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A bipartisan majority of the U.S. House of Representatives – 233 members – have signed a letter urging the House leadership to preserve the cash method of accounting for tax purposes, writing that proposals requiring a transition to the accrual method “will have a severely detrimental impact on thousands of businesses in our districts.”  

To read more, please see the full article on the AICPA's website:  AICPA - Press Release

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How much money did you save last year? If you didn't save at least 10% of your earnings, you didn't save enough. If your savings in 2013 fell short, the only solution is to take charge of your financial future right now and start saving more money.

Saving money doesn't have to be hard work. In fact, many successful savers have found simple ways to cut spending and increase their savings. Here are some tips to help you get started and stay on track.

* Set goals. To give your savings purpose, set specific financial goals. For example, it's advisable to have an emergency fund of approximately six months' worth of living expenses to cover any cash outlays that may catch you by surprise. Nothing can derail your financial plans faster than a series of mishaps that force you to take drastic financial measures. Other saving goals may include a college savings fund, vacation fund, or a fund for major purchases.

* Treat your savings as your most important monthly bill. Write a check to savings first, or have your savings automatically deducted from your checking account or paycheck.

* Tax-deferred retirement accounts offer a smart way for you to save money for retirement. If your employer offers a 401(k) or SIMPLE retirement plan, contribute the maximum amount allowed. If your employer offers no plan, contribute to an individual retirement account (IRA). The money you contribute to a retirement account can reduce your taxable income and grow tax-free until withdrawn.

* Another way to maximize savings is to track your expenses for a few months. This is a great way to spot unnecessary or wasteful spending; it doesn't take much work to see potential cutbacks.

* When it comes to saving, think "control." For example, control the use of your credit cards. The amount you pay each month in finance charges could go to savings instead. Also, control the use of your ATM card. Get in the habit of giving yourself a regular cash allowance, and try to live with it.

You should be saving at least 10% of your earnings. Seem impossible? If you took a new job at 10% less pay, you would get by. For help in setting financial goals and developing a savings plan, call us.

 

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Another strong warning from the IRS is alerting taxpayers to phone scams that have already resulted in 90,000 complaints and the theft of millions of dollars. Here's how the typical scam works: The caller claims to be from the IRS and, using hostile and abusive language, demands immediate payment of taxes by a prepaid debit card or wire transfer. The IRS reminds taxpayers it will never contact you by phone about owed taxes; the first contact will be by mail. It will never ask for credit, debit, or prepaid card information in a phone call, and it will never request immediate payment over the phone.

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If you are a small employer with fewer than 25 full-time equivalent employees, pay an average wage of less than $50,000 (as adjusted for inflation beginning in 2014) a year, and pay at least half of employee health insurance premiums then there is a tax credit that may put money in your pocket.

For tax years 2010-2013, the maximum credit is 35% of premiums paid for small business employers and 25% of premiums paid for small tax-exempt employers such as charities. For tax years beginning in 2014 or later, there are changes to the credit:

•  The maximum credit increases to 50% of premiums paid for small business employers and 35% of premiums paid for small tax-exempt employers.

•  To be eligible for the credit, a small employer must pay premiums on behalf of employees enrolled in a qualified health plan offered through a Small Business Health Options Program (SHOP) Marketplace or qualify for an exception to this requirement.

•  The credit is available to eligible employers for two consecutive tax years.

This means that if you pay $50,000 a year toward employees’ health care premiums — and if you qualify for a 15% credit, you save $7,500. If you save $7,500 a year from tax year 2010-2013, that’s total savings of $30,000. If, in 2014, you qualify for a slightly larger credit, say 20%, your savings go from $7,500 a year to $10,000 a year.

Even if you are a small business employer who does not owe tax during the year, you can carry the credit back or forward to other tax years. Also, since the amount of the health insurance premium payments is more than the total credit, eligible small businesses can still claim a business expense deduction for the premiums in excess of the credit. That’s both a credit and a deduction for employee premium payments.

There is good news for small tax-exempt employers too. The credit is refundable, so even if you have no taxable income, you may be eligible to receive the credit as a refund so long as it does not exceed your income tax withholding and Medicare tax liability.

And finally, if you can benefit from the credit this year but forgot to claim it on your tax return, there’s still time to file an amended return. Refund limitations may apply. Generally, a claim for refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.

To be eligible, you must cover at least 50% of the cost of employee-only (not family or dependent) health care coverage for each of your employees. You must also have fewer than 25 full-time equivalent employees (FTEs). Those employees must have average wages of less than $50,000 (as adjusted for inflation beginning in 2014) per year.

Remember, you will have to purchase insurance through the SHOP Marketplace (or qualify for an exception to this requirement) to be eligible for the credit for tax years 2014 and beyond. Participating in the direct enrollment process, such as the one adopted by federally-facilitated SHOP Marketplaces, counts as SHOP Marketplace participation for 2014 only.

What is an FTE?

Basically, two half-time employees count as one FTE. That means 20 half-time employees are equivalent to 10 FTEs, which makes the number of FTEs 10, not 20.

For example, if you pay total wages of $200,000 and have 10 FTEs. To figure average annual wages you divide $200,000 by 10 — the number of FTEs — and the result is your average annual wage. The average annual wage in this example would be $20,000.

Also, the amount of the credit you receive works on a sliding scale. The smaller the business or charity, the bigger the credit. So if you have more than 10 FTEs or if the average wage is more than $25,000 (as adjusted for inflation beginning in 2014), the amount of the credit you receive will be less.

Now that you know how the credit can make a difference for your business, we can help determine if you can claim it. Please call our office for more details. 

401k Mistakes

Participating in a 401(k) or similar retirement plan is a tax-advantaged way to save for retirement. If you have the option of participating in a 401(k) plan, avoid these five common mistakes.

* Failing to participate fully. Too many employees opt out of the plan or don't contribute as much as they can afford. At a minimum, try to set aside enough to receive the full employer-matching contribution. For example, your employer might offer to match 30% of the first 3% of payroll. That match is equivalent to a 30% first-year return on the amount you contribute.

* Over-investing in company stock. Don't invest too much of your plan contributions in company stock. Remember, even if the company is doing well now, things can change. And if the worst happens and you lose your job, you don't want to lose your retirement savings too. (Think of Enron employees.) If your employer uses company stock for the matching contribution, you may have no choice. But at least you can select other investments for your own contributions.

* Failing to diversify. Choose a well-diversified mix of investments in the plan. Then continually monitor and rebalance your investments as they grow. Coordinate your investment choices with your non-401(k) savings to make sure you have an appropriate mix. Seek professional advice if you need it.

* Borrowing from your plan. Take a loan from the plan only as a last resort. Remember, these savings are for your retirement, not to fund everyday needs. When you borrow from the plan, you're losing the tax-deferred growth on those funds.

* Withdrawing your savings if you change jobs. It's tempting to cash out your savings if you change jobs. But if you do, you'll owe taxes and probably a penalty. More important, you'll lose the future tax-favored growth that you might need in retirement. Instead, arrange a direct rollover into an IRA or your new employer's plan.

 

 

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Delaware Top WorkplaceWe sincerely thank our employees for again voting us the highest ranking CPA firm on the list, and 3rd overall in the small business catagory.  

You can see the full article here

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We are hiring! 

Gunnip CPAs is seeking several professionals to join our tax and audit teams to assist a diverse group of individual and business clients.  We provide assurance, tax and business consulting services to clients throughout the Mid-Atlantic region.   Our team of professionals works with clients in industries such as manufacturing, wholesale, professional services, commercial development, contractors, nonprofit organizations and state and local government.  We look for people who are seeking a career in public accounting.

Since 2008, our employees have consistently ranked us in the Top 10 small workplaces in Delaware. Since 2011, we have been the highest ranking CPA firm on the list. Our staff specifically names our exceptional benefits package, high appreciation level and low-stress, flexible environment as the main reasons they stay.

To learn more about our current opportunities see our TAX MANAGER and STAFF ACCOUNTANT positions. 

 

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The IRS recently announced the inflation-adjusted contribution limits for health savings accounts (HSAs) for 2015. HSAs allow taxpayers with high-deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay unreimbursed medical expenses. The 2015 contribution limit for individuals is $3,350; the limit for family coverage is $6,650. A catch-up contribution of an additional $1,000 is permitted for individuals who are 55 or older.

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Gunnip & Company CPAs is proud to recognize our dedicated staff and announce the following accomplishments and promotions. 

Lindsay J Jennings CPA and Anne R Lane CPA have each been promoted to Manager.

Lindsay Jennings CPA  Anne Lane CPA

Lindsay started her career as an intern at Gunnip.  Her primary focus is the audit and review of construction and real estate entities, law practices, employee benefit plans and nonprofit organizations.  She is a graduate of the University of Delaware.

Anne has worked in various accounting positions including working in The Netherlands before coming home to Delaware.  Her primary focus is tax, specializing in tax planning strategies and compliance for individuals and businesses.  She is a graduate of Colorado State University and earned a Masters in Taxation from Villanova University School of Law.

John M. Leary CPA and Ryan J. Bond have each been promoted to Supervisor.

John started his career with Gunnip in 2008 as a graduate of West Chester University.  John is involved on audits, reviews, and compilation engagements in industries including governments, not-for-profits, private schools and privately-held companies. 

Ryan graduated from the University of Arizona in 2007. He worked in firms in Tucson before moving to Delaware.  Ryan provides tax planning, research and analysis for individuals, and business owners to help grow and maintain their businesses.

 

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The premium tax credit is a refundable tax credit that helps eligible people with moderate incomes afford health insurance purchased through the Health Insurance Marketplace.

You can choose to have all or part of the credit paid in advance to your insurance company to lower what you pay for your monthly premiums, or you can claim the credit when you file your tax return. If you choose to have the credit paid in advance, you must reconcile the advance payments with the actual credit you compute when you file your tax return.

Advance credit payments made to your insurance company are based on an estimate of the credit that you will claim on your federal income tax return. The Marketplace estimates the credit by using information about your family composition and projected income that you provide when you submit your application.

Report Changes in Circumstances

It is important for you to report changes in circumstances to get the proper type and amount of financial assistance and to avoid getting too much or too little in advance. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payment. This adjustment will help you avoid getting a smaller refund or owing money that you did not expect to owe on your federal tax return.

Changes you should report to the Marketplace include:
* Birth or adoption
* Marriage or divorce
* Moving to a different state
* Changes in household income
*
 Incarceration or release from incarceration
*
 Gaining or losing health care coverage or eligibility
*
 Other changes affecting income and household size

These changes may also open the door for the Marketplace special enrollment period that permits health care plan changes. In most cases, the special enrollment period for Marketplace coverage is open for 60 days from the date of the life event.

File a Federal tax Return

If you receive advance credit payments in any amount or if you plan to claim the premium tax credit, you must file a federal income tax return. If you receive any advance credit payments, you will use your return to reconcile the difference between the payments and of the credit.

To find out more about the premium tax credit and other tax-related provisions of the health care law, please call Gunnip CPAs at (302) 225-5000 or email us at info@gunnip.com. We will be happy to help.

 

 

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