IRS Tax Tip Number 11 – IRS, States, Industry Urge Taxpayers to Learn Signs of Identity Theft

No matter how careful you are, identity thieves may be able to steal your personal information. If this happens, thieves try to turn that data quickly into cash by filing fraudulent tax returns.

The IRS, state tax agencies and the nation’s tax industry ask for your help in their effort to combat identity theft and fraudulent returns. Working in partnership with you, we can make a difference.

That’s why we launched a public awareness campaign called “Taxes. Security. Together.” We’ve also started a new series of security awareness tips that can help protect you from cybercriminals.

Here are a few signs that you may be a victim of tax-related identity theft:

  1. Your attempt to file your tax return electronically is rejected. You get a message saying a return with a duplicate Social Security number has been filed. First, check to make sure you did not transpose any numbers. Also, make sure one of your dependents, for example, your college-age child, did not file a tax return and claim themselves. If your information is accurate, and you still can’t successfully e-file because of a duplicate SSN, you may be a victim of identity theft. You should complete Form 14039, Identity Theft Affidavit. Attach it to the top of a paper tax return and mail to the IRS.
  2. You receive a letter from the IRS asking you to verify whether you sent a tax return bearing your name and SSN. The IRS holds suspicious tax returns and sends taxpayers letters to verify them. If you did not file the tax return, follow the instructions in the IRS letter immediately.
  3. You receive income information at tax time from an employer unknown to you. Employment-related identity theft involves the use of your SSN by someone, generally an undocumented worker, for employment purposes only.
  4. You receive a tax refund that you did not request. You may receive a paper refund check by mail that the thief intended to have sent elsewhere. If you receive a tax refund you did not request, return it to the IRS. Write “VOID” in the endorsement section, and include a note on why you are returning it. If it is a direct deposit refund that you did not request, contact your bank and ask them to return it to the IRS. Search IRS.gov for “Returning an Erroneous Refund” for more information.
  5. You receive a tax transcript by mail that you did not request. Identity thieves sometimes try to test the validity of the personal data they have chosen or they attempt to use your data to steal even more information. If you receive a tax transcript in the mail and you did not request it, be alert to the possibility of identity theft.
  6. You receive a reloadable, pre-paid debit card in the mail that you did not request. Identity thieves sometimes use your name and address to create an account for a reloadable prepaid debit card that they use for various schemes, including tax-related identity theft.

More information about tax-related identity theft can be found at Identity Protection: Prevention, Detection and Victim Assistance as well as the Taxpayer Guide to Identity Theft – all on IRS.gov.

The IRS, state tax agencies and the tax industry joined together as the Security Summit to enact a series of initiatives to help protect you from tax-related identity theft.

To learn additional steps you can take to protect your personal and financial data, visit Taxes. Security. Together. Also read Publication 4524, Security Awareness for Taxpayers.

Original article was published on January 3, 2017 by the Internal Revenue Service – IRS Tax Tip Number 11.

 

Posted in Akron Accounting Firm, Akron Certified Public Accountants, Akron Ohio Community, Business, Business Owners, Business Professional, Internal Revenue Service, Taxation | Tagged , , , , , , | Leave a comment

Levin Swedler Kennedy Year-End Tax Planning for 2016

With the Presidential and Congressional elections of 2016 behind us and the end of the year approaching, now is a prudent time to consider tax planning strategies to reduce your tax bill for 2016 and possibly future years. The results of the recent election give us a general idea of where federal tax policy may be headed in the coming two years, however, at this point we can only speculate on the details. As such, this letter primarily focuses on tax provisions affecting tax year 2016 (which are unlikely to change at this point). Nonetheless, there are general references throughout to a few broad changes that may be down the road and how those changes affect tax year 2016 planning. Some factors continuing to compound the 2016 tax year planning challenge include turbulence in financial markets, economic uncertainty, and whether Congress will act on a number of important tax breaks set to expire for tax years after 2016. Under current law, tax breaks that won’t be available for tax years after 2016 unless Congress acts in some form include:

  • The exclusion of income from discharge of indebtedness on a principal residence
  • The treatment of mortgage insurance premiums as deductible qualified residence interest
  • The 7.5% of adjusted gross income threshold for medical expense deductions for taxpayers age 65 or older will change to 10%
  • The above-the-line deduction for qualified tuition and related expenses
  • A host of energy provisions including the nonbusiness energy property credit, the residential energy property credit, the credit for 2-wheeled plug-in electric vehicles, the new energy efficient homes credit, and the hybrid solar lighting system property credit

The following is a listing of some key tax provisions that may apply to you in minimizing your taxes. The information is broken up into three sections: Year-End Tax Planning Moves for Businesses & Business Owners, Year-End Tax Planning Moves for Individuals, and Unique Aspects of Planning for Higher Income Individuals.

Year-End Tax Planning Moves for Businesses & Business Owners

  • Businesses should consider making expenditures that qualify for the business property expensing option (“Section 179”). For 2016, the expensing limit is $500,000 and the investment ceiling limit is $2,010,000. Expensing is available for most depreciable property (other than buildings), off-the-shelf computer software, and a limited amount of real property. The deduction is not prorated for the time the property is placed in service during the year. The make-up of the incoming Congress and administration suggests these thresholds are likely to remain as generous as 2016 if not more so for 2017 and 2018.
  • If Section 179 cannot be used, 50% first-year bonus depreciation should be considered. Like Section 179, the amount deductible as bonus depreciation is not prorated for the time of year the property is placed in service.
  • Concerning capitalization versus expense treatment for purchases of items expected to last longer than one year, businesses may be able to take advantage of the “deminimis safe harbor election.” The election permits businesses to expense each “unit of property” with a cost of $5,000 or less for those with an applicable financial statement and $2,500 or less for those without a financial statement. Elected costs may still have to be capitalized under the UNICAP rules.
  • If your business qualifies for the domestic production activities deduction (DPAD) for 2016, consider whether the 50% of W-2 wages limitation on that deduction applies. If it does, consider ways to increase 2016 W-2 income to owner-shareholders whose compensation is allocable to domestic production gross receipts.
  • Consider disposing of a passive activity with suspended passive losses if reducing 2016 income makes sense keeping in mind that with the results of the recent election there is a likelihood that the rates that apply to you may change in 2017 or 2018.
  • If you own an interest in a partnership or S corporation, consider whether you need to increase your basis in your partnership interest or S corporation stock so that you can deduct a loss from the entity this year.
  • There are new filing deadlines for C corporations and partnerships. Formerly, the original filing deadline for calendar year-end C corporations was March 15th and the original filing deadline for calendar year-end partnerships was April 15th. Going forward, this will be reversed. The original filing deadline for calendar year-end C corporations will be April 15th; it will be March 15th for calendar-year partnerships. The extended deadline for calendar year-end partnerships and calendar year-end C corporations will continue to be September 15th, changing to October 15th for C corporations in 2025. S corporations will continue to have March 15th as the original filing deadline and September 15th as the extended deadline.
  • The Research & Development Credit has been made permanent and has also been enhanced. Beginning in 2016, the credit is partially refundable against payroll taxes for businesses with less than $5 million in annual gross receipts who did not generate any gross receipts prior to 2012 (new businesses). The maximum benefit an eligible company is allowed to claim against payroll taxes is $250,000.
  • For tax years beginning in 2018, major changes have been made to the partnership audit process. Generally, the partnership itself will be required to pay any tax resulting from an audit adjustment or make an election to issue adjusted information statements to all partners passing the audit adjustment on to them. Also, the partnership’s designated representative has been granted much greater authority to make decisions on behalf of the partnership. Partnerships may want to review or revise their partnership operating agreement in light of these changes.
  • For Ohio Schedule C and pass-through businesses, the Ohio business income tax deduction will be 100% of business income up to $250,000 ($125,000 for married filing separately) and will no longer be subject to a percentage reduction.
  • Businesses conducting transactions in other states need to keep abreast of ever-changing rules in both the sales and income tax arena for those states in which they do business. Developments that can have a big impact depending on the circumstances are occurring rapidly in this area.
  • Businesses filing Ohio city income tax returns should consider the impact of HB5. HB5 is intended to provide a uniform tax base across all Ohio cities and generally reduce the complexity associated with each City having wide latitude in setting their own tax rules. Most provisions of the legislation went into effect January 1, 2016. One such provision is that a withholding requirement for employees working in another city begins at twenty days rather than twelve days. Changes made by HB5 concerning the application of city net operating losses go into effect January 1, 2017.

Year-End Tax Planning Moves for Individuals

  • Postpone income until 2017 and/or accelerate deductions into 2016 while keeping in mind the various phase-outs for many deductions and credits at certain levels of income. Note that depending on varying individual circumstances there may be times when the opposite strategy is appropriate, such as when you expect to be in a higher tax bracket the following year. However, given the results of the recent election, for most people with relatively stable income year to year the benefits of a general deferral strategy are likely to be enhanced.
  • Remember that charitable gifts of $250 or more may only be deducted if you have a statement from the charitable organization that shows 1) the amount of money contributed or a description of the property donated and 2) whether the organization did or did not give you any goods or services in return for your contribution.
  • Consider a traditional to Roth IRA conversion if you expect to be in a higher tax bracket when eventually taking distributions from the Roth, you do not expect to take distributions from the account for a substantial period of time, and/or your income was much lower in 2016 than is typical. A Roth IRA conversion will increase your adjusted gross income (AGI) in the year converted absent a unique tax attribute such as a net operating loss (NOL).
  • Consider using a credit card to pay deductible expenses before the end of the year. The credit card charges are considered to be a 2016 deduction even when the charges are paid in a future year.
  • Your exposure to alternative minimum tax (AMT) must be kept in mind for 2016 as many tax breaks allowed for regular income taxes are disallowed for AMT purposes. These include the deduction for property taxes on your residence, state and local income taxes, miscellaneous itemized deductions, and personal and dependency exemptions.
  • If you expect to owe state and local income taxes consider increasing your withholding of these taxes (or make or increase state estimated income tax payments) before the end of the year to pull this deduction into 2016. However, keep in mind AMT as the state and local income tax deduction is added back for AMT purposes.
  • If you are just under a threshold for the allowance of a deduction such as miscellaneous itemized deductions or medical expenses consider “bunching” these expenses into one year to get over the threshold.
  • Remember to take into account the required minimum distributions (RMDs) from your IRA or 401(k)/403(b) account(s) if you are over age 70 ½ at the end of 2016. The penalty for failure to take a distribution during the year is 50% of the RMD amount.
  • Consider ways to maximize income taxed at lower capital gain and qualified dividend rates. Consult your investment advisor to develop a strategy to match capital gains and losses and to make investments that pay income as qualified dividends.
  • Shelter gifts by using the annual gift tax exclusion before the end of the year to reduce possible gift and estate taxes. The annual exclusion applies to gifts of up to $14,000 made in 2016 to each of an unlimited number of individuals.
  • Consider filing status as a way to save taxes. Ohio taxpayers can often save by filing separate tax returns and head of household status can save taxes in certain situations. However, retired persons over 65 should also account for the negative impact that married filing separate can have on the cost of Medicare Part B.
  • There are a number of home improvements you can make that qualify for tax credits, mostly related to improving the energy efficiency of your home. Examples of such improvements include installation of material specifically designed to reduce heat loss, exterior windows, skylights, exterior doors, some special types of roofing, electric heat pump water heaters, some forms of central air conditioning, an advanced main air circulating fan, and natural gas, propane or oil hot water boilers. Each of these must meet detailed energy efficiency requirements. Keep in mind the lifetime limits and other limitations associated with these credits – for example, the nonbusiness energy credit has a lifetime limit of $500 with no more than $200 from windows and skylights.

Unique Aspects of Planning for Higher Income Individuals

  • Higher-income individuals must take into account the 3.8% net investment income tax on certain unearned income. The tax applies to individuals with income over $250,000 who use the filing status of married filing jointly or qualifying widow, $125,000 for the married filing separately status, and $200,000 for any other filing status. Strategies to minimize the tax include having investments that generate tax-exempt income (such as municipal bonds) and maximizing investments in qualified retirement plans where income taxes are deferred. Income from activities in which you materially participate is not subject to the tax and your business activities should be carefully analyzed in classifying the income as net investment income versus income from an active trade or business. Going forward into 2017, there is a chance the net investment income tax may be eliminated.
  • Like the 3.8% net investment income tax, the 0.9% Medicare tax applies to individuals for whom the sum of their wages and self-employment income is in excess of $250,000 for joint filers (or the qualifying widow filing status), $125,000 for those with the filing status married filing separate, and $200,000 for any other filing status. Self-employed individuals must take this into account in figuring quarterly estimated taxes due. Also, individuals and married couples who have two or more employers may have a disparity in their withholding if one or more W-2’s are under $200,000 (the amount where employers must withhold the tax) but combined with the other earned income the total earned income exceeds the threshold. Alternatively, tax may also be over-withheld where, for instance, a couple files married filing jointly but one spouse has wages over $200,000 and is required to withhold but the combined income does not exceed $250,000. Again like the net investment income tax, there is a chance this tax will be eliminated going forward.
  • Plan for estate taxes based on current law, but allow for the possibility of dramatic changes from new legislation in this area. As of now, the current effective estate tax exemption due to the unified credit is $5.45 million and a married couple can pass an estate valued at $10.9 million on to their heirs without paying federal estate tax because of a provision allowing for the unlimited portability of a deceased spouse’s unused exclusion amount between spouses.

If you would like to discuss any of the above or any other ideas and/or strategies you may have in achieving your tax objectives, please contact us so that we can help. Remember, most smart tax moves concerning tax year 2016 will need to be done before the end of the year. After the year ends, it’s often too late.

Very truly yours,

Levin Swedler Kennedy

Certified Public Accountants – Akron, Ohio

Akron, Ohio Certified Public Accountants

Posted in Akron Certified Public Accountants, Business, Business Owners, Business Tax Planning, Corporate Taxation, Internal Revenue Service, Ohio Business Taxation, Ohio Department of Taxation, Payroll, State and Local Tax, Tax Compliance, Tax Planning, Taxation, Uncategorized | Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

Managing the Ups and Downs of Seasonal Businesses

What do pumpkin patches, ski resorts, ice cream shops and accounting firms have in common? They’re all seasonal businesses that experience a surge in revenues during their busy seasons that tapers off in the slow season. Seasonal peaks and troughs present challenges that require creative planning and fiscal prudence.

Understand the Cash Flow Cycle

Every business has some degree of ups and downs during the year. But cash flow fluctuations are much more intense for seasonal businesses. So, it’s important to picture-with-pumpkins-for-11-9-16-blog-managing-the-ups-and-downs-of-seasonal-businessesunderstand a seasonal business’s operating cycle to anticipate and minimize shortfalls.

To illustrate, consider a manufacturer and distributor of lawn-and-garden products like topsoil, potting soil and ground cover. Its customers are lawn-and-garden retailers, hardware stores and mass merchants.

The company’s operating cycle starts when customers place orders in the fall — nine months ahead of its peak selling season. The company begins amassing product in the fall but curtails operations in the winter. In late February, when the thaw begins for most of the country, product accumulation continues, with most shipments going out in April.

At this point, a lot of cash has flowed out of the company to pay operating expenses, such as utilities, salaries, raw materials costs and shipping expenses. But cash doesn’t start flowing into the company’s checking account until customers pay their bills around June. Then, the company counts inventory, pays all remaining expenses and starts preparing for the next year. Its strategic selling window — which will determine whether the business succeeds or fails — lasts a mere eight weeks.

Maximize the Selling Window

Seasonal businesses put substantial pressure on their marketing and sales teams. They have a limited amount of time to attract customers and little opportunity to take corrective actions. Successful seasonal businesses use targeted, tailored marketing programs that address these questions:

  • Who’s the company’s typical customer?
  • What’s the best way to reach that customer base?
  • When are customers making their buying decisions?

In the example of the lawn-and-garden distributor, customers place orders in the fall. So, an end-of-summer “early bird” discount program, communicated via an email campaign in September and paper inserts with customer invoices in May, might entice customers to place orders early — and choose that company over its competitors.

Seasonal businesses that market to consumers increasingly turn to social media to generate sales. Customers who follow a business on Facebook or LinkedIn provide a narrow target audience, and social media posts can be cheap and relatively simple to generate. For example, a summer camp sent personalized “Happy Birthday” messages to last year’s campers throughout the year. These posts were viewed by all of the campers’ Facebook friends, many of whom could be potential new campers next summer.

Ramp Up for Busy Season

Ideally, a seasonal business should stockpile cash received at the end of its operating cycle, and then use those cash reserves to finance the next operating cycle. But cash reserves may not be enough, especially for a high-growth company.

Many seasonal businesses apply for a line of credit to avert potential shortfalls. However, banks tend to be leery of such enterprises, particularly those with limited history. To increase the chances that a loan application will be approved, business owners should compile a comprehensive loan package, including historic financial statements and tax returns, as well as marketing materials and supplier affidavits (if available).

More important, the company’s owner should draft a formal business plan that includes financial projections for the next year. Some companies even project financial results for three to five years into the future. Seasonal business owners can’t rely on gut instinct. They need to develop budgets, systems, processes and procedures ahead of the peak season.

Without a line of credit, a business that has severe fluctuations might not have enough working capital to make it through the operating cycle. If there’s insufficient money to pay suppliers, they could stop delivering materials. If the employees aren’t paid, they’re unlikely to report for work. If the weather doesn’t cooperate, revenues might fall short of the business plan. The line of credit is a solid backup plan. If one lender turns down an application for a line of credit, a smart business owner will find out why, remedy any shortcomings and try again.

Plan for the Off-Season

Some companies, such as a local ice cream or golf pro shop, may decide to close during the off-season. Others, such as a hotel or accounting firm, are open year-round, offer promotional discounts or cut operating hours to weather the slow times.

Creative seasonal businesses try to find ways to operate two (or more) seasonal businesses with opposite busy cycles using the same resources. Examples include a midwestern landscaping company that plows snow in the winter, a ski resort that offers hiking and rafting packages in the summer, and costume stores that sell outdoor furniture in the spring.

Another off-season survival strategy is hiring part-time seasonal workers. Salaries and employee benefits quickly drain savings. Using part-timers converts a fixed expense (full-time salaries) into a variable expense that ebbs and flows with the operating cycle. But recruiting reliable, skilled part-timers — who are available to work on demand — is often harder than it seems.

So it’s a good strategy for an employer to build a pool of part-time workers that it can draw on year after year, such as an ice cream shop or a day camp that hires teachers to work during the summer. Also, part-timers should be treated with the same respect as full-timers. A positive work environment will lower turnover, improve morale and increase the likelihood that people will come back to work for the business again. Employers may want to consider offering financial incentives to employees who refer friends and family members for part-time positions.

Remember, most of the same labor laws regarding such issues as harassment, discrimination, child labor, minimum wages, and workplace health and safety apply to all workers, both seasonal and full-time. It’s still necessary to withhold taxes just as for regular employees and pay overtime for nonexempt employees.

Seasonal workers also may affect a company’s headcount under the Affordable Care Act. And, if a seasonal worker exceeds an average of 30 hours per week, large businesses may be required to provide health insurance coverage for them and their children during the months they’re employed. Typically, full-time employment is measured month-to-month. But some large companies avoid providing health insurance benefits for part-timers by electing a measurement period longer than one month or adopting a 90-day waiting period for eligibility.

Consider a Fiscal Year End

Most businesses operate on a calendar year basis that begins on January 1 and ends on December 31. It’s straightforward, matches the owner’s personal record keeping, and may be required by the IRS under certain circumstances.

But seasonal businesses may have good reasons to elect to use a fiscal year. (A fiscal year is 12 consecutive months ending on the last day of any month except December.) For example, reporting income by calendar year could split up the peak season between two years and give a distorted view of income and expenses. This also happens when a seasonal business reports most of its expenses in one calendar year and income in another.

A company that wants to adopt a fiscal year for a seasonal business will need to consistently maintain its books and records and report income and expenses using the time period adopted. But first and foremost, it’s important to consult a tax advisor to determine if the business is allowed to switch its year end under the tax rules and whether doing so is worth the extra effort.

Need Help?

Many seasonal businesses struggle during the operating cycle, and some owners can’t resist the urge to spend their windfall, rather than saving it for the next operating cycle. Financial advisors can help manage seasonal fluctuations and the unique challenges they present.

Levin Swedler Kennedy – Certified Public Accountants – Akron, Ohio

Levin Swedler Kennedy - CPAs

 

Posted in Uncategorized | Tagged , , , , , , , | Leave a comment

Before Borrowing from a 401(k) Plan Account, Consider the Pros, Cons, and Alternatives

So many people seem to be borrowing from their 401(k) plan accounts these days, but is it really a good idea?  Proponents often point to the following:

  • If your plan offers loans, it’s easy to get one. Your credit score has no effect on your qualification, and the loan and its repayment won’t affect your credit score.
  • Plan loans are normally at very reasonable interest rates – less than you may think.
  • Your plan loan repayments are applied to your plan account exclusively, so you are actually paying yourself back with interest.
  • If your other plan investments are continually underperforming or are subject to high fees, such as may be the case for plans that participate in revenue sharing agreements with mutual fund companies, or if you are paying extra to have your investments managed, the rate of return you pay yourself on the plan loan could appear to be a better investment for you.

Sounds pretty tempting, doesn’t it?  Let’s dig a little deeper, though.  Here are some things you may not have realized:

  • The rate of return you pay yourself on a plan loan is likely a worse investment for you (a loss of earnings). Investing in low-risk options, including plan loans, provides almost no potential growth for your money.  Investing in the stock and bond markets over the long-term is your only chance to produce the level of wealth needed for retirement.
  • Most plans charge a loan origination fee and an annual loan maintenance fee, each of which could easily be $75, $100, or more. These fees are paid directly from your plan account.
  • Unless you borrow from Roth elective deferrals you have made, plan loan proceeds consist of previously untaxed money. Although you fundamentally repay your loan principal with these proceeds, you will be paying the interest with new take-home pay, which is net of tax.  Therefore, you will be paying double tax on the interest paid on your plan loan:
    • once as it is being paid each pay date, and
    • again when you withdraw money from your plan account for use in retirement.
  • You may find yourself decreasing your contributions to your plan in order to afford the plan loan repayments. Some plans even prohibit making elective deferral contributions while you have an outstanding plan loan.  A plan loan can derail your retirement savings goals in a major way.
  • If you leave your job before the loan is paid off, you must either pay off your loan balance in full, or you must report the outstanding balance as taxable income on your federal tax return. If you are under age 59 1/2, you will also incur a 10% excise tax penalty.  Talk about unexpected expenses!

OK, so this is a lot of information.  Suffice it to say that 401(k) plan loans generally should be avoided if at all possible.

Well, the thing is, you really need the money – that’s why you’re considering a plan loan in the first place, right?  If you’re really and truly in a bind, by all means, go there.  However, think about the following alternatives:

  • If you own your home, you may be able to refinance your mortgage and utilize a cash-out option, or you could take out a home-equity loan.
  • If you need money for education costs, look into a federal student loan instead.
  • Are there some expenses you could cut back on or renegotiate to free up some money? There is an unbelievable amount of free advice about this on the internet.
  • Have you thought about getting a second, part-time job? This could even be as simple as the following:
    • Do occasional odd jobs for neighbors or seniors (think snow shoveling, lawn care, dog walking, taking care of plants and pets while they’re on vacation, etc.).
    • Make and sell crafts. You’d be surprised how many events provide selling opportunities and, again, free advice on the internet.
    • Sell surplus garden produce at your local farmers’ market.
    • Have garage or yard sales or sell items at flea markets, antique stores, or online.
  • Have you considered crowdfunding? There are a good number of websites for this now.
  • If you smoke cigarettes, stop. This is an expensive habit.
  • As a last resort, can you borrow from a relative?

There are other options out there too – just take some time to do a little research.  Believe me, if you can avoid taking a 401(k) plan loan, your future self will thank you.  We are all living longer than ever, and by all accounts, we are all saving too little for our retirement.  It’s time to let the Information Age work to your advantage, so get creative and be resourceful!

Written by: Debi Ondrik, CPA

Levin Swedler Kennedy - Akron-Ohio-Cpas

Posted in Akron Accounting Firm, Akron Certified Public Accountants, Employee Benefit Plans, Internal Revenue Service | Tagged , , , , | Leave a comment

Reminder: Ohio Quarterly CAT Return Filing Deadline is Thursday, November 10

The Ohio Quarterly CAT Return filing deadline is Thursday, November 10, 2016. 

The commercial activity tax (CAT) is an annual tax imposed on Ohio business entities and certain out of state businesses for the privilege of doing business in Ohio. It is measured by taxable gross receipts from business activities in Ohio.  Businesses with Ohio taxable gross receipts of $150,000 or more per calendar year must register for the CAT, file all applicable returns and make all corresponding payments.  CAT applies to all types of businesses such as, but not limited to, retailers, service providers and manufacturers.  Certain receipts are not taxable receipts, such as interest, dividends, capital gains, wages reported on a W-2, or gifts.

Annual CAT taxpayers are those taxpayers with taxable gross receipts between $150,000 and $1,000,000.

Ohio CAT - Annual Filing Deadline

Taxpayers with annual taxable gross receipts in excess of $1,000,000 must file and pay returns on a quarterly basis.  Quarterly returns are required to be filed electronically through the Ohio Business Gateway.  Quarterly taxpayers are required to pay a $150 annual minimum tax for receipts up to $1,000,000 with their 1st quarter payment.  In addition, quarterly taxpayers pay a rate component for taxable gross receipts in excess of $1,000,000.

Ohio CAT - Quarterly Deadlines

Quarterly taxpayers shall apply the full $1,000,000 exclusion amount to the first quarter return for that calendar year and may carry forward and apply any unused exclusion amount to subsequent calendar quarters within the same calendar year.  Any unused exclusion amount from the calendar may not be carried forward into the next calendar year.

Taxpayers who are not registered for the CAT must register first before filing any return.

Commercial Activity Tax Deadline

Contact Levin Swedler Kennedy – Certified Public Accountants with any questions regarding Ohio CAT compliance.

Levin Swedler Crum - CPAs

Posted in Accounting, Akron Accounting Firm, Akron Certified Public Accountants, Business, Business Professional, Business Tax Planning, Corporate Taxation, State and Local Tax, Tax Compliance, Tax Planning, Uncategorized | Tagged , , , , | Leave a comment

Reminder: Ohio Quarterly CAT Return Filing Deadline is Wednesday, August 10

The Ohio Quarterly CAT Return filing deadline is Wednesday, August 10, 2016. 

The commercial activity tax (CAT) is an annual tax imposed on Ohio business entities and certain out of state businesses for the privilege of doing business in Ohio. It is measured by taxable gross receipts from business activities in Ohio.  Businesses with Ohio taxable gross receipts of $150,000 or more per calendar year must register for the CAT, file all applicable returns and make all corresponding payments.  CAT applies to all types of businesses such as, but not limited to, retailers, service providers and manufacturers.  Certain receipts are not taxable receipts, such as interest, dividends, capital gains, wages reported on a W-2, or gifts.

Annual CAT taxpayers are those taxpayers with taxable gross receipts between $150,000 and $1,000,000.

Ohio CAT - Annual Filing Deadline

Taxpayers with annual taxable gross receipts in excess of $1,000,000 must file and pay returns on a quarterly basis.  Quarterly returns are required to be filed electronically through the Ohio Business Gateway.  Quarterly taxpayers are required to pay a $150 annual minimum tax for receipts up to $1,000,000 with their 1st quarter payment.  In addition, quarterly taxpayers pay a rate component for taxable gross receipts in excess of $1,000,000.

Ohio CAT - Quarterly Deadlines

Quarterly taxpayers shall apply the full $1,000,000 exclusion amount to the first quarter return for that calendar year and may carry forward and apply any unused exclusion amount to subsequent calendar quarters within the same calendar year.  Any unused exclusion amount from the calendar may not be carried forward into the next calendar year.

Taxpayers who are not registered for the CAT must register first before filing any return.

Commercial Activity Tax Deadline

Contact Levin Swedler Kennedy – Certified Public Accountants with any questions regarding Ohio CAT compliance.

Levin Swedler Crum - CPAs

Posted in Accounting, Akron Accounting Firm, Akron Certified Public Accountants, Business, Business Professional, Business Tax Planning, Corporate Taxation, State and Local Tax, Tax Compliance, Tax Planning, Uncategorized | Tagged , , , , | Leave a comment