IRS Changes Deadlines for 1099 Forms

It’s almost January. Are you ready for taxes? Of course, Form 1099s are an important part of any tax season, and this coming year will be no different. As a taxpayer, if you receive any kind of Form 1099 don’t ignore it. The IRS will get the same form and you will be held accountable for its contents. So, make sure you keep and report all Form 1099s that you receive.

On the other hand, if you are a business and you need to issue any of these forms to others there are some changes you need to know about. The IRS has announced changes to some of these Form 1099s. Here’s what you need to know. Starting next year, for the 2016 reporting season, the deadline for Forms 1099-MISC reporting nonemployee compensation in box 7, has been moved to January 31, which is the same deadline for when they need to be sent to recipients.

Previously, filers had more time, up to a month or two, to get those sent to the IRS, but that’s no longer the case. The good news is that for Forms 1099-MISC that don’t report in box 7, the filing dates have not changed. They must be mailed to the recipients by January 31 and to the IRS by the end of February.

The bottom line, whether you are going to give or receive any type of Form 1099, make sure you check the deadlines and do your due diligence. Don’t give the IRS any reason to pay extra attention your taxes return.

You also might like Make Sure you Report All of  Your 1099 Income

 http://www.forbes.com/sites/robertwood/2016/11/07/irs-forms-1099-are-critical-and-due-early-in-2017/#274363c6792a

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Which Stocks Stand to Gain From Trump Victory?

News of Donald Trump’s victory on November 8th sent shockwaves around the world and initially sent the stock market down. However, the market has since stabilized and reports of a major decline have not panned out. Of course, the stock market is in constant flux and things can change at any time. However, for the time being, the market is maintaining a normal cycle.

That being said, many wonder what a Trump presidency will do to the stock market over the long haul. Will there be certain stocks that prosper and others that falter because Trump is in the Oval Office? Only time will tell, but there are certain stocks that might see a boost thanks to the new president-elect.

First off, Trump has made it clear that he would like to reduce the corporate tax rate from 35 percent to 15 percent, which would help almost all companies. Trump has also expressed a desire to cut back on the amount of red tape that banks have to deal with by easing regulations. There are other industries that could also be ripe for gains thanks to other Trump proposals.

Therefore, there are several stocks that could see a significant increase in the coming weeks and months, including Altria Group, AutoNation, CVS Health, Discover Financial Services, J.B. Hunt Transport and Republic Services, to name just a few. Stay tuned.

You also might like Small Business Stocks can Lead to Big Gains

http://www.barrons.com/articles/10-stocks-set-to-win-big-with-trump-tax-cuts-1478865369?mod=BOL_hp_oe

Another Federal Tax Record Set in October

As the year winds down and we look ahead to another tax season, the Federal Reserve is looking at another record tax collection in October. According to the latest numbers released in the Monthly Treasury Statement, October set an all time record high for the month, with $221,692,000,000 collected. What a great way to start the fiscal year for the Treasury. That was an increase of more than $6.7 billion from last October.

However, despite the incredible numbers coming in, the federal government still had a deficit of more than $44 billion in the month, thanks to expenditures of more than 265 billion. Meantime, if you were to break down the numbers in October, on average the Federal Reserve collected roughly $1,459 from everyone who worked either full- or part-time during the month.

So where did the majority of that record revenue come from, you ask? The answer is largely from individual tax returns. According to the Treasury, Americans paid $121,576,000,000 in income taxes in October. But the tax bill for Americans doesn’t stop there. Collectively the country paid another $79,361,000,000 in Social Security and additional payroll taxes.

The rest of the money came from corporate taxes: $2,27 billion; excise taxes: $5.7 billion; and estate and gift taxes: $3.06 billion.

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http://www.cnsnews.com/news/article/terence-p-jeffrey/221692000000-federal-taxes-set-record-october-1459-worker-feds-still

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Top Tech Issues to Watch With Trump

Now that Donald Trump is set to become the nation’s 45th president, there is a lot of talk about his proposed tax policies and how they will affect taxpayers from all walks of life. Taxes are of course a huge issue so it makes sense that they are currently receiving so much attention. However, there are several other important sectors and issues that could be affected positively or negatively by Trump’s presidential plan.

One such industry that is likely watching the Trump presidency closely is the tech industry, and not just because of taxes. There are several factors that will directly or indirectly affect the top tech companies.

Clean Energy – Trump has expressed doubt about global warming and he apparently does not see much value in climate-change spending. This could mean he will eventually scrap government incentives for companies that use alternative energy methods.

Immigration – One of the biggest issues that voters had with Trump was his stance on immigration. If he follows through with his proposed deportation efforts this could affect many of the big companies’ hiring practices, since employees with H-1B visas are so common in Silicon Valley.

Trade – Trump has strongly opposed the Trans-Pacific Partnership, which the tech industry has strongly endorsed. In fact, trump has talked tough against trade in general. If he follows through with his threats it could have major impacts on tech companies doing trade with foreign countries.

Manufacturing – Trump has stated his preference for bringing manufacturing jobs back to the U.S. It will be interesting to watch which policies, if any, he can employ to either force or encourage tech companies to bring these jobs back to America.

http://www.siliconbeat.com/2016/11/09/five-tech-issues-watch-donald-trump-presidency/

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Voters in Multiple States Choose Higher Taxes for the Wealthy

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Of course, the big news from the election earlier this month was that Donald Trump shocked the world and defeated Hillary Clinton in the race to become the 45th president of the United States. However, there were several other important national, as well as local, election races and issues that were decided on November 8th. Not the least of which were several state measures aimed at raising taxes on high net worth individuals.

To that end, voters in both California and Maine decided that the rich needed to pay more taxes. In Maine, the vote to raise the state’s top tax rate from 7.15 percent to 10.15 percent was extremely close, passing by a narrow 50.4 percent to 49.6 percent margin. That means Maine will have the second highest top tax rate in the country in 2017, surpassing Oregon, which was number two in 2016 at 9.9 percent.

In California, meanwhile, the vote wasn’t even close, with 62 percent voting to extend temporary tax hikes already in place. Proposition 55 extended the hikes originally implemented in 2012 with Proposition 30. That means top earners, those who make $1 million or more a year, will continue to pay a tax rate of 13.3 percent at least until 2030. California will continue to have the highest tax rate for top earners in 2017.

So, while all signs point to Donald Trump lowering the federal tax rates, if you live in California or Maine and you’re a top earner, you won’t see any relief in the coming years in your state taxes.

http://www.forbes.com/sites/ashleaebeling/2016/11/10/voters-okay-state-income-tax-hikes-for-the-rich/#71480a7b16d0

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U.S. Treasury Making Push to Keep More Corporate Taxes Home

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For any company considering a tax inversion, the latest news form the U.S. Treasury will likely make it reconsider. Tax inversions, which are used by American companies to reduce their tax bill, occur when a company acquires or opens a subsidiary in a foreign country in order to change its tax address and save millions. Many companies have employed this tactic in recent months, which has caused the government to increase its efforts to stop them.

According to the Treasury Department, the new regulations are aimed at fixing the country’s broken tax system. Specifically, the new regulations from the IRS and the Treasury will seek to put an end to the “earnings stripping” process. This occurs when a company pays deductible interest to an affiliate or parent company in another country, which has lower taxes.

While many corporations have expressed displeasure with the government’s efforts the current White House administration, along with the IRS and the Treasury, has pushed forward to make these changes, especially to target earnings stripping. The department did announce that it would offer a “broad exemption” for short-term loans and cash pools. It also said the effective date won’t be until January 1, 2018, so companies will have more time to prepare and comply with the changing regulations.

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http://www.cnbc.com/2016/10/13/treasury-takes-its-latest-step-to-keep-corporate-taxes-in-the-us.html

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Why Are the Wealthy Paying Fewer Estate Taxes?

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The estate tax was a hot topic throughout the election process and now that we have a new president-elect it’s sure to get an even closer look when White House leadership changes hands early next year. Or course, both candidates had different views regarding this tax, but it’s interesting to note that despite the possible changes that could be coming, there might be very little actual impact to the revenue collected from this tax.

It seems that many high-net-worth individuals have found ways to reduce their estate tax bill, without the help of any new policies. Why is that? How are wealthy individuals avoiding paying more in estate taxes? According to the most recent numbers available from the IRS, taxpayers paid $16.4 billion in federal estate taxes in 2014. Compare that to 2006 when the total was $24.6 billion and it’s clear that the numbers are in decline.

The fact is estate tax dollars only account for 1 percent of all revenue collected by the IRS. So how are the nation’s highest earners – especially those in the top 1 percent – paying so little in estate taxes? One big reason is the increasing number of exemptions that now exist. First off, the exemption threshold has increased to $5.5 million, so anyone who receives less than that is excluded. The top tax rate has also fallen from 70 percent in 1981 to just 40 percent today.

Wealthy taxpayers have also learned how to avoid this tax, by implementing many different estate-planning tools, including trusts, like the grantor-retained trust, to help make passing their wealth on much easier and more tax-friendly. Therefore, unless a massive overhaul of the estate tax is implemented it’s likely that wealthy taxpayers will continue to avoid it, or at the very least, minimize its impact.

You also might like the article Estate Tax Repeal of Revision?

http://www.cnbc.com/2016/09/23/how-the-rich-are-paying-less-in-estate-taxes.html

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Want to Avoid Taxes in Retirement – Try This

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There’s been no shortage of thoughts and opinions regarding Donald Trump’s tax returns since the election process began, especially since his leaked return hit the mainstream media a few weeks ago. One could argue at length regarding those numbers and whether or not they paint a positive picture of Trump and his finances. However, there’s no question that Trump was able to use his losses to help offset gains in years to come.

This is just one of many tricks that the wealthy use to help reduce their taxes in retirement. There are several others that both the wealthy and the everyday average taxpayer can use to help offset their retirement tax bill. One of the most obvious is by using an employer retirement account, which helps offset taxes now and when you’re done working. In addition, you can open a Roth IRA, which is an excellent way to save after tax income. All Roth IRA withdrawals are tax-free once you’ve owned the account for five years and you are at least 59 ½ years old.

Having a health savings account is also a great way to save. The money you place in an HSA is pre-tax so you won’t get hit upfront and it’s tax-free when you withdraw it, as long as you use it for medical expenses. Given that most people experience more health problems in their retirement years than earlier in life, this is a great tax savings tip to save you money.

These are just a few of the ways to help save money on your retirement taxes, but there are several more, including using long term capital gains, your home equity and a charitable remainder trust. If you have more questions about tax savings in retirement then please contact GROCO today.

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http://www.forbes.com/sites/financialfinesse/2016/10/09/how-to-be-like-trump-and-avoid-taxes-in-retirement/#7ee1313f5e95

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How Much Are Fortune 500 Companies Saving in Taxes?

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It’s a well-known fact that many of the richest companies in America have become so financially successful thanks in large part to the tax-savings methods they employ, not the least of which is keeping large amounts of income overseas. These American companies have no problem doing business stateside, but because the U.S. has some of the highest corporate tax rates in the world, they can save millions in taxes by leaving that money in the country where it was earned.

In fact, according to a recent report from Citizens for Tax Justice, the largest Fortune 500 companies in America are storing as much as $2.5 trillion in foreign countries, which is $400 million more than last year. This is not hidden money, stored away in secret bank accounts, mind you, but rather revenue legally earned and held overseas. So why not bring the money back to the U.S.? As long as it stays overseas where it was earned the IRS can’t tax those earnings.

Of course, some people feel that isn’t fair, including the organization Citizens for Tax Justice, which wants the government to tax all income earned by U.S. companies, no matter what country it’s earned in. The problem with that scenario is that companies might decide to simply move their headquarters to other countries in order to avoid this extra tax, which could cost the country even more tax revenue, as well as jobs.

President Obama has recently proposed a 19 percent global minimum tax, which means any foreign subsidiary of a U.S. company that pays at least 19 percent in overseas taxes would be allowed to bring that money back to America without being taxed again stateside.

Of course, both current presidential candidates have their opinion on the matter. Donald Trump wants to significantly lower the corporate tax rate and combine it with a one-time 10 percent tax on any income being held in foreign countries. This could help give companies more of an incentive to bring the money home to the U.S. Hillary Clinton reportedly wants to keep the current standards but she also wants to add an “exit tax” for companies that leave.

Either way, it’s likely that companies will continue to keep foreign earnings overseas unless the government creates a more tax-friendly environment for American corporations.

 

You also might like the article Study Shows Benefit of Lower Corporate Tax

 

http://fortune.com/2016/10/06/fortune-500-tax-haven/

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How Would Proposed Tax Plans Affect the Country’s Economy?

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We’re just days away from the election and it’s likely that most Americans will just be happy that it’s finally over, no matter whom or what they voted for. However, there are some very important things at stake in this election, including how each candidate’s tax proposals would affect our nation’s economy, as well as the affect on individual taxpayers’ pocket books.

The overwhelming belief is that Donald Trump’s tax plan would be simpler than the current code and that it would help the wealthy, while increasing the national debt. As you might expect, Hillary Clinton’s proposals would be basically the opposite. Her tax plan is reportedly more complex and it’s expected to increase taxes on just about everyone, with the wealthiest taxpayers absorbing the brunt of the increase.

However, that being said, neither candidate has to stick to his or her proposed plans if elected. Additionally, the bigger question is how would these plans really affect the economy if they were implemented? The nation’s debt is rising and it will likely continue to raise no matter which candidate is elected. That means people and businesses, especially small ones, will be footing the bill.

According to the Tax Foundation, which typically opposes tax hikes on the wealthy, Clinton’s plan to increase taxes on investment and businesses would likely reduce the size of economy by about 2.6 percent over 10 years. Much of that would come from her desire to increase the estate tax. According to the Tax Foundation that increase would likely cause wealthy taxpayers to invest lest money and thus would hold down the entire economy. That, in turn, would force the average income in the country to go down.

On the other hand, those who believe tax increases on the wealthy are favorable to the economy claim that the Tax Foundation’s estimates are exaggerated and that the economy would not be significantly damaged by Clinton’s proposals.

You also might like the article Trump, Clinton and the Wealthy—What’s at Stake

https://www.washingtonpost.com/news/wonk/wp/2016/10/13/what-hillary-clintons-tax-plan-would-really-do-to-the-economy/
http://www.forbes.com/sites/garrettgunderson/2016/10/13/clinton-versus-trump-how-their-tax-plans-will-affect-you/#76f963cd3346

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