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2019 Income Tax Changes

TThe Tax Cuts and Jobs Act (TCJA) has not changed from 2018. MN did adopt the federal TCJA with exceptions. Most differences have to do with business depreciation. Dependent children in MN will mean an extra deduction. Follow the link below to see all changes.
→2019 Income Tax Changes

Earned Income Credit (EIC) & Head of Household

Attention Parents. To be eligible to receive the EIC credit or HOH status you must be able to prove that your children lived with you during the tax year. In the past the IRS has asked you to be able to provide them with certain records to prove your qualifying child lived with you. Now we are required to document in our records these same things or we could be liable for a preparer penalty of $530 for failure to comply. The IRS is trying to stop people who are not eligible to claim children.
→Earned Income Credit (EIC) & Head of Household Requirements

2018 New Tax Law

The new tax law, commonly called the “Tax Cuts and Jobs Act,” is the biggest federal tax law change in over 30 years. Below are some significant changes affecting individuals and businesses. Note: Except where noted, the changes are effective for tax years beginning after December 31, 2017.
→ Read more about the New Tax Law in 2018

Sales Tax Alert

In 2018 the US Supreme Court in South Dakota v. Wayfair overturned the established physical presence rules for businesses to determine if they needed to register, collect and pay sales tax in an individual state. If your business has a website and engages in internet based out-of-state sales, you could be exposed to new laws passed by over 35 states requiring you to register, collect, and pay sales tax in that state.

If you think these rules do not apply to you, You Are Wrong! Most states have passed laws stating that if you sell more than $100,000 of products or services OR more than 200 transactions of any dollar amount, you are subject to their rules. Failure to follow their rules could essentially bankrupt your company in a few years with penalties. The AICPA has an example of a company with a $9,000 annual sales tax liability unpaid for seven years. With penalties after 7 years the company would owe the state $2.6 million in back taxes and penalties.

We do not monitor sales volumes or the number of transactions by state and do not register or file sales tax returns for you when we prepare your income tax returns. It is imperative if you have a website selling products or services, or you offer sales across state lines, that you familiarize yourself with these rules and protect your company. We can make suggestions for software solutions if you wish, but again, you need to action on this issue because it is not part of your income tax preparation.

We strongly recommend you watch this explanatory video about what this sales tax issue may mean to your business.