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Opinion Editorials

Major changes to IRS rules going into effect: get ready

(Editorial) If the IRS calls this year… tell them I’m not here. There are quite a few rule changes that many are not aware of, but they go into effect in short order.

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IRS changes are overwhelming

It’s truly shaping up to be one of the worst tax seasons in history. With all of the new legislation passed this year, it’s almost impossible to make heads or tails of it. Are the new regulations effective for 2013 or 2014? What are the new regulations? What happens if I file an extension? Well, rest assured one thing is certain; it is not going to be in your favor.

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First, here are some of the changes and or proposed changes as of Jan. 1st 2014:

  • For high income earners, the top ordinary tax rate will be 39.6 percent if, as a single filer, your taxable income is more than $400,000 ($450,000 for married couples filing jointly).
  • There is a new net investment income tax of 3.8 percent, also known as the Medicare surtax.
  • Personal exemptions and itemized deduction total will be reduced.
  • Affordable Care Act (don’t get me started) – if you don’t buy an insurance plan, you could face a penalty. The charge for 2014 is either 1 percent of your yearly household income or $95 per uninsured adult and $47.50 per child, up to $285 for a family. You pay whichever amount is higher. If you get insurance for part of the year, your penalty will be prorated. You’ll pay the penalty when you file your 2014 tax return in 2015.
  • Married same-sex couples now have the same federal tax filing responsibilities as heterosexual couples. The IRS instructed same-sex married couples to file jointly or as a married couple filing separately, even if the state where they live does not recognize their marriage. This will simplify same-sex couples’ federal filings, but if they must pay state income taxes, depending on their state’s law, they could still face filing two state returns as single taxpayers.
  • For 2013 returns filed in 2014, the IRS is now offering a simplified home office deduction. The new optional deduction is $5 for each square foot of home office space, up to a maximum of 300 square feet. That comes to a maximum $1,500 annual home office deduction. The IRS estimates that this option will save home-office filers who claim it’s an estimated 1.6 million hours of paperwork and record keeping collectively. Instead of filling out Form 8829, you’ll use a worksheet in the Schedule C instruction book and enter your simplified home-office deduction amount on Schedule C.
  • Inflation had a nominal effect on around 40 tax provisions. Most notable is that income brackets were widened, meaning you can earn a more next year without being bumped into a higher tax bracket. Most people claim the standard deduction, and those amounts for each filing status in 2014 were increased slightly, as was the personal exemption amount, going from $3,900 to $3,950. However, the amounts you can contribute to your workplace pension plan and individual retirement account in 2014 have stayed the same as in 2013.

Is there anything positive about these changes?

There is one good thing about all these IRS changes for this tax season – you get more time to file your return. Ok, not technically. Due to the federal government shut down for 16 days last October, the IRS says Jan. 31, 2014, is the earliest it will be ready to process individual tax returns. That date might even be pushed back to Feb. 4 in order for the agency to complete system updates and tests, which were interrupted by the shutdown.

The IRS promises to make an official announcement of the filing season start date as soon as it knows for sure. You can go ahead and submit your return electronically as soon as you’re ready; your e-filer will hold it until the IRS is ready to accept returns. If, however, you file a paper return, the IRS encourages you to wait until Jan. 28 (or later) to mail it.

So how can one avoid all the complication and mess?

Coming from a small business owner who has had his fair share of enjoyment of that 14% interest payment to the IRS, the absolute best thing you can do is DO NOT FILE YOUR OWN TAXES. Hiring a great accountant and/or CPA is well worth the weight in gold that they, or the IRS, will charge.

That is the only way I know to avoid all the hassle and aggravation. They also act as an insurance policy between you and the IRS should you have to go through an audit.

Oh yeah and then there’s this:

The IRS effort to regulate professional tax preparers will continue in 2014, both in the court system and on Capitol Hill. The agency wants to register all tax preparers who aren’t already subject to certain standards (that is, attorneys, Enrolled Agents or CPAs) and require they pass competency exams and take continuing education classes. The IRS believes this will help reduce incorrectly and fraudulently filed returns.

Three tax pros filed a federal lawsuit against the IRS, winning the first court round. An appellate court decision is pending. Meanwhile, legislation has been filed in the House to give the IRS statutory authority to regulate tax preparers. Senate Finance Committee Chairman Max Baucus also has suggested such preparer oversight in his tax reform working drafts. A final decision on tax preparer standards could come in 2014, affecting taxpayers who seek professional help in fulfilling their tax responsibilities.

With 16 years of industry experience, earning his CCIM designation in 2007, Smith has held various leadership positions from CCIM Chapter President, CCIM Institute Regional VP, to Partner at McFalls & Smith International Development. Today, Smith is a commercial sales expert at Prudential PenFed Realty's Commercial Division, an Advisory Board Member at the University of Baltimore's Merrick School of Business, and a Professor at the Professional Development Institute. Smith has educated hundreds of REALTORS, investors, and small business owners, helping them find success through Commercial Real Estate.

Opinion Editorials

How strong leaders use times of crises to improve their company’s future

(EDITORIAL) We’re weeks into the COVID-19 crisis, and some leaders are fumbling through it, while others are quietly safeguarding their company’s future.

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Anthony J. Algmin is the Founder and CEO of Algmin Data Leadership, a company helping business and technology leaders transform their future with data, and author of a new book on data leadership. We asked for his insights on how a strong leader can see their teams, their companies, their people through this global pandemic (and other crises in the future). The following are his own words:

Managers sometimes forget that the people we lead have lives outside of the office. This is true always, but is amplified when a crisis like COVID-19 occurs. We need to remember that our job is to serve our teams, to help them be as aligned and productive as possible in the short and long terms. 
 
Crises are exactly when we need to think about what they might be going through, and realize that the partnership we have with our employees is more than a transaction. If we’ve ever asked our people to make sacrifices, like working over a weekend without extra pay, we should be thinking first about how we can support them through the tough times. When we do right by people when they really need it, they will run through walls again for our organizations when things return to normal.

Let them know it’s okay to breathe and talk about it. In a situation like COVID-19 where everything is disrupted and people are now adjusting to things like working from home, it is naturally going to be difficult and frustrating.
 
The best advice is to encourage people to turn off the TV and stop frequently checking the news websites. As fast as news is happening, it will not make a difference in what we can control ourselves. Right now most of us know what our day will look like, and nothing that comes out in the news is going to materially change it. If we avoid the noisy inputs, we’ll be much better able to focus and get our brains to stop spinning on things we can’t control.
 
And this may be the only time I would advocate for more meetings. If you don’t have at least a daily standup with your team, you should. And encourage everyone to have a video-enabled setup if at all possible. We may not be able to be in the same room, but the sense of engagement with video is much greater than audio-only calls.
 
We also risk spiraling if we think too much about how our companies are struggling, or if our teams cannot achieve what our organizations need to be successful. It’s like the difference in sports between practice and the big game. Normal times are when we game plan, we strategize, and work on our fundamentals. Crises are the time to focus and leave it all on the field.
 
That said, do not fail to observe and note what works well and where you struggle. If you had problems with data quality or inefficient processes before the crisis, you are not fixing them now. Pull out the duct tape and find a way through it. But later, when the crisis subsides, learn from the experience and get better for next time.

Find a hobby. Anything you can do to clear your head and separate work from the other considerations in your life. We may feel like the weight of the world is on our shoulders, and without a pressure release we will not be able to sustain this level of stress and remain as productive as our teams, businesses, and families need us.

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Opinion Editorials

I just got furloughed. Now what?

(EDITORIAL) Some companies are furloughing employees, betting on their company’s long-term recovery. Here’s what you can expect and should plan for in your furlough.

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Are you furloughed? You are not alone! What now? What does “furlough” even mean? How will I get money? Will I still keep my insurance?

A furlough differs from a layoff in a few ways. Whereas a layoff means you are definitely unemployed, a furlough is at its core unpaid time off. Not all furloughs are created equal, though the basic concept is the same: to keep valued employees on ice without being on the hook for their pay until a financial turnaround occurs.

The good-ish news is that a furlough means the company wants to keep you available. When a company is unable to pay their employees for an extended (often indefinite, as is the case with COVID-19 closures) period, they may opt to furlough them instead of laying them off. This virus has decimated whole industries, at least temporarily.

Furloughed employees are forbidden by law to do so much as answer a work email or text while furloughed–or else the company must pay them. The first large waves of COVID-19 furloughs are in obvious sectors such as hospitality (Marriott International), airlines industries (Virgin Atlantic), though other industries are following suit with furloughs or layoffs.

Some furloughs may mean cutting employees’ hours/days to a minimum. Maybe you’re being asked to take off a couple days/week unpaid if you’re hourly, or one week/month off if you’re on salary. With the COVID-19 situation, though, many companies are furloughing bunches of employees by asking them not to work at all. This particular furlough will last ostensibly for a few months, or until business begins to bounce back, along with normal life.

So, what are your rights? Why would you wait for the company? Can you claim unemployment benefits? What about your other work benefits? I’d be lying if I said I knew all the answers, as the furlough packages differ from company to company, and the laws differ from state to state.

However, here are some broad truths about furloughs that should apply. I hope this information helps you sort through your options. I feel your pain, truly. It’s a tough time all around. I’m on your side.

The first answer people want to know is yes, if you’re furloughed and have lost all or most of your income, you may apply for unemployment benefits. You can’t be expected to live off of thin air. Apply IMMEDIATELY, as there is normally a one or two week wait period until the first check comes in. Don’t delay. Some states provide more livable unemployment benefits (I’m looking at you, Massachusetts) than others, but some income is better than none.

Also, most furloughed employees will likely continue to receive benefits. Typically, life and health insurance remain intact throughout the length of the furlough. This is one of the ways companies let their employees know they are serious about wanting them back as soon as it’s financially realistic. Yet some other benefits, like a matching 401k contribution, will go away, as without a paycheck, there are no contributions to match.

Should you look for a job in the interim? Can you really afford not to? What if the company goes belly up while you’re waiting? Nobody wants that to happen, but the reality is that it might.

If you absolutely love your job and the company you work for and feel fairly confident the furlough is truly short-lived, then look for a short-term job. Thousands upon thousands of positions have opened up to meet the needs of the COVID-19 economy, at grocery stores or Amazon, for example. You could also look for contract work. That way, when your company reopens the doors, you can return to your position while finishing off the contract work on the side.

If the company was on shaky ground to begin with, keep that in mind when applying to new jobs. A full-time, long-term position may serve you better. At the end of this global health and economic crisis, some industries will be slower to return to their former glory–if they ever do. If you’re furloughed from such an industry, you may want to shift to something else completely. Pivot, as they say. Now would be a good time.

The only exceptions are “Excepted” government workers in essential positions, including public health and safety. They would have to work while furloughed in case of a government shutdown (and did previously).

Furloughs are scary, but they offer a greater measure of security than a layoff. They mean the company plans on returning to a good financial situation, which is encouraging. Furloughs also generally offer the comfort–and necessity–of insurance, which means you can breathe a bit easier while deciding your next move.

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Opinion Editorials

The cringe inducing and lesson learning tale of Poor Jennifer

(EDITORIAL) Video conferencing is becoming the norm, so make sure you don’t end up like poor Jennifer. Take some extra time and precautions against exposure.

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Ever had that bad dream where you were giving a speech, but realized you were totally naked? If so, you’ll join us in cringing at the true life tale of “Poor Jennifer.”

We are all Poor Jennifer. We love Poor Jennifer. We stand with Poor Jennifer. Take a deep breath and prepare to relate far too well to a story this mortifying. You’ll want to tell her you feel for her and perhaps even offer up your own embarrassing anecdotes to let her know she’s not alone. Jennifer’s story serves as the ultimate cautionary tale for Zoom calls.

Working from home is a luxury/burden that was still surprisingly rare until the COVID-19 crisis sent office workers home in droves. IT departments across the country–and across the world–scrambled to ensure they had solid firewalls and valid VPNs locked and loaded on everyone’s computer. Everyone signed up for video conferencing tools. Zoom became a household name overnight, though other options are available, too.

Nearly everyone’s reality has drastically changed over the past several weeks due to the novel coronavirus–and in some cases overnight. With this global pandemic comes uncertainty, anxiety, and dread, meaning few of us are working at our own full mental capacity. Many professionals find themselves working at home, using new tools, and with new, often rambunctious, noisy, or needy coworkers, AKA children, pets, or life partners. It can be jarring, disconcerting.

If you’re used to participating in conference calls in an office environment, whether video or audio, you take them at your desk. Working from home can tempt one to mute the audio call and do some multi-tasking. Nobody can see you or hear you once you mute the phone, after all, and not every part of every call is important for your particular piece of the puzzle.

I’m not proud of it, but I’ve walked the dog or loaded the dishwasher while I muted a conference call during another department’s report. It’s not ideal, but I have to tell you…it happens. I am thanking my lucky stars today that we kept video conferences to a bare minimum at work.

What does this have to do with Poor Jennifer? Well, Poor Jennifer was on a team video conference call when she answered another call: nature’s. Yikes. Zoom caught it all, and her colleagues’ faces told the story. We see confusion, discomfort, then disbelief. By the time one of her colleagues tries to tell her, she obviously already caught a glimpse of herself on the porcelain throne and took care of the problem.

The whole scenario was over practically before it began, yet it’s a moment that will live on forever, because one of Poor Jennifer’s inconsiderate coworkers went ahead and posted the Zoom feed online. NOT COOL, BRO. As for Poor Jennifer, please know we get it. The world is coming to a standstill, and this weighs heavy on our heads. Your accident serves as a warning to all of us coping with a strange new world. And yes, we laughed a little, awkwardly, because we were taken by surprise and felt uncomfortable for you.

Please know, Poor Jennifer, that it could happen to anyone. Know that we’re on your side. Know that we think your coworker is in the wrong 100% for posting it. Most importantly, know that any minute now, some other unsuspecting soul will unseat you from your internet throne of ignominy. This is the beauty of the internet and our ridiculously short attention spans.

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