October 2021 E-Newsletter

OCTOBER 2021 E-NEWSLETTER

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October Featured News

What is the NYS PTET?

(“Pass-Through Entity Tax”)

The NYS PTET is a tax paid through a business entity for the benefit of its owners.

Open Enrollment Tips for Employees

Open enrollment is on the horizon, which means workers will soon navigate their benefit options for the next year. Both new and seasoned employees need to carefully review benefit offerings to ensure they take full advantage of their choices.

Financial Health Checklist For Small Business Owners

Keeping your company running smoothly can be more than a full-time job, which can leave little time to focus on your financial goals. However, decision-making without considering goals and your future may be something you might regret in the future.

Negotiate a Raise

Asking for a raise can be nerve-wracking. You’ll need confidence, professionalism and an effective strategy when the time comes.

Employer Essentials for Open Enrollment

Here are some tips that may help your open enrollment go smoothly.

What is Backup Withholding?

Backup withholding is a tool the IRS uses to collect federal taxes on income that’s not ordinarily subject to withholding, ensuring taxpayers ultimately pay all taxes they owe.

October 2021 Q & A

Q: Our company was targeted by payroll scammers that resulted in data theft of employee W-2 information. What should we do?

A: Time is of the essence in this situation. Quickly, but thoroughly summarize all the information that was compromised. Next, email the IRS at dataloss@irs.gov, and put “W2 Data Loss” in the subject line. Don’t include any of the personal information that was compromised. Instead, provide your company name and contact phone number so someone at the IRS can call you.

Don’t forget to reach out to your state taxing authorities to report the data breach and let affected employees know so they can immediately take steps to limit its impact.

Q: I received a monetary settlement from a malpractice claim. Is the money I received taxable?

A: Generally, successful litigants in a legal malpractice case are taxed on their gross settlement or award amount. Before the 2017 Tax Cuts and Jobs Act (TCJA), attorney’s fees you incurred to litigate your case would have been deductible as non-business-related legal fees on Schedule A as a miscellaneous itemized deduction. But the TCJA eliminated this class of write-off, making the entire compensation amount taxable.

Monetary settlements for other types of malpractice claims (e.g., medical) generally aren’t taxable if they compensate you for economic losses from medical expenses or lost wages.

SHORT BITS

AUDIT INCREASES

For 2020, the IRS audit numbers dropped, continuing a downward trend. The Service concluded nearly 510,000 audits resulting in taxpayers paying an additional $12.9 billion in taxes, with a focus on those who didn’t file and those with certain abusive transactions. Last year’s audit count is down from 2019 figures, where 771,000 audits were wrapped up, resulting in an additional $17 billion in tax revenue. These recent numbers reflect another downward trend at the IRS—staff size. In 2020, the Service had nearly 76,000 full-time equivalent positions, down from over 90,000 in 2010.

AMBULANCE RIDES

In December 2020, Congress passed the “No Surprises Act,” prohibiting most surprise out-of-network billing for plan years starting in 2022. But it excludes ground ambulance services. According to a recent Kaiser Family Foundation study, ambulances bring three million privately insured people to an emergency room each year. Local fire departments and governmental agencies provide nearly two-thirds (62%) of the rides. About half (51%) of emergency and 39% of non-emergency ambulance rides included an out-of-network charge that may put privately insured patients at risk for getting a surprise bill.

ITEMIZED DEDUCTIONS

Fewer taxpayers are itemizing deductions on their personal tax returns. Using data from 2019 federal tax returns, nearly 17 million returns claimed $637 billion in itemized deductions, while over 140 million returns took $2.4 billion of standardized deductions. This large disparity is primarily caused by the 2017 tax reform laws that hiked the standard deduction and pared down itemizations. Taxpayers with adjusted gross income (AGI) of $250,000 and above had the highest average itemized deductions amount—more than $75,000, while taxpayers with under $15,000 of AGI had the lowest—just over $22,000.