Don’t be the victim of a tax scam

Don’t be the victim of a tax scam

Earlier this month the best bit of tax scamming I’ve seen in my career crossed my desk. While there are many red flags on the document below, at first blush it’s the real deal, a balance due notice from the IRS. And not an outrageous bill; something you might consider paying without consulting your tax preparer. Don’t do it. Whenever you receive a notice, your preparer should be copied for an opinion on how to deal with it.
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This is not a scam!

This is not a scam!

The IRS has announced that it will conduct special “compliance efforts” for businesses and individuals in various communities. The purpose is to meet face-to-face with taxpayers with ongoing tax issues. These meetings will take place in areas where the Service’s resources have not been adequate to address these issues.
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Celebrating Anniversaries

In recent months, we at Capaldi Reynolds & Pelosi, P.A., welcomed new staff, Brian Dziobak, Chris Hill, Janice Swank, Craig Mortensen, Joanna Muller and Patrice Girard to our team.  We pride ourselves on providing an enriching, balanced work life for our staff to thrive.  The best example of our success, our shining moment, is to acknowledge staff who are celebrating anniversaries with our firm.

Capaldi Reynolds & Pelosi staff we are celebrating this year:

Lois Fried, Partner, celebrating 35 years; John Moller, Partner, 25 years; Michael Reynolds, Partner, 20 years; Denise Burcaw, Admin Supervisor, 15 years; Szu-Lun (Allen) Hsu, Principal, 15 years; Viktoryia Olunina, Principal, 10 years; Marta Criales, Senior Accountant, 5 years; Frederick Crum, Senior Accountant, 5 years; Quinn Do, Senior Accountant, 5 years; Clayton Himstedt, Principal, 5 years; Gabriela Lara, Senior Accountant, 5 years; Anna Marie Donohue, Senior Admin Assistant, 5 years; Richard Pollard, Senior Principal, 5 Years; Larry Horowitz, Senior Principal, 5 years.

Our sister firm, CRA Financial Services, LLC is celebrating the anniversaries of Donna Savastani, Chief Compliance Officer, 10 years and Patricia Sandland, Client Services Personnel, 10 years.

We wish you all continued success!

New Jersey Adopts Market-Based Sourcing For Corporate Taxpayers

New Jersey sealOne of the latest trends in state and local corporate income tax has been the adoption of market-based sourcing for the sales of services.  In 2018, new state legislation made significant changes to the New Jersey Corporation Business Tax Act, including the implementation of market-based sourcing for services beginning in 2019.

The New Jersey Corporation Business Tax Act imposes tax on domestic and foreign corporations having a taxable status in New Jersey based on the portion of net income allocable to New Jersey.  In order to properly determine the net income allocable to New Jersey, corporate taxpayers doing business both within and outside New Jersey must source their revenue to the appropriate state.
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IRA Rollover to make HSA Contribution

IRA rollover to HSA is a tax-free contributionHealth Savings Accounts (HSAs) are one of the best retirement and investment tools for various reasons.  A HSA is a savings account set up for the sole purpose of paying the qualified medical expenses of the account’s beneficiary or the beneficiary’s dependents or spouse. The HSA can be funded with before-tax employer contributions and/or employee contributions.  Employee contributions are tax deductible.  The contributions may be invested and grow-tax free in the account.  Qualified distributions from the HSA to pay medical expenses are not taxable income.
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Doctors’ and Dentists’ Corner- Employee Dishonesty

Employee counting moneyWho owns that nice new car in your parking lot? Do you have an employee who seems to be living at a standard higher than his salary would permit? Hmmm, he (or she) tells you his Uncle Joe died and left him a huge inheritance, or maybe he won the lottery. You’re happy for him; such a hard worker who never takes a vacation!

This could all be as innocent as it sounds BUT it could also be a flashing warning sign of employee dishonesty.
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Death/Incapacity Dossier: Records to be Compiled in Contemplation of Death or Incapacity

Think about this situation. You received word that an acquaintance passed away suddenly and you were designated as the person to contact. You met the deceased a few years ago and you maintained a causal friendly relationship. After some time for grief and remembrances, you start to think about the task that awaits you. The deceased never asked you to be his/her personal representative. You ponder: What do I do now? Events like this occur every day. Sometimes the departed is a family member, business associate, friend, neighbor, or your spouse. Handling the affairs of someone who has passed away or who abruptly becomes incapacitated would be so much easier and more effective if there was a frank discussion in advance and there was a file containing the key documents, data, and the location of important items needed to conduct a smooth and orderly transition.
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Household Employees

household employeeHow do you determine if an individual who is hired to do household work is considered a household employee or an independent contractor? Per the IRS guidelines, an individual who works around your home is considered a household employee if you can control the type of work they do and how they do it. This applies to babysitters, cooks, maids, nannies, caregivers, gardeners, etc. unless the worker is customarily engaged in an independently established trade or business.

Once you’re able to identify you have a household employee, the employee will need to fill out Forms W-4 and I-9 so the correct taxes can be deducted from their paychecks. Keep in mind a household employee can elect out of having income taxes withheld from their pay. These two forms do not need to be submitted to the IRS. They are kept for the employer’s records.
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Nondeductible Employee Parking Expenses

Employee Parking SignEmployee parking expenses – how much can your business deduct?  

The Tax Cuts and Jobs Act (TCJA) resulted in many tax law changes. One of them was the new rule for determining the deductible portion of employee parking expenses.

Under the new Section 274(a)(4), expenses paid by employers after Dec. 31, 2017, to provide employee parking are generally no longer deductible. Also, new Section 512(a)(7), requires tax-exempt organizations to increase their unrelated business taxable income (UBTI) by the amount of employee parking expenses that are nondeductible.
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