Jul 31, 2012

I Hope You Dance: Expanded Adoption Tax Credit Still Available for Extension Filers

Message from the Goodfellas at the IRS

If you adopted a child last year and requested an extension of time to file your 2011 taxes, you may be able to claim the expanded adoption credit on your federal tax return. The Affordable Care Act temporarily increased the amount of the credit and made it refundable, which means it can increase the amount of your refund.
Here are eight things to know about this valuable tax credit:

1. The adoption credit for tax year 2011 can be as much as $13,360 for each effort to adopt an eligible child. You may qualify for the credit if you adopted or attempted to adopt a child in 2010 or 2011 and paid qualified expenses relating to the adoption.

2. You may be able to claim the credit even if the adoption does not become final. If you adopt a special needs child, you may qualify for the full amount of the adoption credit even if you paid few or no adoption-related expenses.

3. The credit for qualified adoption expenses is subject to income limitations, and may be reduced or eliminated depending on your income.

4. Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child who is under 18 years old, or physically or mentally incapable of caring for himself or herself. These expenses may include adoption fees, court costs, attorney fees and travel expenses.

5. To claim the credit, you must file a paper tax return and Form 8839, Qualified Adoption Expenses, and attach all supporting documents to your return. Documents may include a final adoption decree, placement agreement from an authorized agency, court documents and the state’s determination for special needs children. You can use IRS Free File to prepare your return, but it must be printed and mailed to the IRS. Failure to include required documents will delay your refund.

6. If you filed your tax returns for 2010 or 2011 and did not claim an allowable adoption credit, you can file an amended return to get a refund. Use Form 1040X, Amended U.S. Individual Income Tax Return, along with Form 8839 and the required documents to claim the credit. You generally must file Form 1040X to claim a refund within three years from the date you filed your original return or within two years from the date you paid the tax, whichever is later.

7. The IRS is committed to processing adoption credit claims quickly, but must also safeguard against improper claims by ensuring the standards for receiving the credit are met. If your return is selected for review, please keep in mind that it is necessary for the IRS to verify that the legal criteria are met before the credit can be paid. If you are owed a refund beyond the adoption credit, you will still receive that part of your refund while the review is being conducted.

8. The expanded adoption credit provisions available in 2010 and 2011 do not apply in later years. In 2012 the maximum credit decreases to $12,650 per child and the credit is no longer refundable. A nonrefundable credit can reduce your tax, but any excess is not refunded to you.

Jul 30, 2012

New York New York: NY offering more film business tax credits

You thought that just because I'm young I don't know about Frank aka Chairman of the Board, La Voz, Ol' Blue Eyes, Swoonatra, The Sultan of Swoon!

Last week, Gov. Andrew Cuomo has signed a new law intended to draw more filmmakers to New York for post-production work through bigger tax credits. According to the governor's office, film and television producers have spent more than $7 billion in New York since the state began offering tax breaks in 2004.

New York's 10 percent post-production tax incentives were established in 2010 and have generated 19 applications.

The new law effective immediately raises it from 10 percent to 30 percent in the greater New York City area, including the lower Hudson Valley and Long Island, and up to 35 percent elsewhere.

It would apply to work after filming finishes like film editing, visual effects, color correction, sound editing and mixing.

Lesson of the story: Come do business in my state because we need your money....BAD!

Jul 27, 2012

Summer Days: Renting Your Vacation Home

Here are some tips from the Goodfellas at the IRS

The IRS offers these tips on reporting rental income from a vacation home such as a house, apartment, condominium, mobile home or boat:

Rental Income and Expenses Rental income, as well as certain rental expenses that can be deducted, are normally reported on Schedule E, Supplemental Income and Loss.

Limitation on Vacation Home Rentals When you use a vacation home as your residence and also rent it to others, you must divide the expenses between rental use and personal use, and you may not deduct the rental portion of the expenses in excess of the rental income.

You are considered to use the property as a residence if your personal use is more than 14 days, or more than 10% of the total days it is rented to others if that figure is greater. For example, if you live in your vacation home for 17 days and rent it 160 days during the year, the property is considered used as a residence and your deductible rental expenses would be limited to the amount of rental income.

Special Rule for Limited Rental Use If you use a vacation home as a residence and rent it for fewer than 15 days per year, you do not have to report any of the rental income. Schedule A, Itemized Deductions, may be used to report regularly deductible personal expenses, such as qualified mortgage interest, property taxes, and casualty losses.

Jul 26, 2012

No Church In The Wild: Global super-rich hide $21 trillion in tax havens

Human beings in a mob
What's a mob to a king? What's a king to a God?
What's a God to a non-believer who don't believe in anything?
Will he make it out alive? Alright, alright, no church in the wild

The world's super-rich had between $21 trillion and $32 trillion of wealth hidden in tax havens by the end of 2010, a new study says. The size of these unreported financial assets is equivalent to, or even larger than, the combined GDPs of the United States and Japan, representing up to $280 billion in lost tax revenues. The study, titled "The Price of Offshore Revisited," was released July 22nd by the advocacy group Tax Justice Network.Written by James Henry, former chief economist at McKinsey & Co., the study drew data from the World Bank, the International Monetary Fund, the United Nations and central banks.

The number of the global elite who parked their fortune overseas is fewer than 10 million people, or 0.14% of the global population, the report says. It also shows that major private banks such as UBS, Credit Suisse, Goldman Sachs, Bank of America and HSBC handled the most assets on behalf of the super-rich.

According to the group's 2011 Financial Security Index, which ranks nations and territories providing tax havens, Switzerland, the Cayman Islands, Luxembourg, Hong Kong and Singapore are among the biggest destinations.

In a statement, Henry, senior adviser of the Tax Justice Network, said that "it turns out that this offshore sector --- which specializes in tax dodging -- is basically designed and operated, not by shady no-name banks ... but by the world's largest private banks, law firms and accounting firms, headquartered in First World capitals like London, New York and Geneva."

"Since most of missing financial wealth belongs to a tiny elite, the impact is staggering," Henry said. "For most countries, global financial inequality is not only much greater than we suspected, but it has been growing much faster."

The Tax Justice Network says its estimated offshore fortune is conservative, adding it excludes non-financial assets such as real estate, yachts and artworks.

Non-Tax Opinion
Honestly, this world heading for disaster. I pray for a bright future for our children. However, I won't be surprise if God decides it is time to start over. There will always be the "haves" and "haves-not." History has shown that nothing lasts forever. Just like in ancient times, greed will be our generation's downfall.

Jul 25, 2012

My Way Home: The Bring Jobs Home Act

Democrats on the House Ways and Means Committee have introduced a bill to provide tax credits to businesses that brings jobs and business operations back to the U.S. from abroad.
The Bring Jobs Home Act, introduced on July 20th by Rep. Bill Pascrell, D-N.J., provides a 20 percent tax credit for businesses that “insource” jobs back to the United States and is paid for by closing tax loopholes for companies that “outsource” jobs overseas and treat distributions of debt securities in a tax-free spin-off transaction in the same manner as distributions of cash or other property.
The bill would create a new tax credit to provide an incentive for U.S. companies to move jobs from overseas back to America. Specifically, the legislation would allow companies to qualify for a tax credit equal to 20 percent of the cost associated with bringing jobs and business activity back to the U.S.

To pay for the cost of the bill, the Bring Jobs Home Act would end a tax deduction for companies that outsource jobs and business activity. The cost of moving personnel and components of a company to a new location is defined as a business expense that qualifies for a tax deduction, and the bill would tigtehn these requirements.

My opinion is that this bill will be D.O.A. (Dead On Arrival)!

Jul 24, 2012

I Get Money: McDonald's and Coca-Cola waive Olympic Tax Exemption

Warning: If you don't like cursing, don't listen to the song. Okay, we are adults and you have been warned.

Jul 23, 2012

Jeremy Lin That I Used To Know: Saving Big in State Taxes

Jeremy Lin took the NBA by storm in 2012, rising from undrafted Harvard grad to one of the most popular New York Knicks players in a decade. Lin led the Knicks to wins in his first six starts, and became the first player in NBA history to score 20 points and record seven assists in each of his first five starts. After a last-second game-winning three pointer against the Toronto Raptors, his rise to stardom was known ubiquitously as "Linsanity."

After signing a three year, $25.1 million contract with the Houston Rockets, Lin moves from one of the highest taxed states in the country to one of the lowest. As a Knick, Lin paid a top state income tax rate of 8.82 percent, with New York City piling on at 3.876 percent. As a Houston Rocket, however, he will have no state or local tax burden.

At an average salary of $8,366,667, Lin will save over $1 million annually in state and local income taxes.

Moral of the story: Get rich and then move to Texas or Florida!!!

States Without a State Income Tax

Alaska New Hampshire Tennessee
Florida South Dakota Washington
Nevada Texas Wyoming

Jul 20, 2012

Work To Do: Job Search Expenses Can be Tax Deductible

Here is a word from the Goodfellas at the Internal Revenue Service aka "IRS"

Here are seven things the IRS wants you to know about deducting costs related to your job search:

To qualify for a deduction, your expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.

You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you received in your gross income, up to the amount of your tax benefit in the earlier year.

You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.

If you travel to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area to which you travelled. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity unrelated to your job search compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.

You cannot deduct your job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.

You cannot deduct job search expenses if you are looking for a job for the first time.

The amount of job search expenses that you can claim is limited. To determine your deduction, use Schedule A, Itemized Deductions. Job search expenses are claimed as a miscellaneous itemized deduction and the total of all miscellaneous deductions must be more than two percent of your adjusted gross income.

Jul 19, 2012

The Truth: Rapper Beanie Sigel sentenced to prison for tax evasion

The rapper Beanie Sigel was sentenced on July 12th to 24 months in prison for failing to pay taxes for three years on more than $1 million of income.

U.S. District Judge Jan E. Dubois ordered the Philadelphia native to report to prison Sept. 12.
From 2003 through 2005, Sigel, 38, failed to pay more than $348,000 in taxes, prosecutors said.

Sigel pleaded guilty in August to failing to file federal income-tax returns for that period.

Prosecutors said he also failed to file tax returns from 1999 through 2002, during which time he failed to pay $380,459 in taxes.

Jul 18, 2012

Make that Change: Tips on How to Fix Errors Made on Your Tax Return

Here are 10 tips from the Internal Revenue Service about amending your federal tax return:

When to amend a return Generally, you should file an amended return if your filing status, number of dependents, total income, tax deductions or tax credits were reported incorrectly or omitted. Additional reasons for amending a return are listed in the instructions.

When NOT to amend a return In some cases, you do not need to amend your tax return. The IRS usually corrects math errors or requests missing forms – such as Forms W-2 or schedules – when processing an original return. In these instances, do not amend your return.

Form to use Use Form 1040X, Amended U.S. Individual Income Tax Return, to amend a previously filed Form 1040, 1040A, 1040EZ, 1040NR or 1040NR-EZ. Make sure you check the box for the year of the return you are amending on the Form 1040X. An amended tax return cannot be filed electronically.

Multiple amended returns If you are amending more than one year’s tax return, prepare a separate 1040X for each return and mail them in separate envelopes to the appropriate IRS processing center (see "Where to File" in the instructions for Form 1040X).

Form 1040X The Form 1040X has three columns. Column A shows original figures from the original return. Column B shown the changes you are making. Column C shows the corrected figures. There is an area on the back of the form to explain the specific changes and the reasons for the changes.

Other forms or schedules If the changes involve other schedules or forms, attach them to the Form 1040X. Failure to do this will cause a delay in processing.

Additional refund If you are amending your return to get an additional refund, wait until you have received your original refund before filing Form 1040X. You may cash that check while waiting for any additional refund.

Additional tax If you owe additional tax, you should file Form 1040X and pay the tax as soon as possible to limit interest and penalty charges.

When to file Generally, to claim a refund, you must file Form 1040X within three years from the date you filed your original tax return or within two years from the date you paid the tax, whichever is later.

Processing time Normal processing time for amended returns is 8 to 12 weeks.

Jul 17, 2012

State Tax News

Oklahoma Schedules August Tax Holiday

The Oklahoma Tax Commission reminds taxpayers that the annual sales tax holiday for qualifying clothing and footwear begins this year at 12:01 am on Friday, August 3, 2012 and runs through midnight on Sunday, August 5, 2012. During the three-day holiday period, the sale of any article of clothing or footwear with a sales price of under $100 is exempt from state, county or municipal sales tax.

South Carolina Governor Signs Budget, Provides Teacher Tax Exemption

South Carolina Governor Nikki Haley (R) has signed the fiscal year 2012-2013 budget bill, which contains a personal income tax exemption for teachers who purchase school supplies. The bill provides that all certified, public, and special school teachers and guidance counselors who are employed by a school district or charter school as of November 30 may receive reimbursement of up to $275 each school year. The reimbursement is exempt from state income tax and designed to offset expenses incurred for teaching supplies and materials.

Jul 16, 2012

American Solider: Special Tax Benefits for Armed Forces Personnel

Aword from the Goodfellas at the IRS:

Military personnel and their families face unique life challenges with their duties, expenses and transitions. The IRS wants active members of the U.S. Armed Forces to be aware of all the special tax benefits that are available to them.

Here are 10 of those special tax benefits:

1. Moving Expenses If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you may be able to deduct some of your unreimbursed moving expenses.

2. Combat Pay If you serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all your military pay received for military service during that month is not taxable. For officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger pay received. You can also elect to include your nontaxable combat pay in your "earned income" for purposes of claiming the Earned Income Tax Credit.

3. Extension of Deadlines The deadline for filing tax returns, paying taxes, filing claims for refund, and taking other actions with the IRS is automatically extended for qualifying members of the military.

4. Uniform Cost and Upkeep If military regulations prohibit you from wearing certain uniforms when off duty, you can deduct the cost and upkeep of those uniforms, but you must reduce your expenses by any allowance or reimbursement you receive.

5. Joint Returns Generally, joint income tax returns must be signed by both spouses. However, when one spouse is unavailable due to military duty, a power of attorney may be used to file a joint return.

6. Travel to Reserve Duty If you are a member of the US Armed Forces Reserves, you can deduct unreimbursed travel expenses for traveling more than 100 miles away from home to perform your reserve duties.

7. ROTC Students Subsistence allowances paid to ROTC students participating in advanced training are not taxable. However, active duty pay – such as pay received during summer advanced camp – is taxable.

8. Transitioning Back to Civilian Life You may be able to deduct some costs you incur while looking for a new job. Expenses may include travel, resume preparation fees, and outplacement agency fees. Moving expenses may be deductible if your move is closely related to the start of work at a new job location, and you meet certain tests.

9. Tax Help Most military installations offer free tax filing and preparation assistance during and/or after the tax filing season.

10. Tax Information IRS Publication 3, Armed Forces’ Tax Guide, is an excellent resource as it summarizes many important military-related tax topics. Publication 3 can be downloaded from IRS.gov or may be ordered by calling 1-800-TAX-FORM (800-829-3676).

Jul 13, 2012

Let's Work: A Lesson from the IRS for Students Starting a Summer Job

A word from the Goodfellas at the IRS:

School’s out, but the IRS has another lesson for students who will be starting summer jobs. Summer jobs represent an opportunity for students to learn about the tax system.

Not all of the money they earn will be included in their paychecks because their employer must withhold taxes.

Here are six things the IRS wants students to be aware of when they start a summer job.

1. When you first start a new job you must fill out a Form W-4, Employee’s Withholding Allowance Certificate. This form is used by employers to determine the amount of tax that will be withheld from your paycheck. If you have multiple summer jobs, make sure all your employers are withholding an adequate amount of taxes to cover your total income tax liability.

2. Whether you are working as a waiter or a camp counselor, you may receive tips as part of your summer income. All tips you receive are taxable income and are therefore subject to federal income tax.

3. Many students do odd jobs over the summer to make extra cash. Earnings you receive from self-employment – including jobs like baby-sitting and lawn mowing – are subject to income tax.

4. Even if you do not earn enough money to owe income tax, you will probably have to pay employment taxes. Your employer will withhold these taxes from your paycheck. If you earn $400 or more from self-employment, you will have to pay self-employment tax. This pays for benefits under the Social Security system that are available for self-employed individuals the same as they are for employees that have taxes withheld from their wages. The self-employment tax is figured on Form 1040, Schedule SE, Self-Employment Tax.

5. Food and lodging allowances paid to ROTC students in advanced training are not taxable. However, active duty pay – such as pay received during summer camp – is taxable.

6. Special rules apply to services you perform as a newspaper carrier or distributor. You are
treated as self-employed for federal tax purposes regardless of your age if you meet the following conditions:
  • You are in the business of delivering newspapers.
  • All your pay for these services directly relates to sales rather than to the number of hours worked.
  • You perform the delivery services under a written contract which states that you will not be treated as an employee for federal tax purposes.
    If you do not meet these conditions and you are under age 18, then you are generally exempt from Social Security and Medicare tax.

Jul 12, 2012

The Bush Cut Battle Is About to Get Hot!

On July 9th, President Barack Obama is argued that the expiration of middle-class tax cuts would be a "big blow" to working families and serve as a "drag on the economy."

Obama said at the White House that he wants Congress to extend tax cuts for middle class families earning under $250,000 for one year, saying that it would provide certainty to the economy.
He said that his Republican rival, Mitt Romney, "will fight to keep them in place. I will fight to end them."

Obama's appeal to middle-class voters aims to draw a contrast with Romney and congressional Republicans. The House is expected to push for an extension of all the Bush-era tax cuts due to expire at the end of the year, including the cuts for wealthier Americans.

I hope the IRS is ready for all of these posible changes. I hope that we are all ready for the changes. By the way in New York City, a household making $250,000 is not wealthy. That amount can be two public school principals living together!

Jul 11, 2012

Tax Relief for Victims of Tropical Storm Debby in Florida

Victims of tropical storm Debby that began on June 23, 2012, in parts of Florida may qualify for tax relief from the Internal Revenue Service.

The President has declared Baker, Bradford, Clay, Columbia, Franklin, Hernando, Highlands, Pasco, Pinellas, Suwannee and Wakulla counties a federal disaster area. Individuals who reside or have a business in this county may qualify for tax relief.

The declaration permits the IRS to postpone certain deadlines for taxpayers who reside or have a business in the disaster area. For instance, certain deadlines falling on or after June 23 and on or before Aug. 22 have been postponed to Aug. 22, 2012.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits due on or after June 23 and on or before July 9 as long as the deposits are made by July 9, 2012.

If an affected taxpayer receives a penalty notice from the IRS, the taxpayer should call the telephone number on the notice to have the IRS abate any interest and any late filing or late payment penalties that would otherwise apply. Penalties or interest will be abated only for taxpayers who have an original or extended filing, payment or deposit due date, including an extended filing or payment due date, that falls within the postponement period.

The IRS automatically identifies taxpayers located in the covered disaster area and applies automatic filing and payment relief. But affected taxpayers who reside or have a business located outside the covered disaster area must call the IRS disaster hotline at 1-866-562-5227 to request this tax relief.

Jul 10, 2012

For The Love of Money: Bailed-Out AIG Wants Some Tax Money Back

American International Group, the insurance giant saved by a massive federal bailout, wants some tax money back – from 1991.
AIG is suing in Federal Claims Court in Washington for $30.2 million. It says that's how much interest is owed from an overpayment 21 years ago.
AIG said it underpaid taxes for 1997, 1998, and 1999. But it said the government owes it interest for an overpayment in 1991. It said the two claims work out to $30.2 million in the company's favor.
New York-based AIG said it filed the lawsuit last Thursday because the statute of limitations on its claims was about to run out. The statute of limitations runs for six years on the amounts, which AIG said were determined in July and August 2006.
The Internal Revenue Service is run by the Treasury Department, which also owns about 60 percent of AIG common stock, which it has been selling in pieces.
AIG's $182.5 billion bailout was the largest of the financial crisis.
Last month, the Federal Reserve Bank of New York said the insurer had completed repaying loans it made as part of the bailout.

Jul 9, 2012

IRS Summertime Tip: Keep the Child and Dependent Care Tax Credit in Mind for Summer Planning

During the summer many parents may be planning the time between school years for their children while they work or look for work. The IRS wants to remind taxpayers that are considering their summer agenda to keep in mind a tax credit that can help them offset some day camp expenses.
The Child and Dependent Care Tax Credit is available for expenses incurred during the summer and throughout the rest of the year. Here are six facts the IRS wants taxpayers to know about the credit:

1. Children must be under age 13 in order to qualify.

2. Taxpayers may qualify for the credit, whether the childcare provider is a sitter at home or a daycare facility outside the home.

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

4. The credit can be up to 35 percent of qualifying expenses, depending on income.

5. Expenses for overnight camps or summer school/tutoring do not qualify.

6. Save receipts and paperwork as a reminder when filing your 2012 tax return. Remember to note the Employee Identification Number (EIN) of the camp as well as its location and the dates attended.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Jul 6, 2012

Kelis' Milkshake Brings The IRS To The Yard!

Kelis is the latest celebrity to be hit by the IRS for failing to pay her taxes.

Kelis, who is known for her 2004 hit “Milkshake” and her marriage to hip hop legend, Nas has failed to pay her taxes for 2004 and 2010. Kelis owes a whopping $300,426.17 in unpaid taxes. In 2004, Kelis went on tour with Britney Spears, while in 2010 the singer embarked on her very first headlining U.S. tour – she's now in trouble for not paying taxes on those profitable years.

When Kelis’ five year marriage to Nas ended in 2010, a court ordered Nas to pay $45,000 a month for child support that later reduced down to $25,000 in 2011. Although she and Nas are no longer an item, they clearly follow the same rules when it come to accounts payable. The Queens rapper was exposed for owing the government $6 million in back taxes.

Jul 5, 2012

How We Will Pay For The Patient Protection and Affordable Care Act

I'm not into politics because I believe that taxpayers never win no matter who is the President, Senator, etc. However, I must inform about posible tax changes. This post is not about whether or not I agree with the act.

Here are some of the new taxes you're going to have to pay to pay for The Patient Protection and Affordable Care Act or Fox News' favor term "Obamacare":
  • A 3.8% surtax on "investment income" when your adjusted gross income is more than $200,000 ($250,000 for joint-filers).  Dividends, interest, rent, capital gains, annuities, house sales, partnerships, etc. Taxes on dividends will rise from 15% to 18.8%--if Congress extends the Bush tax cuts. If Congress does not extend the Bush tax cuts, taxes on dividends will rise from 15% to a shocking 43.8%.

  • A 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint). You already pay Medicare tax of 1.45%, and your employer pays another 1.45% for you (unless you're self-employed, in which case you pay the whole 2.9% yourself). Next year, your Medicare bill will be 2.35%. 

  • Flexible Spending Account contributions will be capped at $2,500. Currently, there is no tax-related limit on how much you can set aside pre-tax to pay for medical expenses. Next year, there will be.

  • The itemized-deduction hurdle for medical expenses is going up to 10% of adjusted gross income. Right now, any medical expenses over 7.5% of AGI are deductible. Next year, that hurdle will be 10%.

  • The penalty on non-medical withdrawals from Healthcare Savings Accounts is now 20% instead of 10%. That's twice the penalty that applies to annuities, IRAs, and other tax-free vehicles.

  • A tax of 10% on indoor tanning services. This has been in place for two years, since the summer of 2010.

  • A 40% tax on "Cadillac Health Care Plans" starting in 2018.Those whose employers pay for all or most of comprehensive healthcare plans (costing $10,200 for an individual or $27,500 for families) will have to pay a 40% tax on the amount their employer pays. The 2018 start date is said to have been a gift to unions, which often have comprehensive plans.

  • A"Medicine Cabinet Tax" that eliminates the ability to pay for over-the-counter medicines from a pre-tax Flexible Spending Account. This started in January 2011.

  • A "penalty" tax for those who don't buy health insurance. This will phase in from 2014-2016. It will range from $695 per person to about $4,700 per person, depending on your income.

  • A tax on medical devices costing more than $100. Starting in 2013, medical device manufacturers will have to pay a 2.3% excise tax on medical equipment. This is expected to raise the cost of medical procedures. 
So those are some of the new taxes you'll be paying that will help pay for Obamacare. Sounds funs?!

Note that these taxes are both "progressive" (aimed at rich people) and "regressive" (aimed at the middle class and poor people). The big ones--the 3.8% investment income hike and the Medicare tax increase--only hit you if you're making more than $200,000 a year. The rest hit you no matter how much you're making.

Jul 4, 2012

Day Care Webinar now on the IRS Video Portal

Child care providers really care!

The recent webinar for child care providers covers recordkeeping, business use of the home, and computing and reporting depreciation.

Jul 3, 2012

Register for the July 25 IRS webinar: "Churches and Religious Organizations"

You can register for the July 25 IRS Exempt Organization webinar, "Churches and Religious Organizations."

This free webinar will cover the following topics:
  • When it comes to taxes, what is a "church?"
  • What is a “religious organization?”
  • How do you apply for tax exempt status?
  • How to stay exempt: do's and don'ts
  • Special rules for compensation of ministers
  • Recordkeeping and filing
  • Rules limiting an IRS audit of a church
Presentation times: 2 p.m. Eastern Time, 1 p.m. Central Time, Noon Mountain Time, and 11 a.m. Pacific Time

You can visit the following archived webinars at IRS video portal under the non-profit tab:
  • Starting and Operating Charities for Disaster Relief (May 30, 2012)
  • International Activities of Domestic Charitable Organizations (August 4, 2011)
  • Starting off Right – What New 501(c)(3) Organizations Need to Know (April 28, 2011)
  • Starting off Right - What New NON-501(c)(3) Organizations Need to Know (February 24, 2011)

Jul 2, 2012

Prepare for Hurricanes, Disasters by Safeguarding Tax Records

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.

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.