Inherited IRA

If you inherit an IRA from your spouse, you can roll the account into your account and treat it as your own.

If you inherit an IRA from someone other than your spouse:

Have the IRA custodian retitle the account as an “Inherited IRA” (including decedent’s name and date of death and your name as beneficiary).

Begin required minimum distributions (based on your life expectancy) in the year following death.  Distributions are taxable if traditional IRA, tax free if a Roth IRA.

A charity also named as a beneficiary must take distribution by 9/30 of year following death.

Non-person beneficiaries may require 5 year payout if decedent under age 70.5

The SECURE Act languishing in Congress may change law to 10 year payout.

Change to Overtime Pay Rules

Changes to overtime rules may affect overtime pay due to your employees.  As of December 1, 2016, changes to the Fair Labor Standards Act (FLSA) expands thegroup of employees considered eligible for overtime pay to those employees earning less than $47,476 per year.  Previously the threshold was annual wages of $23,660.  The rate of overtime pay remains one and one half of the employee's regular hourly rate for every hour over 40 hours per week worked.

New Procedure to Avoid Early Distribution Tax on Late IRA Rollover

The IRS has issued guidance in Revenue Procedure 2016-47, which provides that eligible taxpayers with mitigating circumstances can qualify for a waiver of the 60-day time limit on IRA rollovers to avoid early distribution taxes. A sample self-certification letter is provided to notify the administrator or trustee of the retirement plan or IRA receiving the rollover that they qualify for the waiver.

Previously, taxpayers who fail to meet the time limit could only obtain a waiver by requesting a private letter ruling from the IRS.  Now a taxpayer missing the rollover deadline may qualify for a waiver if one of the listed circumstances apply, such as a distribution check that was misplaced and never cashed, the taxpayer’s home was severely damaged, a family member died, the taxpayer or a family member was seriously ill, the taxpayer was incarcerated or restrictions were imposed by a foreign country.

IRS Warns of New Wave of Attacks on Tax Preparers

The IRS has warned tax professionals of a new wave of attacks that allow identity thieves to file fraudulent tax returns by remotely taking over practitioners’ computers.

Tax professionals are urged to review their tax preparation software settings and immediately enact all security measures, especially those settings that require usernames and passwords to access the products.  The IRS is aware of approximately two dozen cases where tax professionals have been victimized in recent days.

"This latest incident reinforces the need for all tax professionals to review their computer settings as soon as possible," said IRS Commissioner John Koskinen‎. "Identity thieves continue to evolve and look for new areas to exploit‎, especially as our fraud filters become more effective."

Thieves are able to access tax professionals’ computers and use remote technology to take control, accessing client data and completing and e-filing tax returns but directing refunds to criminals’ own accounts.

IRS Warns of Back to School Scams

The Internal Revenue Service has issued a warning about telephone scammers targeting students and parents during the back-to-school season and demanding payments for non-existent taxes, such as the “Federal Student Tax.”

Be on the lookout for IRS impersonators calling students and demanding that they wire money immediately to pay a fake “federal student tax” and threatening arrest.

“Although variations of the IRS impersonation scam continue year-round, they tend to peak when scammers find prime opportunities to strike”, said IRS Commissioner John Koskinen. “As students and parents enter the new school year, they should remain alert to bogus calls, including those demanding fake tax payments from students.”