Business Owner News - Sales and Use Tax Rate Decreases January 1, 2017

Due to Voter-approved Proposition 30 along with The Schools and Local Public Safety Protection Act of 2012, the one quarter of one percent (0.25 percent) temporary statewide sales and use tax rate expired on December 31, 2016. As a result, effective January 1, 2017, the California statewide sales and use tax rate will decrease by 0.25 percent from the current rate of 7.50 percent to the new rate of 7.25 percent. In some instances the total tax rate in many cities and counties will remain higher than the statewide rate because of local voter-approved district taxes in those areas.

Need more clarification in filing a Sales Tax Return contact Ken A Anaya at www.KAA4Tax.com or call toll FREE (844) KAA-4TAX.

2016 Standard Mileage Rates for Business, Medical and Moving

The 2016 standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes will be:

·         54 cents per mile for business miles driven

·         19 cents per mile driven for medical or moving purposes.

·         14 cents per mile driven in service of charitable organizations.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates. Consult with Ken A. Anaya for further detail call (844) KAA-4TAX or www.KAA4Tax.com

Tax Credit Helps Low and Moderate Income Workers Save for Retirement.

As the tax season approaches, the IRS reminds low- and moderate-income workers that they can take steps now to save for retirement and earn a special tax credit in 2016 and years ahead.

The saver’s credit helps offset part of the first $2,000 workers voluntarily contribute to IRAs and 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2016 tax returns. Taxpayers have until the due date for filing their 2016 return (April 18, 2017), to set up a new individual retirement arrangement or add money to an existing IRA for 2016. However, elective deferrals (contributions) must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, or the Thrift Savings Plan for federal employees.

Employees who are unable to set aside money for this year may want to schedule their 2017 contributions soon, so their employer can begin withholding them in January.

Have questions visit our website at: www.kaa4tax.com or call (844) KAA-4Tax.

Did your ITIN Expire January 1, 2017?

Time has run out for many ITIN holders who need to file a federal income tax return in 2017 and want to avoid a long wait for a refund, according to the Internal Revenue Service.

An Individual Taxpayer Identification Number (ITIN) is used by anyone who has tax-filing or payment obligations under U.S. law but is not eligible for a Social Security number. Under a recent law change by Congress, any ITIN not used on a tax return at least once in the past three years have expired on Sunday, Jan. 1, 2017. In addition, any ITIN with middle digits of either 78 or 79 (9NN-78-NNNN or 9NN-79-NNNN) have also expired on that date.

This means that anyone with an expiring ITIN should act now to make sure they have a renewed ITIN in time to file a return during the upcoming tax season. Failure to do so will result in refund delays and possible loss of eligibility for some tax benefits until the ITIN is renewed.

ITIN renewal applicants can get help by visiting our website at www.kaa4tax.com  or calling 
(844) KAA-4TAX.

Plan now to Use your Health FSA in 2017

Eligible employees, now is the time to begin planning to take full advantage of their employer’s health flexible spending arrangement (FSA) during 2017.

(FSA's) provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers this fall are offering their employees the option to participate during the 2017 plan year.

Interested employees wishing to contribute during the new year must make this choice again for 2017, even if they contributed in 2016. Self-employed individuals are not eligible.

An employee who chooses to participate can contribute up to $2,600 during the 2017 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee’s (FSA).

Throughout the year, employees can then use funds to pay qualified medical expenses not covered by their health plan, including co-pays, deductibles and a variety of medical products and services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Under the use or lose provision, participating employees often must incur eligible expenses by the end of the plan year, or forfeit any unspent amounts. But under a special rule, employers may, if they choose, offer participating employees more time through either the carryover option or the grace period option.

Under the carryover option, an employee can carry over up to $500 of unused funds to the following plan year — for example, an employee with $500 of unspent funds at the end of 2017 would still have those funds available to use in 2018. Under the grace period option, an employee has until 2½ months after the end of the plan year to incur eligible expenses — for example, March 15, 2018, for a plan year ending on Dec. 31, 2017. Employers can offer either option, but not both, or none at all.

Have questions visit our website at: www.kaa4tax.com or call (844) KAA-4Tax.