New Jersey Employer Unemployment and Disability Tax Rates for the Fiscal Year 2018-2019

The New Jersey Department of Labor (“NJ DOL”) has begun mailing the New Jersey State Unemployment Insurance (“SUI”) and Disability Insurance (“TDI”) annual Rate Notices to all employers. Upon receipt, a copy of this Notice should be provided to your payroll service provider.

These Rate Notices cover the fiscal year July 1, 2018 through June 30, 2019. The assigned rates help determine the state payroll tax cost that each employer must pay, in addition to several Federal employer taxes.

Recognizing that the typical business owner and their accounting personnel have enough to do already, we can review the Rate Notice to ensure that it is correct. Our experience with these Notices has proven that some of these are routinely incorrect, and errors can result in a significant cost to the employer. For example, a simple name change, entity-type conversion (i.e. a change from a corporation to an LLC), internal reorganization or just an error in the calculation can cause the rate to be over-stated.

Additionally, the NJ DOL allows employers to make a Voluntary Contribution, which enables them to reduce their SUI rate. We have found that many times a modest payment can put an employer in a lower “rate bracket”. Another way of looking at it: The NJ DOL offers employers the opportunity to “buy down” the rate if it is economical to do so. However, this must be done within 30 days of the mailing date of the Rate Notice.

In summary, employers should consider an analysis of their Rate Notice to determine if any savings can be realized.

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As payroll taxes can be a significant cost for most employers, we feel that this is an important area that should be addressed, and we can help you by reviewing your rate assignment. Please contact us to discuss this, or any other issue.

Did You Know?

Clients can make a payment right on our website! We offer this service to make paying invoices easier for our clients. This can be done by clicking the “Make A Payment” tab on our website or by visiting the following web address: https://secure.cpacharge.com/pages/gcs-cpa/payments

Meet Our Team

Dino Rizzo, CPA, MST-Managing Director

Dino M. Rizzo, CPA, MST is a Managing Director at Gramkow Carnevale Seifert & Co., LLC and specializes in providing accounting, tax and management advisory services to a broad industry of clients in real estate, wholesale distribution, retail, professional services, manufacturing, construction and software development.  Dino focuses on providing service to closely held privately owned businesses.

Dino brings many years of diversified accounting and tax expertise to the firm including Big 4 and local firm experience.  He is the firm’s director of audit and accounting and Chairman of the firm’s Assurance Committee.

Dino is an active member of the American Institute of Certified Public Accountants and the New Jersey Society of Certified Public Accountants.  Dino is also a member of committees on Accounting and Auditing and Information Technology of CPA Associates International, a leading association of independent public accounting firms.

Dino has a BS degree in Business Administration from Montclair State University and a MS degree in Taxation from Seton Hall University.  Dino also is a peer review team captain and performs peer reviews for the AICPA.

 

Independent Contractor or Employee

Independent Contractor or Employee
One of the many consequences of the changes to our tax system in 2018 was the creation of incentives in areas that previously did not exist. Included in this discussion is the classification of an employee versus an independent contractor. The “Section 199A” deduction allows pass-through entities to exclude up to 20% of their earnings from taxation. An independent contractor has the ability to potentially take this deduction while almost all employees cannot.

Both Federal and state governments have recognized this as a significant audit issue in the past, and we expect this to be an even larger “hot topic” moving forward due to the Section 199A deduction. Employers are at risk for misclassification of employees through random audits, workplace injury when the worker does not have workers compensation coverage but believes they should have, or even layoffs if the worker tries to apply for unemployment coverage. In the latter two examples, the state may step in to investigate the situation.

The state of New Jersey has a straightforward assessment to determine whether the worker is an employee or independent contractor. If the following three questions can be answered “yes”, the worker is an independent contractor. If any question is not a “yes”, the worker should be classified as an employee.

1. Has the worker been and will continue to be free from any control or direction over the performance of services both under his/her contract and in fact?
2. Is the service outside the usual course of the business for which it is performed, or is it performed away from its business?
3. Is the worker customarily engaged in an independently established business that is of the same nature as that involved in the service?

These questions can also be used to assess worker classification for Federal or other states outside New Jersey. The penalties for violations in this area can be very severe and have a strong negative impact on your business or trade. If you have any questions on this classification, please reach out to our professional staff. Our experienced professionals can address this, or any other questions you may have.

Did You Know?
Any vacant job positions at GCS are posted on our website. Below you can find more information regarding these postings:  https://www.gcs-cpa.com/careers

Meet Our Team
Kenneth Benkovic, CPA is a Director at Gramkow, Carnevale, Seifert & Co., LLC and a trusted advisor to his clients. Ken joined GCS in 2003 and provides accounting and assurance services for clients in various industries, with specialization in family-owned and closely-held businesses, not-for-profits, and employee benefit plans. Ken’s professional experience has been exclusively in public accounting, with over 20 years of experience providing accounting, auditing, taxation, and management advisory services. Ken is a proactive, highly responsive relationship-driven professional dedicated to providing the highest level of client service.
Ken is a Certified Public Accountant licensed in New Jersey and New York. He advises the boards of directors, trustees and management of various privately held companies, not-for-profits, and employee benefits plans on various matters of regulatory compliance, financial and tax reporting, accounting systems, internal controls and operational effectiveness and efficiency. Ken is an expert and resource to his clients and the firm on matters of accounting, financial reporting and assurance.
Ken earned his Bachelor of Science – Accounting degree at Rutgers University in 1989. Ken has held positions in various professional societies and service organizations over the years and is active with the New Jersey Society of Certified Public Accountants accounting and auditing and not-for-profit interest groups. Ken is also an active member of CPA Associates International, a leading association of independent public accounting firms, and he has served on various CPAAI niche services committees. Ken is a member of the firm’s Assurance Committee, serving as coordinator. Ken is a founding member, officer and director of a local not-for-profit youth baseball organization and enjoys volunteering with local youth sports programs and community activities.

 

State and Local Tax Deductions

State and Local Tax Deductions

On Tuesday, June 11th, the Treasury Department issued final regulations on the “State and Local Tax Deductions” (SALT) mainly aimed at preventing residents from circumventing the cap on these deductions.

The tax law signed in December 2017 capped the SALT deduction at $10,000.  This controversial provision lead many politicians in high-tax states to construct “workarounds” from this deduction.  These workarounds included converting state and local tax payments to charitable contributions.  The intention was to enable the taxpayer to deduct these contributions as a charitable donation, which are not capped under the current law.

Under the final regulations, taxpayers are only able to receive a Federal deduction for charitable contributions that are greater than the amount of tax credits received.  For example, if a taxpayer donated $10,000 to a local fund and received an 80% credit of his or her taxes, they could only claim a charitable contribution of $2,000.

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These final regulations highlight the importance on tax planning throughout the year to ensure that you have paid an appropriate amount of taxes to avoid penalties and interest, and to make sure you have taken advantage of all tax savings opportunities available.

Please contact our professional staff at any time to discuss your specific situation and devise a plan that works for you.  Our experienced professionals and advisors are here to address any questions you may have.

Did You Know?

Our professionals at GCS work with a large number of different industries. Some of these industries include high net worth individuals and families, real estate, not-for-profit organizations, physicians and healthcare organizations, family owned and private business,etc. You can find an extensive list of the industries we work with on our website at: https://www.gcs-cpa.com/

Meet Our Team

Steven Panagi is a Director at Gramkow, Carnevale Seifert & Co., LLC and has been practicing as a CPA since November 1989 when he was licensed by the State University of New York. He is graduate of Dominican College at Blauvelt, New York with a B.S. in Accounting in 1987. He is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants. He has been with GCS since 2013. Before joining GCS, Steven has held various positions in public accounting. He was a Senior Manager with a 75 person CPA firm in NYC. Prior to that he was a partner at a 12 person CPA firm in Bergen County, NJ for about 10 years.

Steven’s clients include high net worth individuals, medical practices, real estate, manufacturing, and other service oriented businesses. He is a trusted advisor to numerous closely held and small to medium sized businesses. Steven provides a high level of knowledge across a broad spectrum of areas in general accounting and taxation, tax planning, tax matters resolution, financial planning, retirement and Social Security planning areas.

While not in the office Steve enjoys, salt water fishing and spending time with his wife and three children.

New Jersey Senior Freeze Program

New Jersey Senior Freeze Program

Twice as many people moved out of New Jersey in 2018 as moved into the state, with high property tax bills contributing to this exodus. New Jersey does offer some relief through a Senior Freeze Program, which is a reimbursement program available to state residents 65 and older or disabled individuals who meet eligibility requirements.

Generally, to qualify for the Senior Freeze Program, an applicant must meet several requirements including age, a specified New Jersey residency period, a specified time period for ownership and occupancy of your home, and gross income threshold limitations. Special relief rules apply to residents who moved to their current home between January 1, 2015 and December 31, 2016.

In order to determine if you meet the gross income threshold, all income that you received during the year, including income that you are not required to report on your New Jersey Income Tax return, must be taken into account to determine eligibility. Income limits for eligibility are subject to adjustment annually. However, there are certain sources of income that are excluded for purposes of determining gross income. Also, limited loss adjustments can be taken into account.

The Senior Freeze Program and The Homestead Rebate program are separate programs, and separate applications must be filed every year for each one. It is important to understand the filing requirements for the Senior Freeze Program, as applicants who are filing for a reimbursement the first time (or who filed an application the previous year that was denied because the applicant did not meet all the eligibility requirements) file a different form than those that previously filed.

Eligible applicants must file the 2018 Senior Freeze Application by October 31, 2019. Certain documentation of proof is required to be submitted with applications or the property tax reimbursement is denied.

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The completion of the 2018 Senior Freeze application can be complex and confusing regarding determining eligibility, the required proof documentation and the proper form to file. Our experienced professionals and advisors at Gramkow, Carnevale, Seifert, & Co., LLC can be a valuable asset to assist you in determining if you qualify for the 2018 Senior Freeze Program and how to properly comply by meeting the filing and documentation requirements.

Did You Know?

Gramkow, Carnevale, Seifert, & Co. has a LinkedIn account! Please feel free to follow us or check out our page at the following web address:

https://www.linkedin.com/company/gramkow-carnevale-seifert-&-co.-llc

Meet Our Team

Kristen Van Dyke is a Senior Associate at Gramkow, Carnevale, Seifert, & Co., LLC (GCS.) She joined the GCS team in 2015 and has about 10 years of experience in public accounting. Kristen specializes in tax and accounting for medical practices. She is a member of the Medical Group Management Association.

Kristen received her Bachelors degree in Accounting from Rutgers University in 2010. In her free time, she enjoys being active as the co-captain for her Hoboken Darts Players Association team. She also enjoys reading, writing, knitting, and trying new foods in NYC.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

Tax Changes Affecting Family Law

Tax Changes Affecting Family Law
The Tax Cuts & Jobs Act (TCJA), enacted December 22, 2017 provided for several changes in family law, and has had a significant impact on single parent families and divorcing couples. There are many financial-related items to consider throughout divorce proceedings, such as the impact of the new law on spousal and child support, identifying and dividing family assets, and the income tax implications on property transfers and the divided property.
Under TCJA, which are effective for divorce or settlement agreements entered into after December 31, 2018, a payor spouse would not receive a deduction for the alimony payments made. Although the recipient spouse would not report the alimony payments as income, the overall tax advantages to the divorcing couple would be reduced. As a result, divorcing couples need to understand how new TCJA rules apply and what options are available. For example, parties who fall under the pre-TCJA rules can retain the old rules or be bound by the new TCJA rules if they so choose.
Children will add another layer of complication to the divorce process. The custodial parent should understand the complex rules as they relate to the tax implications of lost dependency exemptions and how they interrelate to claiming child tax credits.
Property settlements should also be considered. Marital home becomes a prime issue in a divorce. Special rules apply to divorcing spouses who receive title to a home for purposes claiming the full exclusion of gain recognition upon the subsequent sale of the home.
The TCJA brought about several changes in itemized deductions. Where there are less deductions, and the available deductions become less valuable and less meaningful, parties will be less incentivized to agree to certain divisions and awards of property and debts in a divorce settlement.
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Our professionals here at GCS have several years of tax planning experience that can help mitigate the costs of a divorce We understand that each family situation is different and take an analytical approach to formulate and customize a solution that will help you achieve your family’s financial goals. Please contact us on this matter or any other questions you may have.

Did You Know?

GCS offers clients a secure file transfer portal. Clients can send and receive files through this portal electronically and securely.
If you are interested in having an account set up on the portal or would like more information, please contact us.

Meet Our Team
Richard Scott DePerto (Rich) is a Senior Associate at Gramkow, Carnevale, Seifert, & Co., LLC (GCS.) He joined the GCS team in 2006 and has had experience as a controller and commercial real estate property manager as well. Rich specializes in real estate and family-owned businesses.
Rich graduated from Bergen Community College in 1975 with his Associates degree in Business Administration and his Bachelors degree in Accounting in 1977 from William Paterson University. He enjoys spending time with his family, gardening, landscaping, and traveling in his free time.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

New Jersey Health Insurance Market Preservation Act

New Jersey Health Insurance Market Preservation Act

New Jersey recently enacted the New Jersey Health Insurance Market Preservation Act, effective January 1, 2019, which will require its residents to maintain health insurance throughout 2019 and beyond, or be subject to a penalty (annual shared responsibility payment) on their New Jersey Income Tax return (Form NJ-1040). Even though the Federal income tax penalty has been eliminated, New Jersey residents may still be subject to a shared responsibility payment imposed by the state.

Generally, failure to have health insurance coverage or qualify for an exemption will result in a shared responsibility payment when you file your 2019 New Jersey Income Tax return. If you are not required to file a 2019 New Jersey Income Tax return, you are exempt from this mandate. There are various exceptions where other exemptions are granted if you meet certain conditions, for example if your income is below a certain level or if you are experiencing a hardship.
The amount of the shared responsibility payment is based on your income and family size, but is capped based on certain criteria. Most basic health coverages satisfies this new requirement, but certain employer plans that provide only very limited benefits do not.
Our team of experienced professionals and advisors at Gramkow, Carnevale, Seifert, & Co., LLC can be a valuable asset by helping you understand how to comply with the newly enacted New Jersey Health Insurance Market Preservation Act.
For more details on what qualifies for the exemption from the shared responsibility payment, how to claim the exemption, how the penalty is calculated, and what type of health coverage plans qualify, please contact us on this or any other issue or question you have.

Did You Know?

You can pay your invoices by credit card online. This is one of many of our convenient services we provide for our clients.

Please visit our website at: https://www.gcs-cpa.com/ and click on “Make A Payment.”

Meet Our Team

Robert Griggs, CPA
Robert (Rob) Griggs, CPA is a Director at Gramkow, Carnevale, Seifert & Co., LLC. Rob provides accounting, tax planning and consulting and business advisory services with an emphasis in family-owned and closely-held businesses. Rob services clients in various industries including retail, manufacturing, restaurant and real estate. Rob also has many years of experience in the construction industry and is involved with servicing the firm’s construction clientele. Rob’s professional experience has been exclusively in public accounting with over 20 years of experience.
Rob is a Certified Public Accountant licensed in New Jersey and New York. Rob earned his Bachelor of Business Administration – Accounting degree at Pace University in 1984. Rob is an active member of CPA Associates International, Construction Financial Management Association, New York State Society of Certified Public Accountants and the American Institute of Certified Public Accountants. Rob has served on various CPAAI niche services committees and is a member of the firm’s Assurance Committee.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

New IRS Audit Rules – Partnerships

New IRS Audit Rules – Partnerships

New partnership IRS audit rules, effective for audits of partnership tax years beginning on or after January 1, 2018, are a substantial departure from the prior partnership audit rules. The changes are expected to dramatically increase the audit rates for partnerships and will require partners to carefully review, if not revise, their partnership’s operating agreement.

The new rules generally apply to partnership returns filed after 2018, but careful planning today will help mitigate any unfavorable consequence. The IRS may collect any additional tax, interest, and penalty directly from the partnership rather than from the partners (the tax could be collected at the highest individual tax rate).

Particularly, the new term “partnership representative” replaces the prior “tax matters partner.” The partnership representative is critical. They will act at the single point of contact between the IRS and the partnership, and will have full authority to bind the partnership and the partners during an audit. A partnership representative can be chosen by the partnership or assigned by the IRS. As a result, it is important to understand how and when a partnership representative is designated.

A partnership with 100 or fewer partners may elect out of the new partnership audit rules and be subject to the old audit rules. Many factors need to be considered to make this election, including an understanding of the old audit rules as compared to the new audit rules and the corresponding impact on incoming and outgoing partners for the audit years in question. Certain specified procedures are required to elect out of the new partnership. The opt-out election must be made in a certain manner and at a specific time frame to make the election valid.

Our tax professionals here at GCS have the knowledge and detailed understanding of both the new and old partnership audit rules. We can serve to guide you in making the right decision in how your partnership will be audited. Please don’t hesitate to contact us with questions or concerns or if you would like to meet with us to discuss this issue or any of your other financial or tax needs.

Meet Our Team
Yaroslav Tashak

Yaroslav Tashak is an Associate at Gramkow, Carnevale, Seifert, & Co., LLC (GCS.) He joined the GCS team in 2017 and previously has experience as an accounting assistant in the manufacturing industry. Yaroslav specializes in assurance/accounting services in the healthcare industry and tax services.

Yaroslav graduated from Montclair State University with Bachelors degree in Accounting and is currently pursuing a Masters degree in Accounting as well. He is a part of NJCPA, AICPA, and NACVA. Yaroslav was born in Ukraine. He volunteers with United Way as a part of their Volunteer Income Tax Assistant program (VITA). In his free time, he enjoys traveling, working out, spending time with friends and family, movies and listening to music.

Benefits of IRA Qualified Charitable Distributions

Benefits of IRA Qualified Charitable Distributions

With the passage of the Tax Cuts & Jobs Act (TCJA), many taxpayers will no longer itemize their deductions, and as such, will not be able to take advantage of tax savings through charitable contributions. The qualified charitable distribution (QCD) is an attractive tax planning tool for senior taxpayers looking to meet their individual retirement account (IRA) required minimum distributions while making a tax deductible charitable contribution.

QCDs can benefit those taking the standard deduction if they choose to make their charitable contributions directly through an IRA distribution. Thus QCDs may lead to significant tax savings.

Recognizing that taxpayers may want to explore the option of using QCDs, there are numerous requirements, such as limitations on the QCD amount that may be excluded from gross income in a tax year, the types of IRAs that distributions can be made from, the manner in which the distribution should be made, and the required timing of the distribution.

Other noteworthy considerations include carryover provisions for unused portion of the QCD allowed for a taxpayer for a tax year, whether contemplated Roth conversions still make sense to them in the long run, and the state income tax implications of a QCD.

This tax planning tool may have additional impacts on your tax filings, such as lessening the effect of phase outs and limitations on other benefits. Our experienced professionals and advisors at Gramkow Carnevale Seifert & Co., LLC can be a valuable asset to determine how QCDs may impact your individual tax planning.

Did You Know?

Most of our full-time tax and accounting staff are highly involved members in many accounting associations such as American Institute of Certified Public Accountants (AICPA) and New Jersey Society of Certified Public Accountants (NJSCPA.)

New Jersey Tax Amnesty Update

As a follow up to our August 2018 e-mail blast, we want to provide an important update on the status of the New Jersey Amnesty program.

The New Jersey Division of Taxation recently announced the period of the tax amnesty program will be 60 days, beginning on November 15, 2018 and ending on January 15, 2019. Accordingly, please be watchful for any notices you receive from The Division of Taxation and forward to us so we can review to determine liability exposure and what the best course of action is to respond.

Should you have any questions or wish to speak to a team member, please don’t hesitate to call us at 201-599-0008.

New Jersey Sales Tax Audits

New Jersey Sales Tax Audits

Due to the recent Supreme Court ruling the case of Wayfair vs South Dakota, we foresee a large rise in the number of sales tax audits.
In short, the Supreme Court ruling on the case Wayfair vs South Dakota overturned a case from 1992. This new ruling states that any sales created over the internet will be subject to sales tax in each state where the product is sold, even if you or your company does not have a physical presence in that state.

For example, if your company is physically placed in New Jersey, and you sell to a client who is in Pennsylvania, your company is now required to collect sales tax, for each product sold, for the state of Pennsylvania.

While this example pertains to New Jersey, this is applicable to all states that impose state & local sales tax. The exception states that do not impose a sales tax are Alaska, Delaware, Montana, New Hampshire and Oregon. If you sell to any state or locality imposing sales tax, you will be required to charge, collect, remit, report and file sales tax returns.

Receiving an audit notice can raise a lot of questions and uncertainty, but we here at GCS have the knowledge, resources, and experience, in various states, to help assist and guide all of our clients throughout the sales tax audit process to minimize sales tax liabilities and exposure.
Please don’t hesitate to contact us with questions or concerns or if you would like to meet with us to discuss this issue or any of your other financial or tax needs.

Did You Know?

Gramkow, Carnevale, Seifert, & Co., LLC provides tax and accounting services to clients from all over the country and the world.