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Extension for MD Fourth Quarter Withholding

Posted by on Feb 2, 2016 | Comments Off on Extension for MD Fourth Quarter Withholding

Extension for MD Fourth Quarter Withholding

Comptroller Peter Franchot announced on January 29th that the deadline for the Maryland quarterly withholding for the fourth quarter of 2015, has been extended to February 12th in an effort to alleviate pressure from small businesses that experience setbacks in their operations due to the blizzard. Please note this extension is applicable to Maryland filings only; Federal returns were still due at the end of January. Please call your Hertzbach Tax Advisor with any questions or concerns at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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IRS Issues Update on Identity Theft PINs

Posted by on Jan 14, 2016 | Comments Off on IRS Issues Update on Identity Theft PINs

IRS Issues Update on Identity Theft PINs

The IRS has recently started to mail taxpayers who are victims of identity theft their Identity Theft PINs for use when filing their 2015 tax returns.  The IRS posted an alert on their website that states the CP 01A Notice (dated January 4, 2016) mailed to taxpayers with their PINs provides the wrong tax year. The Notice indicates the IP PIN is for the 2014 tax year.  The IRS has acknowledged the error and has indicated this IP PIN should be used when filing the 2015 return. For more information including answers to some frequently asked questions, please see the link to the IRS alert below....

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Covering Children Tuition Costs with Capital Gains

Posted by on Dec 21, 2015 | Comments Off on Covering Children Tuition Costs with Capital Gains

Covering Children Tuition Costs with Capital Gains

Many parents may find themselves in a position where they must sell investments to pay for a child’s college tuition. These investments could have appreciated over the years, generating capital gains tax in the year that the investments are sold. However, if these funds are shifted to a child attending college, there is a tax strategy that can significantly lower or possibly eliminate any tax due. The Strategy: Prior to the child attending college, parents would gift appreciated investments to the child to hold allowing the investments to further grow. Once the child starts attending college, he or she would then sell the investments and use the money to pay for tuition themselves. This would allow the child to pay for tuition and open doors on their personal income tax return. First, the child is now providing over 50% of their own support allowing them to claim themselves as a dependent. By doing this, it allows them to claim a personal exemption on their own tax return reducing taxable income (capital gain income from investments). Second, the child benefits from the full standard deduction further reducing taxable income. If a child were claimed as a dependent on their parents return, the standard deduction has the possibility of being limited. By a child being able to claim themselves, it ensures the full standard deduction is allowed. Lastly and most beneficial, the child is allowed to claim the American Opportunity Tax Credit allowing up to $2,500 of income tax to be removed. Looking at the possibilities, a child could generate up to $28,000 in long-term capital gain income with the possibility of wiping out any income tax due. Using this strategy allows the parents to sell appreciated investments with no tax liability which may have needed to be sold anyway to pay for their child’s tuition. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with...

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Tax Provisions in the FAST Act

Posted by on Dec 10, 2015 | Comments Off on Tax Provisions in the FAST Act

Tax Provisions in the FAST Act

The President signed the Fixing America’s Surface Transportation Act (The Act) into law on December 4, 2015. The bill extends spending authorization from the highway trust fund and other related funds while also containing two noteworthy tax provisions. The Act allows the State Department to revoke or deny passports to individuals without social security numbers or with “seriously delinquent” tax debts.  A seriously delinquent tax debt is one that exceeds $50,000 (adjusted for inflation after 2016) and for which a notice of lien has been filed. Three exceptions apply: The individual is already under an installment agreement to pay their tax due Collection is suspended pending a due process hearing The individual has requested innocent spouse relief The second noteworthy tax provision in The Act is the repeal of the 3 ½ month automatic extension for filing Form 5500, “Annual Return/Report of Employee Benefit Plan” recently created by the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 earlier this year effective for returns with tax years beginning after December 31, 2015.  The automatic extension for filing this form is restored to 2 ½ months. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with...

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2015 Year-End Tax Planning Letters for Businesses and Individuals

Posted by on Dec 3, 2015 | Comments Off on 2015 Year-End Tax Planning Letters for Businesses and Individuals

2015 Year-End Tax Planning Letters for Businesses and Individuals

  BDO has shared their annual Tax Planning Letters for Business and Individuals. See below for links to each of the letters. As an independent member of the BDO Alliance USA, Hertzbach has access to the resources of BDO USA, LLP. To read more about our membership in the BDO Alliance USA, click here. Please call your Hertzbach Tax Advisor with any questions or concerns at 800-899-3633. We look forward to speaking with you. 2015 Tax Letter for Individuals 2015 Tax Letter for...

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Uniform Guidance is Here – Ready or Not

Posted by on Nov 12, 2015 | Comments Off on Uniform Guidance is Here – Ready or Not

Uniform Guidance is Here – Ready or Not

OMB launched the process for establishing the Uniform Guidance (UG) more than three years ago to overhaul the decades-old federal grant making process. The Uniform Guidance merges eight separate yet overlapping OMB circulars into the Code of Federal Regulations, eliminating the circulars. The resulting consistency across governments and the entities with which they contract to provide services are intended to ease administrative burdens, increase efficiency and effectiveness of federal awards, and strengthen the oversight of federal funds to reduce the risks of waste, fraud, and abuse. While many nonprofits may feel overwhelmed by the Uniform Guidance, it does establish some important rights for nonprofits: Reimbursement for More of Your Direct Costs The UG clarifies numerous cost allocation rules and specifies more costs that are reimbursable as direct costs. For instance, in certain circumstances, program administration (e.g., secretarial staff dedicated to a specific program) can be reported as direct, rather than as indirect, costs, and therefore are fully recoverable. Reimbursement for Your Nonprofit’s Indirect Costs The UG expressly requires pass-through entities using any federal funds (typically states and local governments, as well as some larger nonprofits) and all federal departments / agencies to reimburse a nonprofit for the reasonable indirect costs it incurs in performing services on behalf of governments. Nonprofits that have never had a federally approved indirect cost rate can elect either the de minimis rate of 10 percent of their modified direct costs (MTDC) or negotiate a higher rate in accordance with the federal cost principles. Nonprofits that have already negotiated a federal indirect cost rate must be paid that amount. Generally, the mandate to pay indirect costs applies to federal cost principles. Nonprofits that have already negotiated a federal indirect cost rate must be paid that amount. Generally, the mandate to pay indirect costs indirect costs applies to federal discretionary funds and certain entitlements funds. The mandate does not apply in cases where a federal statute expressly caps the rate at which indirect costs can be reimbursed. Other reforms in the UG directly affecting nonprofits include the following: Effective Date: Now, for all new awards and incremental funding of existing awards after December 26, 2014. Audit Threshold: The UG requires raises the threshold for single audits to $750,000, reducing the administrative costs for approximately 5,000 nonprofits, as well as governments. Conflict of Interest: This section relates primarily to how decisions are made to select sub-recipients and procurements (contractors). Procurement: These regulations may be more restrictive under the UG than what some organizations are accustomed to. Internal Controls: This is a section that should be reviewed by all organizations. This section attempts to clarify what a non-federal entity “must” and “should” do. Compensation – Personal Services: Commonly referred to as “time and effort reporting”. This section has been modified and now focuses more on stringent internal controls surrounding compensation costs instead of on specific procedures that must be followed in tracking and allocating these costs. Required Certifications: To assure expenditures are “proper and in accordance with the terms and conditions of the award”, the annual and final fiscal reports or vouchers requesting payment must include a certification, signed by an official who is authorized to legally bind the nonprofit entity. Many nonprofits are struggling to find an easy way to determine how the UG will affect them...

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IRS Continues to Warn Taxpayers from Scammers

Posted by on Oct 29, 2015 | Comments Off on IRS Continues to Warn Taxpayers from Scammers

IRS Continues to Warn Taxpayers from Scammers

The IRS continues to warn taxpayers about scammers claiming to be IRS agents.  The scams takes place in various forms, and often target senior citizens.  Among the tactics used by these scammers are unsolicited telephone calls and phishing emails.  Scammers will call unsuspecting victims and intimidate them into paying fake “tax liabilities” by threatening to suspend the victim’s driver’s license or even jail time.  In recent years, scammers have gotten more creative by forging the caller ID to make it look as if the IRS is truly calling or sending fraudulent emails using IRS letterheads.  Since October 2013, IRS scams have cost victims more than $23,000,000. To help protect oneself from these scams, keep in mind the following: The IRS never initiates contact via phone call or email.  It will always be done via mail.  The IRS will never demand immediate payment or require a specific payment method; a taxpayer always has the right to appeal or to inquire about their tax liability.  Finally, the IRS will never threaten arrest for not paying the liability upfront. Please call your Hertzbach Tax Advisor with any questions or concerns at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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Hertzbach at the 2015 HAND Annual Meeting

Posted by on Jun 23, 2015 | 0 comments

Hertzbach at the 2015 HAND Annual Meeting

Hertzbach’s Affordable Housing Team had a blast at the HAND Annual Meeting today! Hertzbach has over 35 years of experience serving the needs of the affordable housing community. Our firm is staffed by a highly skilled team of professionals who are dedicated to understanding of the unique accounting needs of the affordable housing industry. Contact us today at AffordableHousing@hertzbach.com to find out how we can assist you with our services and...

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Supreme Court Rules in Favor of Wynne:

Posted by on May 18, 2015 | 0 comments

Supreme Court Rules in Favor of Wynne:

Maryland Taxpayers to Begin Receiving Refunds on Previously Disallowed Out-of State Income Tax Credits The Supreme Court ruled against a Maryland law that disallowed a full credit to residents on the income taxes paid to other states. Maryland previously allowed a credit on income that was earned and taxed in another state, but the credit was only allowed to be claimed against Maryland state income tax and not against the local tax to counties.  The Supreme Court Justices, in a 5-4 decision, ruled that it was unconstitutional for Maryland to tax resident income that was earned elsewhere and already taxed because it interferes with the interstate commerce clause of the Constitution. For the past several years as the Wynne case made its way through the court system, many Maryland taxpayers have filed protective refund claims for the credit for taxes paid to other states against their local tax. Now that the Supreme Court has ruled in favor of Maryland taxpayers, these claims will be refunded along with interest at 3%. Hertzbach will be monitoring the situation and will post new information as it becomes available, including information on how refunds will be issued and how to file returns going forward to apply the new provision. If you have any questions, please call your Hertzbach Tax Advisor at 410-363-3200 or 800-899-3633. We look forward to speaking with...

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Maryland Tax Amnesty

Posted by on May 7, 2015 | 0 comments

Maryland Tax Amnesty

Maryland will hold a Tax Amnesty Program from September 1, 2015, through October 30, 2015. The program offers most taxpayers a waiver of all civil penalties (with exception to previously assessed fraud penalties) related to delinquent tax liabilities and 50% of levied interest through October 30, 2015, and bars criminal prosecution, except for charges already pending or under investigation. The waiver applies to non-reporting, underreporting and nonpayment of individual and corporate income tax, withholding tax, sales and use tax, and admissions and amusement tax liabilities for tax periods ending on or before December 31, 2014. The program requires full payment of all delinquent taxes and one-half of the interest on or before December 31, 2016. Taxpayers participating in the amnesty program will be required to file delinquent returns and pay tax plus one-half interest due on these and previously filed returns. The amnesty program will not apply to taxpayers who had been previously granted amnesty between in calendar years 1999 through 2014. For more information,  please call your Hertzbach Tax Advisor at 410.363.3200 or 800.899.3633. We look forward to speaking with...

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