Taxable and Nontaxable Income

Did you know…Most types of income are taxable, but some are not. Income can include money, property or services that you receive. According to the IRS, here are some examples of income that are usually not taxable:
• Child support payments;
• Gifts, bequests and inheritances;
• Welfare benefits;
• Damage awards for physical injury or sickness;
• Cash rebates from a dealer or manufacturer for an item you buy; and
• Reimbursements for qualified adoption expenses.

Click here for more information on taxable and nontaxable income.

Gray, Gray & Gray Supports Cradles to Crayons

Together with Cradles to Crayons, Gray, Gray & Gray looks forward to providing children living in homeless or low income situations with the essential items they need to thrive at home, at school and at play. We are committed to paying forward our success to benefit children and families in need.

This spring, we invite you to join us in supporting the “Gear Up for Baby” program. Last year, Cradles to Crayons fulfilled 13,000 requests for the essential items youngsters need for healthy development. This year, Cradles to Crayons hopes to fulfill more than 14,500 requests.

Did you know?

It takes $10,000 to support a baby through his or her first year of life.

In Massachusetts alone, there are 80,000 children under the age of 3 living in poverty-stricken homes.

How can you help?

1) Donate money to Cradles to Crayons – a gift of just $25 will support Cradles to Crayons’ mission to help the youngest, most vulnerable among us to survive and thrive.

2) Donate new or gently used baby items – from car seats and strollers to bibs and board books, Cradles to Crayons seeks basic necessities both big and small.

Visit www.cradlestocrayons.org to learn more about ways to get involved.

Massachusetts Proposes Sales Tax on Computer Service

In the hubbub about the dueling budgets proposed by Massachusetts Governor Deval Patrick and the state legislature, one proposal that has gone relatively unnoticed has the potential to open a Pandora’s box of new taxes. Aligning with the Governor, the House and Senate are ready to impose a sales tax on a segment of the service industry. Their particular target for the sales tax is customized computer software.

While targeting customized computer software seems like a narrow focus, the definition of the category is very broad and includes such everyday services as website development. If passed, businesses would be required to pay an additional 6.25% for a new website, or for hosting services for a current website. This is a tax that will impact virtually every business in the state.

For the most part, the state taxing authorities have remained hands off when it comes to sales tax for services. The only service sector currently forced to collect sales tax is telecommunications, which is why your monthly phone and cellular bill includes all those fees and taxes tacked on at the end.

It is estimated that $161 million per year in new revenues would be generated by this sales tax. The money would be earmarked for funding of state transportation projects and the MBTA.

For additional information and updates on this and other state and federal tax issues, contact the Gray, Gray & Gray Tax Department at (718) 407-0300. Or visit http://www.gggcpas.com.

No Place to Hide? International Effort Underway to Catch Offshore Tax Evaders

Individuals, trusts and corporations sheltering funds in offshore accounts could feel the tax noose tighten in the coming months. Tax authorities from the United States, the United Kingdom and Australia have announced plans to share tax information on entities set up in such places as the Cayman Islands, Singapore, the British Virgin Islands and Cook Islands.

Officials at the Internal Revenue Service (IRS), the Australian Tax Office and Her Majesty’s Revenue & Customs will work together to examine and analyze data and information on the individual owners of the entities in question, as well as the identities of the advisors who assisted in establishing the entities. Their stated goal is to leave “no safe haven for people trying to illegally evade taxes.”

While offshore entities are not, in themselves, illegal, using them to avoid or evade tax liabilities is against the law and can result in penalties and fines. Advisors who promote such a scheme are also subject to civil penalties and possible criminal prosecution.

If you currently hold assets through an offshore entity that has so far escaped scrutiny by the IRS, you may soon be at risk of discovery by a foreign tax administration who will share what they know with their American colleagues. It is very important that you review your offshore holdings with your tax advisor to make sure all reporting requirements are being met and appropriate taxes paid. Otherwise you may be subject to fines, payment of past taxes, and possible criminal prosecution. The IRS Offshore Voluntary Disclosure Program remains in effect at this point, offering a “safe harbor” for those who have failed to report in the past.  Click here to learn more.

IRS Cracks Down on Tax ID Theft: Could You Be a Victim?

In recent years, the IRS has been inundated with thieves filing tax returns using fraudulent information with the goal of stealing other individuals’ tax refunds. The tax agency announced that it is cracking down this filing season. Here are the details of the tax identity theft crackdown, as well as a list of “high-risk” areas identified by the IRS and what you can do to help protect yourself.

Read the full article here.

Why You Should Audit Your Retirement Plan Before the Feds Do

Many companies are unaware that their retirement plans have problems until they are audited by the IRS or investigated by the Department of Labor. However, by self-auditing your plan, you can identify and correct any problems before the federal government initiates an investigation. Continue reading for six areas that can get your company in trouble.

Read the full article here.

HSAs: A Great Tax-Saving Opportunity

Health Savings Accounts (HSAs) started as a good idea that got better, thanks to changes in the law made a few years after these accounts were first created. The innovative plans allow individuals and businesses to pay for out-of-pocket health expenses at a lower cost in many cases. Take a look at how HSAs work and how the current rules might favorably affect your business.

Read the full article here.