Ahh, taxes. As soon as you’ve gotten your head around every last regulation, obscure requirement and special exception for your unique industry, the IRS implements a grand new set of new rules and regulations demanding your compliance that you’ll be required to stay on top of from year to year. That time has come, as the IRS has released several new regulations and standards that each and every business will be expected to follow closely heading into the new year. We’ve provided this helpful guide to give a brief introduction to some of the most significant new regulations that could affect your business. Additionally, we’ll learn about how implementing powerful document management software for your accounting firm or other business that deals with taxes will dramatically increase your organization, competitiveness and preparation throughout your industry.
New Tax Regulations
First let’s run down some of the new regulations that you need to know.
Increase in Employer Plan Contribution Limits
Taxpayers can now contribute up to $18,000 to 401(k) plans, and an increase to $6,000 in catch-up contribution limits will add up to a total limit of $24,000 for 50+ aged employees.
Higher Income Requirements for IRA and Roth IRA Contributions
IRA contribution income limits have been raised across the board for both individuals and spouses. Take a look at IRS guidelines to determine how these new limits will affect you or your clients. Income limits for Roth IRAs have increased by $2,000 across the board as well.
IRA Rollover Limits
Investors are now limited to a single rollover from one IRA to the other in the period of one year. Any rollovers after the first within a 12-month period will result in income taxes being required from the rollover, as well as a withdrawal penalty and excess contributions tax. That being said, there are no limits when it comes to trustee-to-trustee transferring between IRAs.
Health Expense Account Regulations
The IRS has implemented new regulations that restrict your ability to rollover Flexible Spending Account funds from one year into the next. Additionally, the annual limit on employee contributions to employer-sponsored healthcare FSAs has risen to $2,550.
With the rise of virtual currency like the super-popular Bitcoin, the IRS has now made all virtual currencies a legitimate, taxable income. Any virtual currencies acquired by taxpayers must be included in annual income reports at their current fair market value. Whether you made investments in these various currencies or received them as payment for work or services will affect tax calculations.
According to the IRS and a recent Supreme Court Decision, both state unemployment benefits received from the government and compensation/severance received from a former employer are considered taxable income. For employer compensation unemployment benefits, social security taxes must be withheld.
The IRS has recently broadened the definition of “foster care” when it comes to tax deductions. Providing basic medical support or life caregiving for someone living in your home who has some degree of diagnosable mental, physical or emotional disorder or ailment and receiving payments from the government or Medicaid provider can make you exempt from including those payments as taxable income.
Adjustments for Inflation
As usual, the IRS has made minor adjustments to certain tax brackets based on the inflation of the US dollar. You should familiarize yourself with these changes to know where you or your clients fall.
Document Management to the Rescue
While staying on top of every new tax regulation and requirement can be daunting, the task can be made less imposing by using a powerful, digital document management system. This advanced software allows you to digitize all paper files, catalog them with searchable text, and organize them based on what works most for you and your clients all while ensuring that each and every file is perfectly secure and totally safe from failures with multiple backups.
Document management systems can dramatically reduce the amount of time you and your employees spend rooting through filing cabinets, searching for long-lost documents and putting clients on hold while you desperately search for their relevant information. With an effective DMS, a few keyboard clicks can bring up every relevant document that you and your client may need, keeping your clients happy and keeping your firm competitive in a crowded accounting industry.
Don’t just stay afloat this tax season— get out ahead of the competition by adapting effectively to the changing tax industry. Going paperless will not only drastically save you time and money, but will also earn you more business as your potential clients see an advanced, state-of-the-art firm who’s willing to go the extra mile to ensure compliance.
Fill out the short form included on this page to receive a free demo of eFileCabinet’s robust document management software and find out how eFileCabinet can transform your business for the better.