Archive for the ‘Tax News’ Category

The recent expansion of the 1099 reporting rules are officially repealed.  President Obama has signed the legislation, which scraps the requirement that business issue 1099-MISC forms when paying $600 or more to corporations or for goods.  Also gone is the rule making owners of rental properties file 1099s on payments of $600 or more for goods & services.  Business, landlords and lobbying firms complained that the increased reporting was a hassle, and lawmakers finally agreed.

It’s Not What You Earn, But What You Keep, After Taxes.™

CHARLOTTE: With football season winding down, basketball and hockey seasons in full swing, and baseball season right around the corner, there’s another season we all need to gear up for. That’s the 2010 tax filing season…and it’s quickly approaching.

 it’s important for you to contact your tax professional early to reserve a convenient time for your appointment.  Your tax return can be done more accurately and in a shorter period of time if all of the information is available at the initial appointment, so being organized can help both you and your tax preparer.

Start preparing early for your tax appointment by compiling a list of the documents you expect to receive based on last year’s statements and this year’s activities.  If you’re not sure of what documents you may need, call your tax preparer to discuss.  As you start receiving your documents in the mail (usually around the end of January), mark them off your list and put them in a tax folder with the list to stay organized.  Better yet, use a tax organizer if provided.

If employed, you will need to include your W-2.  If you received income from interest, dividends, pensions, self-employment, government payments, or the sale of property, you will receive a Form 1099.  It is helpful to bring the actual statements to your appointment. 

Remember that all forms will not look alike; be sure to check the bottom of year-end statements that may be substitute 1099s.  Also don’t forget to include any Schedule K-1s you receive from a partnership, an S corporation, or estate.  If you had any income not reported on the forms listed above, make a note for your tax preparer to include it 

If you sold stock during the year, you will receive a 1099 as described above that includes the gross proceeds.  However the price you paid for the stock, the cost basis, is not listed on the 1099 (this will change for tax year 2011).  If the stock was received as a gift or inheritance, other means of determining the cost will be necessary.  For every stock you sold, you should include the basis for your tax professional to calculate the net gain/loss.

If you own a home, it is probable that you can itemize deductions.  Each year, bring the property tax bill and the mortgage interest statement to your tax appointment. County vehicle tax and medical expenses are deductible if they exceed 7.5% of your adjusted gross income (AGI).  Prescription drugs, doctor, dental, hospital bills, medical insurance premiums, and the mileage to and from the doctor’s office enter into this category.  

Charitable contributions are a good source of deductions.  Contributions can be cash, property, or out-of-pocket expenses you paid to do volunteer work. If you drove to and from the volunteer work, you can take the actual cost of gas and oil or use the standard rate of 14 cents a mile.  You need a receipt for any donation you claim.

This article contains general tax information for taxpayers and is not all inclusive.  Each tax situation may be different, so don’t rely upon this information as your sole source of authority.  Please seek professional advice for all tax situations.  Remember, tax professionals are experts who keep current on tax law changes.  They can save you time and offer insight on how to use the tax breaks available to you. 

This is a good time to discuss with the tax professional any questions and changes in your financial situation that may have an impact on your future taxes.

Scott Boyar is a Charlotte-based CPA, PLLC, with 30 years of corporate and personal tax experience, providing full-time, year-round accounting services and tax support . He is licensed as a Certified Public Accountant in North Carolina and New York.

Reach him at: www.sboyarcpa.com, 704.527.2725 or scott@sboyarcpa.com

It’s Not What You Earn, But What You Keep, After Taxes.™

S-Corp owners take low salaries so they can receive the bulk of the corporation’s profits as dividends, which are not subject to payroll taxes (Social Security & Medicare tax).  IRS and the courts balk at this practice.  In a recent case, a CPA (who should have known better) took a $24,000 salary in a year when his share of the S-Corp’s profits was around $200,000.  A district court agreed with the with the IRS that his pay was unreasonably low and ruled that the dividends are properly reclasified as salary and subject to payroll taxes.

It’s Not What You Earn, But What You Keep, After Taxes.™

IRS has issued a detailed, 80-page document discussing and rebutting many of the more common frivolous arguments made by individuals and groups that oppose compliance with federal tax laws.  An accompanying news release reminds taxpayers that under Code Sec. 6702, the penalty for frivolous tax returns is $5,000, and applies when a person submits a tax return or other specified submission, and any portion of the submission is based on a position that IRS identifies as frivolous.  IR 2010-18

It’s Not What You Earn, But What You Keep, After Taxes.™

On February 1, the President issued his FY 2011 budget proposals, accompanied by the Treasury’s release of its “General Explanations of the Administration’s Fiscal Year 2011 Revenue Proposals” (known as the Green Book).  The budget and the Green Book reveal that the Administration has a robust agenda of tax proposals it will push Congress to enact.

It’s Not What You Earn, But What You Keep, After Taxes.™

The IRS has announced the release of the revised Form 5405,First Time Homebuyers Credit and Repayment of the Credit, that taxpayers need to use to claim the first time homebuyer credit (FTHTC) in 2009.  Processing of these returns will

It’s Not What You Earn, But What You Keep, After Taxes.™

In a Chief Counsel Memorandum (CCM), IRS has recommended that its Collection employee not access any IRS database to determine whether a taxpayer’s authorized representatives are in compliance with their own filing and payment obligations.

It’s Not What You Earn, But What You Keep, After Taxes.™

Many Important tax changes go into effect in 2010 apart from the numerous changes that apply due to inflation indexing.  These non-indexing changes result from various laws that were enacted and regs and othe guidance issued over the past few years.  See you tax advisor to find out how these changes affect your business tax situation.

It’s Not What You Earn, But What You Keep, After Taxes.™

Beginning 1/1/2010 the standard mileage rates for using a vehicle will be 50 cents per mile for business purposes, 16.5 cents per mile for medical or moving purposes, and 14 cents per mile for charitable purposes.  The standard mileage rates for 2010 reflect lower transportation costs, so the new rates are slightly lower than last year’s rates.

It’s Not What You Earn, But What You Keep, After Taxes.™

The NC Department of Revenue has announced at their website that they are releasing 2008 tax refunds as the funds are available.  The downturn in the economy has reduced the amount of revenues available for refunds.  Therefore, the amount of refunds released is being controlled by the amount of funds available to cover those refunds each week.  Since the weekly release of refunds is based on the amount of cash available each week, the Department of Revenue says that DOR employees cannot project a specific date each refund will be released.

It’s Not What You Earn, But What You Keep, After Taxes.™