Last year IRS delayed some refunds till mid February. This year early filers expecting early refunds were disappointed according to the Chicago Tribune.
The early bird does not always get the worm: The Internal Revenue Service says that some taxpayers who filed on or before Jan. 25 may have to wait a week longer than expected for refunds.
The IRS blamed it on new antifraud safeguards being installed on IRS computer systems that required "fine-tuning."
The federal agency had
originally announced that many taxpayers would get their money back as
soon as 10 days after they filed online and had their check deposited
directly.
That still remains true for those who filed after Jan. 26, said IRS spokesman Mike Dobzinski in Plantation, Fla.
Read more by clicking the above link.
Tuesday, January 31, 2012
Congressional Budget Office Predicts A Huge Tax Increase In the Next 2 Years
From CNS Online:
The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”
Click the above link to read more good news.
The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”
Click the above link to read more good news.
Friday, January 27, 2012
S Corporations
Choosing the form of business you will be operating under is
the second most important decision you can make, the first being actually going
into business.
I believe that
operating your business as a Sub Chapter S or Small Business Corporation makes
sense. In fact five businesses I own are
operated as Sub Chapter S Corporations. I am not alone in this belief. This year of the 4,000,000 corporate income
tax returns that will be filed with the Internal Revenue Service, more than
2,000,000 will be Sub Chapter S Corporation returns.
Take a minute to read the discussions from a variety
of experts. Then if you believe that
becoming an S Corporation makes sense, call us.
We will make an appointment to visit with you to discuss your individual
situation.
Thursday, January 26, 2012
Ten stupid things smart people do to mess up their taxes
After every April 15th we kind of shake are heads and wonder why.
How can really smart people, our clients, do such stupid things to their
taxes. Each year we compile of list of mistakes our clients made with
one purpose in mind. Don’t make the same mistake. Learn from their
lessons.
Here is our current list of things to avoid this year.
1. Take money out of their IRA or pension plan and don’t have any money withheld for taxes. If you have to take money out of your tax sheltered plan don’t forget that there is a 10 percent penalty in addition to Federal tax owed on the distribution if you are under age 59 1/2. Don’t ever take money out of these plans without having the most Federal tax withheld from the distribution. Call our office. We can help.
2. Take money out of their IRA or pension plan or 401 K and not roll it over to another tax deferred plan. Back on this subject again. Leaving your job usually means cashing in a pension plan or 401 K. We understand that sometimes the money is needed to pay for day to day activities until you can find a new job. But if you don’t need the money don’t spend it roll it over. We can help you if you don’t know what to do. We can refer you to very competent people that can help with the rollover. Taking the money if you don’t need it means additional tax liability.
3. Sell stocks or mutual funds and not know what they paid for it. If you are dabbling in the market, you need to keep track of what you paid for the security and when you bought each security. We suggest keeping a permanent stock purchase file, and filing the confirmation each time you buy a security. That way, when you sell it you can easily locate the purchase price and purchase date. Remember that you only pay tax on the gain and you can deduct the loss of each security you sell. Stockbrokers are now required to provide you a basis statement each year. However, they may be wrong or are missing information. The best tip is to keep your stock purchase records.
4. Don’t keep any records. Records are very important in our imaginary tax world. Especially for business tax deductions like car expenses. Jotting down on a daily basis in a daily planner or pocket calendar is all you need. Keep a file nearby for tax deductible receipts. Better yet get a credit card that you use only business tax deductions. That way you all the receipts organized for you. Your credit card along with your milage calendar is all you need to make April 15th very less taxing.
5. Give charitable deductions, especially non cash and don’t make an attempt to value the donation. A note about the date and time of your deduction and a short list of the description of the deduction in your tax deduction file is all you need.
6. Not filing your taxes because you don’t have the money to pay. Always file, even if you do not have the money to pay the taxes you owe. The IRS considers not paying on time and not filing as two separate issues, and a penalty is involved for each. When you file your tax return, you have several options. You can apply for an "offer in compromise," make monthly payments through an IRS installment agreement, or temporarily delay paying. Whichever is best for you, we will help you contact the IRS right away to let them know you cannot pay. You should pay as much as you can when you file because the IRS assesses penalties and interest on the amount not paid.
7. Ignore those letters from the IRS. Do not ignore mail from the IRS. If you owe taxes, the IRS will collect. Persons who do not communicate with the IRS about inability to pay can expect a "Notice of Federal Tax Lien" to be filed against their property. In lien terms, this is a lien about the size of Alaska. Few carry more weight. The lien attaches all your property, including your house, car and any future property you might obtain. A levy, which is a legal seizure of property to satisfy a tax debt, is another legal means the IRS can use to collect taxes. This means the IRS can seize your car, boat or home and sell it to satisfy your tax debt or it can place a levy on your wages. More good news is that these liens often stay on your records long after the issue has been resolved or until the IRS gets around to removing it. So it's also the gift that keeps on giving!
8. Signing. It's not the toughest part of the tax return, but we have found that one of the most common mistakes occurs on the bottom of the tax form: the place where you're supposed to sign your name. A lot of taxpayers simply forget to do it. And, a return without a signature is like no return at all. Although the IRS won't send back your forms (it doesn't want them to get lost in the mail), everything is put on hold while you're sent a special form to sign certifying that your return is accurate. Only after you sign and send in that form, and the tax agency matches it up with your other forms, can your return be processed -- and any refund check issued.
9. Big refunds. Isn’t that the point of filing? Big refunds. In fact some clients rate the expertise of their tax preparer with the size of their refund. The bigger the refund the better the tax preparer. Nothing can be farther from the truth. Refunds are nothing more than interest free loans of your money, even earned income credit which can be advanced to you from your employer throughout the year, to the government. Then you have to go through the expense and the wait of getting your refund when you file your taxes. Extra withholding doesn’t benefit you, only the government. Don’t stand for big refunds. Stand for bigger paychecks. Your goal should be break even on April 15th.
10. Assuming the wrong filing status. Single taxpayers should be singled out for assuming that they should file as single tax payers when in fact they qualify for the much-more-favorable head-of-household (HOH) filing status. Say you're single and your non-adult child lives with you and pays for less than half of his or her own support. If you pay more than half the household's costs, you qualify. You may also qualify if you are still married and lived with your child but apart from your spouse for at least the last half of 2006. Finally, if you are single and can claim your parent as a dependent, you can probably file as HOH. This is true even if your parent has his or her own place. You are the HOH if you pay more than half the cost of your dependent parent's home.
Here is our current list of things to avoid this year.
1. Take money out of their IRA or pension plan and don’t have any money withheld for taxes. If you have to take money out of your tax sheltered plan don’t forget that there is a 10 percent penalty in addition to Federal tax owed on the distribution if you are under age 59 1/2. Don’t ever take money out of these plans without having the most Federal tax withheld from the distribution. Call our office. We can help.
2. Take money out of their IRA or pension plan or 401 K and not roll it over to another tax deferred plan. Back on this subject again. Leaving your job usually means cashing in a pension plan or 401 K. We understand that sometimes the money is needed to pay for day to day activities until you can find a new job. But if you don’t need the money don’t spend it roll it over. We can help you if you don’t know what to do. We can refer you to very competent people that can help with the rollover. Taking the money if you don’t need it means additional tax liability.
3. Sell stocks or mutual funds and not know what they paid for it. If you are dabbling in the market, you need to keep track of what you paid for the security and when you bought each security. We suggest keeping a permanent stock purchase file, and filing the confirmation each time you buy a security. That way, when you sell it you can easily locate the purchase price and purchase date. Remember that you only pay tax on the gain and you can deduct the loss of each security you sell. Stockbrokers are now required to provide you a basis statement each year. However, they may be wrong or are missing information. The best tip is to keep your stock purchase records.
4. Don’t keep any records. Records are very important in our imaginary tax world. Especially for business tax deductions like car expenses. Jotting down on a daily basis in a daily planner or pocket calendar is all you need. Keep a file nearby for tax deductible receipts. Better yet get a credit card that you use only business tax deductions. That way you all the receipts organized for you. Your credit card along with your milage calendar is all you need to make April 15th very less taxing.
5. Give charitable deductions, especially non cash and don’t make an attempt to value the donation. A note about the date and time of your deduction and a short list of the description of the deduction in your tax deduction file is all you need.
6. Not filing your taxes because you don’t have the money to pay. Always file, even if you do not have the money to pay the taxes you owe. The IRS considers not paying on time and not filing as two separate issues, and a penalty is involved for each. When you file your tax return, you have several options. You can apply for an "offer in compromise," make monthly payments through an IRS installment agreement, or temporarily delay paying. Whichever is best for you, we will help you contact the IRS right away to let them know you cannot pay. You should pay as much as you can when you file because the IRS assesses penalties and interest on the amount not paid.
7. Ignore those letters from the IRS. Do not ignore mail from the IRS. If you owe taxes, the IRS will collect. Persons who do not communicate with the IRS about inability to pay can expect a "Notice of Federal Tax Lien" to be filed against their property. In lien terms, this is a lien about the size of Alaska. Few carry more weight. The lien attaches all your property, including your house, car and any future property you might obtain. A levy, which is a legal seizure of property to satisfy a tax debt, is another legal means the IRS can use to collect taxes. This means the IRS can seize your car, boat or home and sell it to satisfy your tax debt or it can place a levy on your wages. More good news is that these liens often stay on your records long after the issue has been resolved or until the IRS gets around to removing it. So it's also the gift that keeps on giving!
8. Signing. It's not the toughest part of the tax return, but we have found that one of the most common mistakes occurs on the bottom of the tax form: the place where you're supposed to sign your name. A lot of taxpayers simply forget to do it. And, a return without a signature is like no return at all. Although the IRS won't send back your forms (it doesn't want them to get lost in the mail), everything is put on hold while you're sent a special form to sign certifying that your return is accurate. Only after you sign and send in that form, and the tax agency matches it up with your other forms, can your return be processed -- and any refund check issued.
9. Big refunds. Isn’t that the point of filing? Big refunds. In fact some clients rate the expertise of their tax preparer with the size of their refund. The bigger the refund the better the tax preparer. Nothing can be farther from the truth. Refunds are nothing more than interest free loans of your money, even earned income credit which can be advanced to you from your employer throughout the year, to the government. Then you have to go through the expense and the wait of getting your refund when you file your taxes. Extra withholding doesn’t benefit you, only the government. Don’t stand for big refunds. Stand for bigger paychecks. Your goal should be break even on April 15th.
10. Assuming the wrong filing status. Single taxpayers should be singled out for assuming that they should file as single tax payers when in fact they qualify for the much-more-favorable head-of-household (HOH) filing status. Say you're single and your non-adult child lives with you and pays for less than half of his or her own support. If you pay more than half the household's costs, you qualify. You may also qualify if you are still married and lived with your child but apart from your spouse for at least the last half of 2006. Finally, if you are single and can claim your parent as a dependent, you can probably file as HOH. This is true even if your parent has his or her own place. You are the HOH if you pay more than half the cost of your dependent parent's home.
Ten stupid things business owners do to mess up their business.
Ten no 12 stupid things business owners do to mess up their business.
1. No mailing list to their existing customers.
2. Relying on quickbooks for their accounting.
3. Getting complacent.
4. No relationship with their bankers.
5. Stop learning.
6. Not being honest and dependable.
7. Not having a goal in mind about what your business will look like when it is done.
8. Not picking the right
9. Not leaning from their mistakes.
10. Not taking action. Any action
11. Depending on marketing sales people to focus on your advertising and marketing.
12. Not realizing that sales are the most important thing. That sales are the answers to all your problems.
1. No mailing list to their existing customers.
2. Relying on quickbooks for their accounting.
3. Getting complacent.
4. No relationship with their bankers.
5. Stop learning.
6. Not being honest and dependable.
7. Not having a goal in mind about what your business will look like when it is done.
8. Not picking the right
9. Not leaning from their mistakes.
10. Not taking action. Any action
11. Depending on marketing sales people to focus on your advertising and marketing.
12. Not realizing that sales are the most important thing. That sales are the answers to all your problems.
Wow federal workers failed to pay billions in taxes in 2010
According to Investors Business Daily federal workers have failed to pay more than $3.4 billion dollars in taxes last year.
How embarrassing this must be for President Obama, whose major speech theme so far this campaign season has been that every single American, no matter how rich, should pay their "fair share" of taxes.
Because how unfair -- indeed, un-American -- it is for an office worker like, say, Warren Buffet's secretary to dutifully pay her taxes, while some well-to-do people with better educations and higher incomes end up paying a much smaller tax rate.
Or, worse, skipping their taxes altogether.
A new report just out from the Internal Revenue Service reveals that 36 of President Obama's executive office staff owe the country $833,970 in back taxes. These people working for Mr. Fair Share apparently haven't paid any share, let alone their fair share.
How embarrassing this must be for President Obama, whose major speech theme so far this campaign season has been that every single American, no matter how rich, should pay their "fair share" of taxes.
Because how unfair -- indeed, un-American -- it is for an office worker like, say, Warren Buffet's secretary to dutifully pay her taxes, while some well-to-do people with better educations and higher incomes end up paying a much smaller tax rate.
Or, worse, skipping their taxes altogether.
A new report just out from the Internal Revenue Service reveals that 36 of President Obama's executive office staff owe the country $833,970 in back taxes. These people working for Mr. Fair Share apparently haven't paid any share, let alone their fair share.
Sunday, January 22, 2012
January 1, 2012 Client Newsletter
It is New Year’s Day as I write this newsletter. Somehow the lack of any New Years Day college football bowl games has motivated me to write to you. Lesson one; never underestimate the power of the National Football League and the BCS.
I am a little gun shy of making predictions. In 2008 we predicted a stock market rally that of course never happened. Last year we predicted $5.00 a gallon gas at the end of the year, (It didn’t come close to that price but apparently is headed that way this year) a Chicago Cubs World Series, the increased value of the Internet in just about everything we do including marketing your business, and more doom and gloom in the Public Sector. Two out of four I guess is not bad.
With some certainty I predict the tough economic times will continue. The new year will bring continued misery to millions of Americans, including the jobless, those facing housing trouble and many who had hoped to retire but must work on — if they're lucky enough to have a job. After the recession and the lost decade of the 00s, the typical American household’s real income is back at 1997 levels.
Very slow growth makes it almost impossible to rescue this situation for years. Indeed, the danger of long-term contraction — and how does a society based on fairly high growth manage it — is real.
As you have probably already heard the temporary reduction in the amount of Social Security Tax you withhold from your employees remains in effect until February 29, 2012. That means the amount of Social Security tax you withhold continues to be 4.2% of wages paid through the end of February. Your matching portion of Social Security taxes remains unchanged at 6.2%.
January is always our busiest month. We generate hundreds of your employee’s W-2 forms and quarterly taxes. In addition, at the end of the month we prepare any 1099 forms you may need to furnish your independent contractors. Technically the W-2 and 1099 forms have to be sent to the recipients until the end of January. However, the IRS continues to maintain a policy that will allow employers an additional two weeks to furnish these forms. Sometimes we take advantage of it.
We have already started in December processing your quarterly forms for this month. Some clients will be paying their federal tax liability electronically, while others will not. New IRS mandates to pay all taxes electronically are now in place. Unless your liability is very small, IRS now requires employers to pay and file electronically. We are on top of the new mandate and will notify you of any changes that may apply specifically to you. As usual 1099 forms will be processed last. Don’t expect any 1099 forms mailed to you until very late in January.
We are rushing to complete our mega redesign of our two tax internet sites 1taxes.com and the smallbizwiz.com. Both sites are scheduled to be up and running by the end of the month. We are trying to make more resources available to our existing clients while still making them a key in our marketing message to new clients.
Lastly, I wanted to say thanks for everything in 2011. It was a tough year for a lot of reasons and I won't miss it, I appreciate all of the support from our fabulous clients, the goodwill from you fine people is always heartening. Thank you and Happy New Year.
"Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual. Yesterday, everybody smoked his last cigar, took his last drink, and swore his last oath. Today, we are a pious and exemplary community. Thirty days from now, we shall have cast our reformation to the winds and gone to cutting our ancient shortcomings considerably shorter than ever. We shall also reflect pleasantly upon how we did the same old thing last year about this time. However, go in, community. New Year's is a harmless annual institution, of no particular use to anybody save as a scapegoat for promiscuous drunks, and friendly calls, and humbug resolutions, and we wish you to enjoy it with a looseness suited to the greatness of the occasion." - Mark Twain
I am a little gun shy of making predictions. In 2008 we predicted a stock market rally that of course never happened. Last year we predicted $5.00 a gallon gas at the end of the year, (It didn’t come close to that price but apparently is headed that way this year) a Chicago Cubs World Series, the increased value of the Internet in just about everything we do including marketing your business, and more doom and gloom in the Public Sector. Two out of four I guess is not bad.
With some certainty I predict the tough economic times will continue. The new year will bring continued misery to millions of Americans, including the jobless, those facing housing trouble and many who had hoped to retire but must work on — if they're lucky enough to have a job. After the recession and the lost decade of the 00s, the typical American household’s real income is back at 1997 levels.
Very slow growth makes it almost impossible to rescue this situation for years. Indeed, the danger of long-term contraction — and how does a society based on fairly high growth manage it — is real.
As you have probably already heard the temporary reduction in the amount of Social Security Tax you withhold from your employees remains in effect until February 29, 2012. That means the amount of Social Security tax you withhold continues to be 4.2% of wages paid through the end of February. Your matching portion of Social Security taxes remains unchanged at 6.2%.
January is always our busiest month. We generate hundreds of your employee’s W-2 forms and quarterly taxes. In addition, at the end of the month we prepare any 1099 forms you may need to furnish your independent contractors. Technically the W-2 and 1099 forms have to be sent to the recipients until the end of January. However, the IRS continues to maintain a policy that will allow employers an additional two weeks to furnish these forms. Sometimes we take advantage of it.
We have already started in December processing your quarterly forms for this month. Some clients will be paying their federal tax liability electronically, while others will not. New IRS mandates to pay all taxes electronically are now in place. Unless your liability is very small, IRS now requires employers to pay and file electronically. We are on top of the new mandate and will notify you of any changes that may apply specifically to you. As usual 1099 forms will be processed last. Don’t expect any 1099 forms mailed to you until very late in January.
We are rushing to complete our mega redesign of our two tax internet sites 1taxes.com and the smallbizwiz.com. Both sites are scheduled to be up and running by the end of the month. We are trying to make more resources available to our existing clients while still making them a key in our marketing message to new clients.
Lastly, I wanted to say thanks for everything in 2011. It was a tough year for a lot of reasons and I won't miss it, I appreciate all of the support from our fabulous clients, the goodwill from you fine people is always heartening. Thank you and Happy New Year.
"Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual. Yesterday, everybody smoked his last cigar, took his last drink, and swore his last oath. Today, we are a pious and exemplary community. Thirty days from now, we shall have cast our reformation to the winds and gone to cutting our ancient shortcomings considerably shorter than ever. We shall also reflect pleasantly upon how we did the same old thing last year about this time. However, go in, community. New Year's is a harmless annual institution, of no particular use to anybody save as a scapegoat for promiscuous drunks, and friendly calls, and humbug resolutions, and we wish you to enjoy it with a looseness suited to the greatness of the occasion." - Mark Twain
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