Proposition 206-Minimum Wage Increase and More

Ballot measure Proposition 206 was passed by Arizona voters in November. In addition to annual minimum wage increases, employers will be required to provide earned paid sick time to their employees.

Minimum Wage Increase

  • $10.00 on and after January 1, 2017
  • $10.50 on and after January 1, 2018
  • $11.00 on and after January 1, 2019
  • $12.00 on and after January 1, 2020
  • Will be increased by the cost of living adjustment on and after January 1, 2021

Earned Paid Sick Time

Starting July 1, 2017 all employers are required to allow an employee to accrue a minimum of one (1) hour of sick time per thirty (30) hours worked, subject to the following limits:

  • Employers with fewer than 15 employees are required to allow an employee to accrue a minimum of and use up to twenty-four (24) hours of earned paid sick time per year.
  • Employers with 15 or more employees are required to allow an employee to accrue a minimum of and use up to forty (40) hours of earned paid sick time per year.
  • An employer is allowed to select higher limits.
  • Unused earned paid sick time shall be carried over to the following year, subject to the limits
    stipulated above.

All full-time, part-time and/or temporary basis employees are included.

Employees may utilize the accrued earned paid sick time without an employer retaliating for the following conditions and/or events:

  • Mental or physical illness, injury or health conditions;
  • Care of a family member with the above needs;
  • Communicable diseases announced by Public Officials; and
  • Domestic violence and related follow up.

An employer shall have a written policy for unforeseeable earned paid sick time requests. An employee shall make a good faith effort if the earned paid sick time request is foreseeable.

An employer may be subject to additional payments for failure to implement and adhere the new regulation. There may be additional payments to the employee if an employer retaliates.

Holdsworth Chadd Fuller CPAs can help you with all your accounting and payroll needs. Contact us today for a free consultation >>>

Arizona Tax Credits Update

Arizona has made some exciting changes to its various tax credits for the 2016 tax year! We hope that you will take advantage of them to help the qualifying organizations and so that you can be in control of where your tax dollars are being spent!

Contributions to Qualifying Charitable Organizations

The charitable organizations contribution credit has increased from $200 to $400 for individuals and from $400 to $800 for married taxpayers.

Contributions to Qualifying Foster Care Organizations

The credit for contributions made to charitable foster care organizations has also increased to $500 if you are single and $1,000 if you are married filing jointly.

School Tax Credits

Don’t forget about the School Tax Credits! Taxpayers can receive a tax credit for donations or fees paid to public schools in the amount of $200 for individuals and $400 if married.

Last but not least, you may also receive a tax credit for contributions to private school tuition organizations. The combined limit of this credit is $1,087 for single taxpayers and $2,173 for married taxpayers.
In Summary (click name for link to relevant AZDOR webpages):

Individual Filers Married / Joint Filers
Charitable Tax Credit $400 $800
Foster Care Tax Credit $500 $1,000
Public School Tax Credit $200 $400
Private School Tax Credit $1,087 $2,173

You now have until April 15th of the following year to make your donations for all of the above credits! Donate to help our schools, our kids, and other worthy organizations!

Visit AZ Department of Revenue for more information on these credits and more!

Contact Holdsworth Chadd Fuller CPAs, your Prescott accountants! We offer accounting and tax services and can help you.

Arizona Tax Recovery Program

 

If you are behind on your Arizona state taxes, you may qualify to take advantage of the Arizona Tax Recovery Program.

A few weeks ago, Governor Doug Ducey announced the 2016 Arizona Tax Recovery Program. The program which runs from September 1st, 2016 to October 31st, 2016 allows Arizona taxpayers the ability to pay back taxes without any penalty, interest, or criminal prosecution. Taxes that are included in the program are individual income, corporate income, and transaction privilege sales tax.

Eligible Tax Years

  • The liability period for taxpayers filing annually is any tax year ending before January 1st, 2014. Therefore, an individual that owes back taxes may be able to request recovery for tax years 2013 and earlier.
  • Monthly and quarterly filings are for periods ending before February 1st, 2015.
  • Taxpayers can elect to pay the liability in full on or before October 31st, 2016 or can pay in installments over a 24-month period no later than October 31st, 2018.

Eligibility

Tax recovery is available to taxpayers that meet these conditions:

  • Have an existing liability for tax due and have received a notice from AZDOR.
  • Have failed to file a tax return due during the periods covered under the program.
  • Failed to report ALL income or ALL tax and associated interest or penalties due.
  • Claimed credits or deductions incorrectly.
  • Misrepresented or did not include any tax due.
  • Non-residents or part-year residents who received income that may be taxable in Arizona.
  • Out-of-state and multi-state businesses.

For more information on the Arizona Tax Recovery Program visit the following link: https://azdor.gov/taxrecovery.aspx

If you think you qualify for the tax recovery program, please contact Holdsworth Chadd Fuller CPAs for a free consultation or tax assistance.

New Overtime Exemption Rules-UPDATED

UPDATE: Following a court hearing held November 23rd, the United States District Court issued a nationwide injunction prohibiting the enforcement of these rules. Therefore there will be no change taking place December 1.

ORIGINAL ARTICLE: Last week the White House and Department of Labor released the details of the new overtime exemption rules, which are to take effect December 1, 2016.

The aspect of the new rules that will affect white collar workers is the increase in the minimum salary for employees exempt from overtime. Currently, the minimum salary for exempt employees is $23,660. The new rules more than double this amount to $47,476. In order to be an exempt employee, three requirements must be met: they must perform exempt duties, be paid the minimum salary, and be paid on salary (not hourly) basis.

What does this mean for employers?

Employers will need to review their payroll to see if they have any employees currently on a salary less than $47,476 per year that may work overtime hours during any one week. If you do, then you have a few options to stay in compliance with the labor rules. You can choose to raise their salary to the new minimum, to switch these employees to an hourly rate, or to keep them on their current salary and pay the overtime rate in addition to their salary in the event that they work overtime. A salary below the minimum amount is legal, however, the employee must be compensated for overtime.

A change was also made to the minimum salary for highly compensated employees, increasing that amount from $100,000 to $134,004. The minimum salary for both exempt and high compensated exempt employees is set to be adjusted every three years beginning January 1, 2020.

For more details on the new rules, visit the website below:

http://www.wagehourinsights.com/new-exemption-rules/

Holdsworth Chadd Fuller CPAs can help you with all your accounting and payroll needs. Contact us today for a free consultation >>>

Business Meals and Entertainment

This article clarifies some common misconceptions related to tax deductions for business meals and entertainment. Generally business tax payers can only deduct 50% of entertainment expenses. However, there are some exceptions where they can deduct 100%. Keep reading to see how much of your businesses meals and entertainment expenses you may be able to deduct and make sure you are taking advantage of the items that are allowed 100% deduction.

Businesses can deduct meals and entertainment expenses that are ordinary and necessary in the course of business and that are not lavish or extravagant under the circumstances. The deduction is limited to 50% unless they meet one of the following exceptions.

Exceptions to the 50% Limit

There are some exceptions where the taxpayer is allowed to claim 100% of the expenditure, as follows:

  • Company holiday party or picnic
  • Meals provided for the convenience of employer (All meals provided on the premises are treated as provided for the convenience of the employer)
    • Must include more than ½ of the employees, or
    • Provided to employees, on an occasional basis, who work overtime
  • Office snacks such as coffee, soft drinks, water, etc. provided on business premises
  • Expenses for goods, services, and facilities made available to the general public and / or for a fundraising event or charity
  • Employer provided services, including an employee cafeteria
  • Amounts paid for meals and entertainment where the taxpayer is in the business of providing meals and entertainment

*It is important to keep accurate records of all business expenses. Receipts that substantiate meals and entertainment expenses are a must and the IRS will look for you to have the proper documentation such as the time and place, business purpose, and attendees. It is also recommended that you have two general ledger accounts to track the 50% and 100% deductible expenses separately.

For more clarification on the business meals and entertainment tax deductions, visit the following link >>>.

Contact Holdsworth Chadd Fuller CPAs for all your tax needs.

 

1099s – What You Should Know

Hard to believe we are approaching the end of another year! For businesses this means many year-end tasks will need to be completed including making sure you are ready to issue 1099s to your vendors.

Make sure you get those W-9s!

Before you pay individuals or entities for services provided throughout the year, you should obtain a W-9 from them. This will give you the information you need to prepare your 1099s come year-end. If you have not obtained these forms throughout the year, it is not too late! This does create more work at year-end when you are up against the 1099 filing deadline, however it is necessary for completing your 1099 forms.

Visit the Resources section of our website to download this form.

1099 Requirements

Per the 1099 instructions you must issue a 1099-MISC form to those who you paid at least $600 for Rents, services (performed by someone who is not your employee), and payments to an attorney. These are only the most common categories, please reference the instructions for an inclusive list.

Visit the IRS website for more details: https://www.irs.gov/pub/irs-pdf/i1099msc.pdf

Preparing 1099s

Accounting software is helpful when preparing 1099s for your vendors. The IRS requires that these forms be provided to the recipient by January 31st of the following year and the IRS copy must be filed by the last day of February. Some software will allow you to print the forms on blank paper however, the pre-printed forms can be ordered from the IRS or purchased from an office supply store should you need them. Contact your accountant for further information on preparing and filing these forms.

Holdsworth Chadd Fuller CPAs uses state of the art technology to prepare 1099s and e-file with the IRS taking the burden off their clients. If you are interested in having us prepare and file your 1099s please contact us.

Arizona Tax Credits-Continued

Arizona Tax Credits

Hopefully you caught last week’s article  about the tax credits that benefit Arizona schools, click here to view that article. This week we’re focusing on three additional Arizona tax credits that are available for contributions to certain charitable organizations, foster organizations, and Arizona military families.

 Help Certain Charitable and Foster Organizations!!

By contributing to a Qualifying Charitable Organization you can claim a tax credit of $200 for individuals and $400 for married couples filing jointly. If you also contribute to a qualified foster care charitable organization, another $200/$400 credit is allowed. There are numerous organizations all around the state that qualify. You can find a list of 2015 qualifying organizations on the Arizona Department of Revenue website http://azcredits.org/working-poor-tax-credit/.

Help Arizona Military Families!!

The Arizona Military Family Relief Fund is to provide financial assistance to the families of currently deployed service members and post 9/11 military and veteran families for hardships caused by deployment to a service zone. Donations to this fund are capped at $1,000,000 per year. Once the $1,000,000 is met, contributions must be returned. Therefore, it is better to get your donations in early if you want your tax dollars to assist this organization. Check the following website for current year tally-https://dvs.az.gov/military-family-relief-fund-2015.

Keep in mind you must have a tax liability for at least the amount you contribute to take advantage of all the credits discussed here and in last week’s article. Consult your tax practitioner to optimize the benefit you will receive under the guidelines and limitations of these credits.

At Holdsworth Chadd Fuller CPAs we offer a variety of tax services. Contact us if you would like to receive more information or to see if you would benefit by taking advantage of these Arizona tax credits.

Arizona School Tax Credits

With 2015 coming to an end and 2016 rushing in, we would like to update you on the tax credits that are available to Arizona taxpayers. These credits allow you to have a say in how your state tax dollars are spent! This week we’re talking about the Arizona School Tax Credits that benefit Arizona schools and students. Check in next week for information on three additional credits that are available.

Help our Schools!!
Public School Tax Credit
Taxpayers can claim a credit for donations to an Arizona public school of their choice up to $200 for individuals and $400 for married couples filing jointly. The beauty of the tax credit is that it costs you nothing, keeps your money local and reduces your State of Arizona tax liability.

Private School Tuition Credit
Contributions to Private School Tuition Organizations is another way to designate where your Arizona tax dollars are spent. The combined limits for this credit for 2015 are $1,067 for individuals and $2,134 for married couples filing jointly. A list of Certified School Tuition Organizations can be found on the Arizona Department of Revenue website noted below.

You have until April 15th, 2016 to contribute to The Public School and Private School Tuition Credits! This means you can wait to see what your tax liability is and then write your check to the schools instead of the Department of Revenue! Your tax preparer can assist in getting the proper forms filed to make sure you get credit for your contributions.

More information on these tax credits can be found on the Arizona Department of Revenue website at http://azcredits.org.

Keep in mind you must have a tax liability for at least the amount you contribute to take full advantage of the credits. Consult your tax practitioner to optimize the benefit you will receive under the guidelines and limitations of these credits.

At Holdsworth Chadd Fuller CPAs we offer a variety of tax services. Contact us if you would like to receive more information or to see if you would benefit by taking advantage of these tax credits.

Are You Eligible for Higher Education and Child Tax Credits?

Many individuals with children and individuals who are advancing their education don’t know that they may be eligible for certain tax credits. Do you have children in college or have you recently decided to return to college? Do you have children? Have you paid someone to take care of your children so that you can work? If you answered yes to any of these questions then keep reading because you will want to take advantage of the higher education and child tax credits.

Child Tax Credits

The Child Tax Credit is for individuals who have a dependent child that is age sixteen or younger. Federal income tax may be able to be reduced by up to a $1,000 for each qualifying child.

The Child and Dependent Care Credit are for individuals who paid someone to care for their child or dependent so they could work. If filing a joint return, both taxpayer and spouse must show earned income to qualify for this credit. If you qualify this credit could reduce your federal income taxes up to $3,000 for one dependent and $6,000 for two or more dependents. The dependent must meet the criteria for age, relationship, support, dependent, citizenship, and residence.

The American Opportunity Credit

This tax credit is for students who are at least attending half-time at an accredited school. The credit is available during the first four years of higher education. You can be eligible for up to $2,500 per student. Tuition, books, supplies, etc. are all qualifying expenses for this credit which can only be claimed by the student on their tax return or by the parent if the student is their dependent. Students who are a dependent cannot claim the credit.

The Lifetime Learning Credit

The Lifetime Learning Credit can be claimed by anyone taking higher education classes, with no requirement for being enrolled at least half-time. It can also help pay for undergraduate and graduate degree courses. There is no limit on the number of years this credit can be claimed which could result in up to a $2,000 tax savings per year. This credit has the same rules as The American Opportunity Credit regarding who it can be claimed by and what expenses qualify.

*All of these credits are subject to adjusted gross income phase outs which can be found on the IRS website.

At Holdsworth Chadd Fuller CPAs we can help you understand what type of credits you are eligible for as we provide a variety of tax services. Contact us today!

Small Business Bookkeeping

Small business bookkeeping should be a task that is performed ongoing throughout the year. Many small businesses put off their bookkeeping tasks until year-end rolls around and it is time to do taxes. However, this allows for potential issues, including missed transactions and lost documents, and can be an overwhelming approach to what is much more manageable when handled throughout the year.

Daily & Weekly Tasks

Daily and weekly bookkeeping tasks help your business run on a daily basis. These tasks include; keeping track of receipts and daily cash flows, invoicing customers, paying bills and bank deposits. If you have employees then payroll and payroll taxes will also be frequent tasks. It is important that these tasks get sufficient attention to keep money in the bank, vendors and employees happy, and to stay out of trouble with government agencies.

Monthly Tasks

Monthly bookkeeping tasks help keep business records clean and allow businesses to analyze how they are doing financially. Month end bookkeeping tasks include; reconciling bank and credit card accounts and financial reporting and analysis. Reconciling helps to ensure accurate records by bringing to attention any items that may have been posted incorrectly. Financial reporting and analysis includes reviewing your profit and loss statements and balance sheets, and making sure you understand what your numbers are telling you. Financial analysis helps a business make sure they are on track with their goals and allows management to make adjustments if goals are not being met.

Year-End

Year-end for most people means – dreaded tax time. If you have maintained your accounting throughout the year, then your year-end tasks will be minimal and you won’t have to stress about getting a year’s worth of information documented for your tax return preparation. Instead you can focus on business operations for the New Year!

 Holdsworth Chadd Fuller CPAs offers a wide variety of accounting and bookkeeping servicesadvisory services, and we can also help you with your taxes.

Contact us today for a free consultation!