Social Security is a valuable resource for older and disabled workers as well as the worker’s survivors and dependents. It provides 90% of the cash flow for one-third of retirees. It delivers 28% of the cash flow for high income retirees. A mistake in claiming these benefits can be permanent and costly to the worker and his/her family. This is the second in a series of articles on Social Security. The objective of the series is to help you make better decisions regarding claiming benefits. To make good decisions we need to identify, determine, and appreciate certain terms and concepts. The theme of this installment is the procedure used to calculate Social Security benefits and a brief discussion of average benefits. Estimating your benefits is the essential first step in the SS decision-making process.
The Tax Cuts & Jobs Act (TJCA) repealed the deduction for business entertainment beginning in 2018. This includes expenditures for taking clients to sporting events and shows, and paying for season tickets for various sporting events. Generally, any dues for social clubs such as country clubs or athletic clubs will also be non-deductible.
Most business-related meals will be 50% deductible. If no business is discussed, the meal is not deductible for tax purposes and should be classified as entertainment.
Deductions will be permissible for sponsorship payments, net of the fair market value of any meals and entertainment, as well as for payments for professional dues and meetings such as civic organizations, trade associations and professional organizations.
Proper classification of the above-cited expenditures will be important for proper tax reporting. Accordingly, it is essential to have your company’s internal accounting set up appropriately. Please contact us if you would like assistance in identifying and classifying these expenses to treat them correctly on your tax return.
By Terri L. Marakos, CPA
The staff of Capaldi, Reynolds & Pelosi (CRP) is often found crunching numbers and burning the midnight oil, especially during the 1st quarter of the year. Sometimes, however, they do come up for air and when they do, they get involved in some very worthwhile ventures in the community. Several members serve on boards of civic organizations, participate in local events, and even offer presentations to various groups. Here are some of our activities outside the office.
New Jersey Health Insurance Mandate to be effective in 2019: In response to the repeal of the Affordable Care Act’s (ACA) federal health insurance mandate that will become effective in 2019, legislation was signed on May 30, 2018 by New Jersey Gov. Phil Murphy whereby New Jersey will impose a similar mandate effective in taxable years beginning January 1, 2019. The New Jersey law requires all state residents to have health insurance or pay a penalty. The penalty will be calculated based upon the current federal formula, which is 2.5% of income or $695 per adult taxpayer and $347 per child, whichever is greater. A family’s maximum penalty is $2,085. The penalty is designed to increase each year that someone is not covered, but cannot exceed the price of a lower-cost bronze-level plan on New Jersey’s ACA marketplace. The cost of such a plan averaged just under $3,300 in 2017.
New Jersey is the second state to enact a health insurance mandate. In 2006, Massachusetts was the first state to adopt an individual mandate. Other states are currently developing similar legislation.
By Terri L. Marakos, CPA
New Tips for Employers in New Jersey
Federal Tax Credits
The Work Opportunity Tax Credit allows employers that hire members of targeted groups who face employment barriers to claim a credit against income tax for a percentage of first-year wages. In a recent News Release, the IRS reminds employers there are now ten categories of eligible workers: qualified IV-A Temporary Assistance for Needy Families recipients; unemployed veterans, including disabled veterans; ex-felons; designated community residents living in Empowerment Zones or Rural Renewal Counties; vocational rehabilitation referrals; summer youth employees living in Empowerment Zones; food stamp (SNAP) recipients; Supplemental Security Income recipients; long-term family assistance recipients; and qualified long-term unemployment recipients.
Decisions regarding Social Security can be deviously complicated. There are thousands of rules, thousands upon thousands of additional codicils to clarify the rules, annual changes, and recent legislation, the Bipartisan Budget Act of 2015 (BBA), which drastically modified the planning landscape. Each day 10,000+ “baby-boomers” reach retirement age and many other individuals of pre-retirement age make critical choices impacting their potential Social Security benefits. These decisions involve when to claim benefits, what kind of benefit to request, and when to marry, divorce, or remarry. Too often people are misinformed and mislead when they make these assessments. We need to be aware of certain fundamental concepts in order to get the maximum benefits from Social Security and avoid costly mistakes. After all, we have paid for these benefits, and we should get what we are entitled to.
This article is the first of a series of articles that will highlight factors we need to consider to make better choices with respect to claiming Social Security. This particular article will discuss two concepts, eligibility and full retirement age. It will also describe the first two steps to start the Social Security decision-making process.
We get them from our banks, our retirement plans, and our brokers but are we ever required to issue a 1099? The 1099 series are information returns that report to the IRS various types of payments. This is then matched with the recipients’ reported income.
In an earlier newsletter we gave you advice on how to use Quickbooks to keep track of your 1099 vendors, but how do you know who to put in your 1099 database?
Advertising is communicating with customers in an attempt to influence their buying behavior by conveying a persuasive message about your products or services. Although we may not recognize it, businesses around the world use every media outlet possible to advertise their products or services. Some common advertising outlets include newspapers, Yellow Pages, direct mailing, television commercials, radio advertisings, billboard/vehicle advertising and online marketing (website advertising, business webpages, email chains, social media, etc.). The type of media outlet a business chooses depends on the type of customers the business wishes to reach, also known as the target market.
For businesses that are preparing year-end payroll and information returns from Quickbooks, the following tips are helpful in order to avoid the most common mistakes: