Archive for the ‘Tax Tips’ Category

IRS Now Says No Payroll Taxes on Family Employment in a Single Member LLC

The IRS admits that its regulation that made the single-member LLC a corporation for payroll tax purposes is unfair to small business family employment.

To right this wrong, the IRS allows the single-member LLC to use the family employment rules to exempt FICA and Medicare taxes (for your children who are under age 18) retroactively to January 1, 2009. The regulation granting this change expires on or before October 31, 2014

You can amend your payroll tax returns.

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

Random line-by-line audits of small corporations will start soon!

IRS examiners will scrutinize the 2010 returns of about 2,500 corporations with assets of less than $250,000 to look for pockets on noncompliance by firms and their owners.

If you do not have a good way to keep your books, we can help.  We are Certified QuickBooks Pro Advisors and can setup and train you on QuickBooks or handle your bookkeeping needs for you.

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

Own a Business???  Watch out for IRS levy on employee wages.

An employer that ignored an IRS levy on wages of an employee’s overdue income taxes was found liable by a court for the tax plus a 50% penalty–OUCH.

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

The recent expansion of the 1099 reporting rules are officially repealed.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.™

Why should you hire an accountant?

We get that question a lot…

Many businesses discover financial and operational funding issues when there is a lack of proper accounting practices. A business accountant will remedy these problems proactively – exactly why they play such an important part in the well-being of any entity.

You may not like it, but taxes are always an issue for any type of business. A trained accountant will create a strategy for proper tax planning – keeping an eye on the future of your business.  An accountant will also ensure that the filing of tax returns is done in the correct time frame.  By filing seamlessly and quickly, your business will avoid penalties and other late payment fees which might prove costly. Proper tax accounting can also prevent money from being tied-up in the form of tax refunds to the business since the correct amounts will be paid.

An accountant’s job is also to ensure that all financial statements comply with governing regulatory bodies. The putting together of financial statements follows a number of accounting standards which are accepted nation-wide. An accountant makes sure that high standards are adhered to while proper preparing of financial accounts is completed. This makes certain that the numbers are accurate and correct.

The managing of financial resources is the also the responsibility of an accountant. A solid accountant will also make sure that all proper systems are in place to make sure expenditures and costs are monitored and controlled. The main task of these finance systems is to have a cautious eye on spending.  An accountant is there to also prevent any misuse or unlawful use of funds. Business accountants will also create forecasts for the long-term financial needs of your organization.

The bottom line – and that is really what business is all about, the BOTTOM LINE – is that if you want to ensure that all business revenues, tax and financial development is properly handled and always running seamlessly – you should have an accountant.

The Ninth Circuit has held that an IRA’s named beneficiaries, rather than his wife, were entitled to the IRA funds after his death, even though some of the funds in the IRA had been rolled over from a 401(k) plan subject to ERISA’s surviving spouse provisions.

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

Eligible homebuyers should include with their return a copy of (1) a settlement statement showing all parties’ names and signatures, property address, sales price, and date of purchase; (2) an executed retail sales contract for mobile home purchasers who can’t get a settlement statement; or (3) a certificate of occupancy for newly constructed homes where a settlement statement is not available.  The IRS expects to start processing 2009 returns claiming the credit in mid-February after it updates and tests its systems, with the first refunds based on the credit to be issued toward the end of March.

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

Seniors who are thinking of converting to a Roth IRA should note the Medicare tax trap:  The extra income from converting can raise the Medicare Part B premiums.

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