June 2016 Tax Newsletter

What’s Inside

Dear Subscriber

We hope your summer is off to a good start. Ours sure is here at Moskowitz LLP as It is our pleasure to announce that Elizabeth Prehn and Reem Abdelaal have joined the firm as attorneys. Further, we continue to fight on behalf of taxpayers and have obtained some very exciting results.

We are also excited to announce our Real Estate Practice Group. After noticing so many of our clients were requesting assistance related to real estate law, we have now formalized a practice group dedicated to real estate law. Please see the Real Estate Law section of our website for more information.

As always, we appreciate the trust that you place in us by choosing our firm to represent you.

Go Warriors!

Steve Moskowitz, Esq.
Founding Partner

Tax Calendar

June 15 is the Deadline for Your Second Estimated Tax Payment

Be sure to make the second installment of your 2016 individual estimated tax by June 15, 2016. You can pay online or by phone with a check, credit card or debit card. June 15 is also the due date for calendar-year corporations to make their second quarter 2016 estimated tax payments.

Online payments to the Internal Revenue Service can be made at IRS.gov EFTPS, while estimated tax payments to the Franchise Tax Board can easily be made online through their Web Pay service.

Report Your Foreign Financial Accounts by June 30

June 30, 2016, is the deadline for filing the 2015 Form 114, Report of Foreign Bank and Financial Accounts, also known as the FBAR. Unsure if you’re required to file? The general rule is that a return is due if you have a financial interest in, or signature authority over, a foreign financial account(s) and the aggregate value of the account(s) exceeds $10,000 at any time during the calendar year. This requirement applies to both individuals and entities such as trusts and businesses. Additionally, you may need to file even if your foreign account produces no income.

Be aware that June 30, 2016, is a “hard” deadline. Your 2015 Form 114 must be filed electronically with the Financial Crimes Enforcement Network (FinCEN) no later than that date. No filing extension is available for 2015 forms – even if you filed an extension for your federal income tax return.

Please be aware that both the criminal and civil penalties for failing to timely file this form are extremely severe. The criminal penalty provides for a five year prison sentence for failing to file just one Form 114. The civil penalties apply to ‘willful’ or ‘non-willful’ failures. Both penalties are expensive. For instance, the “willful” penalty is the greater of the high balance of the account, per year, per signature, or $100,000 per year, per signature. The “non-willful” penalty is $10,000 per year, per account, per signature. See our article published in the California Tax Journal regarding the Non-Willful FBAR Penalty. Failure to file may prompt additional consequences, including but not limited to, criminal charges and/or revocation of OVDP acceptance.

Should you need assistance with regards to FBAR or your case, please contact Moskowitz LLP immediately.

Make June Business Tax Planning Time

Looking for suggestions to reduce your 2016 business tax liability? Here are three tips to consider as summer gets underway:

  1. Business Trips When you travel on business this summer, you can write off your business expenses – including airfare, lodging, and 50% of the cost of meals – if the primary purpose of the trip is business-related. If you travel by car, deduct actual business-related auto costs or a flat rate of 54 cents per mile (plus tolls and parking fees).
  2. Hire Your Child Does your teenaged child need a summer job? If you hire your child, the wages paid for actual services rendered are deductible, the same as wages of other employees. The wages will be taxable to your child at your child’s tax rate, which are probably much lower than your rate or that of your business. If the child is under age 18, he or she is exempt from social security taxes on his or her wages regardless of the amount.
  3. Job Credits When your business hires workers from certain “target groups,” such as veterans and food stamp recipients, you may be able to claim the Work Opportunity Tax Credit. The maximum credit is generally $2,400 per qualified worker. A special summertime credit is also available for hiring youths residing in empowerment zones or enterprise communities who work for you between May 1 and September 15.

Contact Moskowitz LLP today to receive more tax planning suggestions for your business.

Did You Get Your New “Chip” Card?

The latest credit cards have a new feature: a half-inch square on the card’s face that looks like a mini circuit board. The square is a small computer chip called an EMV; the acronym stands for Europay, MasterCard, and VISA, the developers of the technology. Over the next several years, these chip-embedded cards are expected to replace the familiar magnetic strip technology on cards that you now swipe at point-of-sale devices. When you use your EMV card, you’ll need to “dip” or insert it into a new type of reader.

Why the change? The new chips are expected to improve credit and debit card security. Data on cards with the older technology is much easier for crooks to steal because the information on the magnetic strip is static and can be copied. As a result, a thief can use your card for multiple fraudulent transactions. Cards with the new chip are different. Every time you use an EMV card, the chip creates a unique transaction code. As a result, the newer cards aren’t as useful to counterfeiters and card thieves.

Get to Know FinCEN Because They are Getting to Know You

Familiarize yourself with the Financial Crimes Enforcement Network (FinCEN) as it is a U.S. governmental agency that is authorized by Congress to enforce the Bank Secrecy Act. As part of its enforcement, FinCEN acts as a repository for information about monetary transactions.

This is important to you because, domestically, FinCEN grants more than 10,000 agents, analysts, and investigative personnel from over 350 US Government agencies direct access to your reporting so that it gets the broadest possible use. This means, Suspicious Activity Reports, Form 8300, Form 114 (FBARs), and more, can be easily identified and used in investigations and for Bank Secrecy Act compliance penalty assessments.