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May 16

index

BUSINESS ENTERTAINMENT EXPENSES -NEW RULES

 

Transportation to and from event

Ticket price for anything

Scalpers ticket price

Cover charge, taxes and tips

Country club fees, dues

Golf, business discussed

Tickets to charitable fundraising event

Tickets to non profit high school/college sports event.

 

NO % IS DEDUCTABLE- NOTHING!!!!!

 

stay tuned for Part 2 and 3 . . .

 

Jul 24

Crowd funding or crowdfunding (alternately crowd financing, equity crowdfunding, or hyper funding) describes the collective effort of individuals who network and pool their resources, usually via the Internet, to support efforts initiated by other people or organizations. Crowd funding is used in support of a wide variety of activities, including disaster relief, citizen journalism, support of artists by fans, political campaigns, startup company funding, movie or free software development, and scientific research.

Crowd funding can also refer to the funding of a company by selling small amounts of equity to many investors. This form of crowd funding has recently received attention from policymakers in the United States with direct mention in the JOBS Act; legislation that allows for a wider pool of small investors with fewer restrictions. The JOBS Act was signed into law by President Obama on April 5, 2012. The U.S. Securities and Exchange Commission has been given approximately 270…

The Donald is getting into crowdfunding.

The Donald announced Wednesday that he is backing a new crowdfunding service called FundAnything, which is similar to Kickstarter. The major difference is that there are no restrictions on the types of projects one can fund (as long as they’re not deemed offensive) and it lets users keep the funds they raised even if they don’t meet their target goal. Trump himself will back new projects on the site each week.

In typical Trump fashion, the announcement carried all the hallmarks of a publicity stunt. Trump gathered a crowd together at the Trump Tower (Where else?) on Fifth avenue in New York and proceeded to give out “suitcases filled with cash” to fund three projects featured on FundAnything.

http://www.fundanything.com/en

http://www.kickstarter.com/

Crowdfunding, as its name suggests, is a funding method where common people like you and me, henceforth the crowd, fund your personal or business project with their own money. There’s a term that we commonly use to describe this money-giving action; it’s called a donation.

The main difference between crowdfunding and donation is that crowdfunding is tied to the American JOBS act that allows online sales of small stock to a huge pool of investors, although the act has not been passed yet. Nonetheless, you could still embrace the crowdfunding method to raise your project funds, as long as you don’t sell any kind of stock.

Different crowdfunding site could have different a purpose or approach , but overall the concept is simple – you post your project to a large group of site users, or “potential investors”, and they will fund your project with money if they are interested in the project. you can start a crowdfunding exercise for free as you will only be charged when your project has raised some funs or the full amount. There’s nothing to lose and this is great for publicity.

1. Kickstarter

Probably the hottest crowdfunding site on the Internet is Kickstarter, which raised a total of $220 million from 61,000 launched projects so far. Thousands explore its listed projects every second waiting to give away their money to the project they think is most deserving! According to the guidelines, Kickstarter accepts all major kinds of creative projects but not for causes or awareness campaigns, charity or scholarships, and definitely not for vacations or a new digital camera.

2. Indiegogo

Indie is the short form of ‘independence’, so from the name you already know that this crowdfunding site is aimed to help you raise funds and make you personal project ‘go-go-go’ without any difficulty. The site’s layout is similar to Kickstarter so it’s easy to adapt to if you have tried Kickstarter. Unlike Kickstarter though, you can kick-start any project including donations for charity. Its “Backer Rewards” feaure is known as “Perks” here.

3. Crowdfunder
Crowdfunder is the crowdfunding platform for businesses, with a growing social network of investors, tech startups, small businesses, and social enterprises (financially sustainable/profitable businesses with social impact goals).

Crowdfunder offers a blend of donation-based and investment crowdfunding from individuals and angel investors, and was a leading participant in the JOBS Act legislation. The company has localized crowdfunding and investment to help develop entrepreneurial ecosystems and access to capital outside Silicon Valley. Its unique CROWDFUNDx initiative in cities across the US and Mexico connects local investors with local entrepreneurs both online and offline, and does the work to validate top local companies in each city across the US and Mexico.

4. RocketHub
Rockethub powers donation-based funding for a wide variety of creative projects.

What’s unique about RocketHub is their FuelPad and LaunchPad programs that help campaign owners and potential promotion and marketing partners connect and collaborate for the success of a campaign.

5. Crowdrise
Crowdrise is a place for donation-based funding for Causes and Charity. They’ve attracted a community of do-gooders and and fund all kinds of inspiring causes and needs.

A unique Points System on Crowdrise helps track and reveal how much charitable impact members and organizations are making.

6. Somolend
Somolend is a site for lending for small businesses in the US, providing debt-based investment funding to qualified businesses with existing operations and revenue. Somolend has partnered with banks to provide loans, as well as helping small business owners bring their friends and family into the effort.

With their Midwest roots, a strong founder who was a leading participant in the JOBS Act legislation, and their focus and lead in the local small business market, Somolend has begun expanding into multiple cities and markets in the US.

7. appbackr
If you want to build the next new mobile app and are seeking donation-based funding to get things off the ground or growing, then check out appbackr and their niche community for mobile app development.

8. AngelList
If you’re a tech startup with a shiny lead investor already signed on, or looking for for Silicon Valley momentum, then there are angels and institutions finding investments through AngelList. For a long while AngelList didn’t say that they did crowdfunding, which makes sense as they have catered to the investment establishment in tech startups, but now they’re getting into the game. The accredited investors and institutions on AngelList have been funding a growing number of select tech startup deals.

9. Invested.in
You might want to create your own crowdfunding community to support donation-based fundraising for a specific group or niche in the market. Invested.in is a Venice, CA based company that is a top name “white label” software provider, giving you the tools to get started and grow your own.

10. Quirky
If you’re an inventor, maker, or tinkerer of some kind then Quirky is a place to collaborate and crowdfund for donation-based funding with a community of other like-minded folks. Their site digs deeper into helping the process of bringing an invention or product to life, allowing community participation in the process.

These  crowdfunding sites cover most campaign types or funding goals you might have. Go check out the sites here that grab your attention.

So you’ve browsed through a list of quality crowdfunding sites, but in the end you still prefer to let an Angel Investor fund your company. If you need help getting their attention, Crowdfunder can help. Crowdfunder allows U.S. startup and small businesses to raise funds by selling equity, debt and revenue-based securities, while attracting Angel Investors and Venture Capital to your company.

CrowdFunding

May 30

 70% of Americans will need long term care at some point

 Few Americans reaching that age are prepared to pay for that care

 Fact:  A SCAN Foundation report states that families of the aging bear a major share of care costs paying out $450 billion in unpaid caregiving along with $63 billion in out-of-pocket costs.

  Planning ahead is essential to assuring any care needed ahead.  Taking prudent financial steps now means funds for future long term care will be available when needed.

  It’s an accepted fact that Americans now live longer.  10,000 baby boomers each day over the next two decades will turn 65.  As the population ages, millions will either receive or provide long term care.

 It’s a common assumption that the aging will either rely on government entitlement supports or family support to provide for their future care.  A 2010 Harris Interactive Age Wave survey indicates the aging generally fear becoming burdensome more than they fear death itself.

 Aging responsibly means crafting a written plan and sharing that plan with one’s family.  The plan should address three primary considerations:

 1.     How will I receive care

 2.     Where will I receive care

 3.     Who will provide the care

 Costs associated with care will inevitably change and it’s more important than ever to understand those changes.  For example, costs vary by region.  Many providers now offer consumer information via free mobile apps for iPhone, iPad and iTunes.

 Retirement planning and long term care planning go hand in hand.   One survey of costs puts the annual median rate of a nursing home private room at $83,950.  A good retirement plan coupled to a long term care insure plan helps to transfer some of the risk an unplanned long term care need may bring.

 As long term care insurance costs are lower for younger consumers, it a good idea to purchase a plan at a younger rather than older age.  In fact, it’s really never too early to get started!

 Long term care plans evolve to meet changing needs.  Currently available options give  the consumer the ability to tailor care packages to his or her individual needs, ranges and budgets.  Just as consumers have many options available in other areas of their lives, consumers now have many options available in choosing long term care packages.

 When considering long term care insurance, remember that knowledge is power and that there are many tools available to help an individual in making sound decision and completing solid written care plan.

Definitely something to think about . . .

 

Jul 10
 

Running out of products too frequently? Having to sell cheap because inventory is overloaded? Use QuickBooks’ reports.

It seems so simple in theory. Don’t overstock goods because you’ll tie up too much money and perhaps need a clearance sale to get rid of the excess. On the other hand, don’t let yourself run out of anything and lose orders.

In practice – especially if you stocks dozens or hundreds of items – it’s impossible to ensure this if you’re managing your inventory manually. Guesswork can be costly.

It’s a complex element of accounting, but QuickBooks comes equipped with a handful of reports that can keep you on track. They don’t teach you how to balance your inventory to improve profitability, but we can help with that.

Figure 1: Be sure to enter a figure in the Reorder Point field so QuickBooks can remind you to reorder.

Building Precise Records
There’s a critical number in your item records that must be completed: Reorder Point. You’ll see it at the bottom of the Edit Item window (click Lists | Item Lists and double-click on the correct entry or click New in the Item drop-down list). Without it, QuickBooks can’t alert you when you’re running low.

QuickBooks also tells you how many items are currently on hand. If you had reached the reorder point and created a purchase order, you’d see a number under On P.O.

Ideally, you would do this when you’re first adding item records, but you can go back at any time and add it.

Rigorous Reporting
Running reports regularly will keep you apprised of your inventory status. To see what QuickBooks offers, click Reports | Inventory or go to the Report Center. Select Inventory Valuation Summary. You can also see this report in detail, but if you carry a lot of inventory, it’s difficult to get a birds’ eye view. Do run it, though, if you want to see the transactions that affected your inventory’s value.

Figure 2: The Inventory Valuation Summary does just what the name says

In addition to what’s pictured here, this report displays columns for Sales Price, Retail Value and % of Total Retail. As always, you can click Customize Report to change the date range.

Figure 3: This report provides a real-time update of the status of every inventory item.

Precise Tracking
The Inventory Stock Status by Item report should be consulted frequently. It tells you exactly where all of your items are in the pipeline.

Watch for checkmarks in the Order column; they appear when you’ve hit or exceeded your specified reorder point. Three other important figures populate columns in this report: the number on purchase order, the date the next shipment should arrive and average sales per week.

Reminders can come in quite handy here. To set them up, go to Edit | Preferences | Reminders | Company Preferences. And you’ll find the most comprehensive view of your items in the Inventory Center. Go to Vendors | Inventory Activities | Inventory Center. This screen also provides quick access to commonly-used reports.

Figure 4: The Inventory Center tells you everything you want to know about your items.

Automate Your Inventory Reporting
Here’s a quicker way to grab your reports:

  • Go to Reports | Memorized Reports | Memorized Report List.
  • Click the down arrow next to Memorized Report at the bottom and select New Group. Type in Inventory and click OK.
  • Open an inventory report and click Memorize. The Memorize Report window opens. Check Save in Memorized Report Group and select Inventory from the drop-down list. Click OK. Repeat for others you want in this cluster.
  • Click Reports | Process Multiple Reports. Select Inventory from the drop-down list and make sure that there’s a check mark next to the reports you want. You can click on the dates in the From and To column to change them.
  • Click Display or Print.


If you operate a product-based business, the success of your company depends in large part on your ability to find the sweet spot: neither too much nor too little inventory. It’s an ongoing, daily challenge. Let us know if we can provide guidance on this critical balancing act. Running out of products too frequently? Having to sell cheap because inventory is overloaded? Use QuickBooks’ reports.

It seems so simple in theory. Don’t overstock goods because you’ll tie up too much money and perhaps need a clearance sale to get rid of the excess. On the other hand, don’t let yourself run out of anything and lose orders.

In practice – especially if you stocks dozens or hundreds of items – it’s impossible to ensure this if you’re managing your inventory manually. Guesswork can be costly.

It’s a complex element of accounting, but QuickBooks comes equipped with a handful of reports that can keep you on track. They don’t teach you how to balance your inventory to improve profitability, but we can help with that.

Figure 1: Be sure to enter a figure in the Reorder Point field so QuickBooks can remind you to reorder.

Building Precise Records
There’s a critical number in your item records that must be completed: Reorder Point. You’ll see it at the bottom of the Edit Item window (click Lists | Item Lists and double-click on the correct entry or click New in the Item drop-down list). Without it, QuickBooks can’t alert you when you’re running low.

QuickBooks also tells you how many items are currently on hand. If you had reached the reorder point and created a purchase order, you’d see a number under On P.O.

Ideally, you would do this when you’re first adding item records, but you can go back at any time and add it.

Rigorous Reporting
Running reports regularly will keep you apprised of your inventory status. To see what QuickBooks offers, click Reports | Inventory or go to the Report Center. Select Inventory Valuation Summary. You can also see this report in detail, but if you carry a lot of inventory, it’s difficult to get a birds’ eye view. Do run it, though, if you want to see the transactions that affected your inventory’s value.

Figure 2: The Inventory Valuation Summary does just what the name says

In addition to what’s pictured here, this report displays columns for Sales Price, Retail Value and % of Total Retail. As always, you can click Customize Report to change the date range.

Figure 3: This report provides a real-time update of the status of every inventory item.

Precise Tracking
The Inventory Stock Status by Item report should be consulted frequently. It tells you exactly where all of your items are in the pipeline.

Watch for checkmarks in the Order column; they appear when you’ve hit or exceeded your specified reorder point. Three other important figures populate columns in this report: the number on purchase order, the date the next shipment should arrive and average sales per week.

Reminders can come in quite handy here. To set them up, go to Edit | Preferences | Reminders | Company Preferences. And you’ll find the most comprehensive view of your items in the Inventory Center. Go to Vendors | Inventory Activities | Inventory Center. This screen also provides quick access to commonly-used reports.

Figure 4: The Inventory Center tells you everything you want to know about your items.

Automate Your Inventory Reporting
Here’s a quicker way to grab your reports:

  • Go to Reports | Memorized Reports | Memorized Report List.
  • Click the down arrow next to Memorized Report at the bottom and select New Group. Type in Inventory and click OK.
  • Open an inventory report and click Memorize. The Memorize Report window opens. Check Save in Memorized Report Group and select Inventory from the drop-down list. Click OK. Repeat for others you want in this cluster.
  • Click Reports | Process Multiple Reports. Select Inventory from the drop-down list and make sure that there’s a check mark next to the reports you want. You can click on the dates in the From and To column to change them.
  • Click Display or Print.


If you operate a product-based business, the success of your company depends in large part on your ability to find the sweet spot: neither too much nor too little inventory. It’s an ongoing, daily challenge. Let us know if we can provide guidance on this critical balancing act.

Jul 10

Without Congressional action before the end of the year, just about everyone, rich and poor alike, will be hit by tax increases. These increases are the result of temporary tax benefits that will expire at the end of 2012.

Just about everyone will be affected in one way or another. The following is a list of the expiring benefits and how taxpayers will be affected. Check the list for items that will apply to you to get an idea of how your taxes will be impacted.

  • Exemption Phase-Out – Each taxpayer is entitled to a $3,800 (2012) tax exemption (deduction) for him or herself, his or her spouse, and each dependent. Beginning in 2013, a phase-out (reduction) of the exemptions will return for higher income taxpayers. The otherwise allowable exemption amounts will be reduced by 2% for each $2,500 or part of $2,500 ($1,250 for married filing separately) that the taxpayer’s AGI exceeds the AGI threshold for the year based on the taxpayer’s filing status. The threshold amounts for 2013 have not been announced yet but will be inflation-adjusted amounts from 2009 (the last year when this rule applied). These amounts were $372,700 for married taxpayers filing jointly, $186,350 for married taxpayers filing separately, $331,000 for head of household filers, and $289,300 for single filers. Impact: Higher income families.
  • Itemized Deduction Phase-Out -  Beginning in 2013, higher income taxpayers will again be subject to the phase-out of itemized deductions. Not all itemized deductions are subject to phase-out. The following are the ones subject to phase-out: taxes, interest (except investment interest), charitable contributions, employee job expenses and other miscellaneous itemized deductions (excluding gambling and casualty or theft losses).If the itemized deductions are subject to the limit, the total of all itemized deductions is reduced by the smaller of: 1) 3% of the amount by which the AGI exceeds the annual limit, or 2) 80% of the itemized deductions that are affected by the limit. The threshold amounts for 2013 have not been announced yet but will be inflation-adjusted amounts from 2009, which were $83,400 for married taxpayers filing separately and $166,800 for all others. Impact: Higher income families who itemize their deductions.
  • Payroll Tax & Self-Employment Tax – Both the payroll withholding tax  and self-employment tax rates have been reduced by 2 percentage points for two years. Payroll FICA withholding will return to 6.2% (up from 4.2%) and self-employment tax will return to 12.4% (up from 10.4%) beginning in 2013. Impact: All working taxpayers.
  • Long-Term Capital Gains Rates Increase – Taxpayers have enjoyed reduced long-term capital gains rates for several years as a result of the Bush-era tax cuts. However, those reduced rates will return to the higher rates in effect prior to 2003. The table below compares the current long-term capital gains rates to the anticipated rates for 2013 and subsequent years. Taxpayers with unrealized gains in investment property they’ve held for over one year may want to consider selling some or all of those assets in 2012 to lock in the lower long-term capital gains rate on their gains. Impact: All taxpayers with long-term capital gains.
  • Regular Tax Rates – In addition to lower long-term capital gains rates, the regular marginal tax rates have been declining since 2001. However, without Congressional action, those reduced rates will return to the higher rates that were in effect prior to 2001. The table below compares the current marginal individual tax rates to the anticipated rates for 2013 and subsequent years.These increased rates will apply to all varieties of ordinary income, including interest, dividends, short-term capital gains, employment income, etc. Marginal tax rates increase as a taxpayer’s overall income increases, taxing the first block of income received at the lowest rate and each subsequent block at ever-increasing rates until the maximum rate is reached. As with assets eligible for the long-term capital gains rates, it may be appropriate for some taxpayers to accelerate ordinary income into 2012 to take advantage of the lower rates. Impact: All taxpayers.
  • Bonus Depreciation Expires – For several years, businesses have been able to take advantage of bonus depreciation that essentially allows a 50% (100% during some periods) depreciation deduction of the cost of qualified business equipment and machinery in the first year it is placed in service. The big business write-off expires after 2012. Impact: Larger businesses.
  • Coverdell Education Accounts – Some years back, the tax benefits related to Coverdell Education Accounts were liberalized and made more beneficial to taxpayers. Those liberalized benefits will no longer apply after 2012. The most notable of these changes are: the dollar limit on contributions for any one beneficiary is reduced to $500 from $2,000, contributions can be made only by individuals, the modified AGI phase-out range for the annual contribution limit will be $150,000 – $160,000 for joint filers instead of twice the amounts for single filers ($95,000 – $110,000), contributions for special needs students age 18 or over will no longer be allowed, contributions for the tax year must be made by December 31 (was April 15 in the following year), qualifying expenses will no longer include those related to elementary or secondary school expenses, contributions to a Coverdell account and a Sec 529 Qualified Tuition Program will no longer be allowed in the same year, and education credits cannot be taken in a year in which a Coverdell withdrawal is made. Impact: Lower to moderate income families.
  • American Opportunity Tax Credit ExpiresThe American Opportunity Tax Credit (AOTC), which took the place of the Hope Education credit beginning in 2009, will expire after 2012. This liberalized credit provided a credit of up to $2,500 (the Hope credit provided only $1,800), and where the Hope credit could be used only to offset a taxpayer’s tax liability, up to 40% of the AOTC is refundable in many instances. In addition, the ATOC provided 4 years of credit, while the Hope credit only applies for two years. The AOTC expires after 2012. Impact: Lower income families.
  • Higher Education Loan Interest – A deduction of up to $2,500 is allowed for interest paid on loans for higher education. This deduction was originally limited to the first 60 months for which the interest payments were required. Congress subsequently temporarily eliminated the 60-month limitation and increased the AGI phase-out. Beginning in 2013, the 60-month rule returns and the AGI phase-out ranges (before adjustment for inflation) will be reduced to $60,000 – $75,000 for joint filers and $40,000 – $55,000 for other filers (except married couples filing separately who are barred from claiming this deduction). Impact: Lower to moderate income taxpayers.
  • Alternative Minimum Tax (AMT) – Congress originally implemented the AMT to impose a minimum tax on higher-income taxpayers who were avoiding taxes through tax shelters and other legal means. However, years of inflation without corresponding adjustment to the AMT components have, each successive year, caused an increasing number of taxpayers to be subject to the AMT.Much as the regular income tax allows personal exemptions, the AMT calculation allows an exemption, but based upon filing status. For the past several years, Congress has, on a year-to-year basis, increased that exemption for inflation. However, should they fail to provide an increase for 2012 and 2013, the exemption amounts would revert to levels not seen since the early 2000s, which, depending upon filing status, would result in an approximate 30% to 40% decrease in the exemption amount. For example, the exemption amount for joint filers would drop from 2011’s $74,450 to $45,000. The reduction of the exemption amount would snare a significantly greater number of taxpayers for 2012 – estimated to be around 31 million versus 4 million for 2011. Impact: Generally, middle income taxpayers.
  • Child Tax Credit – Since 2003, the child tax credit has been $1,000 for each qualified child of a taxpayer who is under the age of 17 at the end of the year. However, this was a temporary provision that expires at the end of 2012, and, beginning in 2013, the credit will revert to $500 per child. In addition, the refundable portion of the credit will be reduced. Impact: Lower income taxpayers with children.
  • Child & Dependent Care Credit – As part of the Bush-era tax cuts, the maximum expenses qualifying for dependent care credit were raised from $2,400 ($4,800 for two or more qualifiers) to $3,000 ($6,000 for two or more qualifiers) and the income-based maximum credit percentage was raised from 30% to 35%. However, these increases are scheduled to revert to the lower amounts in 2013. Impact: Lower income working taxpayers with children.
  • Earned Income Tax Credit – In 2009, a credit category for three or more children was added, providing an increased credit for taxpayers with three or more qualifying children. However, that was a temporary measure which will expire at the end of 2012. This will reduce the maximum credit for individuals with three or more children by $650 in 2013. Other changes that enhanced and simplified the credit computation are also set to expire. Impact: Lower income taxpayers with large families.

In addition to the expiring benefits listed above, depending upon what the Supreme Court ultimately decides about the Health Care Law, the following provisions of the Heath Care law will take effect in 2013:

  • Increased Hospital Insurance Tax – The Hospital Insurance (HI) tax rate (currently at 1.45%) will be increased by 0.9 percentage points on individual taxpayer earnings (wages and self-employment income) in excess of compensation thresholds for the taxpayer’s filing status. Thus, the wage withholding HI rate will be 1.45% up to the income threshold and 2.35% (1.45 + 0.9) on amounts in excess of the income thresholds. The hospital insurance portion of the SE tax rate will be 2.9% up to the income threshold and 3.8% (2.9 + 0.9) on amounts in excess of the threshold. The income thresholds where this increase begins is $250,000 for married taxpayers fling jointly, $125,000 for married taxpayers filing separately, and $200,000 for all other taxpayers. Impact: Higher income working families.
  • Surtax on Unearned Income – A new surtax called the Unearned Income Medicare Contribution Tax is imposed on the unearned income of individuals, estates, and trusts. For individuals, the surtax is 3.8% of the lesser of:
    1. The taxpayer’s net investment income or
    2. The excess of modified adjusted gross income over the threshold amount ($250,000 for a joint return or surviving spouse, $125,000 for a married individual filing a separate return, and $200,000 for all others)

    “Net” investment income is investment income reduced by allowable investment expenses. Investment income includes: Income from interest, dividends, annuities, royalties, rents (other than those derived from a trade or business), capital gains (other than those derived from a trade or business), trade or business income that is a passive activity with respect to the taxpayer, and trade or business income with respect to the trading of financial instruments or commodities. For surtax purposes, modified adjusted gross income doesn’t include excluded items such as interest on tax-exempt bonds, veterans’ benefits, and excluded gains from the sale of a principal residence. Impact: Higher income families.

  • Employer Health FLEX-Spending Plan Contributions Limited – In order for a health FSA to be a qualified benefit under a cafeteria plan, the maximum amount available for the reimbursement of incurred medical expenses of an employee, the employee’s dependents, and any other eligible beneficiaries with respect to the employee under the health FSA for a plan year (or other 12-month coverage period) cannot exceed $2,500. Impact: All taxpayers participating in health FSAs.
  • Medical Itemized Deductions Limited – The AGI threshold percentage for claiming medical expenses on a taxpayer’s Schedule A will be increased from 7.5% to 10%, which is the same as the current threshold percentage for alternative minimum tax (AMT) purposes. Individuals (and their spouses) age 65 (before close of year) and older will continue to use the 7.5% rate through 2016. Impact: Higher income taxpayers.

Keep in mind that Congress could and probably will extend some of the provisions. In addition, the Supreme Court is considering the validity of the health care provisions. Even so, it may be appropriate to review your tax situation and plan for all eventualities.

Please give this office a call if you would like to schedule a planning session for steps you can take now to mitigate the changes coming in 2013. Without Congressional action before the end of the year, just about everyone, rich and poor alike, will be hit by tax increases. These increases are the result of temporary tax benefits that will expire at the end of 2012.

Jul 09

More Flexible Offer-in-Compromise Terms Help Taxpayers Make a Fresh Start 

The IRS has expanded its “Fresh Start” initiative by offering more flexible terms to its Offer-in-Compromise Program. These newest rules enable some financially distressed taxpayers to clear up their tax problems even quicker.

An offer-in-compromise (OIC) is an agreement between a taxpayer and the IRS that settles the taxpayer’s tax liabilities for less than the full amount owed. An OIC is generally not accepted if the IRS believes the liability can be paid in full as a lump sum or through a payment agreement. The IRS looks at the taxpayer’s income and assets to determine the reasonable collection potential.

This expansion of the “Fresh Start” initiative focuses on the financial analysis used to determine which taxpayers qualify for an OIC.

Here are the OIC changes:

  • Revising the calculation for a taxpayer’s future income The IRS will now look at only one year (instead of four years) of future income for offers paid in five or fewer months; and two years (instead of five years) of future income for offers paid in six to 24 months. All OICs must be paid in full within 24 months of the date the offer is accepted.
  • Allowing taxpayers to repay their student loans Minimum payments on student loans guaranteed by the federal government will be allowed for the taxpayer’s post-high school education. Proof of payment must be provided.
  • Allowing taxpayers to pay state and local delinquent taxes When a taxpayer owes delinquent federal and state or local taxes, and does not have the ability to fully pay the liabilities, monthly payments to state taxing authorities may be allowed in certain circumstances.
  • Expanding the Allowable Living Expense allowance Standard allowances incorporate average expenses for basic necessities for citizens in similar geographic areas. These standards are used when evaluating installment agreement and offer-in-compromise requests. The National Standard miscellaneous allowance has been expanded. Taxpayers can use the allowance to cover expenses such as credit card payments and bank fees and charges.

More information on the “Fresh Start” initiative can be found at IRS.gov.

Sep 07

There are generally two words that you never want to hear from the IRS: penalties and interest. As you already know, the IRS has a laundry list of penalties for not paying the full amount of taxes due, that is topic for another discussion. On top of those penalties, you will have to pay interest, beginning from when the tax payment was due and lasting until the underpayment has been received by the IRS.

There are two words that are rare from the IRS: Good news! This is one of those rare days. Beginning October 1, 2011, changes will take effect to those interest rates. The IRS announced that underpayments will accrue interest charges at significantly lower rates than before.

Now you’re wondering, “How much interest do I have to pay?” According to Section 6621, the interest rate to be charged on underpayments is the sum of the Federal short-term interest rate and a fixed percentage amount. The IRS sets the interest rate on a quarterly basis. As of now, the Federal short-term interest rate is irrelevant in this equation, because IRS rules, in Notice 8859, that this number be rounded. Since it is so low, it is rounded to 0. When rates go up, so will the short-term interest rate.

The IRS announced that the fixed percentage component of the interest rate will be reduced starting the fourth quarter of 2011. For non-corporate tax payers, the rate is defined as the Federal short-term interest rate plus 3 percentage points. Small corporate tax payers with small underpayments is defined the same as non-corporate tax payers. For corporate tax payers with large underpayments, the interest rate is calculated as the sum of the Federal short-term interest rate plus 5 percentage points.

The IRS has reduced the all three categories by a full percentage point across the board as compared to the third quarter of this year. Unfortunately, you can’t win them all. The IRS has also reduced the interest rate they pay you for overpayments.

Aug 04

The IRS has two forms of “missing money” and some of it could be yours. To find out if the IRS owes you money, ask yourself these questions:

• Did you earn income in the past few years, but not file a tax return because your wages were below the filing requirement?

• Were you expecting a return, but never received one?

Some people earn income and may have taxes withheld, but they are not required to file a tax return because their income is too low. In this case, you can claim a refund for the tax that was withheld from your pay. Others may have earned income, but no taxes were withheld. If this is the case, then you are eligible for the refundable Earned Income Tax Credit. In order to claim this tax credit, a return must be filed.

If you were expecting a refund check, but never received one, the solution can be as simple as updating your address with the IRS and/or the U.S. Postal Service. Refund checks are mailed to your last known address. If you move without notifying the IRS or U.S. Postal Service, the checks are returned to the IRS.
To update your address with the IRS, you can go to www.IRS.gov, and click the “Where’s My Refund?” tab. If you have an outstanding check within the last 12 months, you will be prompted for an updated address.

You can also ensure that the IRS has the correct address by filing Form 8822 (Change of Address). This form is available on www.irs.gov or can be ordered by calling 800-TAX-FORM (829-3676).

Any other questions can be answered by calling the IRS assistance line at 800-829-1040.

Nov 23

The IRS announced last week that it is currently in possession of undelivered tax refund checks totaling $164.4 million.  Almost 112,000 taxpayers are due at least one refund check that was undeliverable due to mailing address errors, the IRS said. You can check on the status of our refund and update your mailing address by going to the “Where’s My Refund?” tool on the IRS website at http://www.irs.gov/individuals/article/0,,id=96596,00.html.

In some cases, the tool may also provide instructions on how to resolve delivery problems. “If you think you are missing a refund, the sooner you update your address information, the quicker you can get your money,” said IRS Commissioner Douglas Shulman.