Welcome CPE Webinar

BEFORE OCTOBER 15: 10 THINGS YOU MUST DO TO FINALIZE RETURNS Thursday, September 22, 2016; 11 am – noon (EDST) Thursday, September 22, 2016; 1 pm – 2 pm (EDST)

The following program is authored by Barbara Weltman and is designed to provide accurate and authoritative information in regard to the subject matter covered. It is distributed and sold with the understanding that ADP and SmartPros Ltd. are not engaged in rendering legal, tax, accounting, investment or other expert advice. If expert assistance is required, the services of a competent professional should be sought. The views and conclusions expressed herein are those of the speaker and not necessarily those of ADP and SmartPros Ltd.

EXPERT COMMENTATOR: Barbara Weltman, J.D. President, Big Ideas for Small Business

Introduction About 5% of individuals file on extension Help these clients take advantage of new tax breaks finalized for 2015 returns. 10 tips are covered in this program Give clients a heads up for 2016 and beyond.

1. Extensions of Expired Laws PATH Act extended most laws for 2015 and beyond. Examples: Exclusion of COD income for a principal residence (including a short sale). Tax credit for certain home energy improvements. Not extended for 2015: Tax credit for 3-wheeled electric vehicles.

2. IRAs Check on any rollovers. Only 1 per year. Recharacterization of Roth IRA conversions. Deadline for 2015 conversions is October 17, 2016. Excess contributions for 2015. Take action to minimize the 6% penalty. Missed 60-day rollover deadline: self-certify.

3. SEPs Self-employed individuals can set up and fund a SEP through the extended due date. 2015 deduction limit up to $53,000 Consider SEPs for sideline businesses (e.g., Uber drivers).

4. Disaster Losses Disaster losses in 2016 can be claimed on 2015 returns. Compare AGIs in 2016 with 2015. Clients in certain areas may have extended dates for 2015 returns. E.g., victims of August 11th storm in parts of Louisiana have until January 17, 2017 (instead of October 17, 2016). Check at https://www.irs.gov/uac/tax-relief-in-disaster-situations.

5. Work Opportunity Tax Credit Those in business can claim the credit for eligible new employees who began work in 2015. Long-term unemployed not a category for 2015. Extended date for submitting Form 8850 to the state workforce agency: September 28, 2016 (Notice 2016-40). Extended date also applies for those hired in 2016 on or before August 31, 2016 (including long-term unemployed).

6. 529 Plans Definition of qualified expenses for tax-free distributions after 2014 (i.e., in 2015) includes: Technology (e.g., computers/software) Recontributions within 60 days Rollovers to ABLE accounts? In Joint Committee explanation said yes, but this change was not in the final PATH Act.

7. Penalties Practitioners should take note of inflation-adjustments to various penalties (Rev. Proc. 2015-53). Penalties on clients. Penalties on preparers.

8. What Can’t Be Done Now Post-year end strategies that ended on April 18, 2016: IRA contributions. HSA contributions. Caution: E-filing ends October 17, 2016.

9. Alerts for 2016 Returns Inform clients about the following: Check for withholding/estimated tax payments for 2016 (e.g., impact of year-end bonuses, mutual fund distributions). Those receiving advance premiums tax credit for 2016 should notify government of a change in circumstances. Those 70½ can make qualified charitable distributions from IRAs up to $100k to satisfy RMDs. No refunds of earned income credit and additional child tax credit for 2016 will be issued before February 15, 2017. Need to update expired ITINs.

10. Looking Ahead Open enrollment for 2017 health coverage from a government Marketplace begins November 1, 2016. Federal Marketplace open enrollment ends January 31, 2017. State Marketplace open enrollment end date varies (e.g., December 15, 2016; December 23, 2016).

Bonus Ideas Mortgage interest on expensive homes: Factor in AOD on Voss decision. Sale before meeting the 2-year ownership and use tests: Birth of a second child is an unforeseen circumstance.

Conclusion Take advantage of planning opportunities for clients who received filing extensions. Take this time to inform clients about changes for 2016 and suggest actions they should take.