Guidelines for Monetary Donations
To deduct any charitable donation of money, regardless of amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. Bank records include canceled checks, bank or credit union statements, and credit card statements. Bank or credit union statements should show the name of the charity, the date, and the amount paid. Credit card statements should show the name of the charity, the date, and the transaction posting date.
Donations of money include those made in cash or by check, electronic funds transfer, credit card and payroll deduction. For payroll deductions, the taxpayer should retain a pay stub, a Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity. These requirements for the deduction of monetary donations do not change the long-standing requirement that a taxpayer obtain an acknowledgment from a charity for each deductible donation (either money or property) of $250 or more. However, one statement containing all of the required information may meet both requirements.
Reminders
To help taxpayers plan their holiday-season and year-end giving, the IRS offers the following additional reminders:
* Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of 2009 count for 2009. This is true even if the credit card bill isn’t paid until 2010. Also, checks count for 2009 as long as they are mailed in 2009 and clear, shortly thereafter.
* Check that the organization is qualified. Only donations to qualified organizations are tax-deductible. IRS Publication 78, available online and at many public libraries, lists most organizations that are qualified to receive deductible contributions. The searchable online version can be found at IRS.gov under Search for Charities. In addition, churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even if they are not listed in Publication 78.
* For individuals, only taxpayers who itemize their deductions on Form 1040 Schedule A can claim deductions for charitable contributions. This deduction is not available to individuals who choose the standard deduction, including anyone who files a short form (Form 1040A or 1040EZ). A taxpayer will have a tax savings only if the total itemized deductions (mortgage interest, charitable contributions, state and local taxes, etc.) exceed the standard deduction. Use the 2009 Form 1040 Schedule A, available now on IRS.gov, to determine whether itemizing is better than claiming the standard deduction.
* For all donations of property, including clothing and household items, get from the charity, if possible, a receipt that includes the name of the charity, date of the contribution, and a reasonably-detailed description of the donated property. If a donation is left at a charity’s unattended drop site, keep a written record of the donation that includes this information, as well as the fair market value of the property at the time of the donation and the method used to determine that value. Additional rules apply for a contribution of $250 or more.
* The deduction for a motor vehicle, boat or airplane donated to charity is usually limited to the gross proceeds from its sale. So be mindful when you give a car to that charity of your choice, if they sell it for a couple hundred scrap, that is your deduction. This rule applies if the claimed value is more than $500. Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.
* If the amount of a taxpayer’s deduction for all noncash contributions is over $500, a properly-completed Form 8283 must be submitted with the tax return.
Thursday, December 10, 2009
Tuesday, November 17, 2009
Energy Savings Credit for 2009 & 2010
The year end is approaching. If you were thinking about doing windows, adding insulation, or upgrading your heating or a/c system. Do so before December 31, 2009 to tke advantage of the credit, up to $1500 on your 2009 tax return. The credit will also be available in 2010.
The American Recovery and Reinvestment Act (ARRA) provides numerous tax incentives for individuals to invest in energy-efficient products.
Residential Energy Property Credit (Section 1121): The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.
The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient” for purposes of this tax credit
The American Recovery and Reinvestment Act (ARRA) provides numerous tax incentives for individuals to invest in energy-efficient products.
Residential Energy Property Credit (Section 1121): The new law increases the energy tax credit for homeowners who make energy efficient improvements to their existing homes. The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 for improvements placed in service in 2009 and 2010.
The credit applies to improvements such as adding insulation, energy efficient exterior windows and energy-efficient heating and air conditioning systems.
A similar credit was available for 2007, but was not available in 2008. Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007 for products that qualify as “energy efficient” for purposes of this tax credit
Thursday, November 12, 2009
Fake IRS email sends Malware to your computer
Scam E-mail Sends Malicious Software to Recipients' Computers | |
|
Tuesday, September 29, 2009
American Opportunity Tax Credit
American Opportunity Tax Credit
Many Parents and college students will be able to offset the cost of college over the next two years under the new American Opportunity Tax Credit. This tax credit is part of the American Recovery and Reinvestment Act of 2009.
1. The credit, which expands and renames the Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 & 2010. Qualified tuition and related expenses included tuition, related fees, books, and other required course materials.
2. The credit is equal to 100% of the first $2000 spent and 25% of the next $2000 per student each year. Basically, the full $2500 credit will be available for taxpayers who paid $4000 or more in qualifying expenses for an eligible student.
3. The full credit is subject to income phase outs (AGI limitations) of $80,000 for single taxpayers and $160,000 for married couples.
4. 40% of the credit is refundable, so even those who owe no tax can get up to $1000 of the credit for each eligible student as cash back.
5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.
6. You cannot claim the tuition and fess tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction, which ever is more beneficial for you.
Many Parents and college students will be able to offset the cost of college over the next two years under the new American Opportunity Tax Credit. This tax credit is part of the American Recovery and Reinvestment Act of 2009.
1. The credit, which expands and renames the Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 & 2010. Qualified tuition and related expenses included tuition, related fees, books, and other required course materials.
2. The credit is equal to 100% of the first $2000 spent and 25% of the next $2000 per student each year. Basically, the full $2500 credit will be available for taxpayers who paid $4000 or more in qualifying expenses for an eligible student.
3. The full credit is subject to income phase outs (AGI limitations) of $80,000 for single taxpayers and $160,000 for married couples.
4. 40% of the credit is refundable, so even those who owe no tax can get up to $1000 of the credit for each eligible student as cash back.
5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.
6. You cannot claim the tuition and fess tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction, which ever is more beneficial for you.
Tuesday, September 22, 2009
IRS Extends Offshore Account Disclosure Deadline
IRS Extends Offshore Account Disclosure Deadline for the Last Time....Seriously no more extensions
The Internal Revenue Service has again extended the deadline for taxpayers to make voluntary disclosures of the unreported income they have stashed in hidden offshore accounts, but warned this would be the final extension.The deadline was originally supposed to be Sept. 23, 2009 but has been extended to a new deadline of Oct. 15, 2009 “Those taxpayers who do not voluntarily disclose their hidden accounts by the new deadline face much harsher civil penalties, where applicable, and possible criminal prosecution,” said the IRS. We are talking big fines here in excess of $10,000 per year (Consult with your CPA or Tax attorney for account specific penalties)
IRS officials decided to extend the deadline after receiving repeated requests from tax practitioners and attorneys around the country following an influx of taxpayer requests. By extending the deadline for a short period of time, the IRS said it is providing relief for those taxpayers who had intended to come forward prior to the deadline, but faced logistical and administrative challenges in meeting it. The extension will allow tax preparers and attorneys the necessary time to interview and advise their backlog of taxpayers with these hidden accounts, and prepare the necessary paperwork to qualify for the special penalty provisions.
This is all a component of the IRS Voluntary Disclosure as seen Here: http://www.irs.gov/newsroom/article/0,,id=104361,00.html
The September 23, 2009, deadline for certain FBAR (Foreign Bank and Financial Accounts) filers and certain offshore-related information returns (Federal Form 5471, etc..) who have no unreported income is also extended to October 15, 2009.
Here is the IRS Q&A with regards to both Voluntary Disclosures and FBARs, it has been updated 4 times so make sure if you use it as a guide you read it more than once, http://www.irs.gov/newsroom/article/0,,id=210027,00.html
Friday, September 18, 2009
Sales Tax on Shipping & Handling in NYS
New York State Sales Tax
From time to time I get asked very specific questions regarding the collection and remittance of sales tax in New York State. A question that recently came up by my client was one regarding the partial refund of a transaction that involved shipping and handling.
The client's transaction was as follows:
Sale of $100
Shipping & Handling of $25
Subtotal $125
Sales Tax (NYC) $11.09
Total $136.09
Now what happens if the client refund the sale but retians the shipping and handling as part of their terms and conditions.
Refund of Sale $(100)
Refund of sales tax on Sale $8.84
Total refund $108.84
As you can see, the client retianed the sales tax on the shipping and handling and will be liable to remit that sales tax collected to NYS with their next sales tax return (Either Annualy, Quarterly, or Monthly depending on their sales figures).
Staten Island CPA
From time to time I get asked very specific questions regarding the collection and remittance of sales tax in New York State. A question that recently came up by my client was one regarding the partial refund of a transaction that involved shipping and handling.
The client's transaction was as follows:
Sale of $100
Shipping & Handling of $25
Subtotal $125
Sales Tax (NYC) $11.09
Total $136.09
Now what happens if the client refund the sale but retians the shipping and handling as part of their terms and conditions.
Refund of Sale $(100)
Refund of sales tax on Sale $8.84
Total refund $108.84
As you can see, the client retianed the sales tax on the shipping and handling and will be liable to remit that sales tax collected to NYS with their next sales tax return (Either Annualy, Quarterly, or Monthly depending on their sales figures).
Staten Island CPA
Monday, August 24, 2009
End of Summer - Tax Credits for September & Education
Education tax credits can help offset the costs of higher education for yourself or a dependent. The Hope Credit and the Lifetime Learning Credit are two education credits available which may benefit you. Because they are credits rather than deductions, you may be able to subtract them in full, dollar for dollar, from your federal income tax.
The Hope Credit
- The credit applies for the first two years of post-secondary education, such as college or vocational school. It does not apply to the third, fourth, or higher years of undergraduate programs, to graduate programs, or to professional-level programs. After your first two years you are entitled to take the lifetime learning credit.
- It can be worth up to $1,800 ($3,600 if a student in a Midwestern disaster area) per eligible student, per year.
- You're allowed a credit of 100% of the first $1,200 ($2,400 if a student in a Midwestern disaster area) of qualified tuition and related fees paid during the tax year, plus 50% of the next $1,200 ($2,400 if a student in a Midwestern disaster area).
- Each student must be enrolled at least half-time for at least one academic period which began during the year.
- The student must be free of any federal or state felony conviction for possessing or distributing a controlled substance as of the end of the tax year. Basically, no drug convictions.
The Lifetime Learning Credit
- The credit applies to undergraduate, graduate and professional degree courses, including instruction to acquire or improve job skills, regardless of the number of years in the program.
- If you qualify, your credit equals 20% (40% if a student in a Midwestern disaster area) of the first $10,000 of post-secondary tuition and fees you pay during the year, for a maximum credit of $2,000 ($4,000 if a student in a Midwestern disaster area) per tax return.
You cannot claim both the Hope and Lifetime Learning Credits for the same student in the same year. You also cannot claim either credit if you claim a tuition and fees deduction for the same student in the same year. To qualify for either credit, you must pay post-secondary tuition and certain related expenses for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. Students who are claimed as a dependent cannot claim the credit.
As with almost every good credit, These credits are phased out for Modified Adjusted Gross Income over $48,000 ($96,000 for married filing jointly) and eliminated completely for Modified Adjusted Gross Income of $58,000 or more ($116,000 for married filing jointly). If the taxpayer is married, the credit may be claimed only on a joint return.
Talk with your NY Accountant come tax time so that you take full advantage of the tax savings these credits provide.
Monday, August 17, 2009
Hurricane Season - How to Claim a Casualty Loss
Top Ten Tips for Taxpayers Deducting Casualty and Theft Losses
People who find themselves the victim of a natural disaster or theft this summer should know the rules for deducting their casualty losses next year when they file their federal tax return. Generally, you may deduct losses to your home, household items and vehicles on your federal income tax return.
Here are ten things the IRS wants you to know about deducting casualty or theft losses.
You may not deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement. You must reduce your loss by the amount of the reimbursement. I.E. Hurricane takes the roof off your home and the cost of the repairs EXCEEDS your insurance coverage, you have a deductible loss.
A casualty does not include normal wear and tear or progressive deterioration from age or termite damage.
The damage must be caused by a sudden, unexpected or unusual event like a car accident, fire, earthquake, flood or vandalism.
If your property is not completely destroyed or if it is personal-use property, the amount of your casualty or theft loss is the lesser of the adjusted basis of your property, or the decrease in fair market value of your property as a result of the casualty or theft, reduced by any insurance or other reimbursement you receive or expect to receive.
If business or income-producing property, such as rental property, is completely destroyed, the amount of your loss is your adjusted basis in the property minus any salvage value, and minus any insurance or other reimbursement you receive or expect to receive.
To claim a casualty or theft loss, you must complete Form 4684, Casualties and Thefts, and attach it to your federal tax return. Generally, you may claim casualty or theft loss of personal use property only if you itemize deductions on Form 1040, Schedule A. However, you can deduct a 2008 or 2009 net disaster loss from a federally-declared disaster even if you do not itemize your deductions.
If the property was held by you for personal use, you must further reduce your loss by $100. This $100 reduction for losses of personal-use property applies to each casualty or theft event that occurred during the year other than 2009. For 2009, individuals must reduce their casualty and theft losses for personal-use property by $500 instead of $100. This $500 reduction for losses of personal-use property applies to each casualty or theft event.
The total of all your casualty and theft losses of personal-use property usually must be further reduced by 10 percent of your adjusted gross income. The 10 percent AGI limitation does not apply to net disaster losses resulting from federally declared disasters in 2008 and 2009. Also if you are a Madoff victim, there are special rules that apply.
In figuring your loss, do not consider the loss of future profits or income due to the casualty. Its a shame but tis true, if your work truck gets destroyed and you use it to earn a living. Your Casualty loss is limited to truck, not the income earning potential of the truck.
Casualty losses are normally deductible only in the year the casualty occurred. But if you have a deductible loss from a federally declared disaster you can choose to deduct that loss on your tax return for the previous year. If you have already filed your return for the preceding year, you can claim the loss on the previous year tax return by filing an amended return.
Thursday, August 6, 2009
Update on First Time Home Buyer Credit
Credit for First Time Home Buyer
Credit for First Time Home BuyerKey PointsThere is a credit available to individuals who purchased their first home after April 8, 2008, and before December 1, 2009. So Hurry up the clock is ticking on this credit. This is an extension of the previous date of April 2009.
For homes purchased in 2008, you may be eligible for a credit of up to $7500, which is basically an interest free loan due and payable over the next 15 years in equal annual installments beginning in 2010.
For homes purchased in 2009, you may be eligible for a credit of $8000, the credit does not have to be paid back unless the home ceases to be the taxpayers primary residence during the three year period following the purchase date. The credit cannot be claimed before the closing date. You may amend your return if you have filed already in order to take the credit.
Taxpayers who have not owned another home at any time during the three years prior to the date of purchase are considered first time home buyers.The credit is claimed on a new form 5405.As with most credits, it is subject to income limitations.
Credit for First Time Home BuyerKey PointsThere is a credit available to individuals who purchased their first home after April 8, 2008, and before December 1, 2009. So Hurry up the clock is ticking on this credit. This is an extension of the previous date of April 2009.
For homes purchased in 2008, you may be eligible for a credit of up to $7500, which is basically an interest free loan due and payable over the next 15 years in equal annual installments beginning in 2010.
For homes purchased in 2009, you may be eligible for a credit of $8000, the credit does not have to be paid back unless the home ceases to be the taxpayers primary residence during the three year period following the purchase date. The credit cannot be claimed before the closing date. You may amend your return if you have filed already in order to take the credit.
Taxpayers who have not owned another home at any time during the three years prior to the date of purchase are considered first time home buyers.The credit is claimed on a new form 5405.As with most credits, it is subject to income limitations.
Thursday, July 30, 2009
New Payroll Tax form for some New York Businesses
A New : New York State Payroll Tax
The metropolitan commuter transportation mobility tax (MCTMT) is a new tax imposed on certain employers and self-employed individuals engaging in business within the metropolitan commuter transportation district (MCTD). This department administers the tax for the Metropolitan Transportation Authority. (The MCTD includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.)
Your MCTMT due is .34% (.0034) of your payroll expenses for all covered employees for each calendar quarter. The tax is remitted on a new quarterly form (MTA-305) Employer’s Quarterly Metropolitan Commuter Transportation Mobility Tax Return.
You can choose to pay this tax using the PrompTax program if you currently use the PrompTax program to file New York State withholding tax.
DUE DATES
For 2010, the return will be due quarterly with your other payroll tax returns so they will be due:
You are not required to file until the first quarter when your payroll expense exceeds $2,500. However, if you previously filed but have a payroll expense of less than $2,500 for a later quarter, you must file a return showing no tax due.
The metropolitan commuter transportation mobility tax (MCTMT) is a new tax imposed on certain employers and self-employed individuals engaging in business within the metropolitan commuter transportation district (MCTD). This department administers the tax for the Metropolitan Transportation Authority. (The MCTD includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.)
Your MCTMT due is .34% (.0034) of your payroll expenses for all covered employees for each calendar quarter. The tax is remitted on a new quarterly form (MTA-305) Employer’s Quarterly Metropolitan Commuter Transportation Mobility Tax Return.
You can choose to pay this tax using the PrompTax program if you currently use the PrompTax program to file New York State withholding tax.
DUE DATES
| Period | Due date |
| March 1, 2009 to September 30, 2009* | November 2, 2009 |
| October 1, 2009 to December 31, 2009 | February 1, 2010 |
For 2010, the return will be due quarterly with your other payroll tax returns so they will be due:
| Quarter | Due date |
| January 1 to March 31 | April 30 |
| April 1 to June 30 | July 31 |
| July 1 to September 30 | October 31 |
| October 1 to December 31 | January 31 |
You are not required to file until the first quarter when your payroll expense exceeds $2,500. However, if you previously filed but have a payroll expense of less than $2,500 for a later quarter, you must file a return showing no tax due.
Tuesday, July 28, 2009
Mortgage Workouts : What you should know
There is tax relief for struggling homeowners.
If your mortgage debt is partly or entirely written off/ canceled (forgiven) during 2007 through 2012; You may be able to claim a special tax relief for your federal taxes.
Here are few things the IRS wants you to know about mortgage debt forgiveness.
A. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.
B. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.
C. The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
D. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax-relief provision. In some cases, other kinds of tax relief – based on insolvency, for example – may be available. In this economy, more and more clients are reducing their credit card debt via debt settlement companies, this will result in you receiving a 1099-C for the amount of debt canceled. You will be responsible to pay income taxes (ordinary income) on that amount.
E. If your debt is reduced or eliminated you should receive a Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven(canceled) and the fair market value of any property given up through foreclosure.
F. People who qualify claim the special exclusion by filling out Federal Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to their federal income tax return for the year.
For more information contact your CPA or tax professional.
If your mortgage debt is partly or entirely written off/ canceled (forgiven) during 2007 through 2012; You may be able to claim a special tax relief for your federal taxes.
Here are few things the IRS wants you to know about mortgage debt forgiveness.
A. Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude from tax up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.
B. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, may qualify for this relief.
C. The debt must have been used to buy, build or substantially improve your principal residence and must have been secured by that residence. Debt used to refinance qualifying debt is also eligible for the exclusion, but only up to the amount of the old mortgage principal, just before the refinancing.
D. Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the tax-relief provision. In some cases, other kinds of tax relief – based on insolvency, for example – may be available. In this economy, more and more clients are reducing their credit card debt via debt settlement companies, this will result in you receiving a 1099-C for the amount of debt canceled. You will be responsible to pay income taxes (ordinary income) on that amount.
E. If your debt is reduced or eliminated you should receive a Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven(canceled) and the fair market value of any property given up through foreclosure.
F. People who qualify claim the special exclusion by filling out Federal Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to their federal income tax return for the year.
For more information contact your CPA or tax professional.
Tuesday, July 14, 2009
Tax Tips for New Businesses
Thinking about Starting A New Business?
Here a few quick tax tips to help you along the way.
First, you must decide what type of business entity you are going to establish. This will determine how you are taxed by the IRS, State, and local (Including but not limited to Income tax, self-employment tax, employment or payroll taxes, and excise tax). The most common types of businesses are LLCs, sole proprietorship's, partnerships, corporations and S corporations.
Make sure you get An Employer Identification Number (EIN). Many people who use simple online sites to get Incorporated often neglect to get an EIN#. This is needed to open an bank account as well as report taxes to the various government agencies.
Keep Good records. If you can, purchase a computer based bookkeeping system such as QuickBooks. A good set of quickbooks is a valuable asset to have in case of a government audit as well as a client billing dispute. Also, there is a saying " Good Data In, Good Data out", so either learn quickbooks from a Quickbooks Proadvisor or hire a local bookkeeper to do the data entry for you.
Plan ahead. Many taxpayers fail to realize until the end of the year that they may owe tax. This occurs primarily because the taxpayer fails to notify his or her accountant of the activity inside the business until year-end. Ask your accountant to visit you at least quarterly to assure that your estimated tax payments are sufficient to cover your projected tax bill.
Here a few quick tax tips to help you along the way.
First, you must decide what type of business entity you are going to establish. This will determine how you are taxed by the IRS, State, and local (Including but not limited to Income tax, self-employment tax, employment or payroll taxes, and excise tax). The most common types of businesses are LLCs, sole proprietorship's, partnerships, corporations and S corporations.
Make sure you get An Employer Identification Number (EIN). Many people who use simple online sites to get Incorporated often neglect to get an EIN#. This is needed to open an bank account as well as report taxes to the various government agencies.
Keep Good records. If you can, purchase a computer based bookkeeping system such as QuickBooks. A good set of quickbooks is a valuable asset to have in case of a government audit as well as a client billing dispute. Also, there is a saying " Good Data In, Good Data out", so either learn quickbooks from a Quickbooks Proadvisor or hire a local bookkeeper to do the data entry for you.
Plan ahead. Many taxpayers fail to realize until the end of the year that they may owe tax. This occurs primarily because the taxpayer fails to notify his or her accountant of the activity inside the business until year-end. Ask your accountant to visit you at least quarterly to assure that your estimated tax payments are sufficient to cover your projected tax bill.
Wednesday, July 8, 2009
Filing Tax Returns Late or Paying Tax Returns Late
Filing Tax Returns Late or Paying Tax Returns Late
Which is the lessor of these two issues?
In this economy, it is not impossible to believe that small business owners or individual tax payers may have a hard time paying or completing their respective tax returns. There are options available for taxpayers who need assistance in preparing or paying their taxes.
Filing Late or not Filing
It is always in your best interest to file your taxes timely. If you cant file timely, prepare an extension to allow yourself additional time to prepare your returns. However, your tax (Money0 is due on the original due date either March 15th or April 15th depending on whether you are a corporation or a partnership.
If your return is late, and you have not filed; You should do so as soon as possible to avoid additional interests and penalties.
Paying Your Taxes
There are multiple options available to pay your taxes these days. From credit cards, to check, to the IRS's EFTPS (Electronic Funds Transfer Payment System). If you cannot pay your complete tax bill on time, you should pay as much as possible as soon as possible to reduce the amount of interest and penalties that will accrue.
Based on the circumstances, a taxpayer could qualify for an extension of time to pay, an Installment Agreement, temporary delay, or Offer in Compromise from the IRS. You must meet specific reasons and follow the appropriate procedures in order to qualify.
Keep in mind that with low borrowing rates, it may be cheaper to borrow the money to pay your taxes from a creditor rather than going on a n installment agreement with the IRS.
Thursday, June 4, 2009
Retirement Plan Due Dates
Is your Corporate or Partnership return on extension? Do you have questions regarding your retirment plan contribution due dates? This post will help outline those dates for you so you can properly plan for the upcoming year as well as finalize your tax return that is on extension.
Consider a SEP
Simplified Employee Pension plans (SEPs) can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) for all employees (including the employer). A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.
SEP Plans can be extablished (started) as late as the extended due date of the tax return. That means if your corporation as a December 31, 2008 year end, you can start and fund your SEP for your business as late as the extended due date of September 15, 2009.
Check out IRS Publication 560 for more details or contact your Local CPA.
Consider a SEP
Simplified Employee Pension plans (SEPs) can provide a significant source of income at retirement by allowing employers to set aside money in retirement accounts for themselves and their employees. Under a SEP, an employer contributes directly to traditional individual retirement accounts (SEP-IRAs) for all employees (including the employer). A SEP does not have the start-up and operating costs of a conventional retirement plan and allows for a contribution of up to 25 percent of each employee’s pay.
SEP Plans can be extablished (started) as late as the extended due date of the tax return. That means if your corporation as a December 31, 2008 year end, you can start and fund your SEP for your business as late as the extended due date of September 15, 2009.
Check out IRS Publication 560 for more details or contact your Local CPA.
Monday, April 27, 2009
What Happens After I File?
What Happens After I File My Taxes with my Staten Island Accountant?
Most people have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.
Refund Information
If you dont want to call your Staten Island Accountant or local CPA, you can always go through the IRS. You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:
• Go to IRS.gov, and click on “Where’s My Refund.”
• Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• Call 1-800-829-1954 during the hours shown in your form instructions.
What Records Should I Keep?
Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.
Change of Address
If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.
What If I Made a Mistake?
Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:
1. You did not report some income,
2. You claimed deductions or credits you should not have claimed.
3. You did not claim deductions or credits you could have claimed.
4. You should have claimed a different filing status. Taxpayers who filed a joint return cannot choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.
5. If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.
Most people have already filed their federal tax returns but may still have questions. Here’s what you need to know about refund status, recordkeeping, mistakes and what to do if you move.
Refund Information
If you dont want to call your Staten Island Accountant or local CPA, you can always go through the IRS. You can go online to check the status of your 2008 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2008 tax return available because you will need to know the filing status, the first SSN shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:
• Go to IRS.gov, and click on “Where’s My Refund.”
• Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• Call 1-800-829-1954 during the hours shown in your form instructions.
What Records Should I Keep?
Good record keeping allows you to prepare a complete and accurate income tax return. You should keep all receipts, canceled checks or other proof of payment, and any other records to support any deductions or credits you claim.
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending filed returns or preparing future ones.
Change of Address
If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also notify the post office serving your former address, which will ensure your check makes it to your new address.
What If I Made a Mistake?
Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return. Here are five reasons to file an amended return:
1. You did not report some income,
2. You claimed deductions or credits you should not have claimed.
3. You did not claim deductions or credits you could have claimed.
4. You should have claimed a different filing status. Taxpayers who filed a joint return cannot choose to file separate returns for that year after the due date of the return. However, an executor may be able to make this change for a deceased spouse.
5. If you bought or are thinking of buying home, you may be able to file an amended return to claim the First Time Home Buyer Credit. Taxpayers who purchased a qualifying home can claim the Homebuyer Credit on the 2008 return without waiting until next year to claim it on their 2009 return.
Friday, March 13, 2009
2009 Due Dates for NYS
2009 Due Dates for New York State
March 16th
Corporation Tax Return for Calendar Year Filers Due
Corporation Tax Estimated Tax Payment Due with Return or Extension
S Corporation Tax Return for Calendar Year Filers Due
March 20th
Sales Tax Return for Quarterly Filers Due
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Annual Filers Due
April 15th
Personal Income Tax, Partnership and Fiduciary Tax Returns Due for Calendar Year Filers
Personal Income Tax Estimated Tax Payment Due
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
April 20th
Sales Tax Return for Monthly Filers Due
May 20th
Sales Tax Return for Monthly Filers Due
June 15th
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
Personal Income Tax Estimated Tax Payments Due
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
June 22nd
Sales Tax Return for Quarterly Filers Due
Sales Tax Return for Monthly Filers Due
July 20th
Sales Tax Return for Monthly Filers Due
August 20th
Sales Tax Return for Monthly Filers Due
September 15th
Personal Income Tax Estimated Tax Payments Due
S Corporation Return Due for Calendar Year Filers Who Requested an Extension
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
Corporation Tax Return Due for Calendar Year Filers Who Requested Six Month Extension to File
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
September 21st
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Quarterly Filers Due
October 15th
Personal Income Tax, Partnership, and Fiduciary Returns Due for Calendar Year Taxpayers who Requested an Automatic Six Month Extension to File
October 20th
Sales Tax Return for Monthly Filers Due
November 20th
Sales Tax Return for Monthly Filers Due
December 15th
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
December 21st
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Quarterly Filers Due
March 16th
Corporation Tax Return for Calendar Year Filers Due
Corporation Tax Estimated Tax Payment Due with Return or Extension
S Corporation Tax Return for Calendar Year Filers Due
March 20th
Sales Tax Return for Quarterly Filers Due
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Annual Filers Due
April 15th
Personal Income Tax, Partnership and Fiduciary Tax Returns Due for Calendar Year Filers
Personal Income Tax Estimated Tax Payment Due
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
April 20th
Sales Tax Return for Monthly Filers Due
May 20th
Sales Tax Return for Monthly Filers Due
June 15th
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
Personal Income Tax Estimated Tax Payments Due
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
June 22nd
Sales Tax Return for Quarterly Filers Due
Sales Tax Return for Monthly Filers Due
July 20th
Sales Tax Return for Monthly Filers Due
August 20th
Sales Tax Return for Monthly Filers Due
September 15th
Personal Income Tax Estimated Tax Payments Due
S Corporation Return Due for Calendar Year Filers Who Requested an Extension
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
Corporation Tax Return Due for Calendar Year Filers Who Requested Six Month Extension to File
Partnership and LLC Estimated Tax Payments Due (For payments required to be made on behalf of partners and members)
S Corporation Estimated Tax Payments Due (For payments required to be made on behalf of nonresident shareholders)
September 21st
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Quarterly Filers Due
October 15th
Personal Income Tax, Partnership, and Fiduciary Returns Due for Calendar Year Taxpayers who Requested an Automatic Six Month Extension to File
October 20th
Sales Tax Return for Monthly Filers Due
November 20th
Sales Tax Return for Monthly Filers Due
December 15th
Corporation Tax Estimated Tax Payments for Calendar Year Filers Due
December 21st
Sales Tax Return for Monthly Filers Due
Sales Tax Return for Quarterly Filers Due
Wednesday, March 11, 2009
Staten Island CPA & Tax Preparer
Here is the volunteer site on Staten Island open March 21, 2009, to provide free taxpayer assistance.
Staten Island Site for Volunteer Tax Assistance
These sites usually have a mix of local Staten Island CPA's as well as other tax preparers.
Staten Island
SI Bank & Trust
15 Hyatt Street, 3rd Floor
Foodbank - Staten Island, NY 10301
9 a.m. - 5 p.m.
Staten Island Site for Volunteer Tax Assistance
These sites usually have a mix of local Staten Island CPA's as well as other tax preparers.
Staten Island
SI Bank & Trust
15 Hyatt Street, 3rd Floor
Foodbank - Staten Island, NY 10301
9 a.m. - 5 p.m.
Waiting on your Federal Refund
Waiting on your Federal refund, call the IRS at (800) 829-1954 its free and you can get the status of your funds.
Thursday, March 5, 2009
NYS Tax Extension - Online & Free
Need an extension to file your personal income tax return? Apply online for an automatic extension. It's free and easy to use. You'll receive an instant, printable confirmation that the Tax Department received your application.
To apply for an extension to file online, go to:
https://www8.nystax.gov/PEXT/pextHome
If you owe tax with your extension, you can pay it by:
- direct debit from a savings or checking account
- credit card (a convenience fee applies)
- printing a voucher and mailing a check
To apply for an extension to file online, go to:
https://www8.nystax.gov/PEXT/pextHome
If you owe tax with your extension, you can pay it by:
- direct debit from a savings or checking account
- credit card (a convenience fee applies)
- printing a voucher and mailing a check
Special Tax Exclusion For Mortgage Debt Forgiveness
Mortgage Debt Forgiveness as per the IRS Tax Tips #44
If your mortgage debt is partly or entirely forgiven during tax years 2007 – 2012, you may be able to claim special tax relief and exclude the debt forgiveness income.
Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.
Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.
If you qualify, you claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to your federal income tax return for the year.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other tax relief provisions, (for example, insolvency), may be available.
If your debt is reduced or eliminated you will receive a year-end statement, Form 1099-C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed. The IRS urges borrowers to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).
For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit the IRS Web site at IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. People may obtain a copy of this publication and Form 982 either by downloading from IRS.gov or by calling 800-TAX-FORM (800-829-3676).
If your mortgage debt is partly or entirely forgiven during tax years 2007 – 2012, you may be able to claim special tax relief and exclude the debt forgiveness income.
Normally, debt forgiveness results in taxable income. However, under the Mortgage Forgiveness Debt Relief Act of 2007, you may be able to exclude up to $2 million of debt forgiven on your principal residence. The limit is $1 million for a married person filing a separate return.
Taxpayers may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure. To qualify, the debt must have been used to buy, build or substantially improve your principal residence and be secured by that residence. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.
However, proceeds of refinanced debt used for other purposes (for example, to pay off credit card debt) do not qualify for the exclusion.
If you qualify, you claim the special exclusion by filling out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attaching it to your federal income tax return for the year.
Debt forgiven on second homes, rental property, business property, credit cards or car loans does not qualify for the new tax-relief provision. In some cases, however, other tax relief provisions, (for example, insolvency), may be available.
If your debt is reduced or eliminated you will receive a year-end statement, Form 1099-C, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed. The IRS urges borrowers to examine the Form 1099-C carefully. Notify the lender immediately if any of the information shown is incorrect. You should pay particular attention to the amount of debt forgiven (Box 2) and the value listed for your home (Box 7).
For more information about the Mortgage Forgiveness Debt Relief Act of 2007, visit the IRS Web site at IRS.gov. A good resource is IRS Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments. People may obtain a copy of this publication and Form 982 either by downloading from IRS.gov or by calling 800-TAX-FORM (800-829-3676).
Saturday, February 28, 2009
Getting the Recovery Rebate Right
How to Get the Recovery Rebate Credit Right
The IRS sent taxpayers nearly 119 million stimulus payments last year. There are three ways individuals can find out how much they received:
1. Check the amount listed on Notice 1378, which the IRS mailed last year to individuals who received the economic stimulus payment.
2. Go to the How Much Was My Stimulus Payment? tool that is available on the IRS Web site, IRS.gov. This can provide the correct amount in a matter of a few seconds.
3. Individuals can call the IRS at 1-866-234-2942. After a brief recorded announcement they can select option one to find out the amount of their economic stimulus payment. They will need to provide their filing status, Social Security Number and number of exemptions.
With the amount of last year’s economic stimulus payment in hand, the taxpayer can then enter the figure on the recovery rebate credit worksheet or in the appropriate location when your Tax preparaer requests it.
If the taxpayer or preparer is using tax software, the amount of the recovery rebate credit will automatically be calculated and reported properly. If the taxpayer is using the paper method, the recovery rebate credit, as determined through the worksheet, should be reported on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ.
If there is any question at all as to the amount that should be reported for the recovery rebate credit, the taxpayer or preparer should enter "RRC" next to the appropriate line above, and the IRS will determine whether a recovery rebate credit is due, and, if so, how much.
Some of the major factors that could qualify you for the recovery rebate credit include:
Your financial situation changed dramatically from 2007 to 2008.
You did not file a 2007 tax return.
Your family gained an additional qualifying child in 2008.
You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as dependent by someone else in 2008.
The IRS sent taxpayers nearly 119 million stimulus payments last year. There are three ways individuals can find out how much they received:
1. Check the amount listed on Notice 1378, which the IRS mailed last year to individuals who received the economic stimulus payment.
2. Go to the How Much Was My Stimulus Payment? tool that is available on the IRS Web site, IRS.gov. This can provide the correct amount in a matter of a few seconds.
3. Individuals can call the IRS at 1-866-234-2942. After a brief recorded announcement they can select option one to find out the amount of their economic stimulus payment. They will need to provide their filing status, Social Security Number and number of exemptions.
With the amount of last year’s economic stimulus payment in hand, the taxpayer can then enter the figure on the recovery rebate credit worksheet or in the appropriate location when your Tax preparaer requests it.
If the taxpayer or preparer is using tax software, the amount of the recovery rebate credit will automatically be calculated and reported properly. If the taxpayer is using the paper method, the recovery rebate credit, as determined through the worksheet, should be reported on Line 70 of Form 1040, Line 42 of Form 1040A or Line 9 of Form 1040EZ.
If there is any question at all as to the amount that should be reported for the recovery rebate credit, the taxpayer or preparer should enter "RRC" next to the appropriate line above, and the IRS will determine whether a recovery rebate credit is due, and, if so, how much.
Some of the major factors that could qualify you for the recovery rebate credit include:
Your financial situation changed dramatically from 2007 to 2008.
You did not file a 2007 tax return.
Your family gained an additional qualifying child in 2008.
You were claimed as a dependent on someone else’s return in 2007 but cannot be claimed as dependent by someone else in 2008.
Wednesday, February 11, 2009
New S-Corporation Franchise Tax Minimum Tax Payments
This is new for Tax Year 2008.
New York S corporations taxable under Article 9-A are required to pay
the fixed dollar minimum tax.
Fixed dollar minimum tax for all New York S corporations.
Not more than $100,000 $ 25 *
More than $100,000 but not over $250,000 $ 50 *
More than $250,000 but not over $500,000 $ 175 *
More than $500,000 but not over $1,000,000 $ 300
More than $1,000,000 but not over $5,000,000 $ 1,000
More than $5,000,000 but not over $25,000,000 $ 3,000
Over $25,000,000 $ 4,500
New York S corporations taxable under Article 9-A are required to pay
the fixed dollar minimum tax.
Fixed dollar minimum tax for all New York S corporations.
Not more than $100,000 $ 25 *
More than $100,000 but not over $250,000 $ 50 *
More than $250,000 but not over $500,000 $ 175 *
More than $500,000 but not over $1,000,000 $ 300
More than $1,000,000 but not over $5,000,000 $ 1,000
More than $5,000,000 but not over $25,000,000 $ 3,000
Over $25,000,000 $ 4,500
Schedule A- Either State & Local Income Tax or Sales Tax but not both
Another Tax tip from your Staten Island CPA
If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. This is especially helpful if you live in a state with no income tax or you live in a state with income tax, like New York, but purchased a large item (like a car, truck, boat, or appliances). Many smaller taxpayers forget this rule and forget to take the higher amount on their schedule A.
If you file a Form 1040, and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes. (You can’t claim both.) If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. This is especially helpful if you live in a state with no income tax or you live in a state with income tax, like New York, but purchased a large item (like a car, truck, boat, or appliances). Many smaller taxpayers forget this rule and forget to take the higher amount on their schedule A.
Tuesday, February 3, 2009
Retirement Contribution Due Dates
Here are some quick Retirement Contribution tips for 2009. These are federal tips and are not New York State specific.
1. Fund your retirement accounts. The deadline for this would be April 15th, 2009 for a 2008 tax year contribution to your retirement account (Traditional IRA or Roth IRA). However, if you have a Keogh or SEP and you get a personal filing extension to October 15, 2009, you can wait until then to put 2008 money into those retirement accounts.
1. Fund your retirement accounts. The deadline for this would be April 15th, 2009 for a 2008 tax year contribution to your retirement account (Traditional IRA or Roth IRA). However, if you have a Keogh or SEP and you get a personal filing extension to October 15, 2009, you can wait until then to put 2008 money into those retirement accounts.
Tuesday, January 27, 2009
Tips for Recovery Rebate Credit
Four Tips to Help People Avoid Errors On the Recovery Rebate Credit
Most people who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. A small number of taxpayers who did not receive the full economic stimulus payment last year may be eligible to claim the Recovery Rebate Credit on their 2008 federal income tax return.
Figuring the Recovery Rebate Credit incorrectly or entering inaccurate information will delay the processing of your tax return and any refund due.
Below are the four things every person should know about this one-time credit(only for 2008 tax year), which is related to last year’s Economic Stimulus Payment:
1. You do not have to pay back your Stimulus Payment and the payment is not taxable.
2. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.
3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:
• Your financial situation changed dramatically from 2007 to 2008.
• You did not file a 2007 tax return.
• Your family gained an additional qualifying child in 2008.
• You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.
4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.
Most people who received the economic stimulus payment last year will not be able to claim the Recovery Rebate Credit on their 2008 federal income tax returns. A small number of taxpayers who did not receive the full economic stimulus payment last year may be eligible to claim the Recovery Rebate Credit on their 2008 federal income tax return.
Figuring the Recovery Rebate Credit incorrectly or entering inaccurate information will delay the processing of your tax return and any refund due.
Below are the four things every person should know about this one-time credit(only for 2008 tax year), which is related to last year’s Economic Stimulus Payment:
1. You do not have to pay back your Stimulus Payment and the payment is not taxable.
2. Less than an estimated 3 percent of taxpayers are eligible. The vast majority of taxpayers are not eligible to receive the Recovery Rebate Credit.
3. Did you have a major life change? If so, you may be eligible to claim the Recovery Rebate Credit. Some of the major factors that could qualify you for the Recovery Rebate Credit include:
• Your financial situation changed dramatically from 2007 to 2008.
• You did not file a 2007 tax return.
• Your family gained an additional qualifying child in 2008.
• You were claimed as a dependent on someone else’s return in 2007, but cannot be claimed as dependent by someone else in 2008.
4. Any Recovery Rebate Credit amount will be included in your refund. The IRS will figure the credit for you and include it in your refund or put it toward any taxes owed.
IRS & Free File
Free File is the fast, easy, and free way to prepare and e-file your federal taxes online. The IRS has 2 ways to do so. One way is to utilize a participating company, the other way is to fill in the forms yourself and file them online yourself.
The Free File program provides free federal income tax preparation and electronic filing for eligible taxpayers through a partnership between the Internal Revenue Service (IRS) and the Free File Alliance LLC, a group of private sector tax software companies.
Visit www.irs.gov for more details
Wednesday, January 14, 2009
Credit for First Time Home Buyer
Credit for First Time Home Buyer
Key Points
There is a credit available to individuals who purchased their first home after April 8, 2008, and before July 1, 2009. For a home that you construct, the purchase date is the first date you occupy the home.
The credit is 10 percent of the purchase of the home, with a maximum available credit of $7,500 for either a single taxpayer or a married couple filing a joint return; $3,750 for married persons filing separate returns. The full credit is available for homes costing $75,000 or more.
The credit is actually an interest free loan and will be repaid over the next 15 years.
It is repaid in 15 equal annual installments beginning with the second tax year after the year the credit is claimed. You may need to adjust your withholding or make quarterly estimated tax payments to ensure you are not under-withheld.
Vacations home do not qualify for the credit.
Taxpayers who have not owned another home at any time during the three years prior to the date of purchase are considered first time home buyers.
The credit is claimed on a new form 5405.
As with most credits, it is subject to income limitations.
Staten Island Accountant
Staten Island Accountant
Goldenthal & Suss CPA's & Consultants, P.C.
Partner - David C. Egan, CPA
Staten Island, NY 10312
(p)718-227-6035
(f)718-227-6067
David C. Egan, CPA services Staten Island and the entire NY/NJ metro area.
Goldenthal & Suss CPA's & Consultants, P.C.
Partner - David C. Egan, CPA
Staten Island, NY 10312
(p)718-227-6035
(f)718-227-6067
David C. Egan, CPA services Staten Island and the entire NY/NJ metro area.
Monday, January 12, 2009
What Can I Deduct for my Business?
I get this question all the time. Based on guidance from the IRS, here is a good answer to the age old "What Can I deduct or What kind of expenses are deductible in my small business?"
Business expenses are the cost of carrying on (operating) your business. These expenses are usually deductible if the business is operated to make a profit. If your business never makes any profit, it may be a hobby and unfortunately hobby expenses are not deductible.
What Can I Deduct?
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. In other words, you use and expense the Internet at your office, but you could conduct business without it, although, it would take you back to the 19th century. Another example would be, business meals. They may be necessary depending on your line of work but may not be indispensable.
It is important to separate business expenses from the following expenses:
The expenses used to figure the cost of goods sold (Common in Businesses with Inventory as well as others), Capital Expenses, and Personal Expenses (Not Deductible).
Cost of Goods Sold
If your business manufactures products / items or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in calculating cost of goods sold. Cost of goods sold is deducted from your gross sales to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense; no double dipping. Inventory is complicated and requires your the taxpayer to keep detailed records of all purchases as well as which items were sold during the year.
Some Examples of the Types of expenses that go into figuring the cost of goods sold.
The cost of products or raw materials, including shipping & Storage, labor costs (including contributions to pensions or annuity plans) for workers who produce the products, Factory overhead.
Capital Expenses
You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business.There are, in general, three types of costs you capitalize.
Business start-up cost (See the note below)
Business assets
Improvements
Capital assets are written off over time via depreciation or amortization. Depending on the asset type, you may be able to elect a Section 179 deduction, subject to certain limitations.
Personal versus Business Expenses
Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.
For example, if you borrow money and use 80% of it for business and the other 20% for a family vacation, you can deduct 80% of the interest as a business expense. The remaining 20% is personal interest and is not deductible.
Business Use of Your Home
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.
Business Use of Your Car
If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Keep accurate records such as a daily travel log so you can provide substantive evidence in case of an audit or IRS examination.
Other Types of Business Expenses
Wages - You can generally deduct the pay you give your employees for the services they perform for your business.
Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.
Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.
See my blog for details on how to correctly deduct health insurance for S-corporations.
Business expenses are the cost of carrying on (operating) your business. These expenses are usually deductible if the business is operated to make a profit. If your business never makes any profit, it may be a hobby and unfortunately hobby expenses are not deductible.
What Can I Deduct?
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. In other words, you use and expense the Internet at your office, but you could conduct business without it, although, it would take you back to the 19th century. Another example would be, business meals. They may be necessary depending on your line of work but may not be indispensable.
It is important to separate business expenses from the following expenses:
The expenses used to figure the cost of goods sold (Common in Businesses with Inventory as well as others), Capital Expenses, and Personal Expenses (Not Deductible).
Cost of Goods Sold
If your business manufactures products / items or purchases them for resale, you generally must value inventory at the beginning and end of each tax year to determine your cost of goods sold. Some of your expenses may be included in calculating cost of goods sold. Cost of goods sold is deducted from your gross sales to figure your gross profit for the year. If you include an expense in the cost of goods sold, you cannot deduct it again as a business expense; no double dipping. Inventory is complicated and requires your the taxpayer to keep detailed records of all purchases as well as which items were sold during the year.
Some Examples of the Types of expenses that go into figuring the cost of goods sold.
The cost of products or raw materials, including shipping & Storage, labor costs (including contributions to pensions or annuity plans) for workers who produce the products, Factory overhead.
Capital Expenses
You must capitalize, rather than deduct, some costs. These costs are a part of your investment in your business and are called capital expenses. Capital expenses are considered assets in your business.There are, in general, three types of costs you capitalize.
Business start-up cost (See the note below)
Business assets
Improvements
Capital assets are written off over time via depreciation or amortization. Depending on the asset type, you may be able to elect a Section 179 deduction, subject to certain limitations.
Personal versus Business Expenses
Generally, you cannot deduct personal, living, or family expenses. However, if you have an expense for something that is used partly for business and partly for personal purposes, divide the total cost between the business and personal parts. You can deduct the business part.
For example, if you borrow money and use 80% of it for business and the other 20% for a family vacation, you can deduct 80% of the interest as a business expense. The remaining 20% is personal interest and is not deductible.
Business Use of Your Home
If you use part of your home for business, you may be able to deduct expenses for the business use of your home. These expenses may include mortgage interest, insurance, utilities, repairs, and depreciation.
Business Use of Your Car
If you use your car in your business, you can deduct car expenses. If you use your car for both business and personal purposes, you must divide your expenses based on actual mileage. Keep accurate records such as a daily travel log so you can provide substantive evidence in case of an audit or IRS examination.
Other Types of Business Expenses
Wages - You can generally deduct the pay you give your employees for the services they perform for your business.
Retirement Plans - Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees' retirement.
Rent Expense - Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for property you use in your trade or business. If you have or will receive equity in or title to the property, the rent is not deductible.
Interest - Business interest expense is an amount charged for the use of money you borrowed for business activities.
Taxes - You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
Insurance - Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business, or profession.
See my blog for details on how to correctly deduct health insurance for S-corporations.
Subscribe to:
Posts (Atom)
Posts
