Leaderboard

I had a client call just last week who got the call and was on his way to the Western Union office to wire the money when he had second thoughts and called me first. Guess Patel's arrest hasn't stopped the whole organized criminal gang. It's going to be like wacking moles--get one and another pops up. (Ronnie Deutsch all over again. They shut her and others down, but I still hear a half dozen commercials a day from "pennies on the dollar" places.) I saw a newscast in Maryland yesterday about the same exact scam targeting Dominion Electric Company customers--pay right now or we'll turn off the juice, send the cops, whatever. What's scary about this one is that people won't think to call their tax person to question it. At least we could warn them not to send money. In our practice we have had over 100 clients who contacted us about the IRS call. What scares me is the statement, "Patel and his co-conspirators also used several layers of wire transactions in order to conceal the destination and nature of the extorted payments...." These guys are too good at what they do.

Federal and State W-4 Rules for 2015 | CPA Practice Advisor Let's take a look at W-4s. As we all know, this is the document that employees turn in to an employer to calculate federal and (sometimes) state withholdings. There was once a time when - if the employee turned in a W-4 with more than 10 exemptions - the W-4 needed to be sent to the federal government for verification. This requirement no longer exists, except for California state withholdings. Elsewhere, a lock-in letter replaced this requirement. If an employer receives a lock-in letter from the IRS, the employer is then required to use the IRS calculation of exemptions instead of the employee W-4. The rare exception is if an employee submits a new W-4 with more taxes that are calculated than the lock-in letter-again, this is very rare. A lock-in letter trumps a W-4 and must be put in place by the employer no more than 60 days after it is received. "How many times can an employee change their W-4?" is a common question. Actually, there is no minimum or maximum number of times. However, an employer has up to 30 days to implement the change. Another common question is "Does a W-4 expire?" There is no expiration date for W-4s so you could be correct to use a 1984 (or any other year) W-4, if no change has ever been received from the employee. Let's talk about what constitutes a legal and acceptable W-4. The form can only contain the employee demographic information, marital status, and the number of exemptions, with an area for additional dollar amount of withholding and a box for exempt. Any alteration of this, like set percentage or set dollar amount of withholding, voids the W-4. If the employer does not have a valid W-4 for the employee, the employer is required to use either Single 0 or the last valid W-4 they have on file for the employee. Also, make sure you are using the correct year W-4 when the employee submits it to the employer. Now let's look at the states. The W-4 is a federal document, and several states - but not all - accept the federal W-4. Below is a chart of states and what they accept. If the state has their own withholding form, then the federal W-4 is not allowed for state calculation of withholdings. You'll notice that Pennsylvania does not have a state W-4-this is because the rate is a set percentage. Legend *CA - 10 or more exemptions must be faxed or mailed to stateStateFormALA-4AKNo WHAZA-4ARAR4ECCADE-4*COFED W-4CTCT-2-4DEFED W-4DCD-4FLNO W/HGAG-4HIHW-4IDFED W-4ILIL-W4INWH-4IAIA-W-4KSK-4KYK-4LAL-4MEW-4MEMDMW-507MAM-4MIMI-W4MNW-4MNMS89-350StateFormMOMO W-4MTFED W-4NEFED W-4NVN/ANJNJ W-4NMFED W-4NYIT-2014NCNC_4NDFED W-4OHIT-4OKFED W-4ORFED W-4PANONEPR.499r-4.1RIFED W-4SCFED W-4TNN/ATXN/AUTFED W-4VTW-4VTVAVA-4WAN/AWVWV/IT_104WIWT-4WYN/AKnowing the federal and state W-4 rules will assist you in correct calculations of withholdings and can assist employees with the requirements.

Eric, Thanks that helped a lot. The chart in your article has apparently been taken from IRS Pub-519 and seems correct. By my reading in this circumstance, everything "hangs" on "SOURCE INCOME". Basically since your person was not ever in US and did all work at his place, etc. the income was NOT US Source income and can be deemed untaxable to the vendor. All that seems needed is the protection of the completed W-8BEN as KC stated above. Appreciate your finding the article. Should the Source Income have been from US, then your university might have been on-the-hook for the tax if not paid but by (my reading) since it is NOT US SOURCE income, then they will not have any tax liability (in this case) and your off shore vendor will not need to file, etc.

July 10, 2015By David McGuireThe middle of summer is not the time of year that most of us want to think about taxes. However, the IRS’s tangible property repair regulations that were released this year require some reflection.These regulations led to some confusion as well as a rush to implementation. Some taxpayers implemented them correctly, while others completed only some of the steps necessary to ensure compliance with the new law. Fortunately, taxpayers have until the extension date of the 2014 return to finalize implementation. Even if a return was previously filed, a taxpayer can amend a return with a Change in Accounting Method if that return is filed by their extension date. Firms may be asking why a taxpayer would even be concerned with these regulations at this point. Others may be thinking that the Small Taxpayer Safe Harbor under Revenue Procedure 2015-20 means that no action is necessary. Though the revenue procedure allows many taxpayers to prospectively adopt the new repair regulations, it is not always the most prudent measure to do so. Take, for example, a company with $9 million in fixed assets and $5 million in gross receipts. For purposes of this example, the taxpayer acquired a $5 million property in 2001. Then in 2010 the taxpayer replaced the lights as part of a building improvement. The new lights are considered capital and the taxpayer can take a partial disposition on the original lights. If the original lights were determined to have a $90,000 basis at the time of purchase, this could create a potential catch-up adjustment of $60,000. The only way for the taxpayer to claim the $60,000 deduction would be to file a Form 3115, “Application for Change in Accounting Method,” along with the 2014 tax return. If the taxpayer does not file a 3115, the original lights will stay on the books until they are fully depreciated in 2040 or until the property is sold. Even if the taxpayer replaces the lights again, they will not be able to deduct the original lights. This is a simplified example, but it shows how the numbers can quickly grow. Whether a taxpayer chooses to file a 3115 or not, moving forward they must comply with the new regulations prospectively. A common misconception is that if a taxpayer chooses the simplified method, the lack of change means no changes are necessary for fixed assets. This is incorrect. Taxpayers need to adopt the new repair regulations starting Jan. 1, 2014, whether they have filed a 3115 or not. So what are the next steps that a taxpayer and provider should be taking? Taxpayers should consider the following three steps. While this does not cover all of the issues, it is a good starting point to ensure taxpayers are not missing out on opportunities. Step One: Ensure Taxpayers Have a Capitalization Policy in Place A critical portion of the new regulations is the issuance of a de minimis standard for capitalization. This is something taxpayers have been requesting for years. However, in order to utilize this new standard the IRS states that a capitalization policy needs to be in place. Any taxpayer that does not have a capitalization policy in place should make sure this issue is addressed as soon as possible. In addition to the capitalization policy protecting the de minimis safe harbor, there are other reasons to ensure a capitalization policy is in place. During the 2014 tax year, taxpayers around the country spent millions of dollars to ensure their fixed asset listings were scrubbed. Many taxpayers filed 3115 forms to ensure they were maximizing the benefits of the new repair regulations. This included looking for partial dispositions, as well as reviewing prior capitalized assets to see if they could be treated as repairs. Taxpayers who do not update their capitalization policies to track these issues will be forced to go through the same issues again in the future. It is critical that the lessons learned during this tax season are implemented to ensure assets are correctly handled moving forward. Step Two: Determine if a 3115 is Necessary, where One Has Not Been Filed Many taxpayers have already filed 3115 forms to clean up their fixed asset listings; however, many have not. Due to the complex nature of 3115s, some taxpayers have delayed implementation. This could be for many reasons. Some taxpayers have not wanted to spend the time and money to review their assets, others have determined there is no change, and still others fall under the small taxpayer safe harbor under Revenue Procedure 2015-20. However, many of these taxpayers should still be reviewing their assets to determine if a benefit still applies. Step Three: Communication Between Taxpayer and Preparer In many cases, the most crucial step is for taxpayers and preparers to sit down and discuss these new regulations in detail. It is critical to communicate what changes were made, if any, and how taxpayers should move forward in the 2015 tax year. Some taxpayers, unaware of the extent of the 3115 changes, have reverted back to the old way of handling their assets. For these taxpayers, the 3115s had minimal effect as they reverted back to the old way of doing things as soon as the 2014 return was filed. It is critical that taxpayers understand these changes to ensure future compliance. Time is running out to implement these regulations. Taxpayers who desire to look at their assets on a retroactive basis need to start reviewing them as soon as possible. Unfortunately, the process of reviewing a taxpayer’s assets takes time. While summer is not the time of year that tax preparers want to spend looking at these issues, it is critical that we do not wait. Taxpayers who wait may miss out on some of the opportunities that these regulations create. Providers who wait may see their clients moving on to new tax preparers who are more proactive on these regulations. David McGuire is director of the Cost Segregation Practice at McGuire Sponsel. His expertise includes fixed assets, cost segregation, and depreciation law. His background includes consulting on repair and maintenance studies under the 263(a) regulations and reviewing corporate capitalization policies. He is a frequent speaker on the topic of the repair regulations for accounting training seminars nationwide.

It amazes me how often employers who hire high school and college students advise them to claim Single and 0 for the w-4 instead of exempt, or instead of suggesting that they take the form to their parent(s). I hate having to file a tax return for a kid that only has to file to get back $10 or $15 that was withheld from his or her first job. It was a big enough shock to them to lose all that money to social security withholding.

For the sake of discussion, here's an additional page that I came across this morning. But I never know whether to trust the information. http://judismithlaw.com/overseas-freelancer-w8ben-or-w8eci/

Thanks KC!

Considering the pain and fear - and the kind of threat used - I'd go for execution. But I'm mean and cannot abide those who terrorize others for fun and profit.

Just an update. I called ATX last Thursday , they were closed for the 4th. I called yesterday and was told they would look into it. I received the Federal and PA Acks about an hour after the phone call. The Federal Ack shows an Ack date of June 29th , the same day I efiled it. For some reason ATX did not post the Ack.