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“Taxing” is a word synonymous with “onerous” and “wearing.” Bond Beebe, Accountants & Advisors, have created a user friendly blog called “It’s Taxing” to inform and educate our clients and business associates on timely topics related to tax, estates, accounting and finance. We hope our blog answers your questions and alleviates the heavy burden and anxiety related to understanding complicated tax laws and related matters.
The IRS has released a change to flexible spending accounts (FSAs) under cafeteria plans which addresses the “Use-or-Lose” provision. Essentially, an employer can amend their cafeteria plan to allow participants/employees to rollover up to $500 of unused funds to the following year to reimburse out-of-pocket qualified medical expenses. Treasury estimates that nearly 14 million families participate in these plans, which means that a large base of taxpayers is impacted by the change.
As a result of the 16-day government shutdown, the IRS is already predicting a delayed start to the 2014 filing season. Citing a need to allow adequate time to program and test tax processing systems, the IRS is anticipating a delay ranging from one to two weeks. If that expectation stands, taxpayers will be able to begin filing their 2013 tax returns no earlier than January 28th, and no later than February 4th.
UPDATE: With the end of the government shutdown, the IRS has resumed operations and is processing tax returns received since 10/1, as well as refunds. They have begun to respond to correspondence and requests, but do expect initial delays, as well as high call volumes. For additional information on the transition and any associated delays, visit the IRS website.
With the government shut down, IRS operations are limited; according to its contingency plan, the IRS will only keep about 9% of employees on the job. So, what does this mean for you, the taxpayer?
The IRS has announced updated 2014 per-diem rates for the optional high-low substantiation method, effective October 1, 2013. Per-diem rates can be used by employers in lieu of reimbursing actual substantiated expenses for lodging, meals and incidental expenses (M&IE) while an employee is on business travel. The employee must provide simplified substantiation (time, place and business purpose) and the reimbursement is treated as made under an accountable plan (not taxable to the employee).
As promised, the IRS yesterday issued guidance for employers who need to correct prior payroll tax withholding for employees previously taxed on certain same-sex spouse benefits. In Notice 2013-61, the IRS outlines two optional special procedures for correcting income tax withholding and Federal Insurance Contribution Act (FICA) tax withholding for all prior quarters in 2013. It also outlines the procedure for claiming refunds on prior years’ FICA taxes withheld.
Yesterday the IRS ruled that all legally married same-sex couples will be treated as married for federal tax purposes, regardless of where they currently reside. The ruling is the first official guidance from the IRS since the Supreme Court ruled on June 26 that section 3 of the Defense of Marriage Act was unconstitutional.
In its latest effort to boost compliance, the IRS has sent letters to approximately 20,000 small business owners requesting additional information regarding potentially underreported income. Essentially, the IRS is checking to make sure that you have reported and paid tax on all cash transactions. The IRS letters are ominously titled “Notification of Possible Income Underreporting.”
Millions of students returning to college campuses this month received a back-to-school gift from Congress with an interest rate reduction for federal student aid. After rates on new Direct Subsidized Loans had doubled from 3.40% to 6.80% as of July 1st, the Senate and House approved a new system which ties current and future rates to the 10-Year Treasury note. In the short-term, that effectively lowers rates from 6.80% to 3.86% for undergraduate students and from 6.80% to 5.41% for graduate students.