RUTHERFORD & JOHNSON, P.C.

Certified Public Accountants & Business Advisors

 

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NEW:  "Tax Cuts and Jobs Act of 2017" Summary by the AICPA

                  -For Businesses

                  -For Individuals

Virginia Sales Tax Legislation Changes effective July 1, 2017
Tips for Accumulating Tax Data
Health Care Reform Act
Standard Deduction & Personal Exemption Increase
Gift Tax Exclusion
Social Security Limits  
Financial Planning Process
Record Retention Schedule
Current Mileage Rates  
Minimum Wage Rate  
Retirement Plans
Health Savings Accounts
1099 Compliance Requirements

Standard Deduction and Phase-Out Levels

 Standard Deduction

The basic standard deductions are:

2018

2017

Married, filing joint return

$13,000

$12,700

Surviving spouse

$13,000

$12,700

Head of Household

$9,550

$9,350

Unmarried (not surviving spouse or head of household)

$6,500

$6,350

Married, filing separate return

$6,500

$6,350

"Kiddie" standard deduction alternative amount

$1,050

$1,050

The additional standard deduction amount for the aged and blind (if the individual is also unmarried and not a surviving spouse, $1,600 in 2018 and $1,550 in 2017). $1,300 $1,250

Personal Exemption Amounts

2018 2017
Personal exemption amounts $4,150 $4,050

 

Gift Tax Exclusion

The annual gift tax exemption increases to $15,000 in 2018 from $14,000 in 2017.

 

Social Security Limits

The social security tax rate has remains at 6.2% for both employee and employer.

The Medicare tax rate remains at 1.45% for both employee and employer.

 
2018 2017
Social Security Wage Base

$128,400

$127,200

Medicare

No Limit

No Limit

 

The Maximum Amount of Earnings and Still Receive Full Benefits

   2018

          2017

Under Full Retirement Age

 $17,040

        $16,920

Over Full Retirement Age

 No Limit

        No Limit
Full retirement age (also called "normal retirement age") has been 65 for many years. However, beginning with people born in 1938 or later, that age will gradually increase until it reaches 67 for people born after 1959. 

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Record Retention Schedule

Retain Indefinitely

Audit reports

Capital stock and bond records, ledgers, transfer registers, stubs showing issues, record of interest coupons, options, etc.

Cash books

Charts of accounts

Checks (canceled for important payments, i.e. taxes, purchases of property, special contracts, etc.) (filed with transaction papers)

Contracts and leases in force

Copyrights, patents, trademark registrations

Corporation charter, minute books and bylaws

Correspondence (legal and important matters only)

Deeds, mortgages, easements and other property records

Depreciation schedules

Financial statements (end-of-year, other months optional)

General ledgers and journals

Insurance records, current accident reports, claims, policies, etc.

Property appraisals

Property records - including costs, depreciation reserves, end-of-year trial balances, blueprints and plans

Tax returns and work papers, including records to support carrybacks and carryovers

Retain 7-8 years

Accident reports and claims (settled cases)

Accounts payable ledgers and schedules

Accounts receivable ledgers and schedules

Bank statements

Canceled checks (except checks kept permanently)

Contracts and leases (expired)

Expense analysis and expense distribution schedules

Inventories of products, materials and supplies

Invoices to customers

Invoices from vendors

Maintenance and repair records (buildings and machinery)

Notes receivable ledgers and schedules

Option records (expired)

Payroll records and summaries, including payments to pensioners and timesheets

Plant cost ledgers

Purchase orders (purchasing department copy)

Sales records

Scrap and salvage records (inventories, sales, etc.)

Subsidiary records

Time books

Voucher register and schedules

Vouchers for payments to vendors, employees, etc. (includes allowances and reimbursement of employees, officers, etc. for travel and entertainment)

Retain 6 years

Commission reports

Employee disability benefits records

Employee withholding tax statements

Equipment leases (after expiration)

Fire damage reports

Monthly trial balances

Retain 2 years and less

Purchase orders (except purchasing department copy)

Receiving sheets

Requisitions

Stenographer's notebooks

Stockroom withdrawal forms

* The above listing is only a guide and is not all inclusive. If you have any questions or need additional information, please contact us at (540) 662-7070.

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Current Mileage Rates

The standard mileage rate for business mileage (in lieu of using actual expenses), as well as the standard rates for use of your car for medical and moving or charitable purposes are as follows: 

 

2018

2017

Business 54.5 cents/mile 53.5 cents/mile
Medical & Moving 18 cents/mile 17 cents/mile
Charitable 14 cents/mile 14 cents/mile

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Current Minimum Wage Rate

The current federal minimum wage for covered nonexempt employees is $7.25 per hour effective July 24, 2009.
 

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Retirement Plans

Below are the annual contribution limits on elective deferrals for retirement plans.

Indexed Contribution & Benefit Limits for Qualified Plans
Type of Plan 2018 2017
Individual Retirement Accounts (IRAs)* $5,500 $5,500
Section 401(k) plans or SAR-SEPs* $18,500 $18,000
Section 403(b) plans* $18,500 $18,000
Section 408(p)(2)(E) SIMPLE Contributions* $12,500 $12,500
Section 457(b)(2) limit* $18,500 $18,000
Section 415 limit for:
      Defined contribution plans^ $55,000 $54,000
      Defined benefit plans $220,000 $215,000
Highly compensated employees Section 414(q) $120,000 $120,000
Top Heavy Key Employee Officer compensation limit $175,000 $175,000
Governmental "Grandfathered" plan compensation limit $405,000 $400,000
      *Age 50 Additional contributions
      401(k) type plans $6,000 $6,000
      SIMPLEs $3,000 $3,000
      IRAs $1,000 $1,000
      ^The Section 415 compensation limit for defined contribution plans is $275,000 for 2018 and $265,000 for 2017.

Roth IRAs --- 2017 & 2018

- Nondeductible Contributions
- Qualified tax-free distributions
- AGI limit for maximum contributions: 2018 2017
  Joint filers $189,000 $186,000
  Individual filers $120,000 $118,000

 

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Health Savings Accounts

Contribution Limits 2018 2017
Individual, self-only $3,450 $3,400
Family Coverage $6,900 $6,750
Catch-up for those age 55 and older $1,000 $1,000

For 2017 and 2018, the minimum deductible for a high-deductible health plan (HDHP) is $1,350 in 2018 and $1,300 in 2017 for self-only coverage and $2,700 in 2018 and $2,600 in 2017 for family coverage.  The maximum out-of-pocket limit is $6,650 in 2018 and $6,550 in 2017 for self-only coverage and $13,300 in 2018 and $13,100 in 2017 for family plans.

 

Health Care Reform Act

Mandatory Employer Notification of the Health Insurance Marketplace

All employers subject to the Fair Labor Standards Act with at least one employee, must provide a health insurance marketplace/exchange notification to each employee, regardless of part-time or full-time status.  This includes employers who currently offer health insurance benefits, as well as those who do not.  This notification is required to be issued no later than October 1, 2013 for current employees and must be provided to new hires within 14 days of an employee's start date.

The Department of Labor has developed two model exchange notices to satisfy the notification requirements.  The first model exchange notice is for employers who offer a health plan.  The second model exchange notice is for employers who do not offer a health plan.  For your convenience we have also provided an optional cover letter to assist in explaining the notice to your employees.

The notification may be distributed in person, via First Class mail, or electronically in compliance with the Department of Labor's electronic disclosure safe harbor requirements.  Please contact our office if you have any questions.