The regular and/or extended due dates for partnership, C corporation, and Trust returns have changed for the 2016 tax year. In addition, the W-2 filing deadline and the 1099-MISC filing deadline for those with information in Box 7 have both been moved up to January 31 each year.
The Affordable Care Act (ACA) now requires businesses to file Forms 1094-C and 1095-C with the Internal Revenue Service. Unless you qualify as a small employer, these forms will need to be filed and copies delivered to your employees timely so they can be utilized on your employees’ individual income tax returns. The good news is you have an extra 30 days to file Forms 1095-B and 1095-C next year – the IRS extended the deadline from January 31 to March 2.
Some small businesses are afforded health care tax credits to help them take on the new financial burden of the ACA. Visit the IRS website for more information.
The Department of Labor’s new overtime rules will go into effect on December 1 this year. Many businesses are searching for new or improved timekeeping software to help them comply with this law. (Editor’s note: A federal judge issued a ruling on November 22 suspending implementation of these regulations. Please see our Client Alert for more information.)
The PATH Act of 2015 extended several tax provisions for businesses. If you haven’t taken advantage of these provisions, you may consider doing so before the end of 2016. Some of these provisions are listed below.
Bonus depreciation is being phased out over the next five years. Tax year 2017 is the last year 50% bonus depreciation will be allowed, and the benefit will be phased out completely by 2020. This will be something a business should consider when budgeting for next year’s equipment expenditures.
DEPRECIATION ON QUALIFIED IMPROVEMENT PROPERTY
If your business is considering making major renovations to your building, you have additional depreciation incentive options available to you thanks to the PATH Act. This new rule allows business owners to use bonus depreciation on certain building improvements that were previously ineligible for accelerated depreciation. But remember, bonus depreciation is being phased out – take advantage of this new rule as soon as possible.
SECTION 179 DEPRECIATION
The PATH Act permanently extended the Section 179 expensing limitation and allows for up to $500,000 of equipment purchases to be fully depreciated in the year of purchase for businesses with qualifying equipment purchases of less than $2 million.
WORK OPPORTUNITY TAX CREDIT
The Federal Work Opportunity Tax Credit (WOTC) has been around since 1996, and it has been up for consideration almost every year since then. Because the PATH Act guaranteed this credit through 2019, it might now be worthy of your consideration. If you are concerned about the unique filing requirements, ask your payroll provider if WOTC compliance assistance is a service they offer.
RESEARCH AND DEVELOPMENT TAX CREDIT
With the PATH Act, the Research and Development Tax Credit is now available to be used against some payroll taxes and Alternative Minimum Tax liabilities for certain small and/or new businesses.
As of January 1, 2016, the de minimis safe harbor for expensing equipment purchases increased from $500 to $2,500. This pro-taxpayer provision may entice you to upgrade some of your business equipment or office furniture by allowing you to expense the full cost in the year of purchase.
Often, companies tend to consider only the Federal income tax consequences of a business decision. Luckily, WK stays abreast of the local legislative process, and we send e-mail alerts about important changes that might affect our clients. Check your e-mail for some of these alerts. Examples of recent state and local legislative changes are:
Each item listed above covers a recent legislative change that can impact your year-end and future plans. There are other planning strategies that more or less stay the same from year to year, but are nonetheless worthy of your consideration as 2016 comes to a close. Some of these general recommendations are listed below.
DEFER INCOME TO 2016
ACCELERATE & MAXIMIZE DEDUCTIONS INTO 2016
Businesses that have income from domestic manufacturing and other domestic production activities can take advantage of Section 199 domestic productions activities deduction. The deduction equals 9% of the smaller of:
If you would like to discuss your business’s short- or long-term tax planning strategies, please contact your WK advisor at (573) 442-6171 or (573) 635-6196.