CPA-411

News

Individual

Tax Law Changes:
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Beware of Tax Table Changes:
In recent months, the Federal Government has changed the withholding tables. Changing the tables allows for taxpayers to receive an immediate benefit of the rate change by reducing their withholding thus resulting in a larger net payroll check. This does not benefit all taxpayers. As a matter of fact, reducing the withholdings of some taxpayers may place them in an underpayment penalty situation or may require them to pay the IRS more on April 15th than in the past. Please plan to discuss your specific situation with your tax advisor.

Working in NJ Home for NY Employer:
In today's telecommuting arena, it helps to know where your earnings are taxable. The State of New York will impose New York income tax on earnings derived by a New Jersey resident with respect to work performed at home for a New York employer. It will remain transparent to the state government taxing authorities as to whether the employee actually commuted into New York to perform their duties or whether they remained at home in their pajamas. The fact remains to the states, the employee works for the out-of-state company and is, therefore, subject to income tax of that state as a nonresident. Most resident states (including NJ) have some credit for taxes paid to other jurisdictions allowed as an offset against the resident state's income tax.

Business

Tax Law Changes:
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Loan Origination Costs Deductibles:
The Internal Revenue Service recently lost a high stakes courtroom battle. A Federal appeals court ruled that certain bank costs of marketing, researching and originating loans are deductible as ordinary business expenses in the year they are incurred. This decision reversed a Tax Court ruling stating that those costs had to be "capitalized" and spread out over the life of the loans.

Employer-Provided Computers as Taxable Income:
According to the Financial Executives Institute, many employers are considering providing computers, peripheral devices and Internet access as a fringe benefit for their employees. Such benefits, however, are likely to be interpreted as taxable income for the employees under current Federal tax law. Many believe this treatment to be out of touch with the changing economy.