Home Office Deduction Criteria

February 26, 2013/in Tax Tips/by revel

Do you use your home for business?

Do you use your home for business? If so, you may be able to deduct expenses for the business use of your home, such as: mortgage interest, insurance, utilities, repairs, and depreciation.

You must meet two requirements in order for your home to qualify as a deduction.

You must use your home office space regularly and exclusively for business.
You must run your business primarily out of your home office.

Keep in mind that typically home office deductions are based on the percentage of your home that is devoted to the business. If you use a spare room as your office, you’ll need to calculate the percentage of your home you have devoted to business activities.

If you telecommute and want to deduct your home office workspace, you must meet the follow criteria:

The use of your home workspace must be for the convenience of your employer.
You can’t rent any part of your home to your employer and use the rented portion to perform services for that employer as their employee.

Daycare providers have special qualifications for deducting their workspace. You may be allowed to deduct business expenses for parts of your home, even if you use them for non-business purposes.

You must be providing daycare for children, people age 65 or older, or for people who are physically or mentally unable to care for themselves.
You must have applied for, been granted, or be exempt from having one of the following: a license, certification, registration, or approval as a daycare center, family daycare home, or group daycare home.

To learn more about deducting your home business workspace, contact H&S Companies.

Sources:
Home Office Deduction
Publication 587, Business Use of Your Home

PPACA Newsletter

January 29, 2013/in Affordable Care Act Tips + Updates, Newsletters/by revel

The Patient Protection Affordable Care Act of 2010 (PPACA) is here to stay. Several provisions have already taken effect, but there are many more to come. Read the Special PPACA Edition of the Bottom Line to learn more.

Click to Download

In This Issue:

2013 & The PPACA: The Patient Protection and Affordable Care Act of 2010, also known as the PPACA, is the single largest health care bill ever passed. It has a monumental impact upon the health care and insurance industry in the United States.
Non-Discrimination Rules to Take Affect for 2014: The PPACA added Section 2716 to the Public Health Service Act (PHSA), which states non-grandfathered health insurance plans, including fully-insured plans, must follow the same non-discrimination testing rules that apply to self-insured health insurance plans as outlined under IRS Section 105(h).
Am I Considered A ‘Large Employer’: Only employers who are considered a large employer are subject to the employer mandate provisions of the PPACA.
Major Changes Effective for 2013
The Confusing World of Penalties: As you may have read, the PPACA will implement fines for employers who are subject to the new regulations but do not comply. It is still possible, however, for an employer to offer insurance and still get hit with the fine.

What is the 3.8% Tax?

December 5, 2012/in Tax Tips/by revel

You will NOT pay the tax if you sell your home and the gain qualifies for the $250,000/$500,000 principal residence exclusion.

The 3.8% tax has been a topic of heated discussion since it was slipped into the healthcare bill in 2010. The law is set to take effect in 2013, yet many people are still confused as to what exactly will be taxed.

Here’s what you need to know about the 3.8%:

The 3.8% tax applies to net investment income — capital gains, net rents (so rent after expenses are deducted), passive income from partnerships, interest, and dividends.
For those who are single the tax will apply to the lesser of net investment income or income over $200,000; for those filing jointly, over $250,000. This means if a single person has $20,000 of net investment income and adjusted gross income of $210,000, the tax applies to $10,000 (the portion exceeding $200,000).
This tax goes into effect in 2013 and will be reported on the tax return you file in 2014.

Below are 4 situations where the 3.8% tax will NOT apply:

You will NOT pay the tax if you sell your home and the gain qualifies for the $250,000/$500,000 principal residence exclusion.
You will NOT pay this tax if you buy a home, as it will NOT be collected as a transfer tax.
Have a million dollars but didn’t earn a cent of it from investment income? You will NOT pay the 3.8% tax.
Are you single and made $199,000, or married and made $249,000, and some of that income came from investment income? You will NOT pay the 3.8% tax.

Still have questions about how the 3.8% tax will affect you? Contact H&S today.

photo credit: Images_of_Money via photopin cc

Social Security Wage Base to Increase in 2013

October 19, 2012/in Tax Tips/by revel

Employers who handle payroll in-house will need to be sure to adjust their employees’ paychecks accordingly.

On October 16^th, the Social Security Administration announced that the taxable wage base would increase from $110,100 to $113,700. This means that employees will pay the following on taxable income:

6.2% social security tax on taxable income up to $113,700:
1.45% Medicare tax (aka Hospital Insurance) for the first $200,000 of taxable income
2.35% Medicare tax on taxable income over $200,000