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August Newsletter

August Tidbits


Are You a Business Hiring Employees

 If you hire employees there is information you need to secure from the new employee for your records. The forms they fill out will provide proof of eligibility to work in the United States, their social security number and their withholdings.


Eligibility to Work in the United States

You must verify that each employee is legally eligible to work in the United States. Have each employee you hire fill out Form I-9 which is available from the U.S. Citizenship and Immigration Services’ website at the following link:


Employee’s Social Security Number

You are required to get each employee’s name and Social Security Number (SSN) to enter them on Form W-2. (This requirement also applies to both resident and nonresident alien employees.) You should ask your employee to show their social security card if it is available. Any employee without a social security card should apply for one using Form SS-5, available at the website. Do not accept an ITIN in place of an SSN for employee identification for work. An ITIN is only available to resident and nonresident aliens who are not eligible for U.S. employment but need identification for other tax purposes. You can identify an ITIN because it begins with the number “9” even though it is formatted like an SSN (NNN-NN-NNN). 


Employee’s Withholding Amount

To know how much income tax to withhold from an employee’s wages, you should have them fill out a Form W-4 which is available on our website under “Useful Links” . Ask all new employees to give you a signed Form W-4 when they start work and make the form effective by the first wage payment. If an employee is going to claim an exemption from income tax withholding, they must indicate this on their W-4. The amount of income tax withholding must be based on the employee’s filing status and withholding allowances as indicated on the form. If a new employee does not give you a completed Form W-4, then you should withhold tax as if he or she is single, with no withholding allowances.

A Form W-4 will remain in effect until the employee gives you a new one. If an employee gives you a Form W-4 that replaces an existing Form W-4, begin the change in withholding no later than the start of the first payroll period ending on, or after the 30th day, from the date you received the replacement Form W-4. Additional withholding may be required on wages paid to non-resident aliens. For additional information you can go to


Simplified Option for Home Office Deduction

There is a new option available in 2013 for taxpayers who use their home for business. This simplified option does not change the rules for who may claim a home office deduction, it simplifies the calculation and recordkeeping requirements.

Here are six facts the IRS wants you to know about the new, simplified method:

1. If you use this method in 2013 to claim the home office deduction, you will not need to calculate your deduction based on actual expenses. Instead, you multiply the square footage of your home office by a prescribed rate.

2. The maximum footage allowed is 300 square feet and the rate is $5 per square foot of the part of your home used for business. Therefore, the most you can deduct using the new method is $1,500 per year.

3. You may choose to use either the simplified method or the actual expense method for any tax year. However, once you use a method for a specific tax year, you cannot later change to the other method for that same year.

4. Should you use the simplified method, you cannot depreciate your home office. You can still deduct other qualified home expenses, such as mortgage interest and real estate taxes by claiming these deductions on Schedule A, Itemized Deductions.. You will not need to allocate these expenses between personal and business use because this allocation is only required if you use the actual expense method.

5. If you use the simplified method, you can still fully deduct business expenses that are unrelated to the home. These expenses may include costs such as advertising, supplies and wages paid to employees.

6. If you use more than one home with a qualified home office in the same year, you can only use the simplified method for one house in that year. Fortunately, you may use the simplified method for one and actual expenses for any others in that year.

For more about this easier way to deduct your home office, you can visit


Tips on Gambling Income and Losses

No matter what you play, all your gambling winnings are taxable. The IRS offers some tax tips for the casual gambler.

–  Gambling income includes winnings from lotteries, raffles, horse races and casinos, but it also includes cash and the fair market value of prizes you receive, such as cars, boats and trips.

–  You may receive a Form W-2G, Certain Gambling Winnings, from the payer. This form reports the amount of your winnings to you and to the IRS. The payer issues the form depending on the type of gambling, the amount of winnings, among other factors. If the payer withholds federal income tax from your winnings, you will also receive a Form W-2G.

– You should report all your gambling winnings as income on your federal income tax return true even if you do not receive a Form W-2G.

– You may deduct your gambling losses on Schedule A, Itemized Deductions but the deduction is limited to the amount of your winnings. You must report your winnings as income and claim your allowable losses separately on Schedule A.

– It is important to keep accurate records of your gambling activity. This can include items such as receipts, tickets or other documentation. You should also keep a record of your activity showing your winnings separately from your losses.

Renting Your Vacation Home

A vacation home can be a house, apartment, condominium, mobile home or boat. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return. However, you may not have to report that income if the rental period is short.

In most cases, you can deduct the expenses of renting your property, although your deduction may be limited, if you also use the home as a residence.

Below are some tips from the IRS about vacation rental property.

* Rental income and deductible rental expenses detailed on Schedule E, Supplemental Income and Loss of your federal income tax return.

* You may also be subject to paying “Net Investment Income Tax” on your rental income. Please contact our office with any questions.

* If you personally use your property and sometimes rent it to others, there are special rules that apply. You must divide your expenses between the rental use and the personal use.  To do so, the number of days used for each purpose determines how to divide your costs.

*Report deductible expenses for personal use on Schedule A, Itemized Deductions like you normally do for such expenses as mortgage interest, property taxes and casualty losses.

* If the property is “used as a home,” your rental expense deduction is limited by the amount of the rent you received.

* If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.

Publication 527 is available at the website for more details on this topic.


Important Date

Calendar-year corporations and partnerships on extension are due by September 16th.

Third quarter federal estimated tax payments for individuals, trusts, and calendar-year corporations are due by September 16th.  NH BET estimated payments are also due.

Contact Info

Comolli & Company, P.C.
45 Stiles Road, Unit 208
Salem, NH 03079
Phone: (603) 898-3322
Fax: (603) 898-6322