Archive for the ‘Accounting & Finances’ Category
In Accounting & Finances,Business,Education,Family,Taxes on March 11, 2013 by Sufen Wang Tagged: Child support, Income, Income tax, Internal Revenue Service, IRS tax forms, Life insurance, Tax, tax return
Question Needs to be Answered: Income Tax Basics
You know (hopefully) that federal income tax returns are due April 15. But do you really know what income is – let alone if it’s taxable or non-taxable? Here’s income by the numbers to help you do the math correctly on your returns.
Income can include money, property, or services that you receive. All income is taxable unless the law specifically excludes it – and those “tips” you pocketed are not excluded. You should notice that income doesn’t just mean money: non-cash income received through bartering is as taxable as wages, and both parties must report the fair market value of goods/services received as income on their tax returns.
Although most income is taxable, there are exceptions to this rule. Gifts, bequests, and inheritances are usually nontaxable, so don’t worry about that luxury car given to you for your birthday. If you buy something and get a cash rebate from the dealer/manufacturer, that rebate is also not taxable. Welfare benefits, child support payments, and reimbursements for qualified adoption expenses are all not taxable. Finally, if you collected damage awards for a physical injury or sickness, those are yours to keep, tax-free – nobody wants to kick you while you’re down.
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hings get a little tricky with income that’s not taxable except under certain conditions. For example, life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount more than the cost of the policy is taxable. Similarly, any scholarship income used for certain costs like tuition and required course books is not taxable, but amounts used for room and board are taxable. And classifying your frat house as “textbook” college living won’t work.
Don’t forget to report any taxable refund, credit, or offset of state or local income taxes you received, even if you weren’t mailed Form 1099-G. You’ll have to contact the government agency that issued the payment to obtain that form. And don’t miss out on IRS Publication 525, Taxable and Nontaxable Income – it explains everything you ever wanted to know about income.
Wang Solutions, Sufen Wang, M.S. Accountancy, (562) 856-0793
In Accounting & Finances,Business,Education,Family,Taxes on February 21, 2013 by Sufen Wang Tagged: Certified Public Accountant, Enrolled agent, Google, Internal Revenue Service, irs, Preparer Tax Identification Number, Tax preparation, Tax returns
RTRP Program Up in the Air: Testing and Continuing Education are Voluntary
Calling all Registered Tax Return Preparers! You know how the IRS now requires every paid tax return preparer to pass a competency test and meet continuing education requirements in order to be called an RTRP? Not anymore. On January 18, a federal judge ruled that the mandatory RTRP regulatory system is invalid because the IRS had to stretch a law to make it apply to preparers in the first place. Prepare to be very, very confused.
In short, the ruling means the IRS does not have the authority to license tax preparers. Which means that as of right now, according to the IRS, “tax return preparers covered by this program are not currently required to register with the IRS, to complete competency testing or secure continuing education.” The regulatory practice requirements for CPA’s, attorneys, enrolled agents, enrolled retirement plan agents, or enrolled actuaries are unaffected by the ruling.
Required is the key word in all of this. The IRS filed a motion to suspend the injunction, which was denied on Feb.1 by the same judge. However, he did clarify that the IRS can allow preparers to “voluntarily obtain credentials that might distinguish them from other preparers.” Thus, the IRS’ testing and continuing-education centers will remain open. Indeed, it might be a good idea to complete the RTRP requirements anyways: the IRS can appeal the judge’s full ruling and his decision could eventually be reversed.
The judge also clarified that the injunction does not affect PTINs, which means that those requirements and fees are still active. The IRS has reopened the online PTIN system, but it’s being updated to reflect current requirements. All of this confusion comes at a bad time with tax filing season just ahead. Tax return preparers need answers from the IRS and they need them fast.
And what does all this mean for us, the tax payers? Always check your tax preparer‘s background, credentials and ask for references! “Google” the tax preparer’s name and check out his/her background as much as you are able before you make the hiring. Just because it is NOT required to be licensed, does not mean that anyone off the street can and should prepare your tax returns! Hire a reputable tax preparer will paid off in the long run!
On the Money, Sufen Wang, Wang Solutions
M.S.Accountancy, Long Beach, CA 562-856-0793
In Accounting & Finances,Business,Education,Taxes on January 27, 2013 by Sufen Wang Tagged: Fraud, Identity theft, Internal Revenue Service, irs, Social Security number, Tax, Tax avoidance and tax evasion, Tax return (United States)
Report Suspected Tax Fraud
To catch a thief, the IRS needs your help. If you suspect someone might be bending certain tax laws, don’t just stand there – do something! There’s a variety of tax frauds, so the IRS has conveniently created a chart to explain which form you’ll need to fill out in order to make the tax world a better place.
Direct your pen to Form 3949-A, Information Referral, if you suspect an individual/business of false exemptions or deductions, kickbacks, false/altered documents, failure to pay taxes, unreported income, failure to withhold, or organized crime. Then congratulate yourself on doing the right thing.
Identity theft is also a type of tax fraud. If you believe that someone is posing as you and has used your SSN for employment purposes or to file a tax return, pick up Form 14039, Identity Theft Affidavit. The sooner you submit the form, the sooner the impostor will be caught.
Maybe your friendly neighborhood tax preparer has been getting rich a little too quickly. If you suspect fraudulent activity or an abusive tax scheme by a tax return preparer/company, report it on Form 14157. You’ll need both this form and Form 14157-A if you also think a tax return preparer filed or altered your return without your consent.
If you have information about a suspicious tax promotion or promoter, whip out Form 14242 and show that fake promotion who’s boss. And finally, if you notice misconduct or wrongdoing by an exempt organizationor employee plan, complain about it on Form 13909, Tax-Exempt Organization Complaint (Referral) Form.
Reporting tax fraud is a good deed and should be reward enough by itself. However, for anyone who needs extra motivation, check out Form 211, Application for Award for Original Information. Sometimes it pays to be a whistleblower. Do the right thing, it is hard, but it is very, very rewarding!!!
Sufen Wang, M.S.Accountancy
Wang Solutions, Long Beach, CA (562) 856-0793
Editor: Hannah Huff, M.F.A. Creative Writing: Poetry, (626) 806-5805
In Accounting & Finances,Business,Family,Taxes on January 16, 2013 by Sufen Wang Tagged: Charitable organization, Donation, Internal Revenue Service, IRS tax forms, Itemized deduction, Salvation Army, Standard deduction, Tax deduction
Happy New Year! But Wait!
Do not close the book just yet on year 2012…
Year 2012 is past us and hopefully you rang in the new year with a bang. Although the party is over, you can ensure you get more bang for every buck or item you donated in 2012 by reviewing these tips about year-end charity donations.
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Contributions are tax deductible in the year made. As long as the donation was submitted before the end of 2012, it can be deducted for 2012 – even the check hasn’t been cashed or the credit card bill paid yet. However, take my word for it, the IRS won’t just take your word for charitable acts. To deduct monetary donations, you must have a bank record or written document from the charity with the name of the charity, the contribution amount, and the date.
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Also be aware that deductible donations must be made to “qualified” organizations. Only churches, synagogues, temples, mosques, government agencies, and anything on the Exempt Organizations Select Check have the IRS’ seal of approval. So although you might have splurged on gifts for yourself, you still don’t count as a qualified organization – no matter how often you call yourself a charity case.
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Maybe you couldn’t spare some change and instead donated clothing or household items to a charity. In general, those items must have been in good used condition or better in order to be deductible. That means the bag of ratty old pajamas you left at the Salvation Army drop site probably can’t be deducted. And if you can’t get a receipt, at least keep a detailed written record of every donation.
Remember that individuals can only claim deductions for charitable contributions if they itemize their deductions on Form 1040 Schedule A. That form will help you figure out whether itemizing is better than using a short form (Form 1040A and 1040EZ) to claim the standard deduction. Basically, you’ll have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Of course, whether or not you end up deducting your donations, giving is something you should do year-round.
Remember the old saying….”Spend a little, Save a little, and Give a little…”
On the Money, Sufen Wang, Wang Solutions
In Accounting & Finances,Business,Culture,Entertainment,Family,Taxes on December 14, 2012 by Sufen Wang Tagged: business, Christmas and holiday season, Gift, New Year, Small business, Sufen Wang, Super Saturday, Wang Solutions
Seasonal Strategies for Your Small Business
‘Tis the season to spend time with family, but also ‘tis the season for shoppers to spend money on lots of presents. That means small businesses have to get down to business right now if they want the extra holiday business, especially since Super Saturday (December 22nd)– one of the biggest shopping days of the year – is close at hand.
Special offers can easily increase your sales volume. Everybody likes any kind of discount, so come up with deals like “purchase one product and get the other at half price” or “buy one at full price and get a free gift to give.” A business that doesn’t sell seasonal products can be just as successful as one that does, as long as you promote your products as suitable gifts. You can also donate a portion of the price of your product to a charity so that customers feel they too are contributing to that charity. Hand out samples in exchange for customer’s e-mail addresses so you can send them promotions and keep them coming back after the holidays. Finally, get shoppers in the holiday – meaning spending – spirit by decorating your store and offering a free gift wrapping service.
If you have a store website and social media pages, also decorate those with festive graphics and designs. Organize merchandise so that it’s easy for online buyers to find holiday gifts – for example, “Gifts for Him,” Gifts under $50,” etc. Use email, blogs, and web banners to make gift suggestions, and to showcase popular items and why people have to have them this holiday season. Offer downloadable gift certificates when holiday shipping deadlines have passed and use your site to make people want to visit your brick and mortar store.
You should also be aware of several business-related tax credits and deductions that you’ll want to take advantage of before New Year’s Day. For example, did you know that you can get a tax credit for hiring an unemployed veteran before December 31, 2012? Or that Section 179 of the tax code provides tax benefits for equipment purchases made before the end of the year? Now would be a good time to review your equipment so you can replace any obsolete assets.
You can read this U.S. Small Business Administration bulletin to find out many more holiday marketing tips, answers to your small business tax questions, and more details on the above tax credits and deductions. If you feel stressed out in the coming weeks, just keep in mind that being busy is always a good thing when you’re a small busyness owner.
Happy Holidays!
Sufen Wang,
Wang Solutions
In Accounting & Finances,Culture,Entertainment,Family on December 13, 2012 by Sufen Wang Tagged: Child, Christmas, Christmas and holiday season, Gift, holiday, Opinions, Shopping, Social and Economic
10 Holiday Tips for a Merry Season…
Celebrate on a budget:
Before you buy everything on everybody’s Christmas list, write your own list of how much you can afford to spend on gifts, travel, decorations, and other holiday expenses. Then keep track of your spending as you go. If you’re on a budget too tight for comfort, look around for seasonal employment. Businesses need extra help during the holidays, and if you’re good enough at your job, you could start the new year with a permanent position!
Save money, save your house, and save the planet:
When coming up with a budget, don’t forget to figure in the wintertime electricity bill. Using LED holiday lights will save you energy and money, and since they’re cooler than incandescent bulbs, they reduce the risk of fires. Just to be safe though, don’t overload electrical sockets and make sure your smoke alarm has new batteries. You should also buy rechargeable batteries for all of those electronic gifts to help reduce the amount of harmful materials thrown away. Finally, after the holidays, look for ways to recycle your tree instead of just sending it to a landfill.
Buy age-appropriate toys:
Although we know that every kid ends up playing with the cardboard box instead of the actual toy, you should still remember that toys have age-labels for a reason: it’s not safe to give a two year old something meant for children ages 7+. So don’t give toys with small parts or sharp edges to small children. And if you buy your child a bike or skateboard, please don’t forget the helmet.
Give yourself the gift of health:
With the holidays, comes lots of food, and with lots of food, comes gaining weight. Listen to your heart before you add an extra-large slice of apple pie to the extra-large slice of pumpkin pie already on your plate: it will tell you to avoid those extra calories. If you do decide to indulge, balance it out by taking a walk with your family after dinner. And make sure you put away the leftovers as soon as you get back from walking. To save all that still-good food safe from nasty bacteria, never leave it sitting out for more than two hours and store it in shallow containers at the appropriate temperature.
Give the gift of service:
Last week’s blog brought up ways you can help foster children. However, there is so much more that needs to be done, especially during the holiday season. Instead of rushing to open presents on Christmas morning, take two hours to help out at a local soup kitchen or food bank. Not only will this will cheer you up if you’ve got the holiday blues, you’ll also ensure that other people have a happy holiday.
Happy Holidays!
Sufen Wang,
Wang Solutions
In Accounting & Finances,Business,Culture,Family,Insurance & Liability,Taxes on November 23, 2012 by Sufen Wang Tagged: Emergency management, Employment, Gross income, Hurricane Sandy, Private foundation, Tax, Tax exemption, Taxable income
Hurricane Sandy Qualifies as a Disaster: Victims Given Much-Needed Tax Relief
Just because Hurricane Sandy has disappeared from the Doppler radar does not mean its aftermath dropped off the map. Almost a month has passed, but many East Coast residents are still picking through debris on their lawns and others will be homeless for the holidays. The storm really was a disaster in many ways – which is why it has been designated as a “qualified disaster for federal tax purposes.”
That’s actually good news: victims can exclude qualified disaster relief payments received from their employer (or anyone else for that matter) from their taxable income. So any payments used to repair homes or repair/replace the contents not covered by insurance, would not be included in the individual recipient’s gross income. This is also the case with any payments received for uninsured personal, family, living, or funeral expenses resulting from the storm. As a result, hurricane victims won’t have to worry about paying extra later when they’ve already lost so much.
Hurricane Sandy being named a “qualified disaster” will also help anybody trying to help the storm’s victims. Now, employer-sponsored private foundations can provide disaster relief to employee-victims in areas affected by the hurricane without having to worry that their tax-exempt status will change. An official list of those affected areas can be found here.
This tax relief is nice, but assistance for Hurricane Sandy victims shouldn’t stop there. Every cent does count, so donate whatever you can. Or if you don’t have a lot of money, volunteer a little of your time. It’s the season of giving after all.
Happy Thanks–Giving….
Sufen Wang
Wang Solutions
In Accounting & Finances,Business,Taxes on November 19, 2012 by Sufen Wang Tagged: FTA, Internal Revenue Service, irs, IRS tax forms, Tax, Treasury Inspector General for Tax Administration, Waiver
The IRS Made it Hard to Find…
Failed…
That’s the only word to describe the IRS’ actions concerning penalty forgiveness. How else could you explain forgetting to inform 1.45 million taxpayers that they qualified for and had a right to ask for relief from tax penalties totaling $181 million? If you’re like most people and have never heard of this tax penalty relief, here’s the reason why:
The IRS fines taxpayers when they don’t file a tax return or pay the full tax shown on any tax return. However, any taxpayers who have demonstrated full compliance over the previous three years can have these fines waved in something known as “first-time abate” (FTA). The only catch is that you need to first request the penalty waiver – and that’s hard to do if you don’t even know the waiver exists.
And the IRS has certainly kept its lips zipped and its fine print invisible. The potential penalty relief is not mentioned anywhere on Form 1040, nor is it on the IRS website’s page about penalties, or on any balance due notices – not even within the text on those documents mentioning penalties for failure to file or pay. Even worse, over 90% of the people who actually did qualify for the penalty relief were not granted it.
Of course, the IRS’ failure does not mean that all taxpayers are perfect angels. The TIGTA found that a number of taxpayers who received the FTA waivers failed to fully pay off their taxes six months after the postponement. Accordingly, the TIGTA suggested that the IRS also use the FTA waiver as a compliance tool: make taxpayers aware of their potential to receive an FTA waiver based on their past compliance history and make receipt of the waiver dependent on taxpayers paying their current liability. That way, it’s a win-win situation for everyone involved.
If you to read all of the juicy legal tidbits regarding the TIGTA’s findings, you can check out the full report here.
On the Money, Sufen Wang, Wang Solutions
In Accounting & Finances,Business,Culture,Education,Entertainment on November 4, 2012 by Sufen Wang Tagged: Identity theft, Password, Personally identifiable information, Smartphone, Transport Layer Security, Wi-Fi
Your Identity is at Risk
Smartphones got their name for a reason: they let us send e-mails, login to social networks, buy products, check our bank account balance, and do countless other things – all from the palms of our hands. Thus, it’s not an exaggeration to say that for many people, their smartphone is their life. After all, it contains all of their most important personal information.
You probably know where this is going. While it’s a good thing to have your credit cards, contacts, passwords, etc. all on one handy-dandy device, it becomes a really bad thing if you lose your phone. Whereas in the past an identity thief would have to break into your house and steal a huge stack of papers from your file cabinet, now all they have to do is turn the phone on that you accidentally left at the bus stop.
That’s probably why a recent study by Javelin Research found that smartphone users are 33% more likely to become victims of identity theft than non-users. And things are made worse by the fact that 62% of smartphone users don’t use password protection. If you think it’s annoying to enter a pin whenever you use your phone, just think how much more annoying it will be to change every single password and to deal with fraudulent debts on your credit. Secure your smartphone with a pin – preferably something more difficult to guess than “1234.”
You should also be wary of any apps you download. Many have access to all of your personal files – right down to your billing address and Visa number – and they can even install malware on your phone. In fact, you might consider getting an antivirus just to be safe. Either way, make sure you always surf reputable sites and that they have a “padlock”symbol (meaning they are SSL secure) when you’re entering any financial information.
Speaking of security, never connect to open Wi-Fi connections on your smartphone. If you plug into the wrong network even for a minute, you’re basically giving hackers your personal information on a silver platter. And finally, cover your back by clearing your tracks: don’t store login information for websites on your phone. If you’re smart about your smartphone, you can outsmart anyone who wants to steal your identity.
On the Money, Sufen Wang, Wang Solutions
In Accounting & Finances,Business,Culture on October 15, 2012 by Sufen Wang Tagged: $85 million, American Express, Consumer, Consumer Financial Protection Bureau, Credit card, Credit score, Debt, United States Consumer Financial Protection Bureau
American Express Owes Its Customers Big-Time: $85 Million
American Express: the self-proclaimed world’s largest credit card issuer, the gold standard, the blue chip of credit card providers– well, not anymore. At least, not since the company got caught red-handed using a wide variety of “deceptive consumer practices.” The silver lining is that if you’re one of those consumers, you can expect a refund sometime before March 15th of next year.
That’s because the Consumer Financial Protection Bureau has ordered the credit card company to refund $85 million to 250,000 duped customers, along with paying $27.5 million in civil fines. For example, many applicants for AmEx’s “Blue Sky” credit card program were promised $300 – except all signs of the bonus disappeared into thin air once they signed up. Any victims of this scam will receive a check for their long-lost $300.
Did you know that it’s a violation of the Credit CARD Act to bill late fees on credit cards based on a percentage of the debt? American Express knew that, but did it anyways. Accordingly, any affected customers will have these illegal late fees refunded, with interest.
AmEx also persuaded some customers that they could improve their credit scores by paying off their old credit card debts – except they conveniently forgot to explain that the debts were so old, they really didn’t even need to be paid off. Oh, and then AmEx conveniently forgot to report the payments to the credit bureaus. These customers will be reimbursed the old debt settlement money, with interest.
AmEx’s bamboozling doesn’t stop there, as CFPB Director Richard Cordbray made clear when he stated that the violations took place “at all stages of the game — from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt.” The credit card company even used a credit scoring system that discriminated against applicants based on age.
Eligible, affected customers who are still with AmEx (after reading this, you might be switching companies soon) will have their accounts credited, while anyone who has since left will receive a refund check in the mail by the above date. The fines will hardly make a dent in AmEx’s pocket, considering its $30 billion revenue last year, but hopefully these charges will discredit the credit card giant for awhile.
On the Money, Sufen Wang, Wang Solutions
Question Needs to be Answered: Income Tax Basics
Although most income is taxable, there are exceptions to this rule. Gifts, bequests, and inheritances are usually nontaxable, so don’t worry about that luxury car given to you for your birthday. If you buy something and get a cash rebate from the dealer/manufacturer, that rebate is also not taxable. Welfare benefits, child support payments, and reimbursements for qualified adoption expenses are all not taxable. Finally, if you collected damage awards for a physical injury or sickness, those are yours to keep, tax-free – nobody wants to kick you while you’re down. 
hings get a little tricky with income that’s not taxable except under certain conditions. For example, life insurance proceeds paid to you because of an insured person’s death are usually not taxable. However, if you redeem a life insurance policy for cash, any amount more than the cost of the policy is taxable. Similarly, any scholarship income used for certain costs like tuition and required course books is not taxable, but amounts used for room and board are taxable. And classifying your frat house as “textbook” college living won’t work. 
Wang Solutions 