Archive for the ‘Taxes’ Category

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Tax Filing Deadlines Just Ahead:

In Accounting & Finances,Business,Taxes on September 5, 2011 by Sufen Wang Tagged: , ,

IRS Gives Hurricane Victims a Break 

 
Hey procrastinators, check your calendar!  Time is running out… The Corporate Income Tax for 2010 – if you filed an extension by March 15, 2011 – is due September 15, 2011. The Personal Income Tax for 2010 – if you filed an extension by April 18, 2011 – is due October 17, 2011. Fortunately, the IRS has announced that victims of Hurricane Irene won’t be subject to these deadlines.

 
As of September 2, taxpayers living in federally-declared disaster areas in Vermont, North Carolina, New Jersey, New York, and Puerto Rico will be eligible for tax relief. The extension postpones certain tax filing and payment deadlines until Oct. 31, 2011.
 
The relief is only available to corporations/businesses that previously obtained an extension until Sept.15 for their 2010 returns, and individuals/businesses that received a similar extension until Oct. 17. The estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15, is also included in the extension.
 

Even taxpayers whose preparers aren’t located in FEMA-designated disaster areas will receive some leeway from the IRS. Taxpayers whose preparers were in locales under evacuation or a severe weather warning during the hurricane, have until Sept. 22 (an extra week) to file their returns.
 

Taxpayers also get one more chance to take advantage of the Offshore Voluntary Disclosure Initiative. Due to the potential impact of Hurricane Irene, the IRS has extended the deadline from August 31 until September 9. Don’t delay, at least file for a 90 day-extension today!

 
On the Money,
Sufen Wang
Wang Solutions
 
 

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The Affordable Care Act Gets a Check-Up…

In Accounting & Finances,Business,Insurance & Liability,Taxes on August 29, 2011 by Sufen Wang Tagged: , , , ,

IRS Prescribes Premium Tax Credit Regulations
 
There’s some good news and bad news this month. The good news is that the IRS proposed regulations on August 12 for health care premium tax credits – which means affordable healthcare is one step closer to becoming a reality. The bad news is that the IRS proposed regulations for health care premium tax credits – which means you might be ineligible to receive them.
 

The health insurance premium tax credits were created under the Patient Protection and Affordable Care Act (ACA) of 2010. When the ACA goes into effect in 2014, individuals who are unable to access affordable health insurance through their employers will be able to buy insurance through state-run insurance exchanges. The tax credit is geared toward lower and middle-income individuals who can’t afford to pay their premium costs out-of-pocket.

Of course, calculating the credits will be another task for tax return preparers…..

So who exactly can get the tax credit? The IRS regulations say you must be an applicable taxpayer with a household income between 100 percent and 400 percent of the federal poverty line. That’s about $22,350 to $89,400 for a family of four. Applicable also means you can’t be claimed as a dependent by another taxpayer and if you’re married, you have to file a joint return. The tax credits will average $5,000 per individual.

You also won’t be eligible if you have “minimum essential coverage” available through your employer. Under the ACA, businesses with more than 50 full-time workers over the course of a year will face tax penalties of up to $3,000 per employee if they fail to offer affordable coverage (the regulations help define affordable). Employers must report which employees are not covered by insurance and are thus eligible to participate in health insurance exchanges.

The IRS wants to hear what you think about the proposed regulations! Give them a piece of your mind by October 31:

 http://www.regulations.gov/ 

via e-mail at E-OHPSCA2715.EBSA@dol.gov.

On the Money,
Sufen Wang
Wang Solutions
 

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Got Offshore Accounts? Tell the IRS by August 31 and You’ll Get Off Easy

In Accounting & Finances,Business,Taxes on August 21, 2011 by Sufen Wang Tagged: , ,

 
If you conveniently forgot about that “offshore” account you have hidden somewhere in the Bahamas, NOW is the perfect time to refresh your memory. Not only will you get a good night’s sleep when you give it up, you’ll also earn a ‘get out of jail free card’ from the IRS!
 
The 2011 Offshore Voluntary Disclosure Initiative (OVDI) is the last chance for taxpayers to inform the IRS about their undisclosed income and face less repercussions as a result.   Taxpayers who voluntarily come forward before August 31, 2011 will still have to pay a penalty, back-taxes, and interest for up to eight years.  However, those who wait for the IRS to discover their undisclosed accounts and income – and the IRS will find them – will face much higher penalties and serious criminal charges. 
 
Taxpayers should think twice if they think they can get away with hiding their assets overseas. New foreign account reporting requirements will be phased in over the next few years, so it’s going to be even tougher to conceal income offshore. The IRS will also continue to investigate bankers and banks worldwide that assist U.S. taxpayers with overseas accounts.
 
The OVDI is a limited-time offer for taxpayers to update their taxes with the IRS, so make sure you come clean before it’s too late!
 
 
On the Money,
Sufen Wang
Wang Solutions

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Counting on Your Tax Refund to Pay for Tax Preparation?

In Accounting & Finances,Business,Taxes on July 9, 2011 by Sufen Wang Tagged: , , , , ,

Prepare to Be Disappointed…

Out of sight, out of mind is not always a good idea – at least when it comes to paying for your tax preparation. The IRS seems to agree. David Williams, the director of the IRS return preparer office, announced on June 28 that the Service would not pursue the option of allowing taxpayers to use a portion of their tax refund to pay for tax preparation services.

The concept was originally proposed last year and would have offered taxpayers an alternative to extra number-crunching and out-of-pocket expenses during the already-stressful tax season. However, “Since then, the IRS has conducted outreach to numerous parties, including consumer advocates and industry groups,” Williams said. “During that outreach, the IRS heard a variety of views, some supporting this additional option for consumers, with others raising operational and/or policy concerns.”

Consumer groups especially opposed the idea because “predatory tax preparers” might take advantage of the fact that a taxpayer’s refund is not as visible or accessible once it has been turned over to the preparer. They could then charge more for tax preparation without their client’s knowledge.

The Service’s decision to reject the option won’t do anything to help the headaches that arrive during tax-preparation time. On the other hand, at least taxpayers won’t have to worry about their preparers taking more than their fair share.

Just remember that tax preparation costs money, any way you look at it, and sometimes it’s best not to delay the inevitable.

On the Money,
Sufen Wang
Wang Solutions

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Give and Get: What Kinds of Gifts are Tax Deductible?

In Business,Taxes on June 14, 2011 by Sufen Wang Tagged: , , , ,

ties

Father’s Day is almost upon us, and you’ve probably already gotten something special for your dad (if you haven’t, you still have a few days left to be a good son or daughter). As you contemplate your gift, you may wonder: “Is this Father’s Day gift tax deductible?”

Unfortunately, the IRS doesn’t always reward us for being so generous. But there are certain circumstances in which you can claim the giving of a gift as a tax deduction.

If you give gifts to clients or business associates as part of your business, you can deduct up to $25 per person for the gifts you give every year. This includes gifts that are given to a company that are intended for the eventual personal use of individuals in that company, such as boxes of candy or cookies.

Gifts given to a customer’s family member must be considered an indirect gift to the customer unless you have a bona fide, independent connection with that family member.

Incidental costs of your gift-giving, such as wrapping paper, don’t generally count towards your $25 limit unless the cost of the incidental is significant compared to the value of the gift itself. For example, if you buy a basket for giving fruit to a customer, the basket would count because it’s worth a lot compared to the value of the fruit.

fruit basket

The Basket Case.

There are exceptions to this rule, however. You can’t claim promotional gifts on your taxes if they have your name clearly and permanently imprinted on them, or if they are items for wide distribution, like the kind of swag (souvenirs, wearables, and gifts) that you might give out at an industry convention.

If you give a customer tickets to an event that you do not also attend, you can decide whether you’d prefer to claim it as a gift or as an entertainment expense, whichever you prefer.

It’s nice to know that you could be rewarded for your generosity to your customers, clients, or business contacts. Truly, ’tis better to give than to receive.

On the Money,
Sufen Wang
Wang Solutions

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Summer Fundraising: Know the IRS Regulations

In Taxes on June 7, 2011 by Sufen Wang Tagged: , , , , , , , , , , , , , ,

alex's lemonade stand

Alex Scott, a childhood cancer patient, raised over $1 million for children's cancer research with her lemonade stands before passing away in 2004 at the age of eight.

The weather is warming up all over the country, and kids and adults alike are getting antsy in anticipation of the summer fun that lies ahead. But for charitable organizations and groups, summer fun also means summer fundraising.

Schools, churches, and charities often take advantage of the warmer weather to put the “fun” in “fundraising” by holding events such as lemonade stands, fun run/walks, and car washes.

But whether you’re planning to raise funds or give them, it’s important to understand the IRS regulations governing the declaration of funds donated or funds collected on your 2011 taxes.

For example, the IRS states that, when you participate in a charity auction, you can only declare the amount that you give above and beyond the value of the item you’re receiving. And you can only declare charitable contributions if you itemize your deductions on Form 1040, Schedule A.

By taking the time to really understand the rules behind charitable giving and receiving, you can save yourself a lot of headache at the end of the fiscal year.

On the Money,

Sufen Wang
Wang Solutions

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Goodbye, Snail Mail: The IRS Goes Electronic

In Taxes on May 17, 2011 by Sufen Wang Tagged: , , ,

snail mail

It looks like the IRS is finally catching up to the digital age.

People have been baffled for years at the IRS’ insistence on sending correspondence via snail mail, despite the fact that lost mail and extended delivery times can lead to delays in resolving taxpayer issues. But the IRS insists that security is paramount, and that e-mail simply isn’t secure enough to guarantee a taxpayer’s privacy.

But the IRS has been working on an encryption program to allow taxpayers and practitioners (i.e. accountants) to communicate securely with the IRS. They expect to start testing it in early 2012, although it’s still unclear which department or office will start using it.

Could it be that the days of fat, scary envelopes from the IRS are over? Stay tuned to find out.

On the Money,

Sufen Wang
Wang Solutions

REMEMBER: the IRS does not yet communicate by e-mail or any other electronic format. If you get any e-mail from a domain name of irs.gov, DO NOT open it. It is not from the IRS or any of its agents/offices.

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Going Rogue:

In Accounting & Finances,Business,Taxes on May 11, 2011 by Sufen Wang Tagged: , , , , , ,

The Risks and Responsibilities of Hiring Independent Contractors

 

America: it’s the land of the free and the home of the brave. We Americans pride ourselves on our independence, and, now, with the economy still slowly making its way towards recovery, more businesses are hiring independent contractors than ever, and more people are working as independent contractors than ever.

I recently came across this article by Ronda Jones of Forrest T. Jones & Company. It’s all about what you need to know before you hire an independent contractor or accept work as an independent contractor. It’s a helpful article, and if you’re thinking about hiring an independent contractor, you should definitely give it a read. But here are some tidbits to whet your appetite.

If you’re thinking about hiring an independent contractor:

    • Consult an attorney and draw up a basic work contract. Make sure that it includes a “hold harmless” clause, a non-competition clause, and insurance clauses, and make sure that it addresses jurisdictional issues in your city and state.
    • Make sure that the independent contractor has adequate insurance to cover their work.
    • Consult your insurance agent to see how hiring an independent contractor will affect your coverage.
    • Request and retain invoices from your contractor.
    • You may also want to run a background check or even run an internet search to make sure that there aren’t any unpleasant surprises in store for you.
    • Make sure that you know how to issue Form 1099-MISC at the end of each tax year for your contractor.

If you are working as an independent contractor:

  • Review the company’s independent work contract. You may want to have your attorney go over it to make sure that it’s okay to sign. Make sure that you are only held accountable for liabilities resulting from gross negligence or willful misconduct. You may also want to insert a liability limitation cap so that you aren’t still held liable for errors or omissions that are discovered years down the line.
  • Ask the employer for copies of their certificates of insurance so that you can make sure that they have general liability and auto liability insurance, if applicable. You should also ask to be listed under their professional liability or errors & omissions insurance, if applicable.
  • Keep a log of the projects you’ve worked on, just in case your involvement is ever called into question.

Ask the contractor periodically to meet and review the terms of the contract to make sure that it adequately covers the work that you’re actually being required to do.Working with an independent contractor is a great way to save money for services you need, compared to hiring someone full-time that you don’t really need full-time. Working as an independent contractor is a great way to get work during times when work is difficult to find.

And if you go about it the right way, then neither party will have to hire Chuck Norris to take out the other.

  • On the Money,
    Sufen Wang
    Wang Solutions

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Tax Document Hoarders: How Long Should I Keep My Tax Records?

In Taxes on May 3, 2011 by Sufen Wang Tagged: , , ,

documents

We’re now two weeks removed from Tax Day 2011, and, yet, there are still questions regarding our taxes lingering in our minds. Last week, we shared with you when you should expect your tax refund, and, today, we’re going to talk about another hot tax topic: document storage.

People are often conflicted when it comes to deciding whether to keep or throw away a tax-related document. On the one hand, they don’t want to throw away any important documents. On the other hand, they don’t want to wake up one day, trapped under a pile of tax documents that they didn’t really need.

In the battle between good recordkeeping and good housekeeping, it’s important to know which documents you really need to keep, and which ones you can actually afford to toss. But it’s discerning the difference that’s the hard part. Fortunately, the IRS has put together a little article to help you decide what you should keep and what you should toss.

Here are some of the highlights:

  • If you did not report income and it’s more than 25% of your filed gross income, keep records for 6 years.
  • If you filed a fraudulent return, keep records indefinitely.
  • If you did not file a return, keep records indefinitely.
  • If none of the first three apply to you (and let’s hope that they don’t!) and you owe additional tax, keep records for 3 years.
  • If you file a claim for a credit or refund after you file your return, keep records for 3 years from the date you filed your original return or 2 years from the date you filed the tax, whichever is later.
  • If you file a claim for a loss from worthless securities or a bad debt deduction, keep records for 7 years.
  • Keep all employment tax records for 4 years from the date that the tax was either due or paid, whichever is later.
  • Keep all documents related to assets (like property) until the period of limitations expires for the year in which you disposed of the property in a taxable disposition.
  • Keep non-tax-related documents until you’re sure that you don’t need them for other purposes. An insurance company might require you to keep a document for longer than the IRS might.
  • Always keep copies of your filed tax returns. They might come in handy if you ever need to file an amended return.

    • As a rule of thumb, if you’re not confident that you can throw it out, you probably shouldn’t. It’s better safe than sorry. Just be sure to invest in some neat and tidy storage organizers so that you don’t wind up trapped under a pile of your tax documents. Many people complain that their taxes are killing them, but it shouldn’t happen in this way.

    On the Money,
    Sufen Wang
    Wang Solutions

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    Show Me the Money: When Will I Get My Tax Refund?

    In Taxes on April 26, 2011 by Sufen Wang Tagged: , , , ,

    Money

    Another Tax Day has come and gone, and you’ve survived. Whether you filed your taxes the second you got all of the necessary documents or at 11:59pm on April 18th, you’re probably all asking the same question:

    “Where’s my tax refund?”

    Well, if you filed your taxes online this year, the IRS has a handy-dandy refund chart that can show you when your refund will be processed.

    refund cycle chart 2011

    For example, if you e-filed your taxes and they were accepted by the IRS on March 15th (I’m going to assume that you were all good boys and girls and filed early this year), then you should either have gotten a direct deposit on March 25th or a check was processed and mailed out to you on April 1st (no joke).

    If you check the chart and your refund should have gotten to you by now, you can head over to the IRS website to check your refund status. Be sure to have your 2011 tax return handy so that you can enter the necessary information to get your refund status. You can also call the IRS Refund Hotline at 1-800-829-1954, or the IRS TeleTax system at 1-800-829-4477.

    Once you find out the status of your refund, you can proceed from there.

    Just don’t spend it all in one place, now.

    On the Money,
    Sufen Wang
    Wang Solutions

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