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INDUSTRY INSIGHTS & NEWS
IRS audits may be increasing, so be prepared
The IRS just released its audit statistics for the 2020 fiscal year and fewer taxpayers had their returns examined as compared with prior years. But even though a small percentage of returns are being chosen for audit these days, that will be little consolation if yours is one of them. Latest statistics Overall, just 0.5% of individual tax returns were audited in 2020. However, as in the past, those with higher incomes were audited at higher rates. For example, in 2020, 2.2%
Jul 11, 20213 min read
2021 dollar limits and thresholds for 401(k)s and similar plans
The IRS recently announced the 2021 dollar limits and thresholds for retirement plans, reflecting the latest cost-of-living adjustments. Here are some relevant amounts for 401(k)s and similar plans: Annual contributions. The limit on annual contributions to 401(k) and other defined contribution plans will increase to $58,000 (up from $57,000 for 2020). Compensation. The annual limit on compensation that can be taken into account for contributions and deductions will increas
Nov 11, 20202 min read
IRS announces per diem rates for business travel
In Notice 2020-71, the IRS recently announced per diem rates that can be used to substantiate the amount of business expenses incurred for travel away from home on or after October 1, 2020. Employers using these rates to set per diem allowances can treat the amount of certain categories of travel expenses as substantiated without requiring that employees prove the actual amount spent. (Employees must still substantiate the time, place and business purposes of their travel exp
Oct 11, 20202 min read
DOL revises rules on paid sick and family leave related to COVID-19
In August, a federal trial court invalidated several provisions of the U.S. Department of Labor’s (DOL’s) temporary regulations that implemented the paid leave provisions of the Families First Coronavirus Response Act (FFCRA). By way of a response, the DOL’s Wage and Hour Division recently issued revised temporary regulations and updated its related FAQs. The revised regulations took effect on September 16, 2020, and are set to expire along with the FFCRA’s paid leave provisi
Oct 6, 20202 min read
Tax implications of working from home and collecting unemployment
COVID-19 has changed our lives in many ways, and some of the changes have tax implications. Here is basic information about two common situations. 1. Working from home. Many employees have been told not to come into their workplaces due to the pandemic. If you’re an employee who “telecommutes” — that is, you work at home, and communicate with your employer mainly by telephone, videoconferencing, email, etc. — you should know about the strict rules that govern whether you can
Sep 28, 20202 min read
Communicate carefully about compensation during the pandemic
The COVID-19 pandemic and resulting economic fallout have spurred layoffs and furloughs for many employers. As the months pass, organizations that have retained employees face another dilemma: How should we handle compensation changes? Pay raises have been out of the question for some organizations. In fact, more than 25% of employers surveyed in June by global advisory firm Willis Towers Watson reported reducing salaries rather than increasing them. However you handle compen
Jul 21, 20202 min read
Some people are required to return Economic Impact Payments that were sent erroneously
The IRS and the U.S. Treasury had disbursed 160.4 million Economic Impact Payments (EIPs) as of May 31, 2020, according to a new report. These are the payments being sent to eligible individuals in response to the economic threats caused by COVID-19. The U.S. Government Accountability Office (GAO) reports that $269.3 billion of EIPs have already been sent through a combination of electronic transfers to bank accounts, paper checks and prepaid debit cards. Eligible individuals
Jul 3, 20202 min read
A nonworking spouse can still have an IRA
It’s often difficult for married couples to save as much as they need for retirement when one spouse doesn’t work outside the home — perhaps so that spouse can take care of children or elderly parents. In general, an IRA contribution is allowed only if a taxpayer has compensation. However, an exception involves a “spousal” IRA. It allows a contribution to be made for a nonworking spouse. Under the spousal IRA rules, the amount that a married couple can contribute to an IRA fo
Jun 10, 20202 min read
2020 adjusted penalties for health benefits and other plans
The U.S. Department of Labor (DOL) recently announced the 2020 annual adjustments to civil monetary penalties for a wide range of...
May 14, 20202 min read
Answers to questions you may have about Economic Impact Payments
Millions of eligible Americans have already received their Economic Impact Payments (EIPs) via direct deposit or paper checks, according...
May 11, 20202 min read
IRS extends some (but not all) employee benefit plan deadlines
The IRS recently issued Notice 2020-23, expanding on previously issued guidance extending certain tax filing and payment deadlines in...
May 6, 20202 min read
Home is where the tax breaks might be
If you own a home, the interest you pay on your home mortgage may provide a tax break. However, many people believe that any interest paid on their home mortgage loans and home equity loans is deductible. Unfortunately, that’s not true. First, keep in mind that you must itemize deductions in order to take advantage of the mortgage interest deduction. Deduction and limits for “acquisition debt” A personal interest deduction generally isn’t allowed, but one kind of interest tha
Mar 5, 20203 min read
Tax credits may help with the high cost of raising children
If you’re a parent, or if you’re planning on having children, you know that it’s expensive to pay for their food, clothes, activities and education. Fortunately, there’s a tax credit available for taxpayers with children under the age of 17, as well as a dependent credit for older children. Recent tax law changes Changes made by the Tax Cuts and Jobs Act (TCJA) make the child tax credit more valuable and allow more taxpayers to be able to benefit from it. These changes apply
Feb 26, 20203 min read
Answers to your questions about 2020 individual tax limits
Right now, you may be more concerned about your 2019 tax bill than you are about your 2020 tax situation. That’s understandable because your 2019 individual tax return is due to be filed in less than three months. However, it’s a good idea to familiarize yourself with tax-related amounts that may have changed for 2020. For example, the amount of money you can put into a 401(k) plan has increased and you may want to start making contributions as early in the year as possible b
Feb 12, 20202 min read
Look closely at your company’s concentration risks
The word “concentration” is usually associated with a strong ability to pay attention. Business owners are urged to concentrate when attempting to resolve the many challenges facing them. But the word has an alternate meaning in a business context as well — and a distinctly negative one at that. Common problem A common problem among many companies is customer concentration. This is when a business relies on only a few customers to generate most of its revenue. The dilemma is
Jan 30, 20202 min read
401(k) plan highlights of the SECURE Act
Late last year, Congress passed, and the President signed into law, the Setting Every Community Up for Retirement Enhancement (SECURE)...
Jan 18, 20202 min read
4 new law changes that may affect your retirement plan
If you save for retirement with an IRA or other plan, you’ll be interested to know that Congress recently passed a law that makes significant modifications to these accounts. The SECURE Act, which was signed into law on December 20, 2019, made these four changes. Change #1: The maximum age for making traditional IRA contributions is repealed. Before 2020, traditional IRA contributions weren’t allowed once you reached age 70½. Starting in 2020, an individual of any age can ma
Jan 15, 20202 min read
Should I Update My W-4 Withholding?
Some life events result in more taxes, while others entitle you to credits and deductions that lower your taxes. The list of these events is long, but here are 5 of the most common: You get a second job Getting a second job is a common reason for needing to adjust your W-4. Do this whether you moonlight, have a home business, or get another full-time job. Any time your income goes up, your tax liability will likely increase, requiring a new W-4. If your extra income comes f
Jan 3, 20202 min read
What’s the right device policy for your company?
Device policies pertaining to smartphones and other technology tools continue to frustrate business owners as they try to balance their needs for security and functionality against employees’ rights to privacy and freedom. At some companies, loose “bring your own device” (BYOD) policies are giving way to stricter “choose your own device” (CYOD) or “corporate-owned, personally enabled” (COPE) policies. CYOD: Their device, your data A CYOD policy lets employees buy a device for
Dec 19, 20192 min read
Bridging the gap between budgeting and risk management
At many companies, a wide gap exists between the budgeting process and risk management. Failing to consider major threats could leave you vulnerable to high-impact hits to your budget if one or more of these dangers materialize. Here are some common types of risks to research, assess and incorporate into adjustments to next year’s budget: Competitive. No business is an island (or a monopoly for that matter). The relative strength and strategies of your competitors affect how
Dec 3, 20192 min read
Bruce & Company P.S.C. is an accounting and financial consulting firm in Madisonville, Kentucky. Bruce & Company proudly serves Evansville, Owensboro, Hopkinsville, Madisonville, Hopkins County, Kentucky, and across the United States. Search for certified public accountant near me. At Bruce & Company, we offer tax compliance and consulting, quality auditing and assurance services, audits of employee benefit plans and options, payroll processing, Quickbooks consulting, personal financial planning, and general accounting services.
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