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Year end hightlights that might be of interest to you
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Below are a few tax planing items that may be of interest to you before year end.....
 
Congress Year-End Sessions 2015 – As of the writing of this newsletter, the tax extenders have been tied up with the potential passing of a spending bill to keep the government open past December 16, 2015.  These tax extenders include many popular business and individual income tax deductions and credits that are critical to tax planning.  Members of Congress’ tax writing committees remain in discussions about a potential deal that would make some tax provisions permanent and provide multi-year extensions for others, but with many moving parts in play, negotiations remain “shaky.”  We will keep you up to date as things progress.
 
2016 Pension Plan Limitations – The Pension Plan limitations for 2016 are as follows: 401(k) employee deferral contribution maximum has remained at $18,000 with a maximum catch-up contribution for employees 50 years of age or older of $6,000; SIMPLE plan employee contribution maximum has remained at $12,500 with a catch-up contribution for employees age 50 or older of $3,000; and maximum total profit sharing plan contribution (including 401k deferrals) remains at $53,000.
 
2016 Social Security Wage Base – The Social Security (FICA) wage base will remain at $118,500.  The 0.9% Medicare surtax continues to be charged by the employer on any employee’s wages exceeding $200,000. 
 
Safe Harbor for Expensing Raised to $2,500 – The IRS has announced new safe harbor limits for the purchase of personal property which have been raised from $500 to $2,500 beginning with purchases starting on January 1, 2016.  Businesses may want to update their written equipment expensing policies to reflect the new safe harbor amounts. 
 
Social Security Closes Unintended Loopholes – the “file and suspend” and “restricted application” methods of applying for Social Security benefits have been eliminated.  These popular methods are used by married couples to maximize their lifetime benefits due to unintended loopholes in the law.   Any claims filed after 4/20/16 will not be eligible for these methods.
 
Required Minimum Distribution (RMD) Reminder - Taxpayers born before 7/1/1945 generally must receive payments from their IRAs (including traditional, SEP and SIMPLE IRAs, but not Roth IRAs) and workplace retirement plans [including Section 401(k), 403(b), and 457(b) plans] by 12/31/15.
 
City of Phoenix Sales and Use Tax Rate change – Based on the passing of Proposition 104, the sales and use tax rate for the City of Phoenix will increase to 8.6% from the current 8.3% rate for sales on or after January 1, 2016.
 
IRS Phone and Phishing Scams – The IRS continues to be advised of various types of scams.  Please remember the IRS first contacts people by mail, not by phone about unpaid taxes.   Many scammers use fake IRS badge numbers; fake caller IDs to appear as if the IRS is calling; send bogus emails where email addresses appear as if from the IRS; or may call a second time claiming to be the police or DMV to support the original caller’s claim.  The IRS would never ask for payment using a pre-paid debit card, wire transfer or ask for a credit card number over the phone.  If you feel that you may have been targeted, please alert the IRS by reporting the scam at their website.
 
State of Arizona Individual Charitable Contribution Credits – Last week we sent out an email about the various Arizona Tax Credits that are available for 2015.  Please don’t hesitate to contact us with any questions about the credits or if making an Arizona Tax Credit contribution is right for you.
 
We hope that you find this information helpful and urge you to contact us if you have any questions.  As always, we appreciate your business and welcome any questions or concerns you may have.


Thank you,

Tony Pescatore and Rachel Cooper
Pescatore-Cooper, PLC

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