that facilitate sales for
resellers to collect and remit sales tax on reseller Amazon activity. There are
more than 30 states that have adapted these laws.
You DO NOT need to register your business to collect
sales tax in states that have Market Facilitator legislation unless you are
otherwise required to do so.
What you need to know
the states. Know which states have Marketplace
Facilitator laws. If you donít, you could unwittingly register your
business with a state when you do not have to do so.
states deploy deceptive tactics. For example,
California passed a Marketplace Facilitator law effective October 2019.
Despite this law, the California Department of Tax and Fee Administration
(CDTFA) is actively soliciting (threatening?) small businesses who sell on
Amazon to register and remit sales taxes for a time period prior to this
date without disclosing the new law. To make matters worse, their sales
tax registration form could make you personally liable for
business-related sales tax and disclose your confidential supplier list.
It may also be filled with other legal entrapments.
the minimums. Even states without Marketplace
Facilitator laws typically have minimum thresholds before they require you
to collect and remit sales tax. Every state is different, but the typical
limit is 200 transactions or $20,000 in sales.
out streamline states. Collecting and remitting sales tax
is a daunting task for any small business. Using a third party sales tax
administrator is very expensive. There is some help, albeit still
complicated, for registering with 23 states that are part of a streamline
sales tax agreement.
Sales tax collection in multiple states is not for the faint of heart. Streamline Sales Tax
and Bill Track 50
are a few of the popular sites that can help.
Decoding the New Dating Scene
Are you feeling a little in the dark about the new
vocabulary developing around dating? Itís not surprising, especially when you
hear a term like getting "ghosted."
Luckily, youíre just a few dating slang definitions away
from having a better understanding of this vocabulary ó often used on social
media. It's important to understand, especially if you have young people in
your life who are dating.
Here are a few popular slang terms and their definitions,
plus conversation-starter ideas for when you encounter them:
Also known as stringing someone along. When someone offers just enough
attention to another person to maintain hope there will be a relationship
someday. Some examples include sending occasional texts and in-person
Conversation starter: Breadcrumbing can happen
before a relationship begins, although sometimes a concrete relationship
never forms. This could just be flirting, but there may also be a more
serious reason a relationship isnít starting. Ask your teen how theyíre feeling
about the person they like, and if there are issues around starting a
relationship with them.
Creating Instagram posts meant to capture the attention of a specific
person. This includes posting photos from certain locations the person has
a history of visiting, and providing references to music, food or clothing
the person is known to favor.
Conversation starter: Has your child started
exclusively posting on Instagram about South America after their new
classmate just moved from Ecuador? Sounds like theyíre Instagrandstanding.
Ask them about their interest in the classmate.
Communicating strong affection for someone at an early stage in a
relationship. This is often considered a dating faux pas, and may be a
manipulation tactic. For instance, going on a first date with someone and
then confessing a desire to marry them the next day.
Conversation starter: If your teen is dealing with love
bombing fallout, talk to them about their actions and how it affected
their relationship. This would be a good time to discuss appropriate
levels of showing affection and why itís sometimes challenging to manage.
Discuss how love bombing can also be used to negatively control a
Stopping all communication for no apparent reason or explanation. This
means no more calls, texts, emails, social media messaging or in-person
meetings. If someone ghosts you, they will not respond to any of your
attempts to communicate with them, and will sometimes actively block you
on social apps.
Conversation starter: Ghosting can feel especially
harsh to someone who didnít suspect there was a problem with a
relationship. If your teen has been ghosted, ask them how they are feeling
and let them know there may not be a logical reason it happened. If you
find out your child has ghosted someone, ask them why. Talk to them about
better ways to handle ending a difficult relationship.
Creating a totally bogus identity online and using it to manipulate
someone to provide money or other favors. Catfishing is deceptive, as well
as dangerous and illegal when used to steal identities. It can be a form
of digital bullying. In the dating world, someone might catfish to hide
their identity out of shame or embarrassment regarding their physical
appearance, social status, age, gender or other traits.
Conversation starter: If someone has been catfished,
get details about whom they thought they were talking to and what kind of
information they shared. If you find someone is catfishing others, tell
them to stop immediately. It is wrong and may need to be reported to the
victim and the proper authorities.
Use these conversation starters to start a meaningful
dialogue and ultimately promote trust and open conversations with your kids.
Reminder: Time to Start the Financial Aid Process
If you have a child in college or entering college during
the next school year, you need to read this. You can now fill out your required
Free Application for Financial Student Aid (FAFSA) for the next school year.
FAFSA application timeframe
The Free Application for Federal Student Aid (FAFSA)
process opened on Oct. 1.
The time to file is now
The earlier you file your application, the earlier you
will receive aid packages from most participating schools. The application is
used to receive grants, federal loans and work study awards. Here are some
hints to ensure the application process works in your favor:
your FSA ID. If you have not already done so, both
the student and a parent will need to set up a Federal Student Aid (FSA)
ID (username and password) within the FAFSA system. You cannot submit the
FAFSA form without first doing this.
the FAFSA early! As soon as possible, fill out and
submit your FAFSA. Filing early maximizes your chances of receiving aid.
It also minimizes your chances of missing an unknown application deadline.
your tax records. Because the year is not
yet over, you can use last year's (2018) tax information when filling out
the application. There are IRS tax return data retrieval tools within the
online application to automate this process.
to your advisors. If you have a child ready to
attend college, stay in touch with both your financial advisor and your
school advisor. A financial advisor is used to help manage your assets to
present a good financial picture starts before your student's junior year
in high school. The school advisor is a great resource to help you find
potential sources of money.
the right info.To fill out a FAFSA you will need the
registration number (if not a U.S. citizen)
of any nontaxable income (excluding retirement account balances)
of the following:
savings and checking accounts
Filling out the form can be a daunting task for the
uninitiated, but with proper preparation you can get your form done in quick
5 Ways Payroll Services Boost a Business
Is a payroll provider right for you and your business?
While it is an added expense, there are good reasons to add a partner to help
with this service. Here are five things to consider:
full attention on growing the business. If
a portion of employees is focused on managing and processing payroll,
business growth opportunity may be stifled. This is especially true if a
key employee or owner is the one processing payroll. By outsourcing
payroll responsibilities, the full workforce can concentrate on growing
accuracy and compliance. Most entrepreneurs
didnít go into business to tabulate hourly time cards, calculate tax
withholdings, or stay current with the constantly changing government
filing requirements. Thankfully there are those who specialize in
monitoring labor regulations, compliance updates and the number-crunching
that payroll requires. This will invariably improve the payroll accuracy a
audit risk and increases peace of mind. Federal taxes,
state taxes, local taxes, Social Security, Medicare, unemployment taxes
and overtime requirements are long (and growing). Payroll services reduce
audit risk on the front end and provide audit assistance on the back end.
internal controls. Separation of duties is an
important internal control for all businesses. This is tough to do in a
small company. Businesses with one or two-person payroll departments are
susceptible to fraud or embezzlement. Adding an outside payroll service
can provide the checks and balances a company needs to stay protected.
money. One of the key methods of reducing
business costs is adding efficiency. Outsourcing payroll increases
efficiencies because payroll professionals need fewer hours to get the job
done. These time improvements, coupled with potential savings in penalties
and interest, can have a positive effect on net income.
When laying out and understanding all aspects of using a
payroll service, it may be time to review your situation.
always, should you have any questions or concerns regarding your tax situation
please feel free to call.
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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.
W. Tuttle & Associates