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Wednesday, September 4, 2013

IRS Recognizes All Same-Sex Marriage Nationwide

WASHINGTON — All same-sex couples who are legally married will be recognized as such for federal tax purposes, even if the state where they live does not recognize their union, the Treasury Department and the Internal Revenue Service said Thursday.
 Chad Griffin, president of the Human Rights Campaign, spoke outside the Supreme Court after the June ruling.
It is the broadest federal rule change to come out of the landmark Supreme Court decision in June that struck down the 1996 Defense of Marriage Act, and a sign of how quickly the government is moving to treat gay couples in the same way that it does straight couples.
The June decision found that same-sex couples were entitled to federal benefits, but left open the question of how Washington would actually administer them. The Treasury Department answered some of those questions on Thursday. As of the 2013 tax year, same-sex spouses who are legally married will not be able to file federal tax returns as if either were single. Instead, they must file together as “married filing jointly” or individually as “married filing separately.”
Their address or the location of their wedding does not matter, as long as the marriage is legal: a same-sex couple who marry in Albany, N.Y., and move to Alabama are treated the same as a same-sex couple who marry and live in Massachusetts.
“Today’s ruling provides certainty and clear, coherent tax-filing guidance for all legally married same-sex couples nationwide,” Treasury Secretary Jacob J. Lew said. “This ruling also assures legally married same-sex couples that they can move freely throughout the country knowing that their federal filing status will not change.”
Gay and civil rights groups praised the ruling. “Committed and loving gay and lesbian married couples will now be treated equally under our nation’s federal tax laws, regardless of what state they call home,” said Chad Griffin, the president of the Human Rights Campaign. “These families finally have access to crucial tax benefits and protections previously denied to them under the discriminatory Defense of Marriage Act.”  
But the Treasury decision could have ramifications for many gay couples’ tax liabilities, said Roberton Williams of the nonpartisan Tax Policy Center in Washington. Couples with similar incomes often pay the “marriage penalty,” with their tax liability as a couple being much higher than it would be if they were single.  
At the same time, same-sex couples will also be able to file amended returns for certain prior tax years, meaning that many couples might be eligible for refunds. Couples do not have to file amended returns if they do not want to, a senior Treasury official said, meaning that couples who might pay the marriage penalty would not owe back taxes.
But the ruling creates complications for same-sex couples who live in any of the 37 states that do not recognize their marriages. Previously, such couples filed federal and state tax returns as individuals. Now, they will have to file their federal returns as other married couples do, but may be required to file their state returns as individuals.
“There’s going to be a cumbersome workaround,” said Nanette Lee Miller of Marcum L.L.P., a public accounting firm. She sees it as a paperwork bother more than a financial issue.
States might also respond to the federal ruling with changes of their own. “Most state income tax regimes begin with federal taxable income as the starting point,” Marvin Kirsner, a tax lawyer at Greenberg Traurig, said in an e-mail. “These state taxing authorities will have to figure out how to deal with a same-sex married couple who file a joint income tax return for federal tax purposes.” He added,
“We will need to see guidance from each nonrecognition state to see how this will be handled.”
The rule change is likely to provide a small increase for federal revenue, as more same-sex couples pay the marriage penalty, Mr. Williams said, describing it as a “rounding error.” But it would be partly offset by new federal spending on benefits for same-sex spouses.
The ruling applies to all legal marriages made in the United States or foreign countries. But it does not extend to civil unions, registered domestic partnerships or other legal relationships, the Treasury said.
The Treasury ruling is one of many that are starting to emerge from all corners of the federal government as Washington changes regulations to conform with the Supreme Court decision.
Separately, the Health and Human Services Department said Thursday that Medicare would extend certain key benefits to same-sex spouses, “clarifying that all beneficiaries in private Medicare plans have access to equal coverage when it comes to care in a nursing home where their spouse lives.” 
But federal agencies are not moving in lock step. Instead, they are creating a patchwork of regulations affecting gay and lesbian couples — and may be raising questions about discrimination and fairness in the way that federal benefits are distributed.
Medicare and Treasury officials have said they would use a “place of celebration” standard for determining whether gay couples are eligible for benefits. That means same-sex couples would receive benefits as long as they are legally married, regardless of where they live.
But the Social Security Administration is now using a “place of residence” standard in determining spousal benefits, and a gay couple in Alabama might not receive the same benefits as a gay couple in New York until final determinations are made or Congress acts. The Obama administration has pushed federal agencies to ensure the Supreme Court’s ruling is carried out quickly and smoothly.
“It would be nice if they were consistent,” Ms. Miller said. Creating federal regulations is a process and could change, she said.
Tara Siegel Bernard contributed reporting from New York.

Wednesday, August 28, 2013

Give Withholding and Payments a Check-up to Avoid a Tax Surprise

Some people are surprised to learn they’re due a large federal income tax refund when they file their taxes. Others are surprised that they owe more taxes than they expected. When this happens, it’s a good idea to check your federal tax withholding or payments. Doing so now can help avoid a tax surprise when you file your 2013 tax return next year.
Here are some tips to help you bring the tax you pay during the year closer to what you’ll actually owe.
Wages and Income Tax Withholding
  • New Job.   Your employer will ask you to complete a Form W-4, Employee's Withholding Allowance Certificate. Complete it accurately to figure the amount of federal income tax to withhold from your paychecks.
  • Life Event.  Change your Form W-4 when certain life events take place. A change in marital status, birth of a child, getting or losing a job, or purchasing a home, for example, can all change the amount of taxes you owe. You can typically submit a new Form W–4 anytime.
  • IRS Withholding Calculator.  This handy online tool will help you figure the correct amount of tax to withhold based on your situation. If a change is necessary, the tool will help you complete a new Form W-4.
Self-Employment and Other Income
  • Estimated tax.  This is how you pay tax on income that’s not subject to withholding. Examples include income from self-employment, interest, dividends, alimony, rent and gains from the sale of assets. You also may need to pay estimated tax if the amount of income tax withheld from your wages, pension or other income is not enough. If you expect to owe a thousand dollars or more in taxes and meet other conditions, you may need to make estimated tax payments.
  • Form 1040-ES.  Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you need to pay estimated taxes on a quarterly basis.
  • Change in Estimated Tax.  After you make an estimated tax payment, some life events or financial changes may affect your future payments. Changes in your income, adjustments, deductions, credits or exemptions may make it necessary for you to refigure your estimated tax.
  • Additional Medicare Tax.  A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual’s wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual’s filing status. For additional information on the Additional Medicare Tax, see our questions and answers.
  • • Net Investment Income Tax.  A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. For additional information on the Net Investment Income Tax, see our questions and answers.
For further information or questions, please contact the professionals at Mantyla McReynolds 801.269.1818

Monday, August 26, 2013

Nine Tax Tips for Individuals Selling Their Home

If you’re selling your main home this summer or sometime this year, the IRS has some helpful tips for you. Even if you make a profit from the sale of your home, you may not have to report it as income.
Here are 10 tips from the IRS to keep in mind when selling your home.

1. If you sell your home at a gain, you may be able to exclude part or all of the profit from your income. This rule generally applies if you’ve owned and used the property as your main home for at least two out of the five years before the date of sale.

2. You normally can exclude up to $250,000 of the gain from your income ($500,000 on a joint return). This excluded gain is also not subject to the new Net Investment Income Tax, which is effective in 2013.

3. If you can exclude all of the gain, you probably don’t need to report the sale of your home on your tax return.

4. If you can’t exclude all of the gain, or you choose not to exclude it, you’ll need to report the sale of your home on your tax return. You’ll also have to report the sale if you received a Form 1099-S, Proceeds From Real Estate Transactions.
5. Generally, you can exclude a gain from the sale of only one main home per two-year period.

6. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is usually the one you live in most of the time.

7. Special rules may apply when you sell a home for which you received the first-time homebuyer credit. See Publication 523 for details.

8. You cannot deduct a loss from the sale of your main home.

9. When you sell your home and move, be sure to update your address with the IRS and the U.S. Postal Service. File Form 8822, Change of Address, to notify the IRS.
For further information or if you have questions, please contact the professionals at Mantyla McReynolds 801.269.1818.

Summertime Tax Tip 2013

During the summer, you may not think about doing your taxes, but maybe you should. Some of the expenses you’ve paid over the past few months might qualify for money-saving tax credits or deductions come tax time. If you organize your tax records now, you’ll make tax filing easier and faster when you do them next year. It also helps reduce the chance that you’ll lose a receipt or statement that you need.

Here are some tips from the IRS on tax recordkeeping.

• You should keep copies of your filed tax returns as part of your tax records. They can help you prepare future tax returns. You’ll also need them if you need to file an amended return.
• You must keep records to support items reported on your tax return. You should keep basic records that relate to your federal tax return for at least three years. Basic records are documents that prove your income and expenses. This includes income information such as Forms W-2 and 1099. It also includes information that supports tax credits or deductions you claimed. This might include sales slips, credit card receipts and other proofs of payment, invoices, cancelled checks, bank statements and mileage logs.
• If you own a home or investment property, you should keep records of your purchases and other records related to those items. You should typically keep these records, including home improvements, at least three years after you have sold or disposed of the property.
• If you own a business, you should keep records that show total receipts, proof of purchases of business expenses and assets. These may include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices. Also include credit card receipts, sales slips, canceled checks, account statements and petty cash slips. Electronic records can include databases, saved files, emails, instant messages, faxes and voice messages.
• If you own a business with employees, you should generally keep all employment-related tax records for at least four years after the tax is due, or after the tax is paid, whichever is later.
• The IRS doesn’t require any special method to keep records, but it’s a good idea to keep them organized and in one place. This will make it easier for you to prepare and file a complete and accurate return. You’ll also be better able to respond if there are questions about your tax return after you file.
For further information or if you have questions, please contact the professinals at Mantyla McReynolds 801.269.1818.

Wednesday, August 14, 2013

Back-to-School Tax Tips for Students and Parents

Going to college can be a stressful time for students and parents. The IRS offers these tips about education tax benefits that can help offset some college costs and maybe relieve some of that stress.

• American Opportunity Tax Credit.  This credit can be up to $2,500 per eligible student. The AOTC is available for the first four years of post secondary education. Forty percent of the credit is refundable. That means that you may be able to receive up to $1,000 of the credit as a refund, even if you don’t owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. A recent law extended the AOTC through the end of Dec. 2017.
• Lifetime Learning Credit.   With the LLC, you may be able to claim up to $2,000 for qualified education expenses on your federal tax return. There is no limit on the number of years you can claim this credit for an eligible student.
You can claim only one type of education credit per student on your federal tax return each year. If you pay college expenses for more than one student in the same year, you can claim credits on a per-student, per-year basis. For example, you can claim the AOTC for one student and the LLC for the other student.
You can use the IRS’s Interactive Tax Assistant tool to help determine if you’re eligible for these credits. The tool is available at IRS.gov.
• Student loan interest deduction.  Other than home mortgage interest, you generally can’t deduct the interest you pay. However, you may be able to deduct interest you pay on a qualified student loan. The deduction can reduce your taxable income by up to $2,500. You don’t need to itemize deductions to claim it.
These education benefits are subject to income limitations and may be reduced or eliminated depending on your income.

For further information or if you have questions, please contact the professionals at Mantyla McReynolds 801.269.1818.

Tuesday, August 13, 2013

Identity Theft and Your Tax Return

We hear about and worry about identity theft almost every day it seems.  Did you know that identity thieves may be using your name, address and social security number to file false tax returns to claim refunds?  We have had clients who have fallen victim to this unfortunate situation.  Imagine e-filing a tax return and having that return rejected because the IRS claims that you have already filed a return.  Someone with your information can create a bogus W-2 with false withholdings, file the return, get the refund and disappear before you file your actual return.
The IRS knows this is a huge problem.  Recently, Danny Werfel, Principal Deputy Commission for the IRS in an address in Dallas, Texas, said,
“More than 3,000 IRS employees are currently working on identity theft – more than double the number at the start of the previous filing season. We have also trained 35,000 employees who work with taxpayers to recognize identity theft and help victims. So far this calendar year, the IRS has worked with victims to resolve more than 565,000 cases. This is more than three times the number of identity theft victim cases that we had resolved at the same time last year. We realize, though that case resolution often takes too long, and we continue to strive to reduce the time that it takes to close cases.
We have also expanded our fraud detection efforts. We have increased the number and quality of our identity theft screening filters, and we have suspended or rejected more than 4.6 million suspicious returns so far this calendar year. The number of identity theft investigations by our Criminal Investigation division continues to rise, with more than 1,100 investigations opened so far in FY 2013.”
These are the IRS' top tips to help you avoid becoming the victim of an identity thief.

Ø  The IRS does not initiate contact with taxpayers by email or social media tools to request personal or financial information. The IRS does not send emails stating you are being electronically audited or that you are getting a refund. This includes any type of electronic communication, such as text messages and social media channels.
Ø  If you receive a scam email claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.
Ø  Identity thieves access your personal information by many different means, including:
·         Stealing your wallet or purse
·         Posing as someone who needs information about you through a phone call or email
·         Looking through your trash for personal information
·         Accessing information you provide to an unsecured Internet site.
Ø  If your SSN is stolen, another individual may use it to get a job. That person's employer may report income earned by them to the IRS using your SSN, thus making it appear you did not report all of your income on your tax return.

When this occurs, you should contact the IRS to show the income is not yours. After the IRS authenticates who you are, your tax record will be updated to reflect only your information. The IRS will use this information to minimize future occurrences.
Ø  Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don't know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice. If you believe the notice is not from the IRS, contact the IRS to determine if the letter is a legitimate IRS notice.
Ø  For more information about identity theft, including information about how to report identity theft, phishing and related fraudulent activity, visit the IRS Identity Theft Protection page, which you can find by searching identity theft on the IRS.gov home page.
Should you become a victim of identity theft which involves filing of false tax returns, please contact us at Mantyla McReynolds as soon as possible.  We know the procedures and the forms that need to be filed to resolve this problem.


MANTYLA MCREYNOLDS RECOGNIZED FOR EXEMPLARY WORKPLACE PRACTICES




Receives prestigious Alfred P. Sloan Award for Excellence in
Workplace Effectiveness and Flexibility

SLC, UT  (August 13th,  2013) – Mantyla McReynolds has been honored with the 2013 Alfred P. Sloan Award for Excellence in Workplace Effectiveness and Flexibility for its use of flexibility and other aspects of workplace effectiveness as a workplace strategy to increase business and employee success.


This prestigious award, part of the national When Work Works project administered by Families and Work Institute (FWI) and the Society for Human Resource Management (SHRM), recognizes employers of all sizes and types in Utah and across the country.

“We recognize the tremendous value of all of our employees to our organization and to our clients, therefore we have always strived to have a workplace culture, environment and benefit package which would attract top talent in the public accounting field.” Don Mantyla, Partner, CPA,  Business Development Director.

Workplace flexibility — such as flextime, part-time work and compressed workweeks — has been demonstrated to help businesses remain competitive while also benefiting employees. Flexibility in combination with other aspects of an effective workplace—such as learning opportunities and supervisor support for job success—can have a powerful impact on employee engagement and motivation.

“Our research consistently finds that employees in effective and flexible workplaces have greater engagement on the job and greater desire to stay with their organization. In addition, they report lower stress levels and better overall health,” said Ellen Galinsky, FWI president.

The Sloan Awards are unique for their rigorous, two-step selection process, which involves an evaluation of employers’ flexibility programs and practices, and a confidential employee survey on the key ingredients of an effective and flexible workplace. All applicants are measured against national norms from the National Study of Employers.

“As a recipient of the 2013 Sloan Award, Mantyla McReynolds ranks among the top 20% of employers nationally in terms of its programs, policies and culture for creating an effective and flexible workplace,” Galinsky said. “In addition, what makes this honor so special is that their employees have corroborated this, affirming that it is indeed an effective and flexible workplace.”

When Work Works is a national project to educate the business community on the value of workplace flexibility by sharing research and promising practices, and conducting the annual Sloan Awards. It is an ongoing initiative of FWI and SHRM.

For more information about the When Work Works initiative and the Alfred P. Sloan Awards for Excellence in Workplace Effectiveness and Flexibility, visit www.whenworkworks.org
  

ABOUT Mantyla McReynolds
Mantyla McReynolds began in 1989 when Don Mantyla and Kim McReynolds had a vision of creating their own business, their own legacy.  Born leaders, Don and Kim have successfully expanded the firm to over 30 employees by hiring bright thinkers and creating a positive work environment.
Mantyla McReynolds is a local CPA firm, based in one of the greatest places to live: Salt Lake City, Utah.  The firm has the experience and expertise to help businesses throughout Utah, the United States and the world, and it has serviced small business, middle-market and international organizations for over 20 years.  Mantyla McReynolds is a BDO Seidman Alliance firm, offering experienced and accessible service teams, world-class engagement management and a focus on quality and efficiency.
With a commitment to timely service and communication, the professionals at Mantyla McReynolds have the experience and knowledge to help you succeed.

About When Work Works
When Work Works is a national initiative, led by the partnership of Families and Work Institute and the Society for Human Resource Management (SHRM), to help businesses of all sizes and types become more successful by transforming the way they view and adopt effective and flexible workplaces. When Work Works is one of the foremost providers of resources, rigorous research and best practices on workplace effectiveness and flexibility in the nation. The initiative administers the prestigious Alfred P. Sloan Awards for Excellence in Workplace Effectiveness and Flexibility annually, which recognize exemplary employers for using flexibility as part of an effective workplace strategy to increase business and employee success. Visit www.whenworkworks.org and follow us on Twitter @WhenWorkWorks @FWINews and @SHRMPress, and join the workflex conversation on Facebook.com/FWINews.

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