Tax Attorneys of Sarasota and Central Florida

Tax Representation and Planning for Individuals and Businesses

Koontz & Associates helps individuals and businesses address issues they have with the IRS. Taking on the IRS by yourself may not be the best option.

Hiring an attorney can save you time, stress and money. Take a look at our resources below for more information about back tax, IRS representation, planning, preparation and other helpful information.

If you have a specific tax question, you can ask us online. If you need representation and immediate help, call our office today at 941-225-2615.

Why Close with Koontz & Associates

We understand you have many options when partnering with a real estate attorney. Every attorney will tell you the same thing: they are the best in town and they have you and your client in their best interest.

Not every attorney is also an accountant.

When you partner with Koontz & Associates you also get an accounting perspective. Your closing is going to have a strong impact on how you file your taxes. Wouldn't you want an accountant at the table when you close?

Buyers and Sellers may save money by having both an attorney and an accountant at the closing table. We are a comprehensive fabric. Nothing will "fall through the cracks."

Most importantly, we'll come up with questions that you never knew you should ask. You may be distracted by the millions of loose ends you need to tie up during the closing process. We are here to help you tie those knots and make sure everything is tight.

What are you waiting for? Get in touch and find out why it's better when you close with us.

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10 Business Start Up Tips

Thinking of starting a business or formalizing your business entity? Have you been afraid or not quite ready to take the risk? Fear not! America thrives on the contributions of small businesses. Follow the legal and regulatory steps below to be sure you start growing your business from a solid foundation.

  1. Select Business Structure

    One of the first steps in organizing any new business is to determine which type of business entity should be formed. When considering the type of business, you need to evaluate both present and future needs of the business and its owners in legal, financial, and tax related aspects. Did you know when operating as a sole-proprietorship, you are entirely and personally responsible for the actions of the company? The best way to really protect your personal assets is to form a corporation or limited liability company (“LLC”).

    There are four common types of business entities:

    Sole Proprietorship

    The sole proprietorship is the simplest form of business structure, however provides the least amount of liability protection. This is not a separate legal or tax entity. The business owner is personally liable for all taxes and liabilities of the company. Many people mistakenly believe the use of “Doing Business As” (D/B/A) designation as the formation of a separate entity. It is not, and it does not afford the owner any liability protection.


    A partnership is an organization or association of two or more owners who operate a business together and allocate the ownership and profit/loss aspects according to their contractual terms. This partnership is a separate entity for legal and tax filing purposes, but not tax paying. Rather it is a form of a conduit where income, losses, credits, and certain deductions are passed along to each partners' tax return. There is no liability protection for the general partners.


    A corporation is a separate, legal entity formed through a state charter using Articles of Incorporation. It is authorized to perform primarily all the business activities an individual can, including such things as filing and paying taxes, signing contracts, and making loans. It is formed through the issuance of stock or securities.

    Limited Liability Company (LLC)

    A limited liability company (LLC) is often described as the combination of a partnership and a corporation. This is because an LLC combines the tax advantages and management flexibility of a partnership with the liability protection of a corporation.

    Forming an LLC has become a popular alternative for sole proprietors and partnerships that have thought about forming a corporation in order to protect personal assets. LLCs also avoid "double taxation" because the income of the LLC itself is not taxed at the company level. Like a partnership, taxes on profits and deductions of losses are passed through to the individual on the personal tax return of each LLC member (owner).

  2. Determine State Business & Professional License Requirements

    The State of Florida regulates certain industries and professions. You may verify if your profession is regulated by visiting

  3. Name the Business

    Availability may be determined via State of Florida’s ( entity name registration and/or the US Patent and Trademark Office database.

  4. Register with the Florida Department of State, Divisions of Corporations

    All legal entities, with the exception of sole proprietors operating under their owner’s full legal names, must file with the State of Florida, Division of Corporations ( A Fictitious Name Registration is also required of individuals who do business under any name other than their full, legal personal name or a properly registered corporate name, partnership, trademark, service mark or limited liability company.

  5. Apply for your Federal Tax ID number

    It is commonly recommended that a Florida business apply for a free Employee Identification Number (EIN) number with the IRS. If your corporation or LLC will be electing to be taxed as an S- Corporation, you will make this election with the IRS as well, using Form 8832 and Form 2553.

  6. Register with Tax Authorities

    In addition to federal & state payroll taxes, employment taxes, sales taxes are handled at the state & county levels. If you will collect and remit taxes to the State of Florida, you will additionally need to file Form DR-1 at

  7. Establish Financial Relationships

    As soon as possible, open a separate business bank account and set up your accounting system. Even small businesses are strongly recommended to open separate accounts. This will demonstrate the observation of the corporate formalities required for liability protection to be afforded & greatly reduce the time and expense on bookkeeping or accounting.

  8. Protect Your Investment

    There are several protective measures that you can take for your business. First, make sure to copyright any original works of authorship (books, drawings, designs, etc.), trademark any branded names used, and patent any inventions. Also, to protect yourself from any potential litigation, you may wish to seek out business liability insurance.

  9. Develop Internal Agreements

    If more than one person will be involved in the ownership and management of the firm, or if you are developing an LLC, Corporation, or partnership, it is recommended that you seek legal advice in the development of internal agreements.

  10. Hire Employees and Outsource

    Your time is valuable! Focus on your core business and outsource accounting, administrative, and legal work to expert and staff.


Koontz & Associates has helped form many new businesses in Sarasota and around the state. We work with local residents and international clients looking to move to Florida. Start the conversation about your new business with us by requesting a consultation with Jo Ann Koontz, Attorney / CPA - 941-225-2615.

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Bringing Taxpayers into Compliance

Related Topics: IRS, Tax Relief

Stated simply, being in compliance means you have filed all required tax returns and have paid your tax bill.  If you have not filed all returns or you are unable to pay your taxes or have fallen behind due to job loss, divorce, home foreclosure, a devastating illness, or other unusual hardships you may no longer be in compliance.  At Koontz & Associates, PL, we are here to help you sort out your IRS compliance issues.

Recently, the IRS announced the “Fresh Start” initiative to help taxpayers facing financial difficulties. Depending on your circumstances, you may be able to adjust payments for back taxes, avoid defaulting on Installment Agreements, and possibly defer collection action. There are many situations in which IRS has been given more flexibility to assist struggling taxpayers.  Fresh Start may allow:

  • The postponement of collection actions
  • Allowing a skipped payment or a reduced monthly payment amount without automatic suspension of an Installment Agreement
  • An additional review for Offers In Compromise based on home values
  • Prevention of Offer In Compromise defaults
  • Eased requirements for expedited levy releases
  • More options for those taxpayers unable to pay their tax liability

Streamlined Installment Agreement Program

The IRS expanded the Streamlined Installment Agreement Program.  Under the streamlined process, financial analysis by the IRS is not required.  Installment Agreements do not require collection manager approval or the filing of liens.  Taxpayers may be granted a streamlined agreement even if they are able to fully pay their accounts.  The IRS raised the monetary threshold for Streamlined Installment Agreements from $25,000 to $50,000 and also increased the maximum term for a Streamlined Installment Agreement from 60 months to 72 months.

We encourage you to contact our office before you contact the IRS. We can work with the IRS while at the same time protecting your interests.  If you have concerns regarding a past or current tax liability, we can review your options, as well as provide assistance with IRS negotiations.

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Tax Representation

Related Topics: Business Tax

Representation before the IRS

If you have a tax issue and need to communicate with the IRS, consider hiring professional help to represent you.  A tax professional will help you reduce the financial, emotional, and mental strain that dealing with the IRS causes.  Koontz & Associates, PL is able to represent you before the Internal Revenue Service and other tax authorities.  In most cases, we can negotiate with the IRS on your behalf without you having to speak directly with their representatives.   Our goal is to serve you and provide the best tax relief solution. 

Jo Ann M. Koontz is a licensed CPA and Attorney practicing in the area of taxation.  Since 1998 she has worked on cases involving the IRS.  She can assist you with your unique situation.


Representation before the Florida Department of Revenue

If you have received notices from the Florida Department of Revenue, you should consider hiring professional help to represent you.   The Florida Department of Revenue is involved in several areas of taxation such as Sales and Use Tax, Reemployment Tax, Corporate Income Tax, Documentary Stamp Tax and other taxes.

Sales and Use Tax applies to the sale, rental, lease, or license to use goods, certain services, and commercial property in Florida. Also, short term residential rentals are subject to sales tax as well.   Individuals and businesses operating, selling or using goods and services may be required to collect or pay taxes to the Florida Department of Revenue.  If your business will have taxable transactions, you must register with the Department of Revenue before doing business in Florida.  If you are unsure whether your business transactions are subject to sales tax, contact Koontz & Associates, PL for clarification.

Formerly known as Unemployment Tax, Florida’s renamed Reemployment Tax is designed to give partial, temporary income to workers who lose their jobs through no fault of their own and are able and available to work.  Employers pay for reemployment assistance through a tax administered by the Department of Revenue.  If your business meets the criteria of the department, you must register and pay reemployment taxes.

Corporate income tax returns need to be filed with the Florida Department of Revenue.  Corporations, LLCs, partnerships, individuals, and entities that do business, earn or receive income in Florida (including out-of-state corporations) must file a Florida corporate income tax return.  For details and assistance with preparing your corporate tax returns contact Koontz & Associates, PL.

Other taxes administered by the Department of Revenue include communications services, documentary stamp, fuel, gross receipts, insurance premium, pollutants, severance, solid waste and surcharge.  If you have questions about any of these, contact Koontz & Associates, PL for assistance.

Call Koontz & Associates, PL in Sarasota if you are struggling with an IRS or Florida tax problem

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Responding to an IRS Notice

Related Topics: IRS, Tax Relief

If you have received a notice from the Internal Revenue Service, you should consider consulting with a tax professional prior to responding.  An experienced CPA or attorney can help you review the IRS notice and help you determine the best way to respond while protecting your rights as a taxpayer. 

The IRS does not communicate via email, so an official IRS notice will be mailed to you.  You will need to respond within a stated time period.  In many cases, additional financial penalties will apply if you fail to reply. 

A tax professional or tax attorney may be able to negotiate on your behalf.  Use our education and extensive experience in tax preparation and tax law to your advantage.  Why be frustrated and muddle through correspondence and meetings with the IRS?  Call tax professional Jo Ann Koontz for assistance. 

Internal Revenue Service Audits and Appeals

The Internal Revenue Service may send you a notice of intent to audit your tax returns.  The purpose of a tax audit is to verify that the income and expenses you reported on your tax return are correct.  Often, when the IRS selects your return for an audit it is because a variation has been statistically identified based upon the numbers you provided.

The IRS uses many different factors when selecting which returns to audit. The majority of tax audits are selected by computers. The IRS uses several different formulas to analyze returns and perform statistical analysis to score tax returns based on their likelihood of being correct.

Being selected does not necessarily mean there is a problem; sometimes you may actually be due a refund after the audit, or the IRS may accept your tax return as filed.

Once the IRS determines that it would like to obtain more information about your tax return, they will send a letter stating that your return has been selected for an audit.  Here are three different audit methods used by the IRS.

  • Correspondence Audit:  This is the most common type of audit and is handled entirely by mail. The IRS will normally request specific documentation to support particular items on the tax return.
  • Field Audit:   This is when the IRS wants to come to your home, place of business, or your tax preparer’s office to perform the audit.  
  • Office Audit:  This is when you are required to go to an IRS office to meet with an IRS auditor. The IRS examiner will determine the time and the particular documents required to be submitted for support.

After the audit, you will receive an IRS examination report that will show the proposed changes to your tax.  The report will provide a clear explanation of any adjustments made.  It will state that you have no changes; you are due a refund; or that changes have been made and you owe more tax plus interest and penalties assessed.  

Once you receive the IRS examination report, you have two options:  You can approve their findings, or you can choose to disagree with their findings.  If you disagree, you have 30 days to do the following:

  • Mail in additional documents you would like them to consider,
  • Request a discussion of the findings with the examiner (you can do this and submit additional information to be considered).
  • Discuss your case with the group manager or senior manager
  • Request an appeal

If you do not respond within 30 days then the IRS will send a notice that your case is considered not agreed and you will have only 30 more days to file for an appeal or the IRS findings will become final.

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Offer in Compromise IRS Payment

Related Topics: IRS, Tax Relief

If you owe money to the IRS, you may be able to obtain an Offer in Compromise (OIC) to pay the money that you owe. An OIC provides a way to have a large portion of your tax debt forgiven.  You must agree to pay a smaller amount in a timely fashion.  Both the amount and the time are agreed upon by both you and the IRS. You may be able to obtain an OIC if you believe the IRS is incorrect as to the amount of taxes you owe or if you are unable to pay back the full amount owed. In the second instance, the IRS will carefully consider the amount owed, your income, your assets, and your living expenses.  

An OIC is quite difficult to obtain; only about 1% of offers submitted to the IRS are accepted. However, in 2012, the IRS expanded its Fresh Start initiative which means that more people will qualify for Offers in Compromise.  Many taxpayers and tax professionals are unaware of these changes to the program as well. Some of the changes made include:

  • Changing the calculation to determine a taxpayer’s future income
  • Expanding the qualified amounts and types for Allowable Living Expenses
  • Making provisions for the repayment of student loans
  • Making provisions for the repayment of state and local taxes

The Sarasota law firm of Koontz & Associates, PL will help you determine if you are eligible for an OIC, and can help craft a persuasive argument regarding your eligibility for presentation to the IRS.

Three Types of Offers in Compromise Provide Certain Advantages and Disadvantages

There are three different types of OICs.  The one for which you qualify is largely dependent upon your income and assets and the amount you owe. No matter how much you owe the IRS, the amount to be paid is determined by a preset formula. Different options include:

  • Cash Offer
  • Short Term Deferred Offer
  • Long Term Deferred Offer

Though the amount considered will differ for the type of OIC, each will involve values that include the “quick sale value” of your assets, as well as the amount that the IRS could collect from your available income. The calculations are complicated and easily misunderstood without experience in this area of tax law. Be wary of companies that claim to be able to submit an OIC on your behalf.  Be especially cautious of companies who make extreme claims of settlement and have no attorneys or CPAs employed with their company. In recent years, there have been an increased number of scams and frauds.  For reduced risk, be certain to work with an experienced and licensed tax attorney or CPA.

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Cancellation of Indebtedness: Income Tax Issues and Planning

Short Sales and Foreclosures

If you have had a cancellation of a debt, a short sale, or a foreclosure on your home, you face special tax issues.  At Koontz & Associates, PL, we routinely handle these procedures and the unique tax implications they present.  Debt forgiveness may result in harsh tax consequences, which may be reduced or eliminated with proper planning.

Cancellation of Debt

Lenders who release a borrower from an outstanding loan are required to issue a Form 1099-C which reports the cancellation of debt.  Although the borrower is not receiving cash, the IRS considers the extinguished debt obligation to be taxable income.  This includes mortgage lenders and even credit card companies.

For example, if the seller borrowed $300,000, the lender receives $200,000 in proceeds from a short sale and forgives the remaining $100,000 balance; the IRS’ position is that the seller has $100,000 of income that no tax has been paid on.  The IRS does not consider that the loan proceeds were “spent” on a property which has lost value.  The result is phantom income, meaning that the seller has not received cash from the sale proceeds with which to pay the tax.  The amount of debt forgiven by lenders, particularly in short sales, can be substantial, and may result in unexpected taxable income and higher tax rates.

Cancellation of debt income can cause complications to the seller’s tax return.  Although one may traditionally fall into a lower tax bracket, cancellation of debt may substantially increase a seller’s taxable income and their total income could be taxed at a higher tax rate.  It is not uncommon to see as much as $150,000, or more, granted in debt forgiveness which could easily result in a higher tax rate for many borrowers.

Reducing Tax on Cancellation of Debt Income

The Internal Revenue Code provides an insolvency exclusion which exempts forgiven debt for a taxpayer, to the extent of their insolvency.  Insolvency is the difference between the taxpayer’s outstanding liabilities and the fair market value of all assets held on the date of sale or debt forgiveness. However, a borrower should never assume that they qualify for this exemption by virtue of the fact that there is negative equity in their home.  To determine eligibility for the insolvency exclusion, a detailed analysis of a taxpayer’s assets and liabilities would need to be performed. 

Lenders are required by law to report on Form 1099-C any release of debt greater than $600 and have no discretion to withhold such information.  The resulting tax liability occurs upon the release of loan obligation, not upon the issuance of the 1099-C.  Not only does the lender have a reporting obligation, but the borrower must also report this liability on their tax return for that year.  Failure to do so can result in a 25% underreporting penalty and an increased audit period from three to six years.


Some borrowers believe that foreclosure may allow them to circumvent tax liability, but release of debt may occur following completion of a foreclosure.  In addition, this may happen without the borrower even knowing it, until they receive the 1099-C from the lender.  Again, the borrower has no ability to request the lender not issue the 1099-C, and if the lender chooses to release the debt following the foreclosure action, either on its own accord or in response to post-deficiency negotiations, the debt forgiven will likely be much larger and the incidental tax liability much greater due to the additional costs and fees that accumulate and grow on the balance of a loan throughout a foreclosure action.


Borrowers also believe bankruptcy to be a potential solution to tax liability.  This may be accurate depending upon when the borrower files bankruptcy.  Income tax liability is not typically dischargeable particularly if the forgiveness of debt occurs prior to the bankruptcy filing.

The Importance of Tax Planning Prior to a Short Sale or Foreclosure

Tax consequences resulting from short sales, debt settlement, loan modifications, and foreclosures are fact specific and should always be evaluated by a professional.  In many cases, tax planning can help a seller legally avoid or minimize the tax consequences of their transaction.  If the seller proceeds without planning for the tax impact of the transaction, they are often unpleasantly surprised with the outcome.

Call Koontz & Associates, PL for a Review of Your Debt Forgiveness Tax Issues

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Unfiled Tax Returns

Related Topics: IRS, Tax Relief

Under the rules of the Internal Revenue Service, not filing your income tax return is not only expensive, but it is illegal.  Harsh penalties are imposed upon individuals and businesses that do not file or pay their taxes.  Many people choose not to file because they cannot pay the taxes due.  However, not filing can make matters much worse than reporting the tax owed and working out an arrangement with the IRS.  Let Koontz & Associates, PL assist you with getting your tax return filed. 

The failure to file penalty is significant. The typical failure to file penalty when no fraud or negligence is involved is 5% per month on the total tax liability that is owed.  This penalty begins the day after the tax return was due.  When fraud or negligence is involved, the rate jumps to 15%.  Get help before penalties start.  Even if you have not filed in years, it is recommended that you start.  It is never too late to comply. 

If you can prove to the IRS that there was reasonable cause for your failure to file on time, the IRS may remove or reduce your tax penalties.  In order to do so you must file what is called a Request for Penalty Abatement.  The IRS handles each request for penalty abatement on a case by case basis.  If you have penalties that are a significant portion of your total tax bill, consider using Koontz & Associates, PL to review your tax situation and to negotiate with the IRS on your behalf.

Substitute for Return (SFR)

If you do not file your tax return, the IRS has a solution to start the collection process from you.  After months of notices requesting a return be filed, the IRS will create a substitute for your return.  A Substitute for Return (SFR) is a formal way for the Internal Revenue Service to make an estimate of how much you might owe for your taxes. The purpose of a Substitute for Return (SFR) is to calculate a definite dollar amount of your tax liability so that the IRS can begin collection efforts. The IRS uses its substitute tax return to issue a proposed assessment of taxes you owe and that calculation is based on all the income reported to IRS without consideration for any deductions to which you may be entitled.  Therefore, the balance is typically much higher than what is truly due.  

If you fail to respond to the proposed assessment, the IRS assessment will become final. Once the IRS assessment becomes final, the IRS can legally collect on the tax for a period of ten years.  The best way to avoid and resolve a Substitute for Return situation is to file a tax return.  If a Substitue for Return has already been filed, you can still file a return and reduce the tax due, if it is less than the estimate of the SFR.  Let Koontz & Associates, PL offer you proper assistance to avoid IRS tax issues.

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Currently Not Collectible Status

Related Topics: IRS, Tax Relief

The IRS has a Currently Not Collectible Status for taxpayers who have faced hardship and are currently unable to pay their tax debt.  Generally it is used when someone is having a difficult time financially.  For example, it may be used if you have lost your job or had your hours cut back. If you are granted this status, the IRS will not continue enforcement actions against you like levies and garnishments.  Because this is a temporary solution, interest and penalties will continue to be charged against you.  The Currently Not Collectible Status is a temporary postponement of paying taxes.  In some cases, a postponement may last up to ten years.  This status is regularly reviewed, and if your circumstances change, you are obligated to notify the IRS.  Koontz & Associates, PL can help you review and complete the forms needed to file for this status.

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Paying the IRS with an Installment Agreement

Related Topics: IRS, Tax Relief

If you owe money to the IRS, you may already be facing financial hardship.  This may be the reason you were unable to pay your taxes in the first place.  Now you need to pay the taxes you owe along with the IRS penalties and interest accrued on your debt. Many people simply do not have the money to pay such a large lump sum to the government. Fortunately, the IRS offers several ways to make this debt more manageable, one of which is an Installment Agreement.

Weigh the Pros and Cons of an Installment Agreement

When you obtain an Installment Agreement, you make smaller monthly payments to the IRS at a rate agreed upon by both parties. Installment Agreements are easier to obtain since the IRS adopted the Fresh Start program in 2012. Typically, the IRS will grant an Installment Agreement to anyone who requests one, provided that you have a previous history of paying your taxes and all your current taxes are filed and up-to-date.

The biggest advantage of an Installment Agreement is that the government cannot file a tax lien against you while you are making your payments, if one has not already been filed. However, there are some drawbacks, including the interest that continues to accrue.  Combined with IRS penalties, interest can reach 8% to 10% a year.

If you are considering entering into an Installment Agreement with the IRS, Koontz & Associates, PL can help you examine your options and choose the best way to manage your debt with the IRS. If you decide that an Installment Agreement is the right solution for you, we will help you through every step of the process from filing an application to making your final payment and obtaining the release.

Different Types of Installment Agreements Benefit Different Taxpayer Circumstances

There are three types of Installment Agreements available and Koontz & Associates, PL can help you decide which type you qualify for and which would most beneficial. They include:

  • Streamlined Installment Agreement – This is type of agreement is given to those who can pay their debt within 60 months or less. It is the most common type of Installment Agreement, especially since the adoption of the Fresh Start program; prior to the adoption of this program, only those who owed $25,000 or less could qualify, but now those who owe $50,000 or less may obtain a streamlined Installment Agreement. When you apply for this type of agreement, you will not need to fill out a financial statement, and no federal tax lien is required.
  • Basic Installment Agreement – If your debt exceeds $50,000 or if you cannot pay within 60 months, you will need a basic Installment Agreement with the IRS. In order to do so, you fill out a financial statement, which will be reviewed by the IRS in order to determine the rate of repayment. Generally, that rate is calculated by subtracting your allowable expenses from your monthly income. Not all expenses are allowable so you will need to consult with a tax attorney or CPA to craft a careful budget prior to filing an application for an Installment Agreement.  In addition, there are some categories and amounts of expenses which you may be entitled to, but they must be requested.  The IRS will not automatically give them to you.  These may allow the monthly payment to be reduced.  Often, when the IRS requires a payback amount that the taxpayer deems unreasonable, he or she can appeal to the IRS and come to a compromise. Koontz & Associates, PL will help you apply, negotiate and represent you for your appeal.
  • Partial Pay Installment Agreement – If you cannot pay back what you owe within 60 months, you may also want to consider a Partial Pay Installment Agreement, which allows you to pay back an amount deemed reasonable, considering your essential living expenses.  Because your taxes will not be paid in full before the statute of limitation expires, the IRS may still file a tax lien against you, and they will conduct periodic reviews of your financial situation. If it changes in any way, your Installment Agreement may be altered.

Because there are advantages and disadvantages to all three types of Installment Agreements, it is essential that you carefully investigate which one will benefit you the most. Koontz & Associates, PL will examine your financial situation and help you determine which type of agreement is best. Once that is determined, an agreement is made with the IRS.

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Tips for Taxpayers Who Owe the IRS

Related Topics: backtax, Tax

Many people become paralyzed with fear when they owe money to such an onerous creditor as the Internal Revenue Service. They cringe at the sight of that dreaded piece of mail – a notice from the IRS. The most important thing is to respond promptly. Ignoring the problem will only make it worse.

An IRS notice includes the amount of tax owed, plus any penalties and interest added from the date the tax was due. If you are unable to pay your balance in full, and fail to respond, the IRS will begin collection actions against you. This may include offsetting any refund to which you may be entitled, filing a notice of federal tax lien against your property, or serving a notice of levy of assets such as wages, bank accounts, Social Security benefits and retirement income. To prevent these drastic actions, you must communicate with the IRS promptly.

The first thing you should do is to confirm the tax assessment is in fact correct. If you believe it isn’t, you must contact the IRS within 60 days and speak with someone who can explain the charges. If you still believe the charges are incorrect, or if you are uncomfortable calling the IRS, you should contact an attorney or a tax professional.

Second, if you are able, you should remit some payment with the notice/bill in order to show good faith effort to comply. Because your balance is subject to interest and a monthly late payment penalty, it is in your best interest to pay the balance in full as quickly as possible. Penalties are also assessed for failure to file a tax return, so you should file immediately even if you cannot pay your balance in full.

If you are able to pay your full balance and simply need more time, you may request up to 120 days to pay in full. You are not obligated to pay a fee for this arrangement, although the interest continues to accrue. The IRS will encourage you to obtain a cash advance on your credit card or obtain a bank loan, but many people are unwilling or unable to do so, as the fees for doing so may be too high.

The most common solution to this daunting debt is to submit a request for an Installment Agreement. This is a monthly payment plan you can use to pay the debt, ward off collection efforts and return to a good night’s sleep. Again, interest continues to accrue until the debt is paid in full. In many cases, the IRS still files a tax lien.

To qualify, you must meet certain criteria. You must demonstrate current and future filing compliance – meaning all tax returns have been filed. In addition, you must begin making payments toward your current tax liability, the purpose of which is to show that this problem will not continue to recur and the issues which contributed to the problem have been resolved.

You must disclose your income, expenses, assets and liabilities. Based on the information provided, you can make an offer of the monthly payment you feel you can afford. The IRS will ultimately determine your monthly payments based on your disposable income, according to local standards. Frequently, the IRS calculation of the amount you can afford is higher than what you’re comfortable with. There is some room for negotiation, if you properly exercise your rights.

The IRS will respond to your request usually within 30 days, either to inform you whether your request has been approved or denied, or in some cases, whether more information is needed to make a decision.

Once the IRS approves an Installment Agreement, it is imperative that you comply with all the terms and not miss any payments or make late payments. If you default, the Installment Agreement may be voided and the IRS may immediately reinstate enforcement actions to collect.

Another option for taxpayers who are unable to pay is to request an Offer in Compromise (OIC). An OIC is an agreement between the taxpayer and the IRS that allows you to settle your outstanding tax liability by paying less than the full amount owed. Although, it should be noted that if the liabilities can be fully paid through an Installment Agreement or other means, the taxpayer will in most cases not be eligible for an OIC.

If you truly cannot afford to pay anything as a result of your financial hardship, the IRS may place you in a status known as “Currently Not Collectible.” This is a temporary hold on your account which permits you to not make any payments for the duration of the hardship. This status is reviewed annually and you have an obligation to inform the IRS promptly if there is a change in your financial circumstances. Interest continues to accrue, but no collection action will be enforced.

The tax rules and regulations are complex and change frequently. You should always file your tax return timely, even if you know you cannot pay the balance due in full. Knowing that payment arrangements can be made provides a significant relief for many taxpayers. If you are not comfortable representing yourself, you should hire an attorney or tax professional that practices in this area regularly and understands the intricacies of dealing with the IRS.  

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Business Income Taxation

Related Topics: Business Tax

As a business owner, you bear the responsibility of paying income tax whether your business is a sole proprietorship, a partnership, an LLC, or a corporation. Proper calculation and payment of your business taxes are essential for the financial health of your company and to ensure that you do not encounter any legal or tax liability issues in the future. Business income taxes are extremely complex, especially in light of recent changes in tax legislation. Without the proper skills and an intimate knowledge of tax law, it is very easy to make a mistake that could prove costly for your company. Attorney and Certified Public Accountant Jo Ann M. Koontz of Koontz & Associates, PL can assist you in calculating your business income tax, taking advantage of the deductions available to you, and avoiding serious mistakes.

New Legislation Makes Business Income Tax Preparation More Complicated

New tax legislation is passed every year and has great impact for individuals and for businesses, but unlike the provisions made for individuals, the incentives and benefits for corporations may be temporary. It is essential that you take advantage of the tax incentives and create a comprehensive tax plan that takes temporary benefits into consideration. Koontz & Associates, PL have followed these changes closely and are ready to help you take advantage of these incentives and put a creative financial strategy in place for the future.

Significant Benefits for Companies that Invest in Equipment, Property, and Services

Both the American Taxpayer Relief Act of 2013 and the 2012 Relief Act provided significant incentives for businesses who invest in capital and equipment. However, because many of these incentives are temporary, it is vital that you take advantage of them now. Changes included:

  • A 50% first-year bonus deprecation allowance to apply for qualifying property placed in service through 2013. For longer lasting and transportation property, the allowance extends into 2014.
  • Under Internal Revenue Code Section 179, taxpayers in 2013 may expense as much as $500,000 of qualifying property reduced by the amount by which the property exceeds $2,000,000. Beginning in 2014, however, taxpayers may only deduct $25,000 of qualifying property with an investment cap of $200,000 regardless of inflation.
  • Research Tax Credits, originally set to expire in 2011, have been extended through 2013. This credit may be claimed for costs incurred by business research or payments to universities and other institutions for their research. This applies to the amount by which the research for this fiscal year exceeds the annual average for research for the last four years.
  • The Relief Act extended the 15-year recovery period for leasehold, retail, and restaurant improvements. Taxpayers may continue to take those deductions through 2013.

Changed Vehicle Deductions Have Easy-to-Miss Details

Business vehicles have always been eligible for tax deductions. However, new changes have been made with regard to depreciation reductions and lease inclusions. Vehicle expenses can be calculated using mileage costs or using actual expenses, such as lease payments, registration, maintenance, storage, repairs, oil changes, and tolls. The actual deductions taken will vary depending on the size and type of vehicle, whether it is a luxury car, and whether it is leased. Deciding whether to calculate costs based on mileage or actual expenses can be tricky. Koontz & Associates, PL can help you make the right decision for your business.

Sweeping Health Care Reform Has Significant Effects on Southwest Florida Business Owners

The U.S. Supreme Court ruled that the Patient Protection and Affordable Care Act (PPAC) is constitutional. This act has significant consequences for businesses. With the Supreme Court’s declaration, all businesses are now required to meet the provisions of PPAC. Employers must report the total cost of provided health benefits on their employees’ W-2 forms, whether the employer or the employee pays for it.

Small businesses have slightly different provisions for health care. If you own a small business with no more than 10 employees and an average wage that does not exceed an average of $25,000, you may be able to take a 35% tax credit on health insurance premiums paid in 2012 and 2013. Tax exempt employers can take a 25% discount on premiums paid between 2010 and 2013. After 2014, taxable employers can deduct 50% of insurance costs and non-profit employers can deduct 35%. An employer must offer insurance through a state insurance exchange.

Employee Services Are Rewarded with Significant Tax Incentives

In addition to health care, employers are rewarded for giving jobs to those-in-need and to providing services to their employees. The Work Opportunity Tax Credit (WOTC) grants tax incentives to employers who hire from hard-to-employ groups. Usually, this incentive is equal to 40 percent of the worker’s wages, with a maximum set at $6,000. The Heroes Act of 2011 extended this tax credit to companies who hire veterans and disabled veterans. The tax credit for hiring these workers can go as high as $9,600.

In addition, the Relief Act made a permanent extension for tax credits given to companies that provide child care and facilities for their employees. Companies may deduct 25% of all child care costs and 10% of all child care resource and referral costs, not to exceed $150,000 in any tax year.

Some Tax Hikes Negatively Impact Business Owners

Not all of the changes in tax law will positively impact business owners. There are increases of which you should be aware. They include:

  • Personal holding company taxes – The rate on these taxes has been permanently raised from 15% to 20%, beginning December 31, 2012
  • Accumulated Earnings Taxes – The rate on these taxes has also been permanently raised from 15% to 20%, beginning December 31, 2012

It is vital that you be aware of these changes or work with and who is familiar with them to keep from unwittingly making a smaller payment than required and having issues with the IRS in the future.

Call Koontz & Associates, PL for Corporate Income Tax Services in Southwest Florida

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing tax clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941.225-2615.

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Sales & Use Taxes and Tourist Development Tax

Sales & Use Taxes 

Almost every Floridian who purchases, sells or provides goods and services is subject to Sales and Use Taxes.  Florida sales tax is generally 6% but it can be higher depending upon additional local levies.  This applies to the purchase price, admission prices, storage, and services, as well as tangible items. Use tax is similar to sales tax, although it only applies in certain situations, for instance:

  • If you buy a taxable item in Florida and did not pay taxes at the time of purchase
  • If you buy a taxable item outside of the state without paying taxes and have it delivered into Florida
  • If you buy a tax exempt item with the intent to resell and then use it for personal or business purposes

In addition to little-known laws regarding use tax, there are also laws regarding discretionary sales surtax, which is a county tax that applies to almost all goods or services subject to regular sales tax. However, these taxes are not universal across Florida but are calculated according to the county to where the goods are shipped. Not paying sales or use taxes or the discretionary sales surtax can result in serious legal consequences including criminal sanctions.  Because sales and use tax regulations are not always clear cut, it is easy to make mistakes. Consulting with us can help ensure that you meet all requirements, and minimize your tax liability by taking advantage of all exemptions.

Sales and Use Tax Questions

If you are starting a new business in Florida, it is essential that you determine whether state law requires you to collect and remit sales tax. Most businesses are required to pay sales and use tax and relatively few are exempt. Exempt from taxation are federal, state, county, and municipal governments, charities, religious groups, educational institutions, science organizations, and veterans’ institutes. If you are not sure whether you are subject to taxation or eligible for exemption, consult with us. We can help you complete tax registration with the state of Florida and also prepare and file your sales and use tax returns allowing your business to utilize all eligible exceptions, deductions, and incentives, and reap the greatest profits possible.

Tourist Development Tax

Florida law allows for a Tourist Development Tax.  Individual counties may impose local option transient rental taxes on rentals or leases of accommodations in hotels, motels, apartments, rooming houses, mobile home parks, RV parks, condominiums, or timeshare resorts for a term of six months or less. The revenues may be used for capital construction of tourist-related facilities, tourist promotion, and beach and shoreline maintenance; however, the approved uses vary according to the particular levy. Depending on a county's eligibility, the maximum tax rate varies from a minimum of 3 percent to a maximum of 6 percent. These local option taxes can be administered by the Department of Revenue or by one or more units of local government.  Koontz & Associates, PL can assist you with your questions and concerns about these taxes and the relevance to your situation.

Call Koontz & Associates, PL for Information on Sales & Use and Tourist Development Taxes

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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State and Local Tax Services

Related Topics: Business Tax

Florida does not levy a state income tax on individuals. However, Florida residents are not exempt from other taxes payable to the state. Business owners and those who own tangible personal property may owe significant taxes to the state and/or county. Corporate Income Tax and Tangible Personal Property Tax can be complicated to understand, calculate, and file. The experienced Sarasota accounting team of Koontz & Associates, PL can ensure that you meet all legal requirements and limit your tax liability.

Florida Corporate Income Tax

Many companies that generate profits in Florida, including those located outside of the state, owe Florida corporate income tax, and even if no taxes are due, many of those companies must still file an information tax return each year. Corporate income tax can be confusing because there are different regulations for each type of business tax structure. For instance:

  • An LLC taxed as a corporation must file the Florida corporate income tax return.
  • An LLC taxed as a partnership may have to file Florida Form F-1065
  • A single member LLC is not subject to Florida corporate income tax. However, if the sole member of the LLC is a corporation that owns the company, it is not tax exempt, and the business must file Florida form F-1120.
  • Entities which have elected to be taxed as S corporations and tax-exempt businesses do not have to file a Florida corporate income tax return unless they are subject to federal income tax.  However, in the first year the business elects to be taxed as an S-Corporation, the company must notify the Department of Revenue of the S corporation election in order to be exempt from filing a tax return.

Tangible Personal Property Tax Is Governed by Numerous Regulations

All business owners, self-employed workers, and independent contractors who own tangible personal property are subject to tax on these assets each year. Florida law defines tangible property as, “all goods, chattels, and other articles of value (but does not include vehicular items) capable of manual possession and whose chief value is intrinsic to the article itself.” Furniture, computers, equipment, and signs are examples of such goods. Owners of tangible personal property should file Form DR-405 or an extension before April 1, or they will be subject to penalties. Each tax return is eligible for an exemption of up to $25,000 based on the value of the property, and if more than one person owns the property, each owner may qualify for a $25,000 exemption. In addition, each freestanding business site requires a separate DR-405 form with a related $25,000 exemption.

Tangible Personal Property Tax is complex, and many property and business owners find themselves filing form after form, still unsure as to whether they are meeting all of their legal requirements or paying tax at the proper rate.  The Sarasota law and CPA firm of  Koontz & Associates, PL is highly familiar with this area of tax law and will work on your behalf to take advantage of the deductions to which you are entitled.

Call the Sarasota Law Firm of Koontz & Associates, PL for State and Local Tax Assistance in Southwest Florida

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing tax and business matters. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Calculate and File Your Payroll Tax

Related Topics: Business Tax, Payroll

As an employer, you have numerous tax responsibilities, one of which is filing state and federal employee payroll tax quarterly and at the end of each taxable year. These taxes are withheld from each of your employees’ paychecks, and you must submit these withholdings regularly to the federal government. Usually, payroll taxes are calculated by subtracting statutory and voluntary payroll deductions from the employees’ gross pay to arrive at net pay for the year. Though this may sound simple, it can actually become quite confusing, especially if you are in charge of a large workforce. If the thought of filing payroll tax for your employees fills you with trepidation, the experienced and knowledgeable firm of Sarasota’s Koontz & Associates, PL can help you calculate and file these returns so you can focus on the myriad of other things you need to do.

All Forms of Payroll Tax

There are multiple forms of payroll tax that must be calculated and filed. They include:

  • Federal Income Tax – These funds must be withheld from each paycheck and deposited by the employer.
  • Social Security and Medicare Tax – These taxes are withheld from an employee’s paycheck, and the employer pays a matching amount. In 2013, the rate of Social Security and Medicare taxes increased to 6.2%.
  • Additional Medicare Tax – In 2013, the federal government approved an additional 0.9% Medicare tax for workers above a certain wage bracket. Employers are now responsible for withholding these funds.
  • Federal Unemployment (FUTA) Tax – Employers must pay an annual tax to fund state and federal unemployment programs.
  • Self-Employment Tax – Self-employment taxes are comprised of two parts: Social Security and Medicare. As a self-employed person, there may be tax deductions that can be taken. We can help you determine your eligibility for self-employment tax deductions.

In addition, employers must take into consideration voluntary payroll deductions such as health insurance, life insurance, retirement plans such as 401(k)’s, stock purchase plans, meals, uniforms, and union dues.

Calculating and Filing Payroll Tax is a Year-Round Commitment  

Employee payroll tax must be filed monthly or semi-weekly, and your business must follow schedules according to federal law. These laws and requirements can change at the beginning of every taxable year, so it is important to keep on top of the regulations for the year. Beginning in January and extending through April, there are a number of other forms such as W-2s and 1099s that you are required to file. In short, filing and keeping track of payroll tax can be a full-time job in itself, depending on the number of employees you have.

Koontz & Associates, PL Can Help with Payroll Taxes.

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941-225-2615.

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Are my medical and dental expenses deductible?

Related Topics: Individual Tax

Wondering if your medical and dental expenses are deductible? Maybe… There are a couple important things to considered.

First, add up all medical and dental expenses. Include expenses paid for yourself, spouse or dependent (such as a child). Make sure to count any expenses you paid in 2015. Note that these payments count for the date of payment, not when a medical service was received. Expenses that qualify include, co-payments, doctor visits, procedures, some insurance premiums, medical supplies, medical related mileage and transport cost.

Second, you need to see if your total expenses are more than a certain threshold amount. For most people, the amount is 10% of your adjusted gross income. If they are you may deduct the amount that exceeds 10%.

Are you 65 or older? You have a lower threshold amount. You may deduct total medical expenses that exceed 7.5% of your adjusted gross income through the year 2016. If you're married and only one of you is 65%, you can still write off expenses over 7.5%.

This information is provided by IRS: Tax Tip 2016-35: Claiming a Tax Deduction for Medical and Dental Expenses

If you have additional questions, please contact our office - 941-225-2615

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Child Deductions and Dependent Deductions

How much did you spend on care for your child or a dependent in 2015? The money you spend on a child or an individual that is dependent on you can provide a deduction of up to $3,000 for one qualifying person, or $6,000 for two or more individuals. Find out if your child or dependent qualifies for a deduction. We recommend speaking with a tax professional for complete details about your deduction, but here is a brief overview on child deduction and individual dependent deductions.

Who is considered a qualifying individual:

  • Your child if they are 13 years old or younger when the care is provided.
  • Your spouse if he or she is not physically or mentally capable of caring for themselves.
  • An individual that is not physically or mentally capable of caring for themselves and has lived with you for more than half a year. This individual also needs to be your dependent or could have been claimed as a dependent on another taxpayer's return.

What is deductible?

If you have paid someone to take care of a qualifying child or individual, your cost will likely be deductible. This cost includes expenses paid for care provided inside the household or outside the household. The expenses must be for the well-being of the individual.

You will also need to provide proof of the care provided. Form W-10, Dependent Care Provider's Identification and Certification can be completed for proof of the persons or organization that provided the care. Note that the care provider cannot be your spouse or the parent of your qualifying individual.

The truth is that each family or individual's situation is unique and so is their filing. You will need to speak with a tax professional to have a full understanding of what is deductible and how to fully take advantage and maximize your deduction.

Dependent Care Benefits

Special rules apply if your employer provides dependent care benefits. Form 2441, Child and Dependent Care Expenses, will guide you through the process of reporting your benefits.

Child and dependent deductions is an important topic to discuss with your accountant. These deductions are made available by the IRS to help families and individuals reduce their taxes. Contact Jo Ann Koontz to set up a consultation about reducing your taxes by maximizing your deduction - 941-225-2615.


Recommended Resources Provided by the IRS


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Five Steps to Improve Your Credit Score

Related Topics: Buying Home, Individual Tax

Koontz & Associates, PL can assist you with professional help to improve your credit.  We have recommendations on how to get out of credit card debt.  We offer credit card debt relief assistance to get you back on track.  With our debt solutions, we can get you on the road to credit recovery to help alleviate the burden of financial stress.    Here are five ways you can get started.  Call us for a personalized consultation on debt settlement for your specific needs.

1.  Pay Down Your Credit Card Balances.

High debt is one of the primary catalysts of a low credit score. Carrying too much debt can hinder your credit utilization ratio, or the amount you owe vs. your total credit limit. Initiate instant results by paying down balances and keeping your ratio below 25 percent.

2.  Increase Your Limits.

Credit repair requires skill. If paying off debt isn’t an option, use a different strategy to lower your credit utilization ratio. Asking your credit card issuers to increase your credit limits may lessen the burden. For example, Mara owes $3,000 on a card with a $9,000 limit. She calls her creditor and requests a limit increase to $11,000. This simple act lowers her utilization ratio from 33 to 27 percent without costing her a penny. There is a Catch 22, though: If your credit history is really poor, then you’ll likely have to delay your request until you’ve got at least a few months of real credit repair under your financial belt.

3.  Cash in on History.

The length of your credit history in years accounts for 15 percent of your credit score, so why not cash in on that history? Dust off your oldest account and use it a bit before your creditor decides to close it due to long-term inactivity. This actually happens, by the way, especially during tough economic times when creditors seek to rid their portfolios of unprofitable customers.

4.  Confront Unfair Credit Reporting.

Fortunately for you, credit reporting must be fair, relevant, substantiated, and accurate. So don’t pay for a credit company’s mistakes without realizing it. Keep the playing field level by ordering a free copy of your credit report. Look for questionable information related to:

  • Unverifiable late payments, charge-offs, or collections
  • Paid accounts that are falsely cited as “settled,” “paid derogatory,” or “paid charge-off”
  • Accounts that are not yours Credit limits listed as less than they actually are
  • Accounts listed as “unpaid” even if they were charged off in bankruptcy
  • Older, negative items that should have fallen off your credit report (e.g., items older than 7 years; 10 years in the case of some bankruptcies)

5.  Stop the Inquiries.

Legally, creditors need permission to access your personal credit information, and a credit report “inquiry” provides a record of such access. In reality, credit companies often don’t follow the rules to the letter when violating your privacy in this way. Even worse, even the presence of a few inquiries can depress your credit scores. Review the inquiries on your credit report to verify that your permission was obtained in advance. If you see something you don’t recognize, contact the credit bureaus to remove the offending marks.

Remember to Consider the Tax Implications

As with any short sale or debt settlement, potential tax consequences must be considered. If a lender chooses to release a borrower from some, or all, of an outstanding loan obligation, it is required to issue a Form 1099-C which reports the cancellation of debt. Not only does the lender have a reporting obligation, but the borrower must also report this liability on their tax return for that year.

Good Credit should be a Lifelong Goal

Credit repair is a lifelong goal, and you have the power to make positive and fast changes today. If your credit reports need significant attention, consider hiring professional help. No matter how you decide to proceed, take the time to improve your credit score now because the results may afford a lasting financial impact.

Koontz & Associates, PL can assist you with further professional help to improve your credit.  We have helped many clients with the negotiation of debt settlement with credit card companies and mortgage lenders.  We have recommendations on how to get out of credit card debt.  We offer credit card debt relief assistance to get you back on track.  With our debt solutions, we can get you on the road to credit recovery to help alleviate the burden of financial stress.    Call us today for a personalized consultation on debt settlement for your specific needs.

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Individual Income Tax

Related Topics: Individual Tax, Tax

Koontz & Associates, PL Prepares Individual Tax Returns

Planning, calculating, and paying income tax can be complicated. The professional tax services provided by the Sarasota Law and CPA firm of Koontz & Associates, PL can ease the stress of income tax payment with comprehensive individual income tax preparation and planning services.

New Laws Make Certified Public Accountants a Necessity for Smart Tax Planning

Each year, the federal government passes new laws regarding income taxes, and in the last few years, the government has made sweeping changes.  When President Obama signed The American Taxpayer Relief Act into law it reduced the amount of income tax to be paid by most Americans and it extended many tax incentives, either permanently or temporarily.

While the Act is primarily beneficial for most Americans, not all of its provisions work to your advantage. In addition, the widespread changes make income tax planning for the following years very difficult. Koontz & Parkin CPAs can help you take advantage of the positive aspects of the Act, minimize negative impact, and make a smart, well-informed tax plan for the future. In particular, the Koontz & Associates, PL team can help you with specific areas affected by the new laws, including:

  • Tax Rates: The Taxpayer Relief Act permanently extended previous tax rates for families, except for single filers with incomes above $400,000, heads of households with incomes above $425,000, and married couples with joint returns of $450,000 or more. These taxpayers will pay at a 39.6% interest rate, with adjustments for inflation in the following years. However, the amount of Social Security each worker must pay increased to 6.2% (a 2% increase) meaning that Americans will actually take home less income this fiscal year.
  • Capital Gains and Dividends: For taxpayers with the incomes mentioned in the section above, capital gains and dividends are now being taxed at 20% rather than at 15%, as they were in previous years. For other taxpayers, the taxation rate remains at 15%, and for income below the top 15% tax-bracket, there is a 0% taxation rate.
  • Alternative Minimum Tax: The Alternative Minimum Tax (AMT) was established more than 40 years ago to ensure that wealthy citizens paid their taxes. However, it was never adjusted for inflation, and in recent years it began affecting middle-income taxpayers, as well. The American Taxpayer Relief Act made permanent adjustments for inflation and changed exemption amounts.
  • Estate Tax: For a number of years, estate, gift, and generation-skipping transfer taxes have been inconsistent. The Taxpayer Relief Act set a standard of taxation, and the minimum estate, gift, and generation-skipping transfer tax is now 40%, which represents a 35% increase from 2012. However, there is no change in the exclusion amount for estate and gift tax in 2013. In subsequent years, it is at $5 million, with adjustments for inflation. The generation-skipping transfer tax exemption is also $5 million for 2013 and years following, with adjustments for inflation.
  • Tax Deductions: The American Taxpayer Relief Act permanently and temporarily extended a number of tax credits and deductions, including a permanent extension of the enhanced adoption credit/exclusion, a permanent extension of the enhanced child and dependent care credit, a permanent extension of the $1,000 child tax credit, and a permanent extension of the enhanced student loan interest deduction. Temporary extensions include the higher education tuition deduction, transit benefits parity, IRA distributions to charitable organizations, American Opportunity Tax Credit, teachers’ classroom expense deductions, cancellation of indebtedness on principal residence, and residential energy efficient property credit.
  • 3.8% Net Investment Tax: Additional tax is now calculated based on a taxpayer’s “net investment income,” including interest, dividends, annuities, rent, royalties, and similar sources of income. However, it is not calculated based on income from a business or the sale of property related to a business. It is also based on the lesser of the taxpayer’s net investment income or adjusted gross income in excess of $200,000 ($250,000 for a married couple or $125,000 for married couple filing separately).
  • 0.9% Medicare Tax: Beginning in 2013, higher income individuals are required to pay an additional 0.9% Medicare tax. In other words, any income exceeding $200,000 ($250,000 for a married couple or $125,000 for a married couple filing separately) will be taxed at a 2.35% Medicare rate.
  • Retirement Savings: The American Taxpayer Relief Act has made it easier for taxpayers to save and plan for retirement, lifting most restrictions on Roth accounts.

Call Koontz & Associates, PL for Individual Income Tax and Planning Services in Sarasota

Jo Ann M. Koontz offers a powerful combination of in-depth knowledge of tax regulations, a firm grasp of the business world, and years of experience representing clients. To schedule a consultation, call the Sarasota office of Koontz & Associates, PL at 941.225-2615.

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Tax Services

Related Topics: Tax

At Koontz & Associates, we understand the tax implications of any decision you make and we can help you minimize your tax commitment wherever possible by looking at the big picture.

Your tax standing is delicate — one bad decision has the potential to destroy your financial record, sink your business, and jeopardize your goals for the future. No matter what issue you’re currently having, it needs to be addressed quickly.

Not having any of the problems below? Good! Let’s keep it that way. Request a consult so we can establish a relationship now and make sure you don’t find yourself in a messy tax situation down the road. Remember, it’s easier and less expensive to prevent tax issues ahead of time than it is to fix them when the damage has already been done.

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