Staten Island Certified Public Accountant

New Form 1099-K

2012-01-23T08:56:00.000-08:00

Business Accept Credit Card Payments?

To our Clients and Friends:

If your company has a business relationship with a “payment settlement entity” (e.g., an issuer of credit or debit cards; PayPal), you may soon be receiving something new in the mail: Federal Form 1099-K. Any payment settlement entity that processes over 200 transactions on your behalf in a calendar year that aggregates to over $20,000, must issue this form to you by January 31 of the following year. Thus, forms for 2011 must be distributed to you by January 31, 2012. The Internal Revenue Service will, of course, receive a copy.

The purpose of Form 1099-K is to enable the IRS to compare dollar amounts reported by the issuer with data reported by business entities on their annual tax returns. Thus, it will be prudent to compare the dollar amount shown on any form you may receive with your own business records to check accuracy and avoid unnecessary correspondences with the IRS.

Contact our Staten Island Office for more details.

David C Egan, CPA
Partner

718-227-6035

Important Facts about Dependents and Exemptions

2012-01-11T08:04:00.000-08:00

Six Important Facts about Dependents and Exemptions

Even though each individual tax return is different, some tax rules affect every person who may have to file a federal income tax return. These rules include dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2011 tax return.
1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.

2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you’re filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.

3. Exemptions for dependents. You generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the Social Security number of any dependent for whom you claim an exemption.

4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status and any special taxes you owe.

5. If you are a dependent, you may not claim an exemption. If someone else – such as your parent – claims you as a dependent, you may not claim your personal exemption on your own tax return.

6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.

For further information or clarification, feel free to contact my office at 718-227-6035

David C Egan, CPA
Partner

Tax Updates for 2011-2012

2012-01-04T09:27:00.000-08:00

The most significant event affecting 2011 returns was the signing on Dec. 17. 2010, of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act), P.L. 111-312, which extended the ordinary income tax rates introduced by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), P.L. 107-16, and the capital gain tax rates introduced by the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), P.L. 108-27. The Tax Relief Act also extended a large number of other expired or expiring provisions.
Many of the tax provisions enacted in EGTRRA and JGTRRA had been set to expire after 2010. The Tax Relief Act amended EGTRRA and JGTRRA to postpone the sunset of the affected provisions until after 2012 and extended many other provisions to 2011 or 2012.

EXTENSION OF EGTRRA AND JGTRRA PROVISIONS

Tax rates. EGTRRA introduced a 10% tax bracket below the 15% bracket for individuals and reduced the other tax brackets to 25%, 28%, 33% and 35%. Those changes were scheduled to sunset after 2010 so that in 2011 the 10% rate would disappear (with income in that bracket reverting to the 15% bracket) and the other rates would revert to 28%, 31%, 36% and 39.6%, respectively. With the Tax Relief Act’s postponement of the EGTRRA sunset, those rates are scheduled to continue through 2012.
Capital gains. In 2003, JGTRRA also lowered the capital gain tax rate to 15% (0% for taxpayers in the 10% and 15% ordinary income tax brackets). These rate changes also had been scheduled to expire after 2010. The Tax Relief Act’s postponement of JGTRRA’s sunset continues the lowered capital gain tax rate through 2012.
Itemized deductions and personal exemptions. The Tax Relief Act also extended EGTRRA’s repeal of the itemized deduction phaseout and the personal exemption phaseout for two years through 2012.

PAYROLL TAX REDUCTION

For 2011 only, the Tax Relief Act also reduced the rate for the Social Security portion of payroll taxes to 10.4% by reducing the employee rate from 6.2% to 4.2% (the employer’s portion remained at 6.2%). The payroll tax reduction replaced the former making work pay credit, which expired at the end of 2010. However, while the making work pay credit was phased out for higher-income taxpayers, the payroll tax reduction applied to all workers who paid payroll taxes, regardless of income level, and should be reflected in box 4 on the taxpayer’s 2011 Form W-2, Wage and Tax Statement.

AMT PROVISIONS

The Tax Relief Act increased the alternative minimum tax (AMT) exemption amounts for 2010 and 2011 (also known as the AMT patch). For 2011, the amounts are $48,450 for unmarried individuals; $74,450 for married individuals filing jointly; and $37,225 for married individuals filing separately.
In addition, the Tax Relief Act extended through 2012 the 0% and 15% capital gain rates for the AMT; the AMT offset of the child tax credit; and the 7% AMT preference for excluded gain on the disposition of qualified small business stock. It also extended the offset of nonrefundable personal credits against the AMT, but only through 2011.

EXTENSION OF EXPIRED INDIVIDUAL PROVISIONS

The Tax Relief Act extended a variety of temporary individual tax provisions that had expired at the end of 2009 or were scheduled to expire at the end of 2010. They include tax credits, deductions and various tax incentives.
All of the following were extended for two years through 2012:
Marriage penalty relief (the increased standard deduction and expanded 15% bracket for married taxpayers filing jointly);
The $1,000 child tax credit amount (previously scheduled to revert to $500 after 2010) and the expanded refundability of the credit;
The increased starting and ending points for the earned income credit and the increase in the credit amount for families with three or more qualifying children;
The liberalized child and dependent care credit rules (allowing the credit to be calculated based on up to $3,000 of expenses for one dependent or up to $6,000 for more than one);
The American opportunity tax credit;
The higher contribution amount and other EGTRRA changes to Coverdell education savings accounts;
The enhanced rules for student loan deductions introduced by EGTRRA;
The exclusion for employer-provided educational assistance (Sec. 127); and
The exclusion for National Health Services Corps and Armed Forces Health Professions Scholarships (Sec. 117(c)(2)).
The following provisions were extended for one year through 2011:
The treatment of mortgage insurance premiums as interest (Sec. 163(h)(3)(E));
The parity for exclusion from income for employer-provided mass transit passes and parking benefits (Sec. 132);
The allowance for tax-free distributions from individual retirement plans for charitable purposes (Sec. 408(d)(8));
The temporary 100% exclusion of gain from the sale of certain small business stock under Sec. 1202, enacted by the Small Business Jobs Act of 2010, P.L. 111-240;
The deduction for tuition and related expenses (Sec. 222);
The state and local sales tax deduction (Sec. 164);
The deduction for elementary and secondary school teachers (Sec. 62(a)(2)(D));
The nonbusiness energy property credit (under the rules in effect before the American Recovery and Reinvestment Act of 2009, P.L. 111-5) (Sec. 25C);
The credit for first-time Washington, D.C., homebuyers (Sec. 1400C); and
The special rules for qualified conservation contributions by individuals (Sec. 170(b)(1)(E)).

HEALTH CARE TAX PROVISIONS

Although most of its major provisions will take effect in subsequent years, the health care reform legislation passed in 2010 contained some provisions that were effective in 2011.
Employees may see some new information on their Forms W-2 for 2011. The Patient Protection and Affordable Care Act (PPACA), P.L. 111-148, requires employers to disclose on each employee’s annual Form W-2 the value of the employee’s health insurance coverage sponsored by the employer. This provision was originally mandatory for tax years beginning after Dec. 31, 2010; however, in Notice 2010-69, the IRS announced that employers will not be required to report the cost of employer- sponsored coverage on W-2s issued for 2011, due to the difficulty in preparing payroll systems for the requirement. However, employers have the option to report such costs in 2011, so some employees may see this information. It will appear in box 12 of the W-2, with a code DD. This reporting is strictly informational; the amount reported will not affect the individual’s tax liability.
Over-the-counter medications. Under the PPACA, amounts paid or incurred after Dec. 31, 2010, for medications obtained without a prescription (except for insulin) are no longer reimbursable from health savings accounts (HSAs), Archer medical savings accounts (MSAs), health FSAs or health reimbursement arrangements.
Tax on HSA distributions. The additional tax on distributions from an HSA or an Archer MSA that are not used for qualified medical expenses was increased to 20% of the disbursed amount, effective for disbursements made during tax years starting after Dec. 31, 2010. (Under prior law, the tax was 10% of the disbursed amount for HSAs and 15% for Archer MSAs.)
SIMPLE cafeteria plans. Starting in 2011, small businesses could start offering SIMPLE cafeteria plans. Under the provision, an eligible small employer is provided with a safe harbor from the nondiscrimination requirements for cafeteria plans as well as from the nondiscrimination requirements for specified qualified benefits offered under a cafeteria plan, including group term life insurance, benefits under a self-insured medical expense reimbursement plan and benefits under a dependent care assistance program. Under the safe harbor, a cafeteria plan and the specified qualified benefits are treated as meeting the specified nondiscrimination rules if the cafeteria plan satisfies minimum eligibility and participation requirements and minimum contribution requirements.

BUSINESS PROVISIONS

Self-employment. The self-employment tax rate for 2011 dropped from 15.3% to 13.3%, reflecting the one-year cut in the Social Security tax also applicable to employees. However, taxpayers taking the above-the-line deduction for one-half of self-employment tax can still claim the same 7.65% amount as in 2010—making the deduction equal to 57.51% of self-employment tax for 2011. However, a provision that for 2010 allowed self-employed individuals to deduct health insurance premiums from self-employment income for purposes of determining self-employment tax (Sec. 162(l)(4)) was not extended for 2011.
Depreciation. Property acquired and placed in service between Sept. 9, 2010, and Dec. 31, 2011, may be eligible for 100% depreciation.
Work opportunity tax credit. Employers who hire certain military veterans, young people and members of other targeted groups by Dec. 31, 2011, may claim a credit based on the employee’s wages (Sec. 51).

NEW INFORMATION REPORTING PROVISIONS

Stock basis reporting. Individual taxpayers should also see more information on Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, which has been expanded to include the cost or other basis of stock and mutual fund shares sold or exchanged during the year. Stockbrokers and mutual fund companies will use Form 1099-B to report this information at year-end. They will also use the expanded form to report whether gain or loss realized on these transactions qualifies as long-term or short-term gain or loss. The payer is required to file the expanded Form 1099-B with the IRS by Feb. 28, 2012 (or April 2, 2012, if the payer files electronically) and provide it to investors by Feb. 15, 2012. Box 3 will show the cost or other basis of securities sold.
Credit card transactions. Beginning with calendar year 2011, payment settlement entities for traditional and online merchants will be required to report to a payee, as well as to the IRS, the gross amount of the payee’s reportable payment transactions within a calendar year. The payee is the party that accepts a payment card as payment or establishes an account with a third-party settlement organization to settle transactions. In a payment card transaction, the payee is generally the merchant or seller. This provision was enacted as Sec. 6050W by the Housing and Economic Recovery Act of 2008, P.L. 110-289, but became effective only in 2011. These payments are reported on Form 1099-K, Merchant Card and Third Party Network Payments, which may be furnished electronically.
The IRS in Notice 2011-89 provided transitional relief for 2012 from penalties under Secs. 6721 and 6722 for Forms 1099-K that are incorrect or incomplete, as long as the payer makes a good-faith effort to file and issue them correctly. The IRS also postponed until 2013 backup withholding with respect to amounts reportable under Sec. 6050W (Notice 2011-88). Form 1040, schedules C and E for 2011 tax years includes a line for payee taxpayers to report amounts reported to them on Form 1099-K, but the schedules direct taxpayers to enter a zero on the line.
Basis of inherited property. While most commentary and guidance has focused on the changes in estate and gift taxes for 2010 and 2011 as they relate to gift and estate returns, CPA practitioners may see effects of the 2010 modified carryover basis election on capital gains for 2011 reported by inheritors of the estates of 2010 decedents that made the election. Under these rules, the heirs receive inherited property with a basis equal to the lesser of the decedent’s basis or the property’s fair market value (FMV) as of the date of death (Sec. 1022(a)), plus any basis increase (up to the FMV of the property at the decedent’s date of death) allocated to the property by the executor of the estate.
The maximum amount of basis increase that the executor can allocate among all of the decedent’s assets is $1.3 million ($60,000 for estates of nonresidents who were not citizens), plus certain losses and loss carryovers of the decedent. Property transferred outright to the decedent’s spouse and qualified terminable interest property is eligible for an additional $3 million of basis increase. If the executor has made the Sec. 1022 election, the heir should receive from the estate a Form 8939, Schedule A, containing information about the property’s basis, date acquired, whether any gain on its sale would be ordinary, the amount of basis increase allocated to it and its FMV on the decedent’s date of death.
Individuals who inherited property from 2010 decedents may have already disposed of it before the estate made the carryover basis election and assumed that their basis was the FMV at the time of death. The estate’s subsequent election to apply the modified carryover basis rules may result in such individuals’ owing capital gain tax, due to the now lower basis of the property. The IRS has said that, in such cases, it will presume the recipient’s reasonable cause and good faith for any increase in the recipient’s tax liability due to the application of Sec. 1022 and will not impose failure-to-pay or accuracy-related penalties (Notice 2011-76). The IRS advises affected taxpayers to write at the top of an amended return “IR Notice 2011-76” to obtain the relief.

--------------------------------------------------------------------------------

Looking Ahead to the 2012 Tax Year
The IRS made inflation adjustments to the income tax tables and many tax credits and other items for tax years beginning in 2012 in Rev. Proc. 2011-52.
Separately, the IRS announced the 2012 contribution limits and other figures for pension plans and other retirement-related items (IR-2011-103).
The increases are greater than in the previous two years, when inflation was lower.
Besides revised income tax tables, the new revenue procedure included updated amounts for various items such as the personal exemption (which increases from $3,700 to $3,800) and standard deduction. The revenue procedure also gave new figures for the child tax credit, American opportunity and lifetime learning credits and the earned income tax credit—40 items in all.
The $13,000 annual gift exclusion is unchanged for 2012, although the estate and gift lifetime exclusion for decedents dying during 2012 goes up from $5 million to $5.12 million.
The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b) or 457(b) plans and the federal government’s Thrift Savings Plan increases from $16,500 to $17,000. The catch-up contribution limit under those plans for those age 50 and over is unchanged at $5,500.
The Social Security Administration announced that the Social Security wage base for 2012 is $110,100 (up from $106,800 in 2011).

Charitable Giving Tips

2011-08-22T06:27:00.000-07:00

If you make a donation to a charity this year, you may be able to take a
deduction for it on your 2011 tax return. Here are the top nine things the IRS
wants every taxpayer to know before deducting charitable donations.

Make sure the organization qualifies Charitable contributions must be made to qualified
organizations to be deductible. You can ask any organization whether it is
a qualified organization or check IRS Publication 78, Cumulative List of
Organizations. It is available online at the IRS.
You must itemize
Charitable contributions are deductible only if you itemize deductions
using Form 1040, Schedule A.
What you can deduct You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified organization. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
When you receive something in return If your contribution entitles you to receive
merchandise, goods, or services in return – such as admission to a charity
banquet or sporting event – you can deduct only the amount that exceeds
the fair market value of the benefit received.
Recordkeeping Keep good records of
any contribution you make, regardless of the amount. For any cash
contribution, you must maintain a record of the contribution, such as a
cancelled check, bank or credit card statement, payroll deduction record
or a written statement from the charity containing the date and amount of
the contribution and the name of the organization.
Pledges and payments
Only contributions actually made during the tax year are deductible. For
example, if you pledged $500 in September but paid the charity only $200
by Dec. 31, you can only deduct $200.
Donations made near the end of the year Include credit card charges and payments by check in the year you give them to the charity, even though you may not pay the
credit card bill or have your bank account debited until the next year.
Large donations
For any contribution of $250 or more, you need more than a bank record.
You must have a written acknowledgment from the organization. It must
include the amount of cash and say whether the organization provided any
goods or services in exchange for the gift. If you donated property, the
acknowledgment must include a description of the items and a good faith
estimate of its value. For items valued at $500 or more you must complete
a Form 8283, Noncash Charitable Contributions, and attach the form to your
return. If you claim a deduction for a contribution of noncash property
worth more than $5,000, you generally must obtain an appraisal and
complete Section B of Form 8283 with your return.
Tax Exemption Revoked Approximately 275,000 organizations automatically lost
their tax-exempt status recently because they did not file required annual
reports for three consecutive years, as required by law. Donations made
prior to an organization’s automatic revocation remain tax-deductible.
Going forward, however, organizations that are on the auto-revocation list
that do not receive reinstatement are no longer eligible to receive
tax-deductible contributions.

For more information contact your local (Staten Island CPA) for more assistance.

Back-to-School Tips for Students and Parents Paying College Expenses

2011-08-16T11:24:00.000-07:00

Back-to-School Tips for Students and Parents Paying College Expenses

Whether you’re a recent graduate going to college for the first time or a returning student, it will soon be time to get to campus – and payment deadlines for tuition and other fees are not far behind. The Internal Revenue Service reminds students or parents paying such expenses to keep receipts and to be aware of some tax benefits that can help offset college costs.

Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

American Opportunity Credit This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years – 2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. The full credit is generally available to eligible taxpayers whose modified adjusted gross income is below $80,000 ($160,000 for married couples filing a joint return).
Lifetime Learning Credit In 2011, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student, but to claim the credit, your modified adjusted gross income must be below $60,000 ($120,000 if married filing jointly).
Tuition and Fees Deduction This deduction can reduce the amount of your income subject to tax by up to $4,000 for 2011 even if you do not itemize your deductions. Generally, you can claim the tuition and fees deduction for qualified higher education expenses for an eligible student if your modified adjusted gross income is below $80,000 ($160,000 if married filing jointly).
Student loan interest deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, if your modified adjusted gross income is less than $75,000 ($150,000 if filing a joint return), you may be able to deduct interest paid on a student loan used for higher education during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

For each student, you can choose to claim only one of the credits in a single tax year. However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.

You cannot claim the tuition and fees deduction for the same student in the same year that you claim the American Opportunity Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

If you have any questions or concers, feel free to contact me at my office at 718-227-6035.
Goldenthal & Suss CPAs & Consultants, PC
David C Egan, CPA
Partner
465 Belfield Avenue
Staten Island, NY 10312

444 Madison Avenue
4 Fl
New York, NY 10022

Make Sure Your Tax Preparer Signs Your Tax Return - He or She May Be a Ghost

2011-07-18T16:34:00.000-07:00

As part of its new oversight program of the nation’s tax return preparation industry, the Internal Revenue Service today announced it will send letters to approximately 100,000 tax return preparers who prepared returns in 2011 but failed to follow new requirements.

In 2010, the IRS launched an initiative to increase its oversight of the tax return preparation industry and regulate the conduct of tax return preparers. All paid tax return preparers must obtain a Preparer Tax Identification Number (PTIN) and, when required to do so, sign their names and include their PTINs on the returns and refund claims they prepare for compensation.

Starting July 7, 2011, the IRS began sending letters to about 100,000 tax return preparers who either used outdated PTINs or used social security numbers as identifying numbers on returns they prepared this filing season. The letters explain the new oversight program, inform preparers of how to register for a new PTIN, or renew an old PTIN, and where to get assistance.

“The vast majority of federal tax return preparers complied with the rules. Obviously, some preparers did not get the word, so these letters provide additional information so they can register as soon as possible,” said IRS Commissioner Doug Shulman. “We owe it to the compliant tax preparers to make sure that everyone is on a level playing field.”

The IRS launched its PTIN registration program last fall. Since then, about 712,000 tax preparers have registered and obtained PTINs. Paid preparers who are not Certified Public Accountants, attorneys or Enrolled Agents, have additional requirements to pass a competency exam and suitability check, which are expected to start this fall, and complete 15 hours of continuing education credits annually, which will start in 2012.

Some unscrupulous preparers may attempt to elude the new oversight program by not signing returns they prepare. Taxpayers should never use tax return preparers who refuse to sign returns and enter PTINs.

In an effort to identify these “ghost preparers,” the IRS later this year also will send letters to taxpayers who appear to have had assistance with their returns but lack tax return preparer signatures. The letter will inform taxpayers how to file a complaint against preparers who failed to sign returns and explain how to choose legitimate tax preparers. The goal of the letters is to protect taxpayers by ensuring that all paid federal tax return preparers are registered with the IRS, and sign tax returns they prepare and use an identifying number when required to do so.

Compliance is a central part of the new tax return preparer initiative and the letters are one step in an ongoing compliance effort to ensure tax return preparers are following the new regulations. The IRS also is working to identify tax return preparers who make repeated errors and IRS personnel have had face-to-face meetings with thousands of these tax return preparers over the past two years.

NYS Fair Play Act - NYS is Targeting Construction Firms

2011-06-28T14:35:00.000-07:00

The NYS Construction Industry Fair Play Act takes effect on October 26, 2010; However, NYS is currently tightening up the enforcement of this Act. The Law/Act creates a new standard for determining whether a worker is an employee or independent contractor in the construction industry. It provides new penalties for employers who fail to properly classify their employees.

The New Standards are Such:
The Law/Act presumes that individuals working for an employer are employees unless they meet ALL THREE criteria listed below.

Free from control and direction in preforming the job, both under contract AND in fact
Performing services outside of the usual course of business for the company AND
Engaged in an independently established trade, occupation or business that is similar to the service they preform.

Separate Business Entity:
The Law/Act also contains a 12 part "test" to determine when a sole proprietor, partnership, corporation or other entity will be considered a "separate business entity" from the contractor for whom it provides a service. If an entity meets ALL of the 12 criteria, it will NOT be considered an employee of the contractor. Instead it will be a separate business that is itself subject to the new law regarding its own employees.
To be considered a separate business entity from the business to which services are provided, a sole proprietor, partnership, corporation or other, entity must meet all 12 criteria.

be performing the service free from the direction or control over the means and manner of providing the service subject only to the right of the contractor to specify the desired result;
not be subject to cancellation when its work with the contractor ends;
have the substantial investment of capital in the entity beyond ordinary tools and equipment and a personal vehicle;
own the capital goods and gain the profits and bear the losses of the entity;
makes its services available to the general public or business community on a regular basis;
include the services provided on a federal income tax schedule as an independent business;
perform the services under the entity's name;
obtain and pay for any required license or permit in the entity's name;
furnish the tools and equipment necessary to provide the service;
hire its own employees without contractor approval, pay the employees without reimbursement from the contractor and report the employees' income to the Internal Revenue Service;
have the right to perform similar services for others on whatever basis and whenever it chooses; and
the contractor does not represent the entity or the employees of the entity as its own employees to its customers.

Coverage:
The law applies to all contractors in the construction industry. Construction is defined as including constructing, reconstructing, altering, maintaining, moving, rehabilitating, repairing, renovating or demolition of any building, structure or improvement or relating to the excavation of or other development to land.

Agencies Covered:
The new standard for determining employment applies to determinations under the Labor Law (including labor standards, prevailing wage law and unemployment insurance) and the Workers' Compensation Law. It does not apply to determinations under the NYS Tax Law. The NYS Department of Taxation and Finance will continue to use its existing standards to determine employment status. The penalties provided by the new law apply to determinations of misclassification under the Labor Law, Workers' Compensation Law, and the NYS Tax Law.

Penalties:
An employer that willfully violates the Fair Play Act by failing to properly classify its employees will be subject to civil penalties of up to a $2,500 fine per misclassified employee for a first violation and up to $5,000 per misclassified employee for a second violation within a five-year period.

Employers also may be subject to criminal prosecution (a misdemeanor) for violations of the act with a penalty of up to 30 days in jail, up to a $25,000 fine and debarment from Public Work for up to one year for a first offense. Subsequent misdemeanor offenses would be punishable by up to 60 days in jail, up to a $50,000 fine and debarment for performing Public Work for up to five years.

Employers also remain subject to all of the existing penalties, taxes and restitutions of the Labor Law, Workers Compensation Law, and Tax Law violations that result from the workers misclassification. Corporate officers and certain shareholders may be personally liable for the fines and penalties under the Act, where they knowingly permit the violations to occur.

Posting:
Construction industry employers must post a notice about the Fair Play Act in a prominent and accessible place on the job site. The Commissioner of Labor will post the required notice on the department's web site within 30 days of the effective date of the law. Failure to post the notice can result in penalties of up to $1,500 for a first offense and up to $5,000 for the second offense.

Protect Your Tax Data This Hurricane Season

2011-06-02T08:24:00.000-07:00

Prepare for Huricane Season and Safeguard your Records

The 2011 hurricane season starts today, and the Internal Revenue Service encourages individuals and businesses to safeguard themselves against natural disasters by taking a few simple steps.

Create a Backup Set of Records Electronically

Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set.

Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies, etc. –– is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD. Also, there are online sources that can securely store files on the web.

Document Valuables

Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-by-room list of belongings.

A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area.

Update Emergency Plans

Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Check on Fiduciary Bonds

Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider.

IRS Ready to Help

If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist trained to handle disaster-related issues.

Back copies of previously-filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return.
Alternatively, transcripts showing most line items on these returns can be ordered on-line, by calling 1-800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506-T, Request for Transcript of Tax Return.

Ten Things to Know About the Child and Dependent Care Credit

2011-03-12T07:22:00.000-08:00

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return.

Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses.

1. The care must have been provided for one or more qualifying persons. A qualifying person is your dependent child age 12 or younger when the care was provided. Additionally, your spouse and certain other individuals who are physically or mentally incapable of self-care may also be qualifying persons. You must identify each qualifying person on your federal tax return.

2. The care must have been provided so you – and your spouse if you are married filing jointly – could work or look for work.

3. You – and your spouse if you file jointly – must have earned income from wages, salaries, tips, other taxable employee compensation or net earnings from self-employment. One spouse may be considered as having earned income if they were a full-time student or were physically or mentally unable to care for themselves.

4. The payments for care cannot be paid to your spouse, to the parent of your qualifying person, to someone you can claim as your dependent on your return, or to your child who will not be age 19 or older by the end of the year even if he or she is not your dependent. You must identify the care provider(s) on your federal tax return.

5. Your filing status must be single, married filing jointly, head of household or qualifying widow(er) with a dependent child.

6. The qualifying person must have lived with you for more than half of 2010 tax year. There are exceptions for the birth or death of a qualifying person, or a child of divorced or separated parents.
7. The credit can be up to 35 percent of your qualifying expenses, depending upon your adjusted gross income.

8. For 2010, you may use up to $3,000 of expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

9. The qualifying expenses must be reduced by the amount of any dependent care benefits provided by your employer that you deduct or exclude from your income.

10. If you pay someone to come to your home and care for your dependent or spouse, you may be a household employer and may have to withhold and pay social security and Medicare tax and pay federal unemployment tax.

Ten Important Facts About Capital Gains and Losses

2011-02-21T08:26:00.000-08:00

Ten Important Facts About Capital Gains and Losses

Did you know that almost everything you own and use for personal or investment purposes is a capital asset? Capital assets include a home, household furnishings and stocks and bonds held in a personal account. When a capital asset is sold, the difference between the amount you paid for the asset and the amount you sold it for is a capital gain or capital loss.

Here are ten facts from the IRS about gains and losses and how they can affect your Federal income tax return.

1. Almost everything you own and use for personal purposes, pleasure or investment is a capital asset.

2. When you sell a capital asset, the difference between the amount you sell it for and your basis – which is usually what you paid for it – is a capital gain or a capital loss.

3. You must report all capital gains.

4. You may deduct capital losses only on investment property, not on property held for personal use.

5. Capital gains and losses are classified as long-term or short-term, depending on how long you hold the property before you sell it. If you hold it more than one year, your capital gain or loss is long-term. If you hold it one year or less, your capital gain or loss is short-term.

6. If you have long-term gains in excess of your long-term losses, you have a net capital gain to the extent your net long-term capital gain is more than your net short-term capital loss, if any.

7. The tax rates that apply to net capital gain are generally lower than the tax rates that apply to other income. For 2010, the maximum capital gains rate for most people is 15%. For lower-income individuals, the rate may be 0% on some or all of the net capital gain. Special types of net capital gain can be taxed at 25% or 28%.

8. If your capital losses exceed your capital gains, the excess can be deducted on your tax return and used to reduce other income, such as wages, up to an annual limit of $3,000, or $1,500 if you are married filing separately.

9. If your total net capital loss is more than the yearly limit on capital loss deductions, you can carry over the unused part to the next year and treat it as if you incurred it in that next year.

10. Capital gains and losses are reported on Schedule D, Capital Gains and Losses, and then transferred to line 13 of Form 1040.

If you have any questions, feel free to contact me at my office.
David C Egan, CPA
718-227-6035

Missing a W-2. We've Got You Covered

2011-02-10T06:47:00.000-08:00

If You Are Missing a W-2 Here Is What You Should Do

Before you file your 2010 tax return, you should make sure you have all the needed documents including all your Forms W-2. You should receive a Form W-2, Wage and Tax Statement, from each of your employers. Employers have until January 31, 2011 to send you a 2010 Form W-2 earnings statement.

If you haven’t received your W-2, follow these four steps:

1. Contact your employer.

If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.

2. Contact the IRS

If you do not receive your W-2 by February 14th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

• Employer’s name, address, city and state, including zip code and phone number

• Dates of employment

• An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

3. File your return.

You still must file your tax return or request an extension to file April 18, 2011, even if you do not receive your Form W-2. If you have not received your Form W-2 by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.

4. File a Form 1040X

On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.

Form 4852, Form 1040X, and instructions are available at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Contact your New York CPA as soon as possible if you believe you are missing a W-2 or need to file an ammended return.

Goldenthal & Suss CPA's & Consultants PC
David C Egan, CPA
Partner
718-227-6035

Medical and Dental Expenses

2011-02-01T06:15:00.000-08:00

Medical and Dental Expenses

Here are six things you should know about medical and dental expenses and other benefits.

1. You may deduct only the amount by which your total medical care expenses for the year exceed 7.5 percent of your adjusted gross income. You do this calculation on Form 1040, Schedule A in computing the amount deductible.

2. You can only include the medical expenses you paid during the year. Your total medical expenses for the year must be reduced by any reimbursement. It makes no difference if you receive the reimbursement or if it is paid directly to the doctor or hospital.

3. You may include qualified medical expenses you pay for yourself, your spouse, and your dependents, including a person you claim as a dependent under a multiple support agreement. If either parent claims a child as a dependent under the rules for divorced or separated parents, each parent may deduct the medical expenses he or she actually pays for the child. You can also deduct medical expenses you paid for someone who would have qualified as your dependent except that the person didn't meet the gross income or joint return test.

4. A deduction is allowed only for expenses primarily paid for the prevention or alleviation of a physical or mental defect or illness. Medical care expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or treatment affecting any structure or function of the body. The cost of drugs is deductible only for drugs that require a prescription except for insulin.

5. You may deduct transportation costs primarily for and essential to medical care that qualify as medical expenses. The actual fare for a taxi, bus, train, or ambulance may be deducted. If you use your car for medical transportation, you can deduct actual out-of-pocket expenses such as gas and oil, or you can deduct the standard mileage rate for medical expenses. With either method you may include tolls and parking fees.

6. Distributions from Health Savings Accounts and withdrawals from Flexible Spending Arrangements may be tax free if you pay qualified medical expenses.

Ten Hot Tax Tips for Parents

2011-01-27T10:39:00.000-08:00

Ten Tax Benefits for Parents

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

1. Dependents In most cases, a child can be claimed as a dependent in the year they were born.
2. Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.
3. Child and Dependent Care Credit You may be able to claim the credit if you pay someone to care for your child under age 13 so that you can work or look for work.
4. Earned Income Tax Credit The EITC is a benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.

5. Adoption Credit You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. Taxpayers claiming the adoption credit must file a paper tax return because adoption-related documentation must be included.
6. Children with Earned Income If your child has income earned from working they may be required to file a tax return.
7. Children with Investment Income Under certain circumstances a child’s investment income may be taxed at the parent’s tax rate.
8. Higher Education Credits Education tax credits can help offset the costs of education. The American Opportunity and the Lifetime Learning Credit are education credits that reduce your federal income tax dollar-for-dollar, unlike a deduction, which reduces your taxable income.
9. Student loan Interest You may be able to deduct interest you pay on a qualified student loan. The deduction is claimed as an adjustment to income so you do not need to itemize your deductions.
10. Self-employed health insurance deduction If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage after March 29, 2010, for any child of yours who was under age 27 at the end of 2010, even if the child was not your dependent.

As always, we are here to help. Call today for your individual tax or business tax appointment.

Goldenthal & Suss CPA's & Consultants, P.C.
David C Egan, CPA
Partner
718-227-6035

Payroll Tax Cuts - Higher Net Pay for Most Individuals

2010-12-22T08:37:00.000-08:00

The Internal Revenue Service today released instructions to help employers implement the 2011 cut in payroll taxes, along with new income-tax withholding tables that employers will use during 2011.

Millions of workers will see their take-home pay rise during 2011 because the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 provides a two percentage point payroll tax cut for employees, reducing their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid. This reduced Social Security withholding will have no effect on the employee’s future Social Security benefits.

The new law also maintains the income-tax rates that have been in effect in recent years.

Employers should start using the new withholding tables and reducing the amount of Social Security tax withheld as soon as possible in 2011 but not later than Jan. 31, 2011. Notice 1036, released today, contains the percentage method income tax withholding tables, the lower Social Security withholding rate, and related information that most employers need to implement these changes. Publication 15, (Circular E), Employer’s Tax Guide, containing the extensive wage bracket tables that some employers use, will be available on IRS.gov in a few days. If you use Quickbooks for your payroll, please update your payroll tax tables. If you are on a payroll service, review or have your CPA review the payroll to assure the reduced amounts were taken.

The IRS recognizes that the late enactment of these changes makes it difficult for many employers to quickly update their withholding systems. For that reason, the agency asks employers to adjust their payroll systems as soon as possible, but not later than Jan. 31, 2011.
For any Social Security tax over withheld during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2011.

Employers and payroll companies will handle the withholding changes, so workers typically won’t need to take any additional action, such as filling out a new W-4 withholding form.

As always, however, the IRS urges workers to review their withholding every year and, if necessary, fill out a new W-4 and give it to their employer. For example, individuals and couples with multiple jobs, people who are having children, getting married, getting divorced or buying a home, and those who typically wind up with a balance due or large refund at the end of the year may want to consider submitting revised W-4 forms. Publication 919, How Do I Adjust My Tax Withholding?, provides more information to workers on making changes to their tax withholding.

If you have any questions or concerns, consult with your CPA or give me a call at my office.

David C Egan, CPA 718-227-6035

Happy Holidays!

2011 Standard Mileage Rate

2010-12-06T15:41:00.000-08:00

2011 Standard Mileage Rates

The Internal Revenue Service today issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2011, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 51 cents per mile for business miles driven

• 19 cents per mile driven for medical or moving purposes

• 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs as determined by the same study. Independent contractor Runzheimer International conducted the study.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously. Its either one or the other. Also, you cannot take the standard mileage deduction if you were reimbursed by your employer

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Non-Business Energy Property Credit

2010-11-11T09:54:00.000-08:00

Nonbusiness Energy Property Credit

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years. The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items. In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit, though the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2010 federal income tax return. Due to limits based on tax liability, amounts spent on eligible energy-saving improvements in 2009, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Take advatange of this tax credit and save some money on your heating and cooling bills.

Lawmakers Are Promising to Fix the Alternative Minimum Tax (AMT)

2010-11-10T07:20:00.000-08:00

Lawmakers Are Promising to Fix the Alternative Minimum Tax (AMT).

As a Certified Public Accountant, I have heard this before so to say that I am skeptical would be an understatement. According to the most recent from Congress, they are saying that: “As the leaders of the Congressional tax-writing committees, we want to assure you that Congress is working on legislative relief,” they wrote. “We will work to draft the AMT provision so that, in the aggregate, not one additional taxpayer faces higher taxes in 2010 due to the onerous AMT. Such legislation will allow the personal credits against the AMT and the exemption amounts for 2010 to be set at $47,450 for individuals and $72,450 for married taxpayers filing jointly.”

They added that they planned to enact AMT relief legislation in a form mutually agreeable to Congress and the President.

Understandably, this is no easy task. The issue is even further compounded by the Bush era Tax cuts which are set to expire. These include reduced tax rates for all individuals. However, under the most recent news byte from the Obama Camp, the president would like compromise. What he is referring to is to extend the Tax cuts for certain individuals, and reinstate the old brackets for the rest of us. We will have to wait and see what will happen in 2010.

Paying Estimated Taxes - Form 1040ES for 2010

2010-10-26T18:33:00.000-07:00

My office is often asked this question, "Why do I have to pay estimated taxes?"

As a general rule, you must pay taxes if both of the following apply to your situation.

1. You expect to owe at least $1,000 in tax for 2010

and

2. You expect your federal withholding and refundable credits to be less than the smaller of:

     a. 90% of the tax to be shown on your 2010 tax return (We are speaking about your federal taxes only, i.e. forms 1040, 1040A, 1040EZ...)

     or

     b. 100% of the tax shown on your 2009 tax return.

You are exempt from this if you were a US Citizen for 2009 or a Resident Alien for 2009, and didn't have to file a tax return for 2009 or had no tax and therefore no taxable income for 2009.

For everyone that makes oer $150,000 or $75,000 if married filing separately, substitute 110% for the 100% listed above. This is the IRS's rules for higher income taxpayers.

Federal Form 1040ES due dates are quarterly and due on the 15th or next business day after the 15th if it falls on a weekend in the following months, April, June, September, & January.

If you mail your payment and it is postmarked by the due date, the post mark is considered the date of payment. Be careful, the IRS is referring to the US Postal Service postmark, not the date you stamped the envelope in your office.

You can also pay your estimated taxes via the IRS's EFTPS, by Check using the EFW system at the IRS or through a third party and use your credit card. These third parties do charge a convenience fee so beware.

Follow Goldenthal & Suss on Facebook

2010-10-05T12:16:00.000-07:00

Additional Child Tax Credit

2010-10-05T11:25:00.000-07:00

ARRA and the Additional Child Tax Credit

Under the American Recovery and Reinvestment Act (ARRA), more families will be eligible for the additional child tax credit because of a change to the way the credit is figured.

Taxpayers who cannot take full advantage of the child tax credit because the credit is more than the taxes they owe may receive a payment for some or all of the credit not used to offset their taxes. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax.

ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. Reducing the amount to $3,000 permits more taxpayers to use the additional child tax credit and increases the amount of the payments they may receive.

This change applies to tax years beginning in 2009 and 2010.

Former Jackson Hewitt Manager Pleads Guilty to Tax Fraud

2010-08-18T06:01:00.000-07:00

Be careful when you choose a tax preparer. Choose a CPA.

Former Jackson Hewitt Manager Pleads Guilty to Tax Fraud

Owe Money to the IRS, Here are Nine Tips to Help

2010-08-09T10:39:00.000-07:00

Nine Tips for Taxpayers Who Owe Money to the IRS

Did you end up owing taxes this year? The vast majority of Americans get a tax refund from the IRS each spring, but those who receive a bill may not know that the IRS has a number of ways for people to pay. Here are nine tips for taxpayers who owe money to the IRS.

1.    If you get a bill this summer for late taxes, you are expected to promptly pay the tax owed including any penalties and interest. If you are unable to pay the amount due, it is often in your best interest to get a loan to pay the bill in full rather than to make installment payments to the IRS.This is because the IRS's rate of interest tends to be higher than a banks personal loan. Call ahead and get rate information before proceeding with your own payment schedule.

2.    You can also pay the bill with your credit card. The interest rate on a credit card or bank loan may be lower than the combination of interest and penalties imposed by the Internal Revenue Code. To pay by credit card contact one of the following processing companies: Official Payments Corporation at 888-UPAY-TAX (also www.officialpayments.com/fed) or Link2Gov at 888-PAY-1040 (also www.pay1040.com) or RBS WorldPay, Inc at 888-9PAY-TAX (also www.payUSAtax.com).

3.    You can pay the balance owed by electronic funds transfer, check, money order, cashier’s check or cash. To pay using electronic funds transfer you can take advantage of the Electronic Federal Tax Payment System by calling 800-555-4477 or online at www.eftps.gov.

4.    An installment agreement may be requested if you cannot pay the liability in full. This is an agreement between you and the IRS to pay the amount due in monthly installment payments. You must first file all returns that are required and be current with estimated tax payments.

5.    If you owe $25,000 or less in combined tax, penalties and interest, you can request an installment agreement using the Online Payment Agreement application at IRS.gov or consult with your CPA.

6.    You can also have your accountant or CPA complete and mail an IRS Form 9465, Installment Agreement Request, along with your bill in the envelope that you have received from the IRS. The IRS will inform you usually within 30 days whether your request is approved, denied, or if additional information is needed. If the amount you owe is $25,000 or less, provide the highest monthly amount you can pay with your request.

7.    You may still qualify for an installment agreement if you owe more than $25,000, but a Form 433F, Collection Information Statement, is required to be completed before an installment agreement can be considered. If your balance is over $25,000, consider your financial situation and propose the highest amount possible, as that is how the IRS will arrive at your payment amount based upon your financial information.

8.    If an agreement is approved, a one-time user fee will be charged. The user fee for a new agreement is $105 or $52 for agreements where payments are deducted directly from your bank account. For eligible individuals with incomes at or below certain levels, a reduced fee of $43 will be charged.

9.    Taxpayers who have a balance due, may want to consider changing their W-4, Employee’s Withholding Allowance Certificate, with their employer. There is a withholding calculator available on IRS.gov to help taxpayers determine the amount that should be withheld.

For more information about installment agreements and other payment options visit IRS.gov. or contact your local Staten Island Accountant.

Call David C. Egan, CPA @ 718-227-6035 for tax payment / settlement assistance.

Indentity Theft - What You Need To Know

2010-07-30T08:01:00.000-07:00

Top 10 Things Every Taxpayer Should Know about Identity Theft

Taxpayers need to be careful to protect their personal information. Identity thieves use many methods to steal personal information and then they use the information to file a tax return and get a refund. Here are 10 things the IRS wants you to know about identity theft so you can avoid becoming the victim of an identity thief.

1. The IRS does not initiate contact with a taxpayer by e-mail.

2. If you receive a scam e-mail claiming to be from the IRS, forward it to the IRS at phishing@irs.gov.

3. Identity thieves get your personal information by many different means, including:

    * Stealing your wallet or purse
    * Posing as someone who needs information about you through a phone call or e-mail
    * Looking through your trash for personal information
    * Accessing information you provide to an unsecured Internet site.

4. If you discover a website that claims to be the IRS but does not begin with ‘www.irs.gov’, forward that link to the IRS at phishing@irs.gov.

5. To learn how to identify a secure website, visit the Federal Trade Commission at www.onguardonline.gov

6. If your Social Security number is stolen, another individual may use it to get a job. That person’s employer may report income earned by them to the IRS using your Social Security number, thus making it appear that you did not report all of your income on your tax return.

7. Your identity may have been stolen if a letter from the IRS indicates more than one tax return was filed for you or the letter states you received wages from an employer you don’t know. If you receive such a letter from the IRS, leading you to believe your identity has been stolen, respond immediately to the name, address or phone number on the IRS notice.

8. If your tax records are not currently affected by identity theft, but you believe you may be at risk due to a lost wallet, questionable credit card activity, or credit report, you need to provide the IRS with proof of your identity. You should submit a copy of your valid government-issued identification – such as a Social Security card, driver’s license, or passport – along with a copy of a police report and/or a completed Form 14039, Identity Theft Affidavit. As an option, you can also contact the IRS Identity Protection Specialized Unit, toll-free at 800-908-4490. You should also follow FTC guidance for reporting identity theft at www.ftc.gov/idtheft.

9. Show your Social Security card to your employer when you start a job or to your financial institution for tax reporting purposes. Do not routinely carry your card or other documents that display your Social Security number.

10. For more information about identity theft – including information about how to report identity theft, phishing and related fraudulent activity – visit the IRS Identity Theft and Your Tax Records Page, which you can find by searching “Identity Theft” on the IRS.gov home page.

Excise Tax on Tanning Services - Look out Jersey Shore Cast its going to cost you and extra 10% for that tan

2010-07-06T12:57:00.000-07:00

Nine Tips on the 10 Percent Tax on Tanning Services

Starting July 1, 2010, many businesses offering tanning services must collect a 10 percent excise tax on the tanning services they provide. This excise tax requirement is part of the Affordable Care Act that was enacted in March 2010.

Here are nine tips on the tanning excise tax that providers must collect.

1.    Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.
2.    If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
3.    The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.
4.    The tax does not apply to spray-on tanning services.
5.    If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.
6.    If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.
7.    The tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.
8.    Tanning service providers must report and pay the excise tax on a quarterly basis.
9.    To pay the tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS. Businesses that don’t already have one can consult with a Certified Public Accountant regarding obtaining one.
For more information about the excise tax on tanning services, IRS Form 720 and other tax provisions of the Affordable Care Act contact your Local Staten Island Accountant or visit the IRS at IRS.gov

New 1099 Requirements affect MANY Businesses

2010-06-08T10:06:00.000-07:00

Buried in the New Health Care Reform bill is a update to the 1099 filing requirements.
Beginning in 2012 all companies will have to issue 1099 tax forms not just to contract workers but to any individual or corporation from which they buy more than $600 in goods or services in a tax year. This is going to create a real accounting nightmare. If your Local CPA hasn't updated you, you should start to obtain vital information that will be needed to prepare your 1099s.

Currently, there is no requirement to file a 1099 to businesses that you buy more than $600 in goods. That is a major difference. For example, If your business buys a computer from Dell for $1000, you will need to 1099 Dell according to the new tax code. The objective here is to close the tax gap, but the consequence is going to be increased cost to small businesses who now need to prepare more 1099s than they have in the past.

These changes do not apply to individuals. So if you the individual pay your Staten Island CPA , in excess of $600 for estate planning; you will not need to prepare a 1099.

Under the new law, the threshold is $600. If your business pays over $600 to an individual or business for goods or services, you will need to issue a 1099. Get started early and collect the information you will need.

Name
Address
and EIN # (Employer ID #) or SS # (Social Security)

If you have any questions about this or need help in planning on how to keep track of the required information. Contact my office at 718-227-6035, David C Egan, CPA.

The Small Business Health Care Tax Credit

2010-05-17T14:50:00.000-07:00

The Small Business Health Care Tax Credit

This is the latest in an effort to make health insurance more affordable to small businesses and not-for-profits.

Who is (generally) eligible?

Have to provide health care coverage. A qualifying employer must cover at least 50 percent of the cost of health care coverage for some of its workers based on the single rate.
Cant be too large. A qualifying employer must have less than the equivalent of 25 full-time workers (for example, an employer with fewer than 50 half-time workers may be eligible).
Cannot pay your workers too much (Highly compensated managers could hurt your average) A qualifying employer must pay average annual wages below $50,000.

How much is the credit?

The credit is worth up to 35 percent of a small business' premium costs in 2010. On Jan. 1, 2014, this rate increases to 50 percent (35 percent for tax-exempt employers).
As with any IRS credit there is a Phase-out. The credit phases out gradually for firms with average wages between $25,000 and $50,000 and for firms with the equivalent of between 10 and 25 full-time workers.

The IRS has even taken the time to post a video on YouTube to help taxpayers and preparers alike understand the credit and how to qualify. You can find the youtube link here.

Are Fines, Penalties, or Violations Tax Deductible?

2010-05-07T09:23:00.000-07:00

Are Fines, Penalties, or Violations Tax Deductible?

No. Neither are parking tickets while on a business meeting or health department violations for your restaurant.

According to Internal Revenue Code Sec 162, you cannot deduct fines or penalties paid to the government. This includes local, state, federal & foreign. Bottom line, the IRS does not want to promote breaking the law.

So even though you may have received that parking ticket because your business meeting ran 15 minutes too late, that expense is not tax deductible.

However, if you are fined by a local government and hire an attorney or CPA to represent you in litigating / addressing the case; those fees are tax deductible.

Not Ready to File Yet - Be Sure To File An Extension

2010-04-12T13:47:00.000-07:00

Not Ready to File Yet?

Be sure to file an extension for both the Federal (IRS) and the states in which you lived and worked in if applicable.

Remember that an extension is only to extend the date to file, not to pay. In other words, if you think you may owe taxes with your 2009 return, be sure to pay with your extension to reduce interest and penalties. The IRS charges a variety of penalties for not-filing and you can avoid one of their largest ones, Failure to File Penalty, by filing a federal extension. (Form 4868). In order to calculate how much you owe, please consult with your New York CPA.

A blank form 4868 can be found here form the IRS's website. Consult with your preparer if you have questions.

Whitehouse has a page to help Taxpayers with Recovery Act

2010-03-23T13:36:00.000-07:00

http://www.whitehouse.gov/Recovery

Look for the tax savings tool link. Click on the link and answer some questions. The site should guide you to some potential tax savings that you or your preparer are not aware of.

As with any reference source, take what you can and discuss the items in questions with your CPA.

Ten Facts About Mortgage Debt Forgiveness

2010-03-04T09:25:00.000-08:00

A quick Note on Mortgage Debt Forgiveness

If your mortgage debt is partly or entirely Forgiven during tax years 2007 through 2012, you may be able to claim special tax relief and exclude the debt forgiven from your income. Here are 10 facts the IRS wants to know about Mortgage Debt.

1. 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.

2. The limit is $1 million for a married person filing a separate return.

3. You may exclude debt reduced through mortgage restructuring, as well as mortgage debt forgiven in a foreclosure.

4. To qualify, the debt must have been used to buy, build, or substantially improve your principal residence and be secured by that residence.

5. Refinanced debt proceeds used for the purpose of substantially improving your principal residence also qualify for the exclusion.

6. Proceeds of refinanced debt used for other purposes - for example, to pay off credit card debt - do not qualify for the exclusion.

7. If you qualify, claim the special exclusion by filing out Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness, and attach it to your federal income tax return for the year in which the qualified debt was forgiven.

8. 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, however, other tax relief provisions - such as insolvency - may be applicable. See IRS Form 982 for specific details on this.

9. If your debt is reduced or eliminated you normally will receive a year-end statement. Form 1099-C, Cancellation of Debt, from your lender. By law, this form must show the amount of debt forgiven and the fair market value of any property foreclosed.

10. Examine your 1099-C carefully. Notify the lender immediately if any of the information shown is not accurate. Particular attention should be paid to Box 2, Amount of Debt Forgiven, and Box 7, The value of your home.

For more information on the Mortgage Forgiveness Debt Relief Act of 2007, contact the IRS or your local Staten Island CPA.

Goldenthal & Suss CPA's & Consultants, P.C.

David C Egan, CPA
465 Belfield Avenue
Staten Island, NY 10312
718-227-6035

Ready to file but missing a W-2? Follow these steps.

2010-02-10T19:19:00.000-08:00

Are you ready to file your tax return? Employers have until February 1, 2010 to send you a 2009 Form W-2 earnings statement. If you have not received one or more of your W-2s, you can follow theses steps.

Contact Your Employer

If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or to issue the W-2.

Contact the IRS

If you do not receive your W-2 by February 16th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

*Employer’s name, address, city and state, including zip code and phone number
*Dates of employment
*An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2009. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

File Your Return

You still must file your tax return or request an extension to file by April 15, even if you do not receive your Form W-2. If you have not received your Form W-2 by April 15th, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.

File a Form 1040X

On occasion, you may receive your missing W-2 after you filed your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return. Keep in mind, most tax professionals charge for an ammened return whereas most tax professionals dont charge for an extension to file.

Form 4852, Form 1040X, and instructions are available on the IRS Web site, IRS.gov or you can contact your local CPA.

David C Egan, CPA
(718)227-6035

Donate to Haiti - Deduct it on your 2009 Return

2010-01-27T08:17:00.000-08:00

People who give to charities providing earthquake relief in Haiti can claim these donations on the tax return they are completing this season, according to the Internal Revenue Service.

Taxpayers who itemize deductions on their 2009 return qualify for this special tax relief provision, enacted Jan. 22. Only cash contributions made to these charities after Jan. 11, 2010, and before March 1, 2010, are eligible. This includes contributions made by text message, check, credit card or debit card.
"Americans have opened their hearts to help those affected by the Haiti earthquake," said IRS Commissioner Doug Shulman." This new law provides an immediate tax benefit for the many taxpayers who have made generous donations."

Taxpayers can benefit from their donations, almost immediately, by filing their 2009 returns early, filing electronically and choosing direct deposit. Refunds take as few as ten days and can be directly deposited into a savings, checking or brokerage account, or used to purchase Series I U.S. savings bonds.
The new law only applies to cash (as opposed to property) contributions. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. Taxpayers have the option of deducting these contributions on either their 2009 or 2010 returns, but not both.
To get a tax benefit, taxpayers must itemize their deductions on Schedule A. Those who claim the standard deduction, including all short-form filers, are not eligible.

Taxpayers should be sure their contributions go to qualified charities. Most organizations eligible to receive tax-deductible donations are listed in a searchable online database available on IRS.gov under Search for Charities. Some organizations, such as churches or governments, may be qualified even though they are not listed on IRS.gov. Donors can find out more about organizations helping Haitian earthquake victims from agencies such as USAID.

The IRS reminds donors that contributions to foreign organizations generally are not deductible. IRS Publication 526, Charitable Contributions, provides information on making contributions to charities.
Federal law requires that taxpayers keep a record of any deductible donations they make. For donations by text message, a telephone bill will meet the recordkeeping requirement if it shows the name of the donee organization, the date of the contribution and the amount of the contribution. For cash contributions made by other means, be sure to keep a bank record, such as a cancelled check, or a receipt from the charity showing the name of the charity and the date and amount of the contribution. Publication 526 has further details on the recordkeeping rules for cash contributions.

This year’s special Haiti relief provision is modeled on a 2005 law that, in the wake of the Dec. 26, 2004, Indian Ocean tsunami, allowed taxpayers to deduct donations they made during January 2005 as if they made the donations in 2004.

For more information contact your tax professional.
David C Egan, CPA 718-227-6035

8 Reasons to File a Tax Return This Year

2010-01-26T15:10:00.000-08:00

Do I have to File a Tax Return?

You must file a tax return if your income is above a certain level. The amount varies depending on filing status, age and the type of income you receive. Check with your local CPA or with the IRS.gov. for specific details that may affect your need to file a tax return with the IRS this year. Even if you don’t have to file, here are eight reasons why you may want to file:

1.    Federal Income Tax Withheld If you are not required to file, you should file to get money back if Federal Income Tax was withheld from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year's tax.
2.    Making Work Pay Credit You may be able to take this credit if you have earned income from work. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers.
3.    Government Retiree Credit You may be eligible for this credit if you received a government pension or annuity payment in 2009. However, the amount of this credit reduces any making work pay credit you receive.
4.    Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund.
5.    Additional Child Tax Credit This credit may be available to you if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.
6.    Refundable American Opportunity Credit This education tax credit is available for 2009 and 2010. The maximum credit per student is $2,500 and the first four years of postsecondary education qualify.
7.    First-Time Homebuyer Credit The credit is a maximum of $8,000 or $4,000 if your filing status is married filing separately. The credit applies to homes bought anytime in 2009 and on or before April 30, 2010. However, you have until on or before June 30, 2010, if you entered into a written binding contract before May 1, 2010. If you bought a home after November 6, 2009, you may be able to qualify and claim the credit even if you already owned a home. In this case, the maximum credit for long-time residents is $6,500, or $3,250 if your filing status is married filing separately.
8.    Health Coverage Tax Credit Certain individuals, who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a Health Coverage Tax Credit worth 80 percent of monthly health insurance premiums when you file your 2009 tax return.
For more information about filing requirements and your eligibility to receive tax credits, visit David C. Egan, CPA 465 Belfield Avenue, Staten Island, NY 10312

NYS Announces New Tax Amnesty (PAID)

2010-01-14T10:50:00.000-08:00

New York State Enacts Tax Amnesty Program:

P.A.I.D. Penalty and Interest Discount

The PAID (Penalty and Interest Discount) program gives taxpayers with older unpaid bills the chance to save up to 80% of the penalty and interest they owe.

To take advantage of the program’s savings, you must make all payments by the program’s expiration date,
March 15, 2010. If you don’t pay in full by that date:

your opportunity for these savings will be lost forever
any unpaid tax debts will continue to accrue interest at the full statutory rate.

Video: About the PAID Program

Why PAID is good for you

You can save:
- 80% of accrued penalty and interest on unpaid bills issued on or before December 31, 2003
- 50% of accrued penalty and interest on unpaid bills issued after December 31, 2003 and on or before December 31, 2006.
Unpaid tax bills are bad for your credit rating and can lead to liens and other enforcement actions.
We’re increasing our efforts to collect unpaid bills. If you act now and pay what you owe, you can take advantage of the savings and avoid collection actions.

For more information on this and other State and Local tax matters, please contact your accountant at Goldenthal & Suss CPA's & Consulants PC, at 718-227-6035 0r 212-750-7380.

New Preparer Rules on the Horizon-

2010-01-08T15:10:00.000-08:00

The Internal Revenue Service kicked off the 2010 tax filing season today by issuing the results of a landmark six-month study that proposes new registration, testing and continuing education of tax return preparers. With more than 80 percent of American households using a tax preparer or tax software to help them prepare and file their taxes, higher standards for the tax preparer community will significantly enhance protections and service for taxpayers, increase confidence in the tax system and result in greater compliance with tax laws over the long term.

To bring immediate help to taxpayers this filing season, the IRS also announced a sweeping new effort to reach tax return preparers with enforcement and education. As part of the outreach effort, the IRS is providing tips to taxpayers to ensure they are working with a reputable tax return preparer.

"As tax season begins, most Americans will turn to tax return preparers to help with one of their biggest financial transactions of the year. The decisions announced today represent a monumental shift in the way the IRS will oversee tax preparers," said IRS Commissioner Doug Shulman. "Our proposals will help ensure taxpayers receive competent, ethical service from qualified professionals and strengthen the integrity of the nation's tax system. In addition, we are taking immediate action to step up oversight of tax preparers this filing season.”

Based on the results of the Return Preparer Review released today, the IRS recommends a number of steps that it plans to implement for future filing seasons, including:

Requiring all paid tax return preparers who must sign a federal tax return to register with the IRS and obtain a preparer tax identification number (PTIN). These preparers will be subject to a limited tax compliance check to ensure they have filed federal personal, employment and business tax returns and that the tax due on those returns has been paid.
Requiring competency tests for all paid tax return preparers except attorneys, certified public accountants (CPAs) and enrolled agents who are active and in good standing with their respective licensing agencies.
Requiring ongoing continuing professional education for all paid tax return preparers except attorneys, CPAs, enrolled agents and others who are already subject to continuing education requirements.
Extending the ethical rules found in Treasury Department Circular 230 -- which currently only apply to attorneys, CPAs and enrolled agents who practice before the IRS -- to all paid preparers. This expansion would allow the IRS to suspend or otherwise discipline tax return preparers who engage in unethical or disreputable conduct. This part is great. Every 4 month facility that calls itself it a tax service, is going to be at risk of loss; Finally legislation that will reduce the amount of inaccurate tax returns prepared.

Other measures the IRS anticipates taking are highlighted in the full report.

Currently, anyone may prepare a federal tax return for anyone else and charge a fee. While some preparers are currently licensed by their states or are enrolled to practice before the IRS, many do not have to meet any government or professionally mandated competency requirements before preparing a federal tax return for a fee.
First Step: Letters to 10,000 Preparers
The initiatives announced today will take several years to fully implement and will not be in effect for the current 2010 tax season. In the meantime, the IRS is taking immediate action to step up oversight of preparers for the 2010 filing season.

Beginning this week, the IRS is sending letters to approximately 10,000 paid tax return preparers nationwide. These preparers are among those with large volumes of specific tax returns where the IRS typically sees frequent errors. The letters are intended to remind preparers to be vigilant in areas where the errors are frequently found, including Schedule C income and expenses, Schedule A deductions, the Earned Income Tax Credit and the First Time Homebuyer Credit.

Thousands of the preparers who receive these letters will also be visited by IRS Revenue Agents in the coming weeks to discuss their obligations and responsibilities to prepare accurate tax returns. This is part of a broader initiative by the IRS to step up its efforts to ensure paid tax return preparers are assisting clients appropriately. Separately, the IRS will be conducting other compliance and education visits with return preparers on a variety of issues. This is the second best part. I cant wait for all of the "part-time" tax preparers to meet an IRS agent for the first time. Buy stock in whatever company sells Adult Diapers.

In addition, the IRS will more widely use investigative tools during this filing season aimed at determining tax return preparer non-compliance. One of those tools will include visits to return preparers by IRS agents posing as a taxpayer. Third best part, the IRS should call me. I have a list of preparers they could visit and find a treasure trove of tax fraud.

During this effort, the IRS will continue to work closely with the Department of Justice to pursue civil or criminal action as appropriate.

Steps Taxpayers Can Take Now to Find a Preparer
In addition to the stepped-up oversight of preparers, Shulman also announced a new outreach effort to help make sure taxpayers choose a reputable preparer this filing season. That’s particularly important because taxpayers are legally responsible for what is on their tax returns -- even if those returns are prepared by someone else.

“Taxpayers should protect themselves from unscrupulous preparers,” Shulman said. “There are some simple steps people can take to choose a reputable tax preparer.”

Most tax return preparers are professional, honest and provide excellent service to their clients. Shulman offered the following points for taxpayers to keep in mind when selecting a tax return preparer:

Be wary of tax preparers who claim they can obtain larger refunds than others.
Avoid tax preparers who base their fees on a percentage of the refund.
Use a reputable tax professional who signs the tax return and provides a copy.
Consider whether the individual or firm will be around months or years after the return has been filed to answer questions about the preparation of the tax return.
Check the person’s credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters, including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.
Find out if the return preparer is affiliated with a professional organization that provides its members with continuing education and other resources and holds them to a code of ethics.

More information about choosing a tax return preparer and avoiding fraud can be found in IRS Fact Sheet 2010-03, How to Choose a Tax Preparer and Avoid Tax Fraud.

Resources for Taxpayers this Filing Season
This filing season, the IRS has many free resources to help taxpayers prepare and file their returns.

IRS.gov has a variety of features to help taxpayers. There’s a special section to help taxpayers get information on a variety of Recovery tax benefits. The web site also has information for people who lost a job or experienced financial problems in 2009.

IRS.gov also has information to help people track their refund.

IRS.gov will once again host the IRS Free File program, which allows virtually everyone to file their taxes for free through the web site. Free File and the rest of the IRS e-file program will open later this month.

More Filing Season Resources Available on IRS.gov

Year End Charitable Donations

2009-12-10T15:09:00.000-08:00

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.

Energy Savings Credit for 2009 & 2010

2009-11-17T07:24:00.000-08:00

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

Fake IRS email sends Malware to your computer

2009-11-12T16:00:00.000-08:00

Scam E-mail Sends Malicious Software to Recipients' Computers

In recent weeks, a phony e-mail claiming to come from the IRS has been circulating in large numbers. The subject line of the e-mail often states that the e-mail is a notice of underreported income. The e-mail may contain an attachment or a link to a bogus Web page directing taxpayers to their "tax statement." In either case, when the recipient opens the attachment or clicks on the link, they download a Trojan horse-type of virus to their computers.

A few of my clients have received this type of fake email and the senders address looked like Official@irs.gov.taxnotices.com

Malicious code (also known as malware), of which the Trojan horse is but one example, can take over the victim’s computer hard drive, giving someone remote access to the computer, or it could look for passwords and other information and send them to the scammer. The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more.
The IRS does not send unsolicited e-mails to taxpayers about their tax accounts. Anyone who receives an unsolicited e-mail claiming to come from the IRS should avoid opening any attachments or clicking on any links. People can report suspicious e-mails they receive which claim to come from the IRS to a mailbox set up for this purpose, phishing@irs.gov. Those who believe they may already be victims of identity theft should find out what do by going to the U.S. Federal Trade Commission's Web site, OnGuardOnLine.gov.
More information on e-mail scams may be viewed on How to Report and Identify Phishing, E-mail Scams and Bogus IRS Web Sites and Suspicious e-Mails and Identity Theft.

American Opportunity Tax Credit

2009-09-29T15:16:00.000-07:00

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.

IRS Extends Offshore Account Disclosure Deadline

2009-09-22T13:33:00.000-07:00

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

Sales Tax on Shipping & Handling in NYS

2009-09-18T10:18:00.000-07:00

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

End of Summer - Tax Credits for September & Education

2009-08-24T09:32:00.000-07:00

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.

Hurricane Season - How to Claim a Casualty Loss

2009-08-17T09:25:00.000-07:00

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.

Update on First Time Home Buyer Credit

2009-08-06T16:56:00.000-07:00

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.

New Payroll Tax form for some New York Businesses

2009-07-30T08:35:00.000-07:00

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

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.

Mortgage Workouts : What you should know

2009-07-28T11:58:00.001-07:00

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.

Tax Tips for New Businesses

2009-07-14T11:00:00.000-07:00

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.

Filing Tax Returns Late or Paying Tax Returns Late

2009-07-08T06:58:00.001-07:00

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.

Retirement Plan Due Dates

2009-06-04T05:36:00.000-07:00

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.

What Happens After I File?

2009-04-27T11:01:00.000-07:00

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.

2009 Due Dates for NYS

2009-03-13T16:35:00.000-07:00

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

Staten Island CPA & Tax Preparer

2009-03-11T07:21:00.000-07:00

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.

Waiting on your Federal Refund

2009-03-11T07:16:00.000-07:00

Waiting on your Federal refund, call the IRS at (800) 829-1954 its free and you can get the status of your funds.

NYS Tax Extension - Online & Free

2009-03-05T10:54:00.000-08:00

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

Special Tax Exclusion For Mortgage Debt Forgiveness

2009-03-05T08:06:00.000-08:00

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).

Getting the Recovery Rebate Right

2009-02-28T12:03:00.000-08:00

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.

New S-Corporation Franchise Tax Minimum Tax Payments

2009-02-11T13:03:00.000-08:00

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

Schedule A- Either State & Local Income Tax or Sales Tax but not both

2009-02-11T11:12:00.000-08:00

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.

Retirement Contribution Due Dates

2009-02-03T09:19:00.001-08:00

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.

Tips for Recovery Rebate Credit

2009-01-27T13:16:00.000-08:00

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.

IRS & Free File

2009-01-27T13:00:00.000-08:00

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

Credit for First Time Home Buyer

2009-01-14T12:18:00.000-08:00

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

2009-01-14T12:15:00.000-08:00

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.

What Can I Deduct for my Business?

2009-01-12T11:17:00.000-08:00

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.

Medical Insurance Premiums paid by an S- Corporation

2008-12-30T15:00:00.000-08:00

Medical Insurance Premiums are commonly paid for by S-corporations for their shareholders. Here is how you should be reporting those insurance bills per the IRS.

The health and accident insurance premiums paid on behalf of the greater than 2 percent S corporation shareholder-employee are deductible by the S corporation as fringe benefits and are reportable as wages for income tax withholding purposes on the shareholder-employee’s Form W-2. They are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. Tax Savings right there. Therefore, this additional compensation is included in Box 1 (Wages) of the Form W-2, Wage and Tax Statement, issued to the shareholder, but would not be included in Boxes 3 or 5 of Form W-2.

A 2-percent shareholder-employee is eligible for an AGI deduction for amounts paid during the year for medical care premiums if the medical care coverage is established by the S corporation. Previously, “established by the S corporation” meant that the medical care coverage had to be in the name of the S corporation.

In Notice 2008-1, the IRS stated that if the medical coverage plan is in the name of the 2 percent shareholder and not in the name of the S corporation, a medical care plan can be considered to be established by the S corporation if: the S corporation either paid or reimbursed the 2percent shareholder for the premiums and reported the premium payment or reimbursement as wages on the 2 percent shareholder’s Form W-2.

Payments of the health and accident insurance premiums on behalf of the shareholder may be further identified in Box 14 (Other) of the Form W-2.
Schedule K-1 (Form 1120S) and Form 1099 should not be used as an alternative to the Form W-2 to report this additional compensation.

Bottom Line
Don't let the expenses for medical insurance paid by the company sit on the K-1 or on the 1120S under insurance expense. Group them with the other fringe benefits you pay for employees in the appropriate boxes as outlined above.

S-Corporation Salary Requirements

2008-12-30T14:36:00.000-08:00

As you may or may not be aware, an Officer of an S Corporation is specifically included within the definition of an employee for payroll taxes ( FICA - Federal Insurance Contributions Act, FUTA - Federal Unemployment Tax Act, and Federal Income tax withholding under the Internal Revenue Code. As a corporate officer performs services for the company, and receives or is entitled to receive payments, his or her compensation is presumed to be wages by the IRS.S corporations should treat payments for services to officers as wages and not as distributions or loans to shareholders. This is common mistake, and results in an underpayment of payroll taxes by the corporation. The IRS will also insist that the corporation pay a reasonable salary. So what is a reasonable salary you might ask?

There are no specific guidelines for reasonable compensation in the Code or the Regulations. The various tax courts that have ruled on this issue have based their determinations on the facts and circumstances of each case. The courts considered factors such as, training and experience, Duties and responsibilities, Time and effort devoted to the business (This would be a big component for all you single officer S-Corporations out there), Dividend history, Payments to non-shareholder employees, Timing and manner of paying bonuses to key people, What comparable businesses pay for similar services (Industry comparison form your Census forms), & Compensation agreements.

When in doubt, consider it salary up to the amount you received as distributions. This may sound as a very conservative approach, but the IRS has been investigating companies who are under reporting wages, look at your corporate return, there is a line for officer salaries. It isnt much of a stretch to figure out if you took an appropriate wage last year.

Last Minute Tax Planning for Individuals & Businesses

2008-12-28T16:34:00.000-08:00

Last Minute Tax Planning for Individuals

First, Sell off those losing positions in your investment portfolio before December 31st. Investment losses can be deducted up to $3000 or offset against investment gains in the same taxable year.

Second, Make that charitable donation or contribution before December 31st. Looking to get rid of that old sofa, donate it to your local salvation army. Just be sure to get a receipt.

Third, as a cash basis taxpayer, be sure and pay your outstanding bills before December 31st. Putting off that bill until next year also puts off that expense for tax purposes until the following year.

Fourth, the IRS treats credit card charges the same as cash. So don't be afraid and charge those last minute business shopping trips for your tax year before December 31st. Just keep in mind that the items need to be placed in service, so you cant buy a computer printer on December 31st from an online store, you need to go to the store.

Fifth, If you were looking for a new piece of equipment or vehicle, complete the deal and place it in service before December 31st and take advantage of the Section 179 deduction available to you. The limitations for 2008 are $250,000 out of which, $25,000 can be used in your business for SUV's over 6000 pounds and under 14,000.

Deductible Vehicle Expenses

2008-12-28T15:40:00.000-08:00

Deductible Vehicle Expenses
Auto Mileage Rates For 2009

The IRS (Internal Revenue Service) has announced the standard rate for business miles will be 55.0 cents for 2009.

The standard mileage rate for use of a auto for medical reasons will be 24 cents a mile.
The standard mileage rate to use when computing deductible moving expenses will also be 24 cents a mile.
The standard mileage rate for the use of a auto when providing services for a charitable organization remains at 14 cents a mile.

Depreciation Update

2008-12-28T15:12:00.000-08:00

Depreciation Update for 2008.

Sec 179 Limitaions before phase out for income s $250,000.
Suv's weiging between 6000 and 14000 pounds are limited to $25,000 Sec. 179 Depreciation limitation.

Looking to Buy or Lease that New Auto? Read This First

2008-12-28T14:45:00.000-08:00

Looking to buy or lease a new auto or truck? If you own a business, you should definitely complete that transaction BEFORE the end of your taxable year. This will allow your business to take full advantage of your purchase. Whether you finance or buy your new vehicle, you can take advantage of the IRS Sec. 179 deduction (Depreciation) which could be substantial in the case of heavy trucks or heavy SUVs.
Don't trust your auto dealer, they will tell you that "leasing" a heavy truck has tax advantages, not so. In fact, there are luxury auto add backs that you should be making on your tax return. Good luck auto shopping.

Year End Bonuses For Small Businesses

2008-12-28T14:09:00.000-08:00

Looking to give yourself a bonus for the end of the year for your small business? Unsure of the payroll tax consuequences? Your bonus may not be fully taxable, be sure to check the limitations so you do not overpay. Dont worry if you do, you can receive the excess via refund from the IRS. For 2008, the FICA limitations are set at $102,000. There is no limit for medicare. Do not overpay Fica, check your payroll to date before your bonus and calculate the applicable amount of tax. For a small business this could mean a potential overpayment of 12.4% (6.2% for the employee & 6.2% for the company match). If you have any questions, contact David C. Egan, CPA of Goldenthal & Suss CPA's & Consultants, P.C.

New York Certified Public Accountant

2008-12-28T14:06:00.000-08:00

David C Egan, CPA a New York State Certified Public Accountant ( CPA ) is currently a Partner at Goldenthal & Suss CPA's & Consultants, P.C. 465 Belfield Avenue, Staten Island, NY 10312. David C Egan, CPA can be reached at 718-227-6035 at his office Monday - Friday 9am to 5pm.

Staten Island CPA

2008-04-22T14:37:00.000-07:00

Staten Island Certified Public Accountant located at 465 Belfield Avenue, Staten Island, NY 10312. Phone 718-227-6035. Fax 718-227-6067