BA Harris LLP

Second Quarter Estimated Tax Payments

Published on Thursday, June 06, 2019

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​ Idaho’s Education Tax Credit- Not just for schools!

Published on Wednesday, May 29, 2019


The primary focus of any charitable donation will always be that your money is going towards a good cause that positively enhances our community, but it never hurts to be aware of the benefits that it may provide come tax time! The state of Idaho offers an Educational Tax Credit for any cash donations made to qualified Idaho Educational entities of 50% of the amount donated, up to $500 per tax payer ($1,000 on a joint return). This means that an Idaho couple may receive a credit of up to $1,000 for $2,000 worth of donations during the year.

Many of our clients are aware that cash contributions made to Idaho schools and their respective athletic programs qualify for the credit (less the fair market value of anything received in return for their donation), but many are surprised to learn that there are several other entities they may donate to which are deemed to be qualified entities as well. In fact, some of the qualifying entities aren’t even mentioned in the instructions of the Idaho Form 39R where the credit is recorded, but remain eligible nonetheless. Some of the more popular organizations include the Boise Zoo, public libraries, public or private non-profit museums, public radio, as well as botanical gardens. Please be aware that this credit only applies to cash contributions made to educational entities, so donations of goods do not qualify.

So, if you are feeling charitable, keep in mind there are a number of educational options available throughout the state outside of schools and their sports teams (although the University of Idaho football program could always use your support. Go Vandals!).

If you have any questions please let us know.

Aaron Lavarias, CPA

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Summer Hours

Published on Monday, May 20, 2019

From Memorial Day Weekend to Labor Day Weekend we will be reverting to our summer hours of 8-5 on Monday-Thursday and 8-noon on Friday. Let us know if you have any questions. Read More...

Beware, Changes are Coming to Form W4

Published on Wednesday, May 15, 2019

If you are employed, chances are you have filled out a W-4 form. Currently, employers are required to have all employees fill out a Form W-4 indicating their marital status and the number of withholding allowances they prefer. When an employer calculates an employee’s paycheck, the income taxes taken out of the paycheck are determined by the allowances claimed on the employee’s Form W-4.Seems simple, right? It’s about to get more complicated.

In 2020 all employees will be required to fill out a new, complex Form W-4 due to IRS changes to the payroll withholding tables following the enactment of the Tax Cuts and Jobs Act on January 1, 2018. According to the IRS, the first draft version of the 2020 Form W-4 is expected to be released by May 31st, 2019. Payroll experts have reviewed earlier drafts with skepticism, saying the new forms require twice as much information than the old forms.

According to USA Today Journalist, Janna Herron, the draft form of the new W-4 asked workers to input the annual dollar amounts for:

  • Nonwage income
  • Itemized deductions
  • Income tax credits expected for the tax year
  • For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household

It is likely the average American will not know how to fill this form out correctly. In addition to the level of difficulty, employees could find the requirement to share this level of personal information invasive.

When the draft is released, the IRS welcomes your comments on the redesign.After review, the final 2020 W-4 version should be available by year-end. If you are an employer, stay up to date with the latest information regarding the new Form W-4 requirements. It will be important to understand the revised Form W-4 in order to explain to employees how to properly complete the forms.

 

Natalie Brodie

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Is an Idaho MSA Right for You?

Published on Monday, April 22, 2019

Tax Free Medical Expenses with an Idaho medical Savings Account (MSA)

Due to the ever-rising cost of medical care in the U.S., finding a tax-advantaged means of paying (or saving) for an inevitable health care related expense has become a top priority for many Idahoans. Fortunately, the state of Idaho offers Idaho Medical Savings Accounts (MSA) which allow for a number of benefits for all residents of the state. The MSA’s are similar to a standard savings account, and may be opened through any participating financial institution in Idaho for a small fee. Once opened, cash contributions of up to $20,000 per year ($10,000 for a single tax filer) may be made, with every dollar contributed during the course of the year deducted from the account owner’s taxable income at the Idaho state level. This equates to a potential tax savings of up to 6.925% for every dollar contributed.

It is important to note that any distributions from the account must be made to pay for qualifying health costs such as deductibles/co-pays, hospital bills, and Medicare and/or Long-Term Care premiums. Any distributions taken from the account used for non-qualifying expenses prior to the account holder turning 59 1/2 will be taxed, and subject to a penalty (unless the money is redeposited within 30 days). Fortunately, unlike Flexible Spending Accounts (FSA’s) which many taxpayers are familiar with, the Idaho MSA’s are not on a “use it or lose it” system, meaning there is no obligation to spend the balance in the account by year end. The interest earned on contributions is tax-free, making it a powerful tool for both immediate health care expenses, and planning for the future.

Other important features of the Idaho MSA are that the funds may be used to pay for the eligible medical expenses for both the account holder’s spouse, or dependent children should the need arise. The MSA is also unattached to any preexisting insurance, and does not actually necessitate that the account holder has any medical insurance at all. Contributions can also be made by anyone, into any account. Meaning employers, friends, and family members can all contribute to an MSA if they so choose.

If you foresee medical expenses in the near or distant future, an Idaho MSA may be a great option for you, or your family members. If you have any questions, please don’t hesitate to give us a call!

Aaron Lavarias

208-424-5177

 

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