4th Quarter 2015 Due Dates
- October 1:
- Businesses: Deadline for establishing a new SIMPLE retirement plan for 2015
- October 15:
- Individuals: 2014 Form 1040 due if on extension
- November 2:
- Employers: File Form 941 for 3rd quarter 2015 During November:
- Employers: Request Form W-4s from employees whose withholding allowances will be different in 2016
- December 15:
- Calendar-year C Corporations: 4th installment of 2015 estimated tax due
Ways to Avoid the IRA Early Withdrawal Penalty
All these years you’ve been saving up, diligently funding your IRAs. But now you’ve got good reason to dip into those funds and are wondering whether it’s safe to do so. Distributions from traditional IRAs are taxable and if taken before reaching age 59 ½, they may also be subject to penalty. There are exceptions, however.
For example, if you’re a first-time homebuyer (meaning you didn’t own a principal residence at any time during the previous two years), up to $10,000 can be withdrawn without penalty. And your spouse can withdraw the same amount as well!
Paying for higher education is another common reason to withdraw IRA funds. When funds are used for tuition at an accredited college or vocational school, there’s no early withdrawal penalty, regardless of amount.
Distributions used to pay medical expenses aren’t subject to penalty either, but only the portion that exceeds 10% of your Adjusted Gross Income (AGI) is excluded. If you’re over age 65, the threshold is lowered to 7.5% of AGI
Below are some other types of distributions from a traditional IRA not subject to an early withdrawal penalty:
- Distributions to pay for health insurance while unemployed, for some taxpayers.
- Distributions to military reservists on active duty for more than 179 days.
- Distributions to an employee over age 55, after the employee no longer works for the employer.
- Distributions made due to death.
- Distributions made due to a total and permanent disability.
- Distributions made due to an IRS levy being placed on the account, unless the funds were distributed to satisfy a different IRS levy on a different property.
Employee Wage Records
Many small business owners like you are confident in their knowledge of regulations concerning the retaining of receipts, canceled checks, bank statements, etc. for their business. But are you as familiar with recordkeeping for employee wages and personnel information? Although the rules vary from state to state, you should maintain a record of your employees’ hours, wage rates, payments, withholdings, etc. for at least four years. (Some states require even longer retention periods.) States frequently audit unemployment tax records, and it’s likely you’ll be asked to produce payroll records if you’re audited for income tax purposes. Also, in most states you’re required to provide employees a detailed breakdown of their paycheck— gross, details of withholdings, and net. There can be penalties for failure to comply, so make sure that you’re familiar with the regulations.
Taxation Woes for Legalized Marijuana Businesses
Owners of legal marijuana dispensaries are faced with the harsh reality of federal laws which disallow deductions for businesses selling federally controlled substances. Many states have legalized or decriminalized the use of marijuana for medical purposes and although state laws regulating sale and use of the drug have been rapidly changing, federal laws have been unaffected. Federal money is no longer allocated to preventing states from legalizing medical marijuana, but those newly legal businesses are still facing harsh realities when it comes to federal taxation and banking regulations.
Expenses related to operating legalized marijuana dispensaries are deductible for state income tax reporting, but most expenses- such as rent, utilities and payroll – are not deductible for federal income taxes. There are some allocable deductions for these businesses under federal tax law, but maneuvering through the web of federal laws and state laws can be tricky. If legal medical marijuana is an option in your state or if your business is involved with this controversial product, consult with us for additional guidance.