Your Friends that Count

In March 2023, Governor JB Pritzker signed SB208 into law, otherwise known as the Paid Leave for All Workers Act (PLFAW). This significant legislation made Illinois the 3^rd state in the country to mandate paid time off that can be used for any reason. Under the law, employees are provided with up to 40 hours of paid leave during a 12-month period.

The new law applies to every employee working for an employer in Illinois, including domestic workers. There is no distinction between full or part-time workers, including seasonal employees. However, employees who work fewer hours may accrue less leave time compared to full-time workers. Independent contractors are excluded, as are certain railroad employees and employees covered by a collective bargaining agreement in the construction and parcel delivery industries. School Districts organized under the School Code and Park Districts organized under the Park District Act are also exempt. State and local governments, any political subdivision of the State or local government, or any State or local government agency are included in the definition of "employer.” This also includes the judicial and legislative branches of government.

Paid leave will accrue at the rate of 1 hour for every 40 hours worked. Part-time employees may accrue leave at a pro rata number of hours. While on leave, the employee will be paid their full wage. Tipped workers will be paid the full minimum wage in their respective jurisdiction. An employee cannot be required to find a replacement while on leave. Employees can determine how much paid leave they need to use. Employers may set a reasonable minimum increment for the use of paid leave not to exceed 2 hours per day.

This law is effective January 1, 2024. Paid leave begins to accrue at the beginning of employment or on the effective date of the legislation. Employees are entitled to begin using paid leave 90 days after beginning employment or 90 days after the effective date of the legislation, whichever is later.

Information sourced by https://www.illinois.gov/news/press-release.26164.html. Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

Many Americans have applied for and received federal fiscal recovery aid from the State & Local Fiscal Recovery Fund (SLFRF) through the American Rescue Plan (ARPA).  To better serve our clients, the John Kasperek Co., Inc. (JKC) team has created a checklist in response to our frequently asked questions and to provide helpful reminders to assist individuals with successfully navigating ARPA.

ELIGIBLE USE OF SLFRF FUNDS:

• COVID-19 mitigation and prevention programs.
• Replacing public sector revenue loss.
• Environmental remediation.
• Rehire government staff.
• Police, Fire, and other public safety staff and services.
• School and educational services, as well as assistance to high-poverty school districts to advance equitable funding.
• Home visiting programs for families with young children.
• Housing services.
• Modernization of cybersecurity, including hardware, software, and protection of critical infrastructure.
• Full payroll and covered benefits costs for employees, operating benefits, or divisions primarily dedicated to the COVID-19 response.
• Administrative costs for reporting on the ARPA funding, including consulting costs for effective management and oversight to ensure compliance with legal, regulatory, and other federal and state requirements.

INELIGIBLE USE OF SLFRF FUNDS:

• Deposits to “rainy day funds” or financial reserves.
• Deposits into defined benefit pension funds- However, funds may be used for routine payroll contributions to pensions of employees whose wages are an eligible use.
• Debt Service- Funds cannot be used to pay debt service for any obligation incurred prior to March 3, 2021.
• Legal settlements or judgements.
• Obligations, interest, or principal related to debt or borrowed money.
• General infrastructure spending is not covered as an eligible use of funds outside of water sewer and broadband investments or above the amount allocated under the revenue loss provision.
• Non-Federal match for federal programs - cannot use for programs whose statute or regulation bar the use of Federal funds to meet the matching requirement (in-kind match).

The information provided is only intended as a helpful reference guide of some possible uses and is not a complete list. We recommend you reference your legal department and administration in order to determine the best plan to utilize funding for your unique organization.

IMPORTANT DEADLINES:

October 31, 2021:      1^st Project & Expenditure Report
October 31, 2022:      2^nd Project & Expenditure Report
October 31, 2023:      3rd Project & Expenditure Report
October 31, 2024:      4^th Project & Expenditure Report
December 31, 2024:   Incur or Obligate Funds
October 31, 2025:      5^th Project & Expenditure Report
October 31, 2026:      6^th Project & Expenditure Report
December 31, 2026:   Expend Funds/End of Performance Period
October 31, 2027:      7^th Project & Expenditure Report

If you have not yet applied and are interested, or if you have specific projects that you would like to have funded, please contact JKC’s Grants Research Specialist Elizabeth Scott for a free consultation at This email address is being protected from spambots. You need JavaScript enabled to view it.  

The Internal Revenue Service (IRS) has released its annual “Dirty Dozen” fraud warnings for all taxpayers to be on guard. The newest cautions for 2021 are highlighted within four separate categories: pandemic-related scams like Economic Impact Payment theft; personal information cons including phishing, ransomware and phone ‘vishing’; ruses focusing on unsuspecting victims like fake charities and senior/immigrant fraud; and schemes that persuade taxpayers into unscrupulous actions. The agency compiled the list into these categories based on who perpetuates the schemes and who they impact.

John Kasperek Co., Inc. encourages all clients to review the special section on IRS.gov to be alert for to these scams throughout the year in order to protect yourselves, your families and your businesses. Three key highlights include:

Economic Impact Payment Theft

Be aware of the continuing threat from identity thieves who try to steal stimulus payments (titled Economic Impact Payments or EIPs). Most eligible people will get their payments automatically from the IRS.

• Any text messages, random incoming phone calls or emails inquiring about bank account information or requesting recipients to click a link or verify data should be considered suspicious and deleted without opening.
• Be alert to mailbox theft. Frequently check mail and report suspected mail losses to Postal Inspectors.
• The IRS won’t initiate contact by phone, email, text or social media asking for Social Security numbers or other personal or financial information related to Economic Impact Payments.

Unemployment Fraud

Because of the COVID-19 pandemic, many taxpayers lost their jobs and received unemployment compensation from their state. However, scammers also took advantage of the pandemic by filing fraudulent claims for unemployment compensation using stolen personal information of individuals who had not filed claims. Payments made on these fraudulent claims went to the identity thieves. The IRS reminds taxpayers to be on the lookout for receiving a Form 1099-G reporting unemployment compensation that they didn’t receive. For people in this situation, the IRS urges them to contact their appropriate state agency for a corrected form. If a corrected form cannot be obtained so that a taxpayer can file a timely tax return, taxpayers should complete their return claiming only the unemployment compensation and other income they actually received. See Identity Theft and Unemployment Benefits for tax details and DOL.gov/fraud for state-by-state reporting information.

Identity Protection PINs

To help protect against identity theft, the IRS this year made its Identity Protection PIN (IP PIN) program available to all taxpayers. Previously it was available only to victims of ID theft or taxpayers in certain states. The IP PIN is a six-digit code known only to the taxpayer and to the IRS. It helps prevent identity thieves from filing fraudulent tax returns using a taxpayer’s personally identifiable information. Using an IP PIN is, in essence, a way to lock a tax account. The IP PIN serves as the key to opening that account. Electronic returns that do not contain the correct IP PIN will be rejected and paper returns will go through additional scrutiny for fraud.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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As you prepare for year-end and consider your 2020 tax planning, be aware of several pandemic-related changes to the tax code. Impacted areas include but are not limited to charitable donations and retirement plan distributions. You may need to consult a tax professional to ensure the law is most appropriately and beneficially applied to your specific situation.

New Charitable Donation Benefits

Among the provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act is a new universal deduction for charitable contributions. Taxpayers who don’t itemize may now deduct up to $300 per year in charitable contributions. Congress has granted this universal nonitemized “above the line” charitable deduction so that all taxpayers can deduct at least some of their donations. The CARES Act also raised the percentage limit on charitable contributions from 60% of modified adjusted gross income (MAGI) to 100% when itemizing. Taxpayers should itemize only if all their personal deductions, including charitable contributions, exceed the standard deduction. The Tax Cuts and Jobs Act (TCJA), which went into effect in 2018, roughly doubled the standard deduction.

Retirement Distribution Options

Additionally, required minimum distributions (RMDs) that usually must be taken from an IRA or 401(k) plan (or other employer-sponsored retirement plan) have been waived for 2020. This includes RMDs that would have been required by April 1st for taxpayers that reached age 70½ during 2019, and for 5% and above equity owners over age 70½ who retired during 2019 after having deferred taking RMDs until April 1st following their year of retirement. So, if there is not a financial need to take a distribution in 2020, taxpayers won't have to.

For taxpayers directly impacted by COVID-19, the CARES Act further waives the 10% penalty for distributions up to $100,000 from IRA’s and defined contribution qualified retirement plans made on or after 1/1/20 and before 12/31/20. Income attributable to these distributions will be subject to tax over three years, and the taxpayer may recontribute the funds to an eligible retirement plan within the three years after receipt without regard to that year’s cap on contributions. Those considered impacted must be diagnosed or must have a spouse diagnosed with COVID-19, or those who experience adverse financial consequences as a result of being quarantined, furloughed, laid off, reduced hours, or are unable to work due to lack of childcare.

Applying Distribution Taxes toward Estimated Taxes

Individuals who are facing a penalty for underpayment of estimated taxes and do not have the option of increasing withholdings may take an eligible rollover distribution from a qualified retirement plan before the end of 2020. Income tax will be withheld from the distribution and will be applied toward taxes owed for 2020. The taxpayer can more-timely roll over the gross amount of the distribution, such as the net amount received plus the amount of withheld tax, to a traditional IRA. No part of the distribution will be included as income for 2020, but the withheld tax will be applied over the full 2020 tax year to reduce the previous underpayments.

During the COVID-19 Pandemic, the federal government has initiated several programs that have altered the qualifications for federal unemployment as well as the range of benefits. The three most significant changes can be categorized as the Federal Pandemic Unemployment Compensation (FPUC) program, the Pandemic Emergency Unemployment Compensation (PEUC) program, and the Pandemic Unemployment Assistance (PUA) program. Please see the following information regarding FPUC’s and PEUC’s expansion of benefits, as well as PUA’s special eligibility guidelines.

As we previously noted in our Coronavirus Aid, Relief, and Economic Security (CARES) article, the Act provides for a temporary emergency increase in unemployment compensation benefits, referred to as the FPUC program. FPUC provides an additional $600 per week payable to all individuals who are eligible for unemployment benefits for weeks beginning March 29, 2020 and ending July 31, 2020. Eligible individuals receive FPUC payments at the same time as their unemployment payments. (FPUC payments are disregarded when determining the amount of income under Medicaid or SCHIP.) IDES will include FPUC when preparing the 1099G tax documents and must withhold taxes from the weekly benefit amount and from the $600 FPUC if an individual elects to have taxes withheld.

Individuals who have received their entire 26 weeks of unemployment benefits may be eligible for more weeks under the CARES Act. PEUC provides up to 13 additional weeks of federally funded unemployment benefits for individuals who have exhausted their regular benefits.

For individuals who are unemployed for reasons attributable to COVID-19 and not covered by the state’s regular unemployment insurance program, the PUA program provides 100% federally funded unemployment. To establish eligibility under PUA, the claimant will have to demonstrate he/she is not eligible under the regular program. Applying for and being denied benefits under the regular program can help establish eligibility under the new temporary program. PUA benefits do provide coverage for self-employed sole proprietors and independent contractors. IDES is contracting with Deloitte to implement and maintain a web-based solution for PUA fully implemented by the week of May 11.

Special Notes

Based upon the additional $600 provided through the CARES Act employees making $50 thousand per year or less should have no financial impact being laid off. As always, claimants must certify every two weeks that they are able and available to work, and if they refuse to go back to work, they are no longer eligible for unemployment benefits, including the FPUC enhancement. Additionally, any businesses hiring new employees are required to report.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Last week, Your Friends that Count reviewed our Frequently Asked Questions related to the federal government’s passing of the CARES Act stimulus legislation. As a follow up to our numerous inquiries from individuals and employers related to the previously approved Families First Coronavirus Response Act, here is a deeper dive into what FFCRA means for our clients.

FFCRA requires certain (most) employers to provide employees with paid sick leave or expanded family and medical leave for specified reasons related to COVID-19. The Department of Labor’s Wage and Hour Division (WHD) administers and enforces the new law’s paid leave requirements. These provisions were signed into law March 18, 2020, and will apply through December 31, 2020.

Generally, the FFCRA provides that employees of covered employers are eligible for:

• Two weeks (up to 80 hours) of paid sick leave at the employee's regular rate of pay where the employee is unable to work because the employee is quarantined (pursuant to Federal, State, or local government order or advice of a health care provider), and/or experiencing COVID-19 symptoms and seeking a medical diagnosis; OR
• Two weeks (up to 80 hours) of paid sick leave at two-thirds the employee's regular rate of pay because the employee is unable to work to care for an individual subject to quarantine (pursuant to Federal, State, or local government order or advice of a health care provider), or to care for a child (under 18 years of age) whose school or childcare provider is closed or unavailable for reasons related to COVID-19, and/or the employee is experiencing a substantially similar condition as specified DOL and IRS; AND
• Up to an additional 10 weeks of paid expanded family and medical leave at two-thirds the employee's regular rate of pay where an employee, who has been employed for at least 30 calendar days, is unable to work due to a bona fide need for leave to care for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19.

Are there employer exemptions and credits?

The paid sick leave and expanded family and medical leave provisions of the FFCRA apply to certain public employers, and private employers with fewer than 500 employees. Small businesses with fewer than 50 employees may qualify for exemption from the requirement to provide leave due to school closings or childcare unavailability if the leave requirements would jeopardize the viability of the business as a going concern.

Eligible employers may receive a refundable sick leave credit or childcare credit based on the paid leave calculations. Eligible employers are entitled to an additional tax credit determined based on costs to maintain health insurance coverage for the eligible employee during the leave period.

Eligible employers who pay qualifying sick or childcare leave will be able to retain an amount of the payroll taxes equal to the amount of qualifying sick and childcare leave that they paid, rather than deposit them with the IRS. The payroll taxes that are available for retention include withheld federal income taxes, the employee share of Social Security and Medicare taxes, and the employer share of Social Security and Medicare taxes with respect to all employees. If there are not sufficient payroll taxes to cover the cost of qualified sick and childcare leave paid, employers will be able file a request for an accelerated payment from the IRS. The IRS says it will process these requests for refunds in two weeks or less.

Who are the eligible employees?

All employees of covered employers are eligible based on the aforementioned criteria for quarantine, diagnosis, family care and childcare (with alternate benefits). Employees employed for at least 30 days are eligible for up to an additional 10 weeks of paid family leave to care for a child under certain circumstances related to COVID-19. A full-time employee is eligible for full 80 hours of leave, and a part-time employee is eligible for the number of hours of leave that the employee works on average over a two-week period. For employees caring for a child whose school or childcare provider is closed or unavailable for reasons related to COVID-19, a full-time employee is eligible for up to 12 weeks of leave (two weeks of paid sick leave followed by up to 10 weeks of paid expanded family and medical leave) at 40 hours a week, and a part-time employee is eligible for leave for the number of hours that the employee is normally scheduled to work over that period. Remember, there is an exemption for this requirement if the employer has fewer than 50 employees.

What is the calculation of pay?

• Employees taking leave due to quarantine or doctor’s orders are entitled to pay at either their regular rate or the applicable minimum wage, whichever is higher, up to $511 per day and $5,110 in the aggregate (over a 2-week period).
• Employees taking leave to care for someone under quarantine are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $2,000 in the aggregate (over a 2-week period).
• Employees taking leave due to childcare issues related to closures are entitled to pay at 2/3 their regular rate or 2/3 the applicable minimum wage, whichever is higher, up to $200 per day and $12,000 in the aggregate (over a 12-week period).

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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As we navigate our new “normal” during this time of social distancing, both the state and federal government have moved quickly with legislation intended to both battle COVID-19 and to infuse resources into our economy. These new laws impact all of us in one way or another whether we are hospitals, schools, big business, small business, employees, job seekers, or students. After much deliberation over the stimulus package in Washington over the past few weeks, President Trump recently signed into law the Coronavirus Aid, Relief, and Economic Security Act, (CARES Act), a $2 trillion bill to mitigate the economic impact of this pandemic.

Who will receive and payments?

The CARES Act includes stimulus payments of $1,200 for each individual and $500 for each dependent child, defined by the child tax credit rules as under age 17.

• Individuals with adjusted gross income (AGI) up to $75,000 a year are eligible for the full $1,200 payment. The payment is reduced by $5 for every $100 in income above $75,000. The payment amount is entirely phased out at an AGI of $99,000.
• Married filing joint couples with AGIs up to $150,000 a year are eligible for a $2,400 payment. The payment is reduced by $5 for every $100 in income above $150,000. The payment amount is entirely phased out at an AGI of $198,000 (if the taxpayers have no dependent children). Married couples also will receive an additional $500 for every dependent child under 17.
• Head of household filers with AGIs up $112,500 a year are eligible for the full $1,200 payment and an additional payment of $500 for each dependent child under age 17. The payment is reduced by $5 for every $100 in income above $112,500. Head of household taxpayers will also receive an additional $500 per dependent child under age 17. With no eligible children, a head of household filer is phased out at AGI of $137,000. With one eligible dependent child, a head of household filer is entirely phased out of the rebate payment at AGI of $146,400.

When Will the Payments Arrive?

The IRS says that a direct deposit should be in your bank account in about three weeks (if your bank information is on file from your 2018 or 2019 return). Checks should start arriving in six to eight weeks.

How Does the Payout Impact My 2020 Tax Return?

The stimulus rebate is actually a 2020 refundable tax credit. If you have less income in 2020 than in 2019 because of layoffs, reduced hours and closed businesses, and your rebate payment was reduced by the income threshold, you’ll receive a credit for the difference on your 2020 return. If for some reason, you receive too much of an advanced payment, you do not have to pay back the excess.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Each Labor Day weekend John Kasperek Co., Inc. provides an annual reminder about the importance of year-end tax planning with helpful tips and tax updates for consideration. If you are like the thousands of Americans who will owe taxes and will have difficulty finalizing your returns in light of the tax reform initiated by the Tax Cuts and Jobs Act (TCJA), the Internal Revenue Service (IRS) has provided some helpful recommendations this year.

Taxpayers who haven’t yet checked their withholding recently should do so ASAP. All taxpayers can do this by using the new mobile-friendly Tax Withholding Estimator. The IRS encourages everyone to use the Tax Withholding Estimator to perform a quick “paycheck checkup.” This new tool can be used by workers, as well as retirees, self-employed individuals and other taxpayers. It’s a user-friendly step-by-step tool to help you effectively adjust the amount of income tax to withhold from wages and pension payments. This will help ensure that you are paying the right amount of tax as you earn income throughout the year, as well as provide you with a better understanding of your tax obligations under TCJA.

Who should do a Paycheck Checkup? Though doing a Paycheck Checkup is a good idea every year, for many people, it’s even more important this year. This includes anyone who:

• Expected to owe less tax or get a bigger 2018 tax refund.
• Has a major life change this year such as having a child, has a dependent older than 17, or has a relative who has become a dependent.
• Has a two-income family.
• Has two or more jobs at the same time or only works part of the year.
• Claims credits like the Child Tax Credit.
• Itemized deductions in the past.
• Has high income or a complex tax return.

Another option for taxpayers with more complicated situations are the worksheets and special instructions in Publication 505, Tax Withholding and Estimated Tax. This includes those who expect to receive long-term capital gains or qualified dividends, or employees who owe self-employment tax, alternative minimum tax or tax on unearned income of minors.

Anyone who needs to make a withholding change should do so as soon as possible. This will allow withholding to be spread evenly throughout the rest of the year. Also, for those who adjusted their tax withholding in the middle or later part of 2018, it is important to check again this year to make sure that over or under withholding is not occurring.

Good luck with your year-end tax planning. If you need assistance, NOW is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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While multiple media outlets were reporting last week that the Internal Revenue Service (IRS) was over 1.2 million returns backlogged prior to the start of tax season due to the government shutdown, taxpayers should expect delays as warned. Additional delays may also be caused due to new laws related to stopping identity theft. Some delays could be two weeks to a month or more.

Expecting delays doesn’t mean taxpayers may as well wait to file their returns. Getting a tax return filed as quickly as possible can alleviate both concerns – the IRS treats tax returns on a first come first served basis, so the sooner you complete your return the sooner it will get processed and the sooner you complete your return the less chance for a scammer to beat you to your refund.

The IRS estimates it paid out $1.3 billion in fraudulent tax refunds last year. It’s a real issue that can cause more headaches than you think. If you're a victim of identity theft, you're going to have to submit documents to the IRS to get the identity issue resolved, which can be a long and difficult process. Additionally, if a criminal has the necessary material to file a fraudulent return, think about what else they could do with that information.

The IRS suggests the following steps if you might be a victim of identity theft:

• File a report with the local police.
• File a complaint with the Federal Trade Commission (FTC) at www.consumer.ftc.gov or the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261.
• Contact one of the three major credit bureaus to place a “fraud alert’ on your account:

• Equifax – www.equifax.com, 800-525-6285
• Experian – www.experian.com, 888-397-3742
• TransUnion – www.transunion.com, 800-680-7289

• Close any accounts that have been tampered with or opened fraudulently.

If your SSN has been compromised and you know or suspect you may be a victim of tax-related identity theft, take these additional steps:

• Respond immediately to any IRS notice; call the number provided.
• Complete IRS Form 14039, Identity Theft Affidavit. Use a fillable form at IRS.gov, print, then mail or fax according to instructions.
• Continue to pay your taxes and file your tax return, even if you must do so by paper.
• If you previously contacted the IRS and did not have a resolution, contact the Identity Protection Specialized Unit at 800-908-4490. We have teams available to assist.

If you are unable to get your issue resolved and are experiencing financial difficulties, contact the Taxpayer Advocate Service toll-free at 877-777-4778.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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As the third government shutdown of 2018 lingers into the New Year without a resolution in sight, the White House announced on Monday that the Internal Revenue Service (IRS) will pay tax refunds even though the agency is subject to the federal government shutdown, reversing a longstanding policy.

When the impasse over a border wall began on December 21st, predictions of an extended stalemate raised concerns with the start of tax-filing season looming on January 28th. The IRS is one of the agencies typically most affected by government shutdowns; however, this week’s decision by the Trump Administration aims to allow billions of dollars to be released to taxpayers in the coming months.

But questions about efficiencies and who will process the returns remain. It is estimated that only about 12 percent of IRS staff will resume working through the shutdown. So, taxpayers can expect at a minimum a reduction in services such as not answering phone calls nor processing amended returns.

The IRS is still working on contingencies if the shutdown continues. They recently issued a new publication that will help taxpayers better understand the reform to enable them to begin setting up their best possible tax scenario. Publication 5307 can be accessed with other beneficial information from IRS.gov/getready. Publication 5307 provides information about increases to the standard deduction, suspending personal exemptions, increasing and adding credits and limiting or discontinuing certain deductions, and more.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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According to the Internal Revenue Service (IRS), about 75% of taxpayers take the standard deduction but could be missing out on valuable tax deductions if they can itemize. Now more than ever – with significant code changes resulting from the Tax Cuts and Jobs Act – taxpayers should strongly consider their tax planning before the year-end.

The good news is that the IRS recently issued a new publication that will help taxpayers better understand the reform to enable them to begin setting up their best possible tax scenario. Publication 5307 can be accessed with other beneficial information from IRS.gov/getready.

Publication 5307 provides information about increases to the standard deduction, suspending personal exemptions, increasing and adding credits and limiting or discontinuing certain deductions, and more.

Now is a good time to consult a tax professional to best determine how the law affects your unique situation. John Kasperek Co., Inc. is a leading expert accounting firm in the Chicago Southland region and can be reached at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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On October 1, 2018, out-of-state retailers who meet certain minimum sales or transaction thresholds will be required to collect and remit the same 6.25% Use Tax (UT) for which Illinois online retailers are already obligated.

Illinois enacted Public Act 100-587 back in June in advance of the expected ruling of U.S. Supreme Court decision South Dakota v. Wayfair, Inc. in which “The Act covers only sellers that, on an annual basis, deliver more than $100,000 of goods or services into the State or engage in 200 or more separate transactions for the delivery of goods or services into the State.” The Illinois law duplicates this language which is applicable to the retailer’s prior 12-months of sales.

So, what does it mean for Illinois tax collections? First, online consumers will realize the 6.25% UT collection on more purchases. Those additional taxes will be remitted to the state and local governments at a rate of 5% and 1.25% respectively. The local government portion is allocated, based on set statutory percentages, first to Chicago, the Regional Transportation Authority, the Madison County Mass Transit District, and to pay Build Illinois bonds, with the remainder remitted to other municipalities and counties based on their relative population as compared to the statewide population. Illinois could realize a $200 million or more annual UT increase, but local government allocations will be smaller, and again, relative to this local/state population ratio.

The recent decisions do not impact the Retailers Occupation Tax (ROT), or traditional sales tax rate applicable to those "engaged in the business of selling tangible personal property at retail" in Illinois. UT is also nothing new, as purchases from Illinois retailers without a physical presence were always subject to the Use Tax. ROT or UT (when no sales tax has been collected on taxable products or services) are paid directly to the Department of Revenue by the purchaser. There is a line on the Illinois Individual Income Tax Return, Form IL-1040.

John Kasperek Co., Inc. is a leading expert governmental consulting firm in the Chicago Southland region. If you have any questions about Public Act 100-587 and what it means for your municipality, call (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it.. 

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In 2015, the Governmental Accounting Standards Board (GASB) released new accounting standards for public sector postretirement benefit programs – GASB 75 –which will replace GASB 45 and became effective for employer fiscal years beginning after June 15, 2017. The purpose of this statement is to improve financial reporting by state and local governments for postemployment benefits other than pensions and improve the information about financial support provided by other entities.

If your entity provides other postemployment benefits (OPEB), you will most likely need to incorporate this change as you prepare for your next financial audit. If you have IMRF employees, this standard applies to you. At John Kasperek Co., Inc., we are already working with its local school district clients to incorporate GASB 75 for the fiscal year ending June 30, 2018, financial statements. Institutions will be required to obtain an actuarial valuation to provide the necessary information for their financial reports.

Our firm recommends contacting your actuary as soon as possible to get the process started in order to be fully prepared. We also recommend using 6/30/2017 as your measurement date for the valuation. If your actuary is experienced in working with school districts in Illinois, they should be able to let you know exactly what information is needed.

If you have any questions about GASB 75 and what it means for this year, please don’t hesitate to contact John Kasperek Co., Inc. at (708) 862-2262 or email This email address is being protected from spambots. You need JavaScript enabled to view it..

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Tax Season is under way at John Kasperek Co., Inc. In response to questions about how the Tax Cuts and Jobs Act will affect everyone in 2019, we created fast facts flyers for businesses and individuals:

Identity thieves are on the prowl in today’s growing world of social network sites and online forums. Even conscientious consumers are becoming victims at a higher rate. Identity theft continues to be the highest reported consumer crime to the Federal Trade Commission (FTC), and has been for 17 consecutive years. The Internal Revenue Service continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security Number.

The IRS warned tax professionals earlier this month about early signs of cybercriminals already at work as tax season approaches. Fraudsters are using a new round of emails posing as potential clients or even the IRS to trick tax practitioners into disclosing sensitive information. The IRS also has received recent reports of fraudsters again posing as IRS e-Services, just one of the reasons the IRS has moved to the more secure identity-proofing process called Secure Access.

Remember, the IRS will NEVER call or e-mail you. If you appear to receive a correspondence from them, contact your tax professional.

The IRS encourages at minimum, these basic steps for protecting your data:

• Always use security software with firewall and anti-virus protections. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS.
• Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure.

If you believe you are at risk of identity theft due to lost or stolen personal information, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490. You may also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 1-800-366-4484.

For more updates and information, please see Tax Cut and Jobs Act for Invidiuals and Business Owners

Please Note: Almost every rule has exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation.

Legislation which includes the most sweeping changes to the tax code since the Tax Reform Act of 1986 is certain to cause partisan posturing and dissention among the masses. But only time will truly tell how favorable the Tax Cuts and Jobs Act’s will be to the economy and its ramifications for individuals, families, nonprofits, small businesses, large corporations and others as the 1,000-page document reveals its scope of impact over the next several months and subsequent tax years.

The most urgent takeaway? The Tax Cuts and Jobs Act offers real relief throughout the income scale.

Most of the discussion in the media and online outlets has already focused on the relief to big business and the wealthy, who will see the largest dollar value in benefits from some significant cuts and credits and in part because they pay the largest portion of the tax burden. So, let’s take a closer look at how others are impacted, for a moment. While not perfect by any means, there are significant benefits to the middle class and the economy as a whole. The middle class will realize the largest reduction in taxes paid – up to 56% for some individuals, and overall there are reductions to five of the seven tax brackets and increases to the child tax credits. On the other hand, perhaps most alarming, is the potential negative impact on nonprofits (more on this later).

Other key takeaways include:

• The Act will double the value of the standard deduction to $12,000 for single filers and $24,000 for those filing jointly.
• Individuals will be allowed to deduct up to $10,000 ($5,000 for married taxpayers filing separately) in state and local income or property taxes (taxpayers cannot take a deduction in 2017 for prepaid 2018 state income taxes).
• For new homebuyers, the mortgage-interest rate deduction will be available for mortgages up to $750,000, down from $1,000,000.
• Home equity loan interest deduction is repealed through 2025, with no “grandfather” clause on existing home equity loans.
• The child tax credit is increased to $2,000 for each qualifying child under the age of 17.
• The current deductions for student loan interest remain unchanged. Additionally, the tuition waivers that are received by graduate students will remain tax free.
• Taxpayers can deduct medical expenses that exceed 7.5% of their adjusted gross income.
• Corporations get a sizeable tax cut from 35% to 21%.
• The new rates start at 10% and rise to 12%, 22%, 24%, 32%, 35% and 37% (the highest rate was lowered from 39.6% for individuals whose income exceeds $500,000 or joint filers exceeding $600,000).
• The alternative minimum tax (AMT) rate is eliminated for corporations, but remains for individuals.
• The Act eliminates the 80% deduction of payments made for "the right to purchase tickets for seating at an athletic event in an athletic stadium."
• Starting in 2019, the new legislation eliminates the Affordable Care Act’s individual mandate.

A critical downside should be noted regarding the Tax Cuts and Jobs Act’s impact on nonprofits – the changes will undoubtedly discourage charitable giving in some taxpayers. The Act’s increase in the standard deductions coupled with the local and state tax caps on itemization will render charitable deductions obsolete for many. The role of nonprofits in American society is essential now more than ever, and they rely on these donations to perform critical and often noble functions. While most people donate from their hearts to causes they care about and will continue to do so, the reward for giving will go down.

Please Note: As with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation.

Pictured: Wally Hummel with son Donny at Bullseye Lounge - 427 Pulaski Rd, Calumet City, Illinois.

For Bullseye Lounge owner Don “Wally” Hummel, 58, running a tavern is a “family tradition.” His father, uncle and grandfather all owned various establishments throughout the Chicago Southland and Northwest Indiana region dating back over 60 years. It’s no wonder his son Donny Hummel and brother are working during our visit on this December night in Calumet City, Illinois.

“Running a tavern is in our blood and I can’t imagine doing anything else,” said Hummel, who has owned several different locations over the years. “I have proudly owned Bullseye Lounge for 13 years and still going strong.”

Hummel, a lifelong Southland resident, attended Richards High School, Moraine Valley Community College and currently resides in an apartment above the Bullseye Lounge, quaintly situated in the middle of a suburban neighborhood on 427 Pulaski Road. The traditional pub decorum, warm atmosphere and smiling faces ring true of Hummel’s reference to the “Cheers” vibe that resonates with patrons. Bullseye is known for a friendly crowd of “regulars,” strong Blackhawks following, pool tables and gaming machines. This year marked one of the great highlights of Hummel’s tavern ownership when his Bullseye-sponsored softball team won the 16” Softball National Championship (Class A), made up mostly of Calumet City and Hegewisch residents.

John Kasperek Co., Inc., a Certified Public Accounting firm in Calumet City, has served as bookkeeper and tax accountant for 12 of Bullseye’s 13 years and has proudly provided support to its activities and ownership. Hummel added, “I had previous issues with my accountants, and I can honestly say the best choice I made in by business life was going to John and his team.”

Bullseye Lounge is open Sunday through Thursday from 11 a.m. – 12 p.m., and a recent referendum extended their Friday and Saturday hours until 2 p.m. For more information about John Kasperek Co., Inc. visit www.kasperekcpa.com or call (708) 862-2262.

According to the Internal Revenue Service (IRS), about 75% of taxpayers take the standard deduction but could be missing out on valuable tax deductions if they can itemize. If you are like the thousands of Americans who will owe taxes or will have difficulty finalizing your returns next year, understanding some basic deductions accepted by the IRS in advance could have a significant impact on your bottom line. To maximize your returns, consider the advantages of year-end tax planning to set up your best possible tax scenario in the New Year.

The tax laws are pretty straightforward, but beware of the alternative minimum tax and always consult a tax professional to best determine how the law affects your unique situation (John Kasperek Co., Inc. is offering a $25 credit for individuals and $50 for businesses who begin planning before the year-end). Here are some tips to consider as you explore your year-end options:

Accelerate Your Deductions
Before the year’s over, make those charitable donations or expense purchases that will be considered deductible. You control the timing, so contact your favorite charity to make donations, purchase tickets or donate in-kind contributions in advance. Other expenses you can accelerate include an estimated state income tax bill due January 15, a property tax bill due early next year, or a doctor’s bill. Remember, you must have a receipt to back up any contribution, regardless of the amount.

Deferred Income
Income is taxed in the year it is received, but you may be able to defer a year-end bonus into next year if your employer has done so before. If you are self-employed, delaying billings until late December can ensure that you won't receive payment until the next year. Whether you are employed or self-employed, you can also defer income by taking capital gains in 2018 instead of in 2017 if you think you will be in the same or a lower tax bracket next year. (You don't want to be hit with a bigger tax bill next year if additional income could push you into a higher tax bracket.)

Sell Investments
Selling investments such as stocks and mutual funds to realize losses can offset any taxable gains you have realized during the year. Losses offset gains dollar for dollar, and if your losses are more than your gains, you can use up to $3,000 of excess loss to wipe out other income, and if you have more than $3,000 in excess loss, it can be carried over to the next year.

Contribute to Retirement Accounts
Tax-deferred retirement accounts can grow to a substantial sum because they compound over time free of taxes. You may want to increase your 401(k) contributions so that you are putting in the maximum amount of money allowed ($18,000 for 2017, $24,000 if you are age 50 or over). At a minimum, try to contribute the amount that will be matched by employer contributions.

Understanding Your Situation
If your qualifying expenses exceed the standard deduction, which in 2017 is $6,350 if you are single, or $12,700 if you’re married filing jointly, then you likely should maximize your deductions and itemize. However, sometimes accelerating deductions can cost you money if you're already in the alternative minimum tax (AMT) or if you trigger it. The AMT is figured separately from your regular tax liability and with different rules—you must pay whichever tax bill is higher. This is a year-end issue because certain expenses that are deductible under the regular rules—and therefore candidates for accelerated payments—are not deductible under the AMT. State and local income taxes and property taxes, for example, are not deductible under the AMT. So, if you expect to be subject to the AMT in 2017, consider paying the installments when they are due in January 2018 as opposed to paying them in December 2017.

Teachers will now have more resources to put into their classrooms, and not just because of Illinois lawmakers’ recent passing of a new school funding formula. Thanks to new bill sponsored by Representative Sue Scherer (Dem.), Illinois educators may be eligible for a new $250 state tax credit in addition to the existing federal deduction.

Teachers and aides often spend hundreds of dollars each year to improve their classroom experience at their own expense. The federal government already allowed teachers to claim tax deductions on supplies they bring to school, up to $250. Now, the state of Illinois will also allow them to claim up to $250 in deductions for instructional materials and supplies on their state income tax returns. The new state credit is available to all teachers, principals or aides in Illinois qualified schools who work at least 900 hours during a school year. Teachers in both private and public schools can apply for the credit.

This new credit went into effect this school year. While the state credit will provide some additional relief to teachers, the hope is that it may also help students of families who might not be able to afford the entire school supply list.

Please keep in mind, as with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation.

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For most citizens, the passage of appropriations for Fiscal Year (FY) 2017 and FY18 and the associated legislation ending Illinois’ 736-day budget-less stalemate feels like the political equivalent of one step forward, one step back. It represents a critical step in the right direction for Illinois schools and state employees that struggled to remain open and employed respectively, while feeling like another step backwards for individuals and families paying Illinois income taxes following the House’s override-approval of Governor Bruce Rauner’s veto of legislation that included an income tax hike, effectively eliminating the short-lived rollbacks implemented under the previous administration.

Tax Ramifications

As a result of Senate Bill 9 (SB 9), the state income tax rate will rise 32% from 3.75% to 4.95%, costing an extra $1,200 a year for a family with a net income of $100,000. The tax hike is expected to generate more than $4.3 billion, coupled with a rise in the corporate income tax rate from 5.25% to 7%, which should bring in another $450 million or more. The research-and-development tax credit would be reinstated, and the earned income tax credit for low-income families would be increased. The law also closes tax loopholes of an estimated $125 million and ends several corporate tax breaks including those for companies that operate on the continental shelves or shift production out of state. SB 9 also creates the Sugar-Sweetened Beverage Tax Act, imposing a tax on distributors of bottled sugar-sweetened beverages, syrups, or powders at the rate of $0.01 per ounce of bottled sugar-sweetened beverages sold or offered for sale to a retailer for sale in the State to a consumer.

The State's bill backlog that topped $15 billion was also addressed as part of the budget package through a new $36 billion spending plan (SB 6) in the coming year.

Impact on Education

SB 6 includes funding for elementary and high schools that would be boosted by $350 million, in addition to increases of $65 million for transportation, $50 million for early childhood education and $29 million for bilingual education. However, the entire K-12 portion of the budget is contingent upon a separate bill (SB1) awaiting the Governor’s signature that changes the funding formula. The new funding model would, for the first time in the state’s history, tie school funding levels to what is needed to “adequately educate students.” It’s structured so that schools with more high-needs students (such as students living in poverty or students with disabilities) get more funding, and takes into consideration local funding such as property tax revenue that the district already receives. However, even upon signature, many schools would still be reeling from the millions of state dollars that districts were supposed to receive, but never did in the past several years.

Higher education funding, on the other hand, won’t require additional action by the Governor. According to the Illinois Board of Higher Education (IBHE), SB 6 – in combination with the stopgap funding approved last June – provides FY17 higher education funding levels equal to what was available in FY15, the last year for which there was a full state budget and “all sectors of the state’s higher education system will benefit.” The FY18 state budget cuts public universities, community colleges, operating agencies and most grant programs by 10%, while appropriations for the Monetary Award Program (MAP) will increase by 10% in FY18. 

The following is an excerpt from the IBHE’s Budget Summary for Higher Ed:

Overall - Higher education received a total of $4.125B in funding for FY17, including $1.181B from SB 6.  The total for FY17 includes $1.676B for SURS which was the certified amount.  Funding for FY18 is $3.823B, including $1.592B for SURS.

Public Universities - Universities were allocated $1.214B for FY17 in all funds.  SB 6 added $560.5M to the $653.7M available from the stopgap funding bill.  (Some universities used their stopgap allocations to cover FY16 costs, which was allowed.)  The total FY17 funding level means allocations effectively equal to FY15, considered the base year.  For FY18 total public university appropriations equal $1.093B.  Universities will receive 10% less than they did for FY15 and FY17.

Community Colleges - Including adult education program funding, community colleges received total appropriations of $448.8M for FY17.  SB 6 added $221.7M to the $227.2M included in the stopgap funding bill. However, all $51.3M provided in the stopgap bill was used for FY16 costs in order to meet maintenance of effort requirements.  There was no FY16 (Stopgap 1) funding for those programs in FY16.  FY18 funding was reduced to $368.0M, generally in line with  the 10% across the board reduction from the base year.  Although, some ICCB grants were not reduced from FFY15/17 levels.  There was a shift of $103.5M from the Educational Assistance Fund (EAF) to the Personal Property Tax Relief Fund between the FY15 and FY18.

ATTENTION GRANT ADMINISTRATORS:  

The Illinois State Board of Education (ISBE) has recently updated its State and Federal Grant Administration Policy, Fiscal Requirements, and Procedures Manual.

This revision was needed to incorporate the Federal Uniform Guidance under Title 2 Code of Federal Regulations Part 200 that governs the administration of federal awards/grants as well as all state grants per the Grant Accountability and Transparency Act (GATA). 

Some major topics and changes include: GATA requirements, Internal Controls, Fraud Policy, General Procurement Standards and Policy, Time and Effort Reporting, Detailed Function and Object Descriptors, Recovery of Grant Funds.

If you are still waiting for your federal income tax return, you probably think you will be facing your first Internal Revenue Service (IRS) Audit. But don’t stress yourself out just yet, being selected for an audit doesn’t necessarily suggest there are issues and there are a number of other reasons your refund could be held up.

First and foremost, if you are selected for an audit, the IRS will notify you via mail on official letterhead. IRS Audits are NEVER communicated through phone calls, text messages or emails – don’t fall victim to these common scams. Selection for an audit does not always mean there’s a problem. The IRS uses several methods of random selection in their process along with computer screening. Another method for selection relates to your return’s involvement with issues or transactions with other taxpayers, such as business partners or investors, whose returns were selected for audit.

There are limitations to selection – the IRS has three years to audit tax returns, although they could look back as far as six years if they come across a significant understatement of income. If your return is selected, the IRS manages audits either by mail or through an in-person interview. The IRS will provide all contact information and instructions in the letter you will receive. For an idea of what to expect, visit Audit Techniques Guides.

On the other hand – if you are not under IRS Audit and have not received your return – the U.S. Treasury Department’s Bureau of the Fiscal Service also has the authority to hold back all or part of your refund to cover certain debts you may owe to help pay them off, a practice called “offset.” Common reasons for offset include but are not limited to unpaid federal or state taxes, child or spousal support, a defaulted student loan, or even unemployment compensation to which you were not entitled.

Please keep in mind, as with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation. The IRS also provides a free Taxpayer Advocate Service (TAS) using Form 911. The TAS is designed to assist both businesses and individual taxpayers with tax-related issues. It provides confidential and personalized service to taxpayers who need help resolving IRS problems that they have not been able to resolve through normal IRS channels. 

Know your options, and take advantage of the tax code. If finalizing your taxes next month expects to be another painful experience (financially, organizationally, or even physically), consider your options early. The Internal Revenue Service provides a fair extension policy for individual taxpayers and partnerships who apply for the automatic extension by Tuesday, April 18, 2017.

That’s right, TUESDAY. So, let’s start there. You may have thought it odd (or may not even have realized) that last year’s tax deadline was Monday, April 17, 2016. Although Tax Day is traditionally on April 15th, if it falls on a weekend the tax deadline is pushed to the following Monday. This year, because Monday, April 17th is Emancipation Day, you have until Tuesday, April 18th to get your taxes done.

While filing an automatic extension is a relatively painless process (more on this later), there are several good reasons to get your taxes in early. These may include reducing exposure to tax fraud, getting money in hand sooner to pay your debts, or giving yourself time to pay your tax debt. Yes, filing early doesn’t necessarily mean paying early. You may file your taxes early and gain certainty about your tax liability and still wait to pay by the April 18th deadline.

On the other hand, the IRS offers automatic extensions for up to six months [October 17] and there are several easy ways to request an extension of time to file a U.S. income tax return. You will need to file a Form 4868 and can pay all or part of your estimated income tax due using Direct Pay, the Electronic Federal Tax Payment System, credit card, or by check to avoid credit and debit card fees. You can file Form 4868 electronically by accessing IRS FreeFile using your home computer or by utilizing a This email address is being protected from spambots. You need JavaScript enabled to view it., or you may file a paper Form 4868 and enclose payment of your estimate of tax due. Businesses will typically use Form 7004.

Unfortunately, even with an extension you will still owe interest on any tax not paid by the regular due date. The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 18, 2017. There are also late filing penalties, usually of 5%. Penalties are charged for each month or part of a month the tax is unpaid. These penalties will not be charged if you can show reasonable cause for not paying on time (attach a statement to your return fully explaining the reason to your Form 4868).

Please keep in mind, as with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation. Best of luck this tax season!

If you are like the thousands of Americans who will owe taxes or are having difficulty finalizing your returns this month, understanding some basic deductions accepted by the Internal Revenue Service (IRS) could have a significant impact on your bottom line. As you work to squeeze every last deduction to keep as much money as you can or get the highest possible return, the IRS wants their fair share of taxes. While there are exceptions – usually based on medical or living environment – the rules are pretty straightforward.

So here’s some helpful “Dos and Don’ts” courtesy of John Kasperek Co., Inc.

First, let’s start with the good news:

Charitable Deductions
Most people realize the monetary benefit of donating to their favorite charity.  But often times the cost of volunteering can add up to a higher tax benefit. Any charitable supplies, materials or uniforms you purchase are deductible as an itemized charitable donation, and the IRS will also let you deduct the travel involved at 14 cents per mile.

Educational Credits
There are several  credits available for individuals furthering their education. The lifetime learning credit is one of the more recent additions to the tax code that could provide some students (or their parents) up to $2,000, while the American Opportunity Tax credit is a dollar-for-dollar tax break of up to $2,500. The standard Tuition and Fees Deduction can take up to $4,000 off your taxable income and is available without having to itemize.

Childcare/Dependent Credits
The Child and Dependent Care Credit is taken by millions of Americans each year for day care expenses, but there is also a tax credit for child care costs during the summer including summer day camp costs. Additionally, if you have an adult dependent who needs care so that you can work, those expenses may qualify under this tax credit.

Home Purchase and Mortgage Refinance Points Deduction
It’s commonly known that when you buy a house, you get to deduct the points paid on the loan, but did you know that you might also qualify to deduct points on your refi? (Some restrictions apply.)

Retirement Tax Credits
You can get a tax savings for up to 50 percent of the first $2,000 you put into retirement accounts, good for up to a  $1,000 tax credit through the Retirement Savings Contribution Credit. This could come from either an individual retirement account or a workplace plan.

Other commonly overlooked deductions may include but are not limited to: moving expenses, first job and job-hunting costs, medical expenses, and home energy-efficiency improvements.

Now, beware of these common mistakes:

Political Contributions
Political or lobbying contributions are never tax deductible under any circumstances.

Gym Memberships and Related Health Programs
Any weight loss, health program or gym membership expenses must be ordered by a doctor specifically for a diagnosed condition in order to be considered an acceptable deduction. (These must be itemized and other rules apply.)

Work Travel Expenses
Commuting to and from your regular place of work is not deductible, no matter the expense nor the mode of transportation.

Pets
No matter how much we love our furry friends, unless they are service animals no expenses including, food, supplies and veterinary visits are considered acceptable deductions.

Any Expenses Not Paid by You
If someone else pays your bills, neither you nor they are usually able to claim these expenses as deductions (some exceptions apply such as student loan payments).  The IRS typically only considers your out of pocket expenses or those you incur on behalf of your spouse and dependents.

Other commonly mistaken non-deductible expenses may include but are not limited to: home alarms, private and home schooling expenses, and driver’s license fees. “Accounting Today” recently published their list of most outrageous tax deductions of 2017.

Please keep in mind, as with almost every rule there are exceptions and limitations and John Kasperek Co., Inc. strongly recommends you consult a tax professional to best determine how the law affects your unique situation. Best of luck this tax season!

Many non-profit boards and executive staff will choose not to invest in the necessary accounting and consulting services that will efficiently organize their financial structure while managing the never-ending round of annual filings required by the Internal Revenue Service (IRS) and within the State of Illinois. Unfortunately, some charitable organizations will often incur unnecessary penalties such as fines or even revocation of their tax-exempt status as a result.

Simply knowing all of the forms, filing requirements and potential extension options for your organization can prevent that unnecessary headache.

Form AG990-IL
Illinois Attorney General’s Office
Due Date:             Annually due within 6 months of fiscal or calendar year-end.
Extension:            Yes, a 60-day extension request must be in writing and received by their office prior to the due date.
Filing Fee:             $15
Late Filing Fee:    $100
Signatures (3):     President or Trustee, AND Treasurer or Trustee AND Preparer
Payment to:          ILLINOIS CHARITY BUREAU FUND - 100 West Randolph 11th Floor, Chicago, IL 60601

Annual Report
Illinois Secretary of State
Due Date:             Annually due on the first day of the month of the initial incorporation date.
Extension:            No.
Mail Filing Fee:  $10
Electronic Fee:    $36 ($10 + $25 Expedited Fee + 2.35% fee OR minimum $1 assessed for Credit Cards).
Late Filing Fee:   $3
Payment to:         Mailed or electronic (Visa, MasterCard, Discover or American Express).
Signatures:           None, but must include the officers (maximum of 6) and directors (maximum of 7) along with mailing addresses on the submitted form.

Form 990 (If annual gross receipts are greater than $200,000 or total assets greater than $500,000)
Internal Revenue Service
Due Date:             Annually by the 15th day of the 5th month after the organization’s year-end.
Extension:            Yes, use Form 8868 to request an automatic 3-month extension. 
                                  If necessary, an additional (not automatic) 3-month extension may also be filed at the same time.
Filing Fee:            None (unless filed late).
Late Filing Fee:   $20.00 per day, not to exceed lesser of $10,000 or 5% of the gross receipts of the organization for the year.
Return to:             Internal Revenue Service Center
                                  Ogden UT 84201-0027
Signatures (2):     Signature of Officer, AND Preparer

Other versions of IRS Form 990 Include:

• Form 990-N (if annual gross receipts are less than $50,000)
• Form 990-EZ (if annual gross receipts are less than $200,000 or total assets less than $500,000)
• Form 990-PF (every private foundation must file annually, regardless of its revenues or assets)

Non-profit organizations should consult a professional accountant, if one is not on staff. Some Certified Public Accounting (CPA) firms such as John Kasperek Co., Inc. provide consulting services at an affordable rate to non-profits in monthly accounting, bookkeeping, IRS/tax services, budgeting and planning, and more.

If your organization is currently on extension and/or needs immediate assistance with your Form AG990-IL, Annual Report and/or 990 Tax Return, email This email address is being protected from spambots. You need JavaScript enabled to view it. or call (708) 862-2262.

 As always, these statements reflect the opinions of John Kasperek Co., Inc. and you should consult your attorney and/or tax professional to best determine how the law affects your unique situation.

Identity thieves are on the prowl in today’s growing world of social network sites and online forums.  Even conscientious consumers are becoming victims at a higher rate.  Identity theft continues to be the highest reported consumer crime to the Federal Trade Commission (FTC), and has been for 15 consecutive years.  Furthermore, identity theft topped the Internal Revenue Service’s (IRS) list of tax scams for 2016.  The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number.

“These staggering statistics should be an alarm to taxpayers and legislators alike to increase awareness and protection from this crippling crime,” said John Kasperek, Jr., President of John Kasperek Co., Inc., a Certified Public Accounting Firm in Calumet City, Illinois.  “Our firm is re-emphasizing to our clients this year to act with extreme caution, especially with protection of Social Security Numbers.”

Learn more about what you can do to protect yourself against tax-related identity theft and IRS scams through February 3rd during Tax Identity Theft Awareness Week (TITAW). Check out free webinars and other events provided by the FTC, IRS, the National Association of Tax Professionals, Identity Theft Resource Center, Department of Veterans Affairs and more.

The IRS encourages at minimum, these basic steps for protecting your data:

• Always use security software with firewall and anti-virus protections. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS.
• Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure.

“At the very least, make sure you and members of your household are aware of the fraudulent phone and email phishing scams,” added Kasperek. “These scams ranked two and three on the IRS list of tax scams for 2016.”

If you believe you are at risk of identity theft due to lost or stolen personal information, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.  You may also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 1-800-366-4484.

As always, these statements reflect the opinions of John Kasperek Co., Inc. and you should consult your attorney and/or tax professional to best determine how the law affects your unique situation.

As a part of the Internal Revenue Service (IRS) efforts to safeguard against tax fraud and identity theft, the Protecting Americans from Tax Hikes (PATH) Act was enacted on December 18, 2015. The PATH Act contains several changes to the tax law that will affect individuals and families in 2017.

Most significantly, the IRS has issued warnings of delays impacting 40 million working poor families claiming the earned income tax credit and the additional child tax credit. For 2016, the maximum earned income tax credit is from $506 for no qualifying children, to $6,269 for three or more qualifying children.

“We are warning our clients not to expect their returns until mid-February at the earliest,” said Glenda Britt, CPA, John Kasperek Co., Inc. in Calumet City, Illinois. “We want to communicate as much information as possible as we know so many families count on these checks."

According to the IRS, the practice of filing of fraudulent returns and claiming tax payers refunds before they have a chance to file has grown significantly over the years. The expected delays will give the agency more time to screen these returns. Tax filing starts January 23. You can check your refund status at IRS.gov if you are able to provide your social security number, filing status and refund amount.

Other PATH Act provisions impacting taxpayers include but are not limited to:

Wrongful-incarceration Exclusion
The PATH Act includes new wrongful-incarceration exclusion. This legislation provides a special one-year window during which an eligible wrongfully-incarcerated individual can file a refund claim based on any civil damages, restitution or other monetary award received and reported in a prior tax year, even if the normal statute of limitations had already expired for that year. The guidelines are contained in a set of frequently-asked questions, posted on IRS.gov.

ITIN Changes and Renewals
The PATH Act provisions related to the Individual Taxpayer Identification Number (ITIN) program require some taxpayers to renew their ITINs beginning in October 2016. ITINs that have not been used on a federal tax return at least once in the last three years will no longer be valid for use on a tax return unless renewed by the taxpayer. Taxpayers using an expired ITIN could face a refund delay and may be ineligible for certain tax credits. These provisions, along with new procedures to help taxpayers navigate these changes, are outlined in IRS Notice 2016-48, and on IRS.gov.

Britt added, “We will continue to update our clients directly as well as provide relevant information through our website as it becomes available and any new pronouncements or warnings are issued by the IRS.”

See also “PATH Act Impact on Employers in 2017.” As always, these statements reflect the opinions of John Kasperek Co., Inc. and you should consult your attorney and/or tax professional to best determine how the law affects your unique situation. 

As a part of the Internal Revenue Service (IRS) efforts to combat fraud and identity theft, the service has moved up the filing dates for W2s and 1099s in 2017 for the 2016 tax year. This is a result of Congress passing the Protecting Americans from Tax Hikes (PATH) Act back in December of 2015.

Last year, employers had to have W2s in their employees’ hands by January 31st. However, those W2s did not have to be submitted to the federal government until February 28th, and even later (March 31st) if they were electronically filed. This year, the 2016 W2s must be delivered to both employees AND the Social Security Administration by January 31st. Also, the new January 31st date remains the same whether the W2s are filed on paper or electronically. Illinois and Indiana have adopted similar changes.

Employers will face similar issues with the 1099-Misc forms they create for their independent contractors. The new January 31st overall filing deadline will apply to any 1099-Misc forms and their respective 1096s where there are amounts in Box 7 for Nonemployee Compensation. The original February 28th and March 31st deadlines remain for all other 1099-Misc filings where Box 7 for Nonemployee Compensation remains blank.

“Although this change generally does not present any significant additional burdens, it does place an increased emphasis on accuracy for these filings,” said Joseph Skibinski, CPA, John Kasperek Co., Inc. in Calumet City, Illinois. “Previously, an employer had a window during which he could make corrections to the federal filing if an employee or vendor had notified him that the W2 or 1099 they received was incorrect. Now the only option for correction will be the filing of a new corrected form.”

The impact is a shorter window for employers to verify their employee and vendor information, make any year end adjusting entries or reconcile any discrepancies. However, the IRS does provide a DeMinimis Safe Harbor for employers to address these accuracy issues. There will be no penalties for income discrepancies of $100 or less and for withholding discrepancies of $25 or less. A corrected return will not be needed. However, employees and vendors may be requested to provide the applicable correction forms.

Finally, options for using Form 8809 to request a 30-day extension to file have been curtailed as well. Employers will be allowed only one extension, it will no longer be automatic and that extension request will need to be filed by January 31st.

Skibinski added, “Keep in mind that late filing penalties can add up quickly—for each W2 or 1099 filed up to 30 days late, the penalty will be $50 per W2 or 1099. The penalties will be $100 each for returns filed more than 30 days late. If the W2s or 1099s are not filed by August 1st, the penalty will be $260 each.”  

Employers can Take Advantage of Expanded Work Opportunity Tax Credit—the WOTC is a credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The PATH Act retroactively extended the WOTC for nine categories of workers hired on or after Jan. 1, 2015. It also added a tenth category for long-term unemployment recipients hired on or after Jan. 1, 2016.

See also “PATH Act Impact on Taxpayers in 2017.” As always, these statements reflect the opinions of John Kasperek Co., Inc. and you should consult your attorney and/or tax professional to best determine how the law affects your unique situation. 

There is a lot of buzz about the new Local Government Travel Expense Control Act, as local boards attempt to fully understand the scope of impact on policy and compliance before the law goes into effect in 2017. Illinois Governor Bruce Rauner actually signed House Bill 4379 into law last July after it passed both chambers of the General Assembly unanimously during the spring legislative session.

The intent of the legislation is loud and clear – the bill is specifically aimed to safeguard against excessive travel and eliminate entertainment expenditures by units of local government, such as non-home rule municipalities, townships, community colleges and school districts. (Home rule is defined as a County which has a chief executive officer elected by the electors of the county and any municipality which has a population of more than 25,000. Other municipalities may elect by referendum to become home rule units.)

HB4379 states that “units of local government shall, by resolution or ordinance, regulate travel, meal, and lodging expenses of officers and employees including: (1) the types of official business for which travel, meal, and lodging expenses are allowable; (2) maximum allowable reimbursement for travel, meal, and lodging expenses; and (3) a standardized form for submission of travel, meal, and lodging expenses.”

In reviewing the Act and numerous narratives on its impact, it appears to be more about disclosures than limitations. Some expenses may only be approved after specified documentation has been submitted and the expenses are approved by a roll call vote of the governing board. Additionally, any expenses submitted over the new limits due to extraordinary circumstance or emergency may also be approved by a vote at an open meeting.

The law does, however, prohibit reimbursement for entertainment expenditures. Entertainment is broadly defined to include “shows, amusements, theaters, circuses, sporting events or any other place of public or private entertainment or amusement unless ancillary to the purpose of the program or event” and could encompass just about anything for a prohibition.

Official Business
The Act requires that “Official Business” be defined by ordinance or resolution. It leaves it up to the agency to determine that definition. A sample ordinance from the Illinois Municipal League (IML) states that “public business means expenses incurred in the performance of a public purpose which is required or useful for the benefit of the City/Village to carry out the responsibilities of City/Village business.”

Maximum Allowable Reimbursement
The Act also requires limitations on reimbursement levels. Again, it leaves those determinations to the discretion of the agency. A sample Township Officials of Illinois (TOI) ordinance provides three options: 1—limitations are set by the State Travel Control Board; 2—limitations are set by the GSA and used by the IRS; 3—limits are simply established by the governing body itself.

Approval of Expenses
The governing board must approve by roll call vote any reimbursement that exceeds the amounts specified by the unit of government, or if the expenses are for one of the board members themselves. The board approval may occur either before or after the travel occurs.

Documentation of Expenses
This final section appears to be the focus of the Act and aims for a standardized form that assures full disclosure and reporting consistency over time. Although the Act consistently refers to reimbursement, it also requires an advance estimate if the expenses have not yet been incurred, such as travel per diem. As for the usage of a credit card, the law requires receipts for reimbursement if the expenses have already been incurred along with the disclosure of the individual’s name, title/office and the dates involved. (The State allows for a signed type written statement certifying the expenses if a receipt is not available.) Essentially, those individuals who receive advances, be they at a per diem or other rate, need to submit a list of expenses in advance, and those who seek reimbursement need to provide adequate documentation. Lastly, be aware, all documentation submitted as proof for reimbursement shall be subject to disclosure under the Freedom of Information Act.

John Kasperek Co., Inc. is advising our government clients on the development of their resolutions now for January or February approvals to avoid significant inconveniences. The Act’s mandated resolutions/ordinances must be approved by local public agencies prior to June 29, 2017; however, all travel related expenses will require approval by formal roll call vote after March 1, 2017, if no such policy is in place. If the resolution/ordinance is not approved by June 29, 2017, no travel, meal or lodging expenses will be permitted to be paid by the local public agency.

As always, these are the opinions of John Kasperek Co., Inc. and you should consult your attorney and/or tax professional to best determine how the law affects your unique situation.

As you begin your year-end tax preparations – organizing your documents and making last minute tax deductible donations – don’t forget to consider the tax implications of any gambling wins and losses you may have incurred throughout the calendar year. Gambling can often be an overlooked benefit or potential liability for individuals who itemize.

Gambling winnings are fully taxable and must be reported on a return. Gambling income includes cash winnings or fair market value from prizes or “comps” from activities sponsored by lotteries, raffles, horse races, and casinos among others. Gambling winnings must be reported on a Form 1040 (PDF) as "other income" including winnings that are not subject to withholding.  

Be aware, payers are required to issue a Form W-2G on “certain gambling winnings” or winnings subject to federal income tax withholding. The W2-G is issued to players and is also sent to the IRS by the payer for winnings of $600 or more from state lotteries, horse racing, dog racing or jai alai and other wagering transactions; if the winnings are at least 300 times the wager; winnings of $1,200 or more from bingo and slot machines; winnings of $1,500 or more from keno; and more. (W2-Gs are not required for winnings from table games such as blackjack, craps, pai gow, baccarat and roulette, regardless of the amount.) Additionally, all winnings are taxable by the state without regard to losses.

Unfortunately for those of us who were not so lucky last year, gambling losses are only deductible for individuals or married couples who claim winnings on their itemizations, and may not be more than the amount of gambling income reported on a return. Receipts, tickets, statements, or other records that show the amount of both winnings and losses should be provided in order to deduct losses (Publication 529). Married couples filing a joint return must combine their winnings and combine their losses, and report only one figure for each.

“As with all itemizations, keeping an accurate diary or other record of your gambling winnings and losses is critical,” said John Kasperek, Jr., President of John Kasperek Co., Inc., a Certified Public Accounting Firm in Calumet City, Illinois.  “Rest assured, the IRS will require these documents in the event of an audit.”

 The IRS requires that an accurate record must be maintained for substantiating wins and losses, and that the diary should contain at least the following information: the date and type of specific wager; the name and address or location of the gaming establishment; the names of any others who were present with the winner; and the amount won or lost. The IRS will also look for supplemental payment or withdrawal records.

 Kasperek added, “It is important to always be aware of your tax obligations. When in doubt, consult an expert.”

According to the Internal Revenue Service (IRS), less than one-third of the more than 13 million taxpayers who requested automatic six-month extensions this year have yet to file their taxes. As the Oct. 17 automatic extension deadline approaches, millions of Americans will again rush to get their returns completed. Unfortunately for many, taking advantage of the extension does not always equate to maximizing tax benefits.

“So many people are not aware of the extent of their options as they prepare for the end of tax season,” said John Kasperek, Jr., of John Kasperek Co., Inc. in Calumet City, Illinois.  “I encourage everyone on an automatic extension to take advantage of the extra time and consult with a tax accountant, or at the very least to thoroughly review their returns for overlooked benefits before filing by the October 17 deadline.”

Some of the commonly overlooked benefits noted on the IRS website include:

• Benefits for low-and moderate-income workers and families, especially the Earned Income Tax Credit. The EITC Assistant can help taxpayers see if they’re eligible.
• Savers credit, claimed on Form 8880, for low-and moderate-income workers who contributed to a retirement plan, such as an IRA or 401(k).
• American Opportunity Tax Credit, claimed on Form 8863, and other education tax benefits for parents and college students.
• The health care law includes  the individual shared responsibility provision and the premium tax credit that may affect a taxpayer’s return.

Unfortunately, even with an extension, taxpayers should be aware that they will owe interest on any tax not paid by the regular due date. The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 18, 2016.

Taxpayers with extensions should file their returns by Oct. 17, even if they can’t pay the full amount due. There are late filing penalties, usually of 5%. Penalties are charged for each month or part of a month the tax is unpaid. These penalties will not be charged if there is “reasonable cause” for not paying on time (attach a statement to your return fully explaining the reason to your Form 4868).

“The key to the automatic extension is creating the best possible estimate of your tax liability based on the information you have and considering previous years, and then making whatever payment you can along the way,” said Kasperek. “If you aren’t able to pay in full by the deadline, you may set up a payment agreement with the IRS online.”

Taxpayers who owe $50,000 or less in tax, penalties and interest can use the Online Payment Agreement to set up a monthly payment plan for up to 72 months, or request a short-term plan. Taxpayers can choose this option even if they have not yet received a bill or notice from the IRS.

There are a number of payment methods available online including IRS Direct Pay, Electronic Federal Tax Payment System (enrollment is required) and Electronic Funds Withdrawal which is available when e-filing. Taxpayers can pay what they owe using, the IRS2Go, mobile app.

Whether you are a recent accountancy graduate or have been working in the field as you attempt to pass the daunting CPA Exam, focused preparation is critical to one’s success. Countless practicing certified public accountants (CPAs) will tell you that they once said ‘this is the last time I am taking the CPA Exam if I don’t pass this section.’ Well it’s a good thing for them that they didn’t give up.

“The CPA Exam is an arduous test of one’s knowledge and understanding of the principles of accountancy, but it is absolutely within reach, even for those who have previously failed, with the right balance of practice time and focus,”said Stephanie Blanco, CPA, Chair of the Illinois CPA Society Government Report Review Committee and Senior Manager atJohn Kasperek Co., Inc. in Calumet City, Illinois. “Having a thorough understanding of what is most important along with knowing one’s own areas of weakness can be the difference that drives up a score.”

Unfortunately, years of shared knowledge and experience about the current exam rigors and pitfalls won’t be so useful to those sitting for the exam next year as American Institute of CPAs (AICPA) has announced changes are comingApril 1, 2017 when they launch the next version of the “Uniform CPA Examination.”

Not everything will change, however, and the 2017 Exam will continue to be organized in four portions:  Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation.  The next version will focus less on memory and more on analysis and evaluation skills. Other key changes, according to the Journal of Accountancy include:

• Total testing time will increase from 14 to 16 hours; candidates are allowed four hours to work on each section of the exam, minus any time they take for breaks that are not standardized.
• The tests will feature fewer multiple-choice questions and more task-based simulations. Weighting for multiple-choice questions and task-based simulations has also changed; each will now count for 50% of a candidate's score on the AUD, FAR, and REG sections. On the BEC section, multiple-choice questions will count for 50% of the score, with task-based simulations counting for 35%, and three written communication questions making up the remaining 15%.
• Candidates will now be offered a standardized 15-minute break approximately halfway through each section; this break stops the exam clock. The break is optional, but if candidates decline it, they will not be offered an additional opportunity to stop the clock for a 15-minute break. Additional breaks between testlets will still be permitted, but they won't pause the clock.

The Examinations Team has released new blueprints to replace current content outlines that are publicly available on the AICPA website.

“Another roadblock we hear from testers is that the exam cost is not only a deterrent but also an added stress while testing,” added Blanco. “The good news is there are plenty of scholarship opportunities out there. The Illinois CPA society, for example, accepts CPA Exam Award Scholarship applications four times per year for those who have not yet completed all four sections.”

Each quarter, the Illinois CPA Society (ILCPAS) offers a scholarship opportunity that reimburses approximately $750 for the National Association of State Boards of Accountancy fee, part of the total exam cost. The ILCPAS CPA Exam Award Scholarship is funded by the CPA Endowment Fund of Illinois. Applicants must meet the following criteria:

• Be a U.S. Citizen or Permanent U.S. Resident and be an Illinois Resident.
• Not be reimbursed for CPA exam fees by an employer.
• Maintain a current or final cumulative GPA of at least 3.0/4.0 or equivalent.
• Have pre-approved status by Illinois Board of Examiners and agree to take at least one section within nine months of the date on the application approval letter from the Board of Examiners.
• Must not have completed all four sections of the exam, but may apply with a portion of the exam completed.
• Complete all four sections of the exam within 18 months of being approved to test by the Board of Examiners. (If all four sections are not completed within 18 months, candidates may be asked to refund all, or a portion of the award based on the number of sections completed.)
• Not already received this award.

The next two scholarship deadlines are on September 15 and November 15, 2016.

Marriage and divorce are both common experiences in Western culture. While more than 90 percent of people marry by age 50, about 40 to 50 percent of married couples in the United States divorce according to the American Psychological Association. The divorce rate for subsequent marriages is even higher.

Going through a divorce is the 2nd most stressful life event an individual can experience, according to the American Institute of Stress. While the emotional impact should be the most critical aspect for families to navigate, sorting out the financial implications can be especially burdensome. Knowing a few basic tax ramifications can be helpful to alleviate some of the financial stress.

“Name or address change are just a few items you may need to consider if you are going through a divorce,” said Kyle Kasperek, Senior Associate at John Kasperek Co., Inc., a certified public accounting firm in Calumet City, Illinois. “There are also tax implications for situations such as alimony and claiming dependents that should not be overlooked.”

Five commonly asked tax questions about divorce:

1. How do I change my married name back to my maiden name?

Individuals who decide to change their name after a divorce should inform the Social Security Administration and file Form SS-5 – application for a Social Security Card.

2.  Is alimony tax deductible?

Individuals paying legally decreed alimony may claim it as a deduction regardless if they itemize. However, voluntary payments are not deductible. The spouse receiving alimony includes this as income.

3.  Will my child support be taxed?

No, child support payments are not taxable, nor are they deductible for the payor.

4.  Who is able to claim the children as dependents?

Generally, the custodial parent claims the dependent but there are other factors which the noncustodial parent should be aware in certain situations. Additionally, a divorce or separation decree may entitle the noncustodial parent to claim the dependent based on the terms of the agreement. There are also special “tiebreaker rules” when there is no divorce decree in place.

5.  Are moving expenses deductible?

No, the only applicable situation for deducting moving expenses is within one year of the date you start work at a new job location. Additional rules apply to this requirement. 

Nonprofit organizations and donors recently received a rare vote of support for privacy from the federal government, as the United States House of Representatives overwhelmingly passed a bill designed to amend the Internal Revenue Code to prohibit the Internal Revenue Service(IRS) from requiring a tax-exempt organization to include the name, address, or other identifying information of contributors on annual returns. The House passed the “Preventing IRS Abuse and Protecting Free Speech Act” as introduced by Representative Peter Roskam, R-IL, by a vote of 240-182.

“We voted to eliminate a confidential form the IRS proved incapable of securing,” Roskam said after the legislation passed in June. “The agency has said it doesn’t even need this form for tax administration in the first place.”

Previously, 501(c)(3) and 501(c)(4) nonprofits were required to provide the IRS with the names and addresses of contributors who gave $5,000 or more to the group that year on the Schedule B of their annual Form 990 returns.

“Congress, in essence, has expressed their desire for exempt groups to stop reporting their donors to IRS,” said Stephanie Blanco, CPA, Senior Manager at John Kasperek Co., Inc. and Chair of the Illinois CPA Society Government Report Review Committee. “It signals a minor shift towards reporting privacy which will reduce transparency, but nonprofits may also realize a positive benefit through increased support from donors who prefer to remain anonymous.” 

H.R.5053 does include exceptions for “(1) required disclosures regarding prohibited tax shelter transactions; and (2) contributions by the organization's officers, directors, or five highest compensated employees (including compensation paid by related organizations).”

“Like all changes, there are protections and exceptions to this rule particularly regarding donations from a nonprofit’s leadership,” added Blanco. “It is critical for nonprofit organizations to be actively informed about the ongoing federal changes to disclosure and regulations as they continue to evolve.”

Creating a charitable organization is not a difficult task with the help of a good accountant. Many successful individuals, business owners and family trusts spend a significant amount of time, money and effort seeking out and/or vetting organizations to meet their donor goals, when in reality, establishing their own 501(c)(3) may be a much more successful way of creating a legacy of support for a particular cause. Additionally, local charitable service organizations can greatly impact communities with significant at-risk populations.

“There are just two critical steps in creating a charitable organization at the state and federal level in terms of filing articles of incorporation and applying for 501(c)(3) status respectively,” said Kyle Kasperek, of John Kasperek Co., Inc., a certified public accounting firm in Calumet City, Illinois. “Both tasks certainly can be accomplished on your own, but I would recommend guidance from an accounting professional to ensure a successful application particularly as it pertains to gaining tax exemption recognition from the IRS.”

 Kasperek most recently assisted with the establishment of a local youth organization and says the momentum can be “inspiring, impactful and immediate” during the infancy of a charitable organization.

Another common misconception is that creating a charitable organization is expensive. In fact, the Internal Revenue Service (IRS) further lowered the cost of applying for tax-exempt status effective July 1st from $400 to $275 for “small” organizations using the new short-form.  Organizations with less than $250,000 in assets or $50,000 in annual gross income can utilize the three-page 1023-EZ. The Form 1023-EZ was first established back in 2014 to streamline the application process under Section 501(c)(3) of the Tax Code. Previously, all groups seeking charity status regardless of their size were required to use the lengthy 26-page Form 1023.

“Perhaps more significant than the recent fee reduction is that the 1023-EZ has helped and will continue to reduce the backlog of submissions, allowing applicants to move forward much faster with their strategic planning,” added Kasperek.  “And it is a much simpler, less time-consuming form to complete.”

While the State of Illinois ranks near the bottom in most key indicators of economic growth forecasting, the Illinois General Assembly is leading the way in a new philosophy directed toward prudent administration of grant funds. In fact, Illinois adopted the nation’s first state legislation requiring the standardization for accountability throughout the entire life cycle of a grant – the Grant Accountability and Transparency Act (GATA).

According to the Illinois State Board of Education (ISBE), the purpose of GATA is to increase accountability and transparency in the use of grant funds while reducing the administrative burden on both state agencies and grantees. The law, which has passed in both houses and was signed by the Governor, re-affirms Illinois commitment to apply federal rules for federally funded and pass-through grants as well as adopting these rules for state grants.  GATA specifically adopts 2 CFR 200 Uniform Requirements, which should streamline administrative functions.  The intent is to develop a coordinated process to limit redundancy and abuse. 

“GATA actually became effective on July 1, 2015, but state agencies are now in the process of implementing the requirements for the fiscal year 2017 grant cycle,” said Stephanie Blanco, CPA, Senior Audit Manager at John Kasperek Co., Inc. in Calumet City, Illinois.  “If you participate in giving or receiving state or federal grants then GATA applies to you and you should make sure that your organization understands the rules that apply to your grants.”

So what should grant administrators expect?  The key points as highlighted by the Illinois.gov website are as follows:

1. Establish a State Catalog of Financial Assistance;
2. Establish qualifications and testing of fiscal agents;
3. Establish Audit requirements for sub-recipients who do not meet the new $750,000 threshold, for-profit entities and state grants;
4. Establish a Grant Accountability Officer for each grant making agency;
5. Create a web portal for posting relevant information;
6. Set administrative requirements through supplemental rules, in accordance with 2 CFR 200;
7. Set Cost principle requirements including implementation of negotiation of indirect cost plans;
8. Establish a “State Debarred and Suspended” List (Excluded parties list);
9. Establish a Pre-qualification of grantees and contractors;
10. Establish Mandatory disclosures including conflict of interest;
11. Establish training requirements for staff of grant applicants;
12. Establish policies and procedures for an exemption process that allows exemption in whole or part to these rules in unique situations;
13. Establish a Grant Accountability and Transparency Unit (GATU) in the Governor’s Office of Management and Budget.

The Department of Labor (DOL) recently announced its final change to overtime rules raising the minimum salary for white collar exemptions to take effect on December 1, 2016, nearly 18 months after issuing its Notice of Proposed Rulemaking (NPRM) in July of 2015. Most significantly, final rule will raise the salary threshold from $23,660 to $47,476. The significance of the change could potentially impact more than 4 million workers by the end of the first year of implementation by automatically extending overtime protections to a much larger segment of the workforce and thereby increasing their take home pay.

“We want our clients to be aware of their responsibilities to make the necessary adjustments in advance of December, whether they choose to raise salaried employees over the new threshold or change them to non-exempt,” said John Kasperek, Jr., President of John Kasperek Co., Inc. “Unpaid overtime and penalties can be significant to employers who incorrectly classify employees, so it’s important to understand exemptions and how to apply them.”

When an employee is exempt, it means that the employee meets a specific definition under the law and is not entitled to overtime and other possible benefits extended to non-exempt employees.Some employees are exempt from the overtime pay provisions, some from both the minimum wage and overtime pay provisions and some from the child labor provisions of the Fair Labor Standards Act (FLSA).

The primary advantages of classifying employees as exempt are that employers don’t have to track their hours or pay them overtime, no matter how many hours they work. Under FLSA, employers must pay non-exempt employees one-and-a-half times their regular rate of pay when they work more than 40 hours in a week.

The FLSA contains many exemptions, but the most commonly applied are the white-collar exemptions for administrative, executive, and professional employees, computer professionals, and outside sales employees.

Other provisions to the DOL’s final rule include:

• Sets the total annual compensation requirement for highly compensated employees (HCE) subject to a minimal duties test to the annual equivalent of the 90th percentile of full-time salaried workers nationally ($134,004)

• Establishes a mechanism for automatically updating the salary and compensation levels every three years to maintain the levels at the above percentiles and to ensure that they continue to provide useful and effective tests for exemption

• Amends the salary basis test to allow employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the new standard salary level

Identity thieves are on the prowl in today’s growing world of social network sites and online forums.  Even conscientious consumers are becoming victims at a higher rate.  Identity theft continues to be the highest reported consumer crime to the Federal Trade Commission (FTC), and has been for 15 consecutive years.  Furthermore, identity theft topped the Internal Revenue Service’s (IRS) list of tax scams for 2016.  The IRS continues to aggressively pursue the criminals that file fraudulent returns using someone else’s Social Security number.

“These staggering statistics should be an alarm to taxpayers  and legislators alike to increase awareness and protection from this crippling crime,” said John Kasperek, Jr., President of John Kasperek Co., Inc., a Certified Public Accounting Firm in Calumet City, Illinois.  “Our firm has re-emphasized to our clients this year to act with extreme caution, especially with protection of Social Security numbers.”

Federal lawmakers have taken notice.  The U.S. House of Representatives recently passed a bill they are calling Stolen Identity Refund Fraud Prevention Act of 2016.  H.R.3832amends the Internal Revenue Code of 1986 to prevent tax-related identity theft and tax fraud.  Among other directives, the bill provides for the establishment of an office within the IRS as a central point of contact for possible identity theft victims, and improves the taxpayer notification and follow-up system for breaches suspected/identified by the Secretary of Treasury.

The bill was originally introduced by Representative Jim Renacci of Ohio and was recently received in the Senate and referred to the Committee on Finance. 

The IRS encourages at minimum, these basic steps for protecting your data:

• Always use security software with firewall and anti-virus protections. Use strong passwords.
• Learn to recognize and avoid phishing emails, threatening calls and texts from thieves posing as legitimate organizations such as your bank, credit card companies and even the IRS.
• Do not click on links or download attachments from unknown or suspicious emails.
• Protect your personal data. Don’t routinely carry your Social Security card, and make sure your tax records are secure.

“Even though tax season is over for most, the scams are not – be aware of the fraudulent phone and email phishing scams going around,” added Kasperek.  (These scams rank two and three on the IRS list of tax scams for 2016.)

If you believe you are at risk of identity theft due to lost or stolen personal information, contact the IRS Identity Protection Specialized Unit at 1-800-908-4490.  You may also report instances of IRS-related phishing attempts and fraud to the Treasury Inspector General for Tax Administration at 1-800-366-4484.

As the global economy has undergone significant change during the past decade, certified public accountants (CPAs) have been forced to adapt to continuing challenges to their working knowledge and changes to the accounting standards and the auditing and reporting requirements determined by the Financial Accounting and Standards Board (FASB). The mission of the FASB is to establish and improve standards of financial accounting and reporting that foster financial reporting by nongovernmental entities that provides decision-useful information to investors and other users of financial reports. These ongoing updates set forth by the FASB along with the general evolution of the accounting profession have led the American Institute of CPAs (AICPA) to announce changes to the already daunting CPA Examination.

According to their website “on April 1, 2017, the AICPA will launch the next version of the Uniform CPA Examination, an assessment steeped in research and rigor that remains aligned with professional practice. The next Exam will continue to provide reasonable assurance to boards of accountancy that individuals who pass possess the minimum level of technical knowledge and skills necessary to protect the public interest.”

So what does this mean for graduates who have already been studying to sit for the CPA Exam?

“I would recommend to recent graduates, and especially to those individuals who have completed portions of the CPA Exam or those who have just not yet passed, to study rigorously and take the Exam as soon as you are prepared and able to sit for it,” said Stephanie Blanco, CPA, Senior Manager at John Kasperek Co., Inc. in Calumet City, Illinois. “The Exam is an arduous test of one’s knowledge and understanding of the principles of accountancy, but it is absolutely within reach, even for those who have previously failed, with the right balance of practice time and focus.”

The 2017 Exam will continue to be organized in four portions: Auditing and Attestation, Business Environment and Concepts, Financial Accounting and Reporting, and Regulation. However, as a result of the AICPA team’s most recent study, the new version will focus less on memory and more on analysis and evaluation skills.

“My fear is that the new Exam could provide an additional roadblock for those who are this far in the process,” added Blanco. “The Exam is undoubtedly a critical hurdle for all CPAs and an important marker in assessing one’s level knowledge and skill, but I believe equally important is the development of that talent in the field. So once you achieve your CPA, it is important to be selective in your career choices to ensure you are growing a broad skill set to be agile and successful in the future.”

John Kasperek Co., Inc. was founded in 1989 to serve the financial needs of the Chicago Southland and Northwest Indiana region. Led by company president John Kasperek, Jr., the firm is dedicated to providing a myriad of personalized financial guidance and auditing services to a diverse client base of individuals, businesses and corporations, not-for-profit organizations and local governments.

The end of tax season is a relief for most (maybe not so much for those who filed extensions) but doesn’t necessarily close the book on your 2015 taxes just because you filed on time. You may realize you made a mistake, overlooked a deduction or income, or received a revised 1099 form or other adjustment. The choice to file an amended return should not be made based on whether or not you getting more money back or are increasing your tax liability, but rather on being as honest and thorough as you are able.

“Often, clients leave money on the table because they are not aware of their options,” said Kyle Kasperek, of John Kasperek Co., Inc. in Calumet City, Illinois. “We encourage our clients to be attentive to what they receive in the mail and to speak up if they realize an oversight for better or worse.”

The good news is that if you file an amended return in your favor you can ask for money back.  You have three years from the date you filed your original return, or within two years from the date you paid the tax, whichever is later. No matter when you choose to file your amended return, the IRS will typically have three years from the filing date of the original return to perform an audit.

“If you will be receiving a significant amount of money back, be aware that the IRS may be more diligent in their review of review your amended return,” said Kasperek.  “You also have the option of having the refund applied to your current year’s tax.”

So how do you file an amended return?  Be advised ALL amended returns must be filed by paper via Form 1040X no matter how the original return was filed or which forms were used. 

If filing an amended return will increase your tax liability, you should complete the Form 1040X as soon as possible.  Many individuals who realize they will owe more are inclined to wait to amend their return at the latest possible date; however, they will owe additional interest and probably penalties too. Interest is charged on any tax not paid by the original return, and the IRS will bill accordingly (penalties may also be assessed but can be contested).

So when shouldn’t you file an amended return after noticing a mistake?

“If you made math mistakes or simply failed to attach certain documents, the IRS will usually make the adjustments or reach out to you if more information is needed,” added Kasperek.

If you are like the thousands of Americans who will owe taxes or are having difficulty finalizing your taxes this month, it is important to understand your options when filing by the close of tax season. You are not alone. The good news is that the Internal Revenue Service provides a fair extension policy for individual taxpayers and partnerships who apply for the automatic extension by April 18.

“Many people are not aware of the extent of their options as they prepare for the end of tax season,” said John Kasperek, Jr., of John Kasperek Co., Inc. in Calumet City, Illinois.  “The IRS offers automatic extensions for up to six months [October 17] and there are several easy ways to request an extension of time to file a U.S. income tax return.”

Individuals will need to file a Form 4868 and can pay all or part of your estimated income tax due using Direct Pay, the Electronic Federal Tax Payment System, credit card, or by check to avoid credit and debit card fees. You can file Form 4868 electronically by accessing IRS FreeFile using your home computer or by utilizing a This email address is being protected from spambots. You need JavaScript enabled to view it., or you can file a paper Form 4868 and enclose payment of your estimate of tax due. Businesses will typically use Form 7004.

Unfortunately, even with an extension you will still owe interest on any tax not paid by the regular due date. The late payment penalty is usually ½ of 1% of any tax (other than estimated tax) not paid by April 18, 2016. There are also late filing penalties, usually of 5%. Penalties are charged for each month or part of a month the tax is unpaid. These penalties will not be charged if you can show reasonable cause for not paying on time (attach a statement to your return fully explaining the reason to your Form 4868).

“The key to the automatic extension is creating the best possible estimate of your tax liability based on the information you have and considering previous years, and then making whatever payment you can,” said Kasperek. “Once you apply for the automatic extension, you can file your tax return any time before the extension expires–the sooner the better for your penalties.”

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