Your chances of being audited are probably lower than you think. A look at the latest IRS statistics for 2016 reveals two interesting and reassuring facts about the risk of an IRS audit.
One of these facts is that audits are becoming less common. The number of individual tax returns the IRS audited fell to a 12-year low last year, to just above 1 million. Audits have been declining steeply over the last five years, which the IRS commissioner said was due in part to declining budgets and a smaller workforce.
Another fact is that IRS audits happen most often to the super-rich. The statistical chance of being audited increases dramatically for people of higher income levels.
For example, filers that made near the average U.S. income only had a 0.4 percent chance of being audited. That frequency doubled once annual incomes reached $200,000, and doubled again at incomes greater than $500,000. By the time a person reports $10 million in income, they have a one-in-five chance of being audited, according to IRS statistics.
This little rascal wants to know what we're up to!
Each year, certain tax figures are adjusted for inflation. While most figures are unchanged versus 2016, there is more than a 7% increase to the maximum earnings subject to social security tax. Take note of these numbers for use in your 2017 planning.
For Business, Medical and Moving
The Internal Revenue Service today issued the 2017 optional standard mileage rates used to calculate the deductible cost of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2017, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
The future of taxes in the US is not set in cement, especially with the unknowns of our newly elected leadership, but if we look at what was promised on the campaign trail and the "Ryan-Brady plan" backed by a Republican majority led congress, we have an idea of what is to come:
Individuals - numerous reductions in income tax rates for higher earners.
Corporations - reduction in the top corporate income tax rate.
Affordable Care Act - a partial repeal of healthcare mandates and related taxes and credits.
Estate tax - elimination of the estate tax.
2017 is just around the corner, and we will know more sooner than later!
One of the pitfalls of receiving a distribution from your IRA with the intention of "rolling it over," or depositing it into another IRA or retirement plan, is the 60-day rule. Under the rule, you're required to complete the rollover within 60 days of receiving the distribution. If you miss the deadline, you have to include the distribution in your income and perhaps pay a penalty. In the past, you generally had to request a special statement from the IRS to avoid that outcome. Now the IRS says you may qualify for a waiver if you meet one of eleven allowable reasons. Contact us for details.
Once you have extended credit to a customer, you have a stake in continuing the relationship even if you suspect trouble is brewing. You don't want to crack down on a good customer too hard too soon; yet you don't want to be "taken" by a debtor who has become unable or unwilling to pay. The problem is distinguishing between slow payers and no-payers.
What you need is an early warning system to detect a credit problem in the making so you can stop additional sales to that customer and begin collection procedures in earnest. Here are some telltale signs of an account that is turning sour.
Any one of these hints of trouble can mean it's time to turn up the heat on your collection efforts with this debtor, and make no more sales unless they're cash on delivery. Contact us for more tips.
On May 18th, 2016 the DOL released a final rule that radically increases the thresholds for overtime rules, expanding the number of employees eligible for overtime pay. Under the FLSA, employees who work more than 40 hours in a week are entitled to overtime pay, unless they meet the requirements of certain wage and duties tests. The new rule doubles the minimum salary threshold from $455 per week to $913 per week (which amounts to $23,660 annually to $46,476 annually) and raises the exemption level for those considered to be "highly compensated employees" from $100,000 to $134,004 annual salary.
We understand that the DOL rule may impact major business decisions like hiring, expansion, offering new benefits or more flexible work arrangements for employees, and possibly even require reductions at your company. We can help you in assessing the effects of the new overtime-pay rule. Companies will have until December 1, 2016, to make determinations on which employees to reclassify as nonexempt and implement the changes. We have the expertise to guide you through this change and help you plan for the future.
Let us know if you have any questions.
The prices you set for your products and services affect every aspect of your business, including long-term viability, short-term profits, market share, and customer loyalty. While the guidebook or financial guru who can provide the perfect answer to this important decision doesn't exist, tried-and-true principles can help. Here are three suggestions to arrive at reasonable pricing for your market and industry.
Jeremiah K. Murphy, CPA is an accounting firm providing tax services, audits and business consulting.