Northeast Financial Strategies Inc - Wrentham MA Tax, Accounting & Financial Services Firm

Life Insurance – You Do It for Love

2012-02-14T05:39:00.000-08:00

What's the best gift to give your loved ones on Valentine's Day??

It’s called Life Insurance, but it could just as easily be labeled Love Insurance. Buying life insurance is really an expression of love. It lets loved ones know that you care so much that you’ve made plans to provide for their well-being…even after you’re gone.

If someone will suffer financially when you die, chances are you need life insurance. Life insurance provides cash to your family after your death. This cash (known as the death benefit) replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses and college funding. What’s more, there is no federal income tax on life insurance benefits.

Most Americans need life insurance. To figure out if you need life insurance, you need to think through the worst-case scenario. If you died tomorrow, how would your loved ones fare financially?

Would they have the money to pay for your final expenses (e.g., funeral costs, medical bills, taxes, debts, lawyers’ fees, etc.)? Would they be able to meet ongoing living expenses like the rent or mortgage, food, clothing, transportation costs, healthcare, etc? What about long-range financial goals? Without your contribution to the household, would your surviving spouse be able to save enough money to put the kids through college or retire comfortably?

The truth is, it’s always a struggle when you lose someone you love. But your emotional struggles don’t need to be compounded by financial difficulties. Life insurance helps make sure that the people you care about will be provided for financially, even if you’re not there to care for them yourself.

Call us now to set up your free life insurance review.

Do I only have to use the ROTH IRA 5-year rule once?

2012-02-13T19:38:00.000-08:00

Q: Does the establishment of ANY Roth IRA start the clock on the 5-year rule? For example, a 40-year-old establishes a Roth IRA in January 2007. In March 2012, he establishes another Roth IRA, which contains funds converted from a Traditional IRA. Could he withdraw those converted funds and not pay a penalty tax?

A: There are two 5-year rules, one for tax-free distributions and one for penalty-free distributions. The 5-year rule for tax-free distributions starts when the first Roth IRA was established in January 2007. That Roth IRA can be used to satisfy any additional Roth IRAs established. Once five years pass and the other qualifications for a qualified distribution are met (age 59 1/2, death, disability, first-time home buyer), all distributions are tax-free. A non-qualified distribution of earnings in the Roth account will be subject to income tax and the 10% early distribution penalty, if applicable. Converted funds in a Roth IRA have their own 5-year rule. If the account owner is under age 59 1/2 and the converted amount has been held for less than five years, then the distribution is subject to the 10% penalty. Each conversion has its own 5-year holding period.

7 Tips for Home Buyers

2012-02-12T19:56:00.000-08:00

Interest rates at favorable levels and a good selection of homes provide an opportunity for buyers. Here are a few things for buyers to keep in mind:

1. Know what you can afford before you fall in love with your dream home.

2. Consider additional expenses that come with owning a home like property tax, insurance, and repairs.

3. Be flexible on the little things. It would be wonderful to find a home with everything you want, but those are hard to come by – distinguish nice-to-haves and must-haves early.

4. Have imagination and look beyond paint colors, wallpaper, or other easy and affordable things you can change.

5. Don't compromise on the big things, such as enough bedrooms to accommodate additions to the family or space for an office if you work from home.

6. Always inspect even if the surface looks great; it's important to know if anything major is wrong and what it will cost to fix.

7. Think about the future in regard to the neighborhoods, surroundings, schools, and developments.

If you have any questions feel free to call. If you are interested in one of our First Time Home Buyer Seminars, check the NFS Events page to find out when our next FREE seminar is

Don't Be Fooled by Intuit Tax ID Scam

2012-02-09T17:55:00.000-08:00

With tax season ramping up, tax scams are on the rise. Scams aren’t limited to in person scams; online scammers are in on the action, too. The latest tax-related scams to make the rounds might have landed in your inbox as early as last month but they’re still going strong; I received three just this morning.

The emails claim to be from Intuit (specifically security@intuit.com) with a subject header that says something like “Urgent update of tax information is requested” or “Tax information required within 30 days.” It may look like this:

In case you can’t make out the text, it says:

Dear Account Holder,
In our continuing effort to guarantee that exact data is being sustained on our systems, as well as to provide you better quality of service; INTUIT INC. has participated in the Internal Revenue Service [IRS] Name and TIN Matching Program.
We have discovered, that your name and/or Taxpayer Identification Number, that is stated on your account does not correspond to the data on file with the Social Security Administration.
In order to check the data on your account, please click here.
Regards,INTUIT INC.
Corporate Headquarters2632 Marine WayMountain View, CA 94043

There are a few variations on this theme but largely, the gist is that they want you to confirm your tax identification number. Don’t. Don’t click on any links and don’t give out your personal information. The link likely contains a virus that could infect your computer or direct you to a site in order to steal your identity or otherwise access your financial information.

The emails that came my way were from an address in Poland marked as “an abusable web server” by my spam filter. The address was also flagged by Barracuda Reputation System (a real-time database of IP addresses) as having a “poor” reputation and is listed on the Barracuda Reputation Block List, a free DNSBL of IP addresses known to send spam.

If you get one of these, best to delete it. If you’re not sure, you can forward any suspicious emails purporting to be from Intuit to the company directly via spoof@intuit.com.

(Author’s update: I contacted the folks at Intuit who advised that you can find out more about these scams through their corporate security web site, security.intuit.com. Additionally, you can read more about a similar scam in January scam here.)

From Forbes.com

Seven Tips to Help You Determine if Your Social Security Benefits are Taxable

2012-02-08T07:09:00.000-08:00

Many people may not realize the Social Security benefits they received in 2011 may be taxable. All Social Security recipients should receive a Form SSA-1099 from the Social Security Administration which shows the total amount of their benefits. You can use this information to help you determine if your benefits are taxable. Here are seven tips from the IRS to help you:

1. How much – if any – of your Social Security benefits are taxable depends on your total income and marital status.

2. Generally, if Social Security benefits were your only income for 2011, your benefits are not taxable and you probably do not need to file a federal income tax return.

3. If you received income from other sources, your benefits will not be taxed unless your modified adjusted gross income is more than the base amount for your filing status (see below).

4. Your taxable benefits and modified adjusted gross income are figured on a worksheet in the Form 1040A or Form 1040 Instruction booklet. Your tax software program will also figure this for you.

5. You can do the following quick computation to determine whether some of your benefits may be taxable:

First, add one-half of the total Social Security benefits you received to all your other income, including any tax-exempt interest and other exclusions from income.
Then, compare this total to the base amount for your filing status. If the total is more than your base amount, some of your benefits may be taxable.

6. The 2011 base amounts are:

$32,000 for married couples filing jointly.
$25,000 for single, head of household, qualifying widow/widower with a dependent child, or married individuals filing separately who did not live with their spouse at any time during the year.
$0 for married persons filing separately who lived together during the year.

7. For additional information on the taxability of Social Security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. You can get a copy of Publication 915 at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

Publication 915, Social Security and Equivalent Railroad Retirement Benefits

IRS Tax Tip 2012-26

Payroll Tax Cut Enters Final Month Amid Talks to Extend

2012-02-06T19:11:00.000-08:00

Congress is still currently debating the extension of the two-month payroll tax cut which will expire at the end of February. Disagreements over how to pay for the tax break (scored at some $170B) have hindered lawmakers’ efforts to extend the break through the end of 2012, notwithstanding the fact that both sides of the aisle are, in principle, in support of the break.

House and Senate conferees met publicly this week to hash out their differences. E@lert has some observations: first, we have the possibility of yet another short-term extension of the payroll tax cut. Out here in the real world, we all know that would be a nightmare, but that doesn’t mean it won’t happen. The second observation is that there has been some discussion of including the general tax
extenders on this bill. This would be a relief to all, businesses and individuals alike.

Now just because taking care of the general tax extenders (e.g., the AMT patch, the R&D credit, bonus depreciation, above the line deductibility of teachers’ expenses, etc.) is a good idea, and just because Senate Finance Committee Chairman Max Baucus (D-MT) stated that the fact Congress allows these extenders to expire each year is an “embarrassment,” it doesn’t mean that’s where our friends in Congress will land. In recent rprivate conversations with lawmakers, NAEA’s GR team has divined that the odds of including the general tax extenders are not great.

Bottom line: we should see some sort of payroll tax break extension, most likely through the end of the year, by the end of February. We may see some portion of the general tax extenders included in the package (though the odds are iffy on this. If we don’t see the general extenders in this bill, we probably won’t see any action on them until after the November election (during the lame duck session, which one legislator confided to us, “would suck”).

36 people in Obama’s executive office owe the government $833,970 in back taxes

2012-02-03T05:41:00.000-08:00

President Barack Obama has preached that all Americans should pay their fair share in taxes, but a government report finds that tens of thousands of federal employees — from staffers in Congress to federal agencies and even Obama’s executive office — collectively owe the government billions in back taxes.

Data from the Internal Revenue Service found that more than 279,000 federal employees and retirees owed $3.4 billion in back income taxes as of Sept. 30, 2010.

The data showed that 467 employees of the House of Representatives, or about 4.2 percent of the workforce, owed more than $8.5 million. In the Senate, 217 employees, or about 3 percent of the workforce, owed $2.13 million.

Obama’s staff was not immune, either, with 36 people in Obama’s executive office of nearly 1,800 workers — about 2 percent — owing the government $833,970 in back taxes.

Obama used part of his State of the Union address Tuesday night to promote economic fairness, arguing for changes in the tax code that would create a minimum tax rate of at least 30 percent on anyone making more than $1 million. The finances of one of his chief Republican rivals, Mitt Romney, has been scrutinized because he, like many millionaires, pays a lower rate because most of his income came from investments, which are taxed at a lower rate.

The IRS report attracted the attention of Republicans, who said it undercut the president’s argument on taxes. “If Obama wants people to pay their ‘fair share,’ perhaps he should start with his own staff,” tweeted Republican National Committee chairman Reince Priebus.

White House officials noted that the delinquency rate among executive office staff had fallen from nearly 3 percent in 2008. In 2009, 41 employees in the president’s executive office owed about $830,000, representing about 2.3 percent of its workforce.

White House spokeswoman Amy Brundage said the annual report was released by the IRS because there is a “high standard for government employees.”

“Though the report shows that fewer executive office employees owe taxes than in the last year of the previous administration and we expect all employees to pay their taxes in full, more needs to be done to ensure compliance and the president has asked his team to work on this issue,” Brundage said.

Overall, the total amount owed is down slightly from September 2009, when more than 282,000 federal workers owed $3.3 billion in taxes.

The report does not offer specific explanations for the delinquencies. Many people who owe back taxes file returns but cannot pay the full amount when their taxes are due, said IRS spokesman Anthony Burke. Others may be disputing the bill, may have filed jointly with a spouse who owes taxes or may have had their tax bills increased by an audit and cannot pay the higher amount.

The statistics on federal employees do not include those who are on payment plans. The IRS doesn’t provide a comparable delinquency rate for income taxes paid by the public.

Among Cabinet agencies, the departments of Education and Housing and Urban Development had the highest delinquency rates, at nearly 4 percent. The Treasury Department had the lowest delinquency rate, at nearly 1 percent.

Reader's Choice Awards Voting

2012-02-03T05:07:00.000-08:00

The 2012 Readers Choice Awards are here! Vote for the best in town and the best around, and make sure your favorites win. Vote online today at www.wickedlocalfavorites.com and enter for a chance to win a brand new Kindle Fire!

When voting please remember NFS - Northeast Financial Strategies Inc. in the Local Insurance Agency category!!

Voting ends Wednesday, Feb. 15, 2012 at 5 p.m. One entry per person and you must be at least 18 years old to vote. Voters must be from Massachusetts. Results will be published in a specially bound keepsake edition the week of June 24.

Taxpayers Must Attach Checklist to All 2012 Returns with Earned Income Credit Claims

2012-02-02T07:58:00.000-08:00

The IRS has issued proposed regulations that require paid tax return preparers to file a due diligence checklist with any federal return claiming the Earned Income Credit (EIC), beginning in 2011.

As a preparer, I have been required to complete this form and retain it in my client records. However, now it must be sent in with the tax return. To fill out the checklist, I am required to ask questions about a client’s dependents, sources of support, living situation, and family relationships. Requiring that this checklist be submitted as part of the tax return raises its legal significance and subjects it to much greater scrutiny by the IRS.

At this point, it also is unclear to what extent my clients will need to prove to me the accuracy of the information they are conveying. The IRS regulations state that I must “make reasonable inquiries if the information furnished appears to be incorrect, inconsistent, or incomplete.”

The significance of this change for you is that your tax return will be more complicated to complete and you can expect the IRS to more closely investigate your eligibility for the earned income credit.

EIC by the Numbers

The earned income credit is targeted to low and moderate-income workers and working families, and the tax benefit varies by income, family size and filing status. Unlike most deductions and credits, the EIC is refundable — taxpayers can get it even if they owe no tax.

For 2011 tax returns, the maximum credit will be $5,751.

Happy Groundhog Day: 6 more weeks of winter

2012-02-02T07:41:00.000-08:00

(AP) PUNXSUTAWNEY, Pa. - Pennsylvania's Punxsutawney Phil emerged from his lair to "see" his shadow on Thursday, in the process predicting six more weeks of winter.
But, at this rate, that might not be so bad.

The groundhog made his "prediction" on Gobbler's Knob, a tiny hill in the town for which he's named about 65 miles northeast of Pittsburgh.

Temperatures were near freezing when he emerged at dawn — unseasonably warm — and were forecast to climb into the mid-40s in a winter that's brought little snow and only a few notably cold days to much of the East.

Thursday's ceremony is largely that: Phil's prediction is determined ahead of time by the Inner Circle, a group who dons top hats and tuxedos and decides in advance what the groundhog will predict.

Organizers expected 15,000 to 18,000 people to witness the furry creature's prognostication ceremony just before 7:30 a.m. EST.

This year's crowd was warmer than most. The average early-morning temperature usually hovers around 17 degrees, according to the National Weather Service.

Pennsylvania Gov. Tom Corbett was among the spectators this year. Those who couldn't make it to Gobbler's Knob could follow the groundhog on Twitter and Facebook, or watch a webcast of the event on his website.

"What started as a small gathering in 1887 has now evolved into tens of thousands of visitors from around the nation and even the world coming to Punxsutawney to participate in this time-honored Groundhog Day tradition," Corbett said.

The Groundhog Day celebration is rooted in a German superstition that says if a hibernating animal casts a shadow on Feb. 2, the Christian holiday of Candlemas, winter will last another six weeks. If no shadow is seen, legend says, spring will come early.

Phil has now seen his shadow 100 times and hasn't seen it just 16 times since 1886, according to the Punxsutawney Groundhog Club's Inner Circle, which runs the event. There are no records for the remaining years.

The tradition attained a large following with the 1993 Bill Murray comedy "Groundhog Day," in which a weatherman covering the event must relive the day over and over again. Before the movie came out, Phil was lucky to have an audience of 2,500, said Mike Johnston, vice president of the Inner Circle.

And while the group has records of Phil's predictions dating back to 1886, what it doesn't have is a tally of whether Phil was right.

Johnston said the reason is simple: "He's never been wrong." Phil is "incapable of error," he said, because the groundhog smartly avoids being site-specific in his prognostications.

If Phil predicts six more weeks of winter, said Johnston, "I guarantee you someone's going to have six more weeks of winter."

Video from Washington Post

Identity Theft Crackdown Sweeps Across the Nation; More than 200 Actions Taken in Past Week in 23 States

2012-02-01T11:05:00.000-08:00

WASHINGTON – The Internal Revenue Service and the Justice Department today announced the results of a massive national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.

Working with the Justice Department’s Tax Division and local U.S. Attorneys’ offices, the nationwide effort targeted 105 people in 23 states. The coast-to-coast effort took place over the last week and included indictments, arrests and the execution of search warrants involving the potential theft of thousands of identities and taxpayer refunds. In all, 939 criminal charges are included in the 69 indictments and informations related to identity theft.

In addition, IRS auditors and investigators conducted extensive compliance visits to money service businesses in nine locations across the country in the past week. The approximately 150 visits occurred to help ensure these check-cashing facilities aren’t facilitating refund fraud and identity theft.

“This unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season,” said IRS Commissioner Doug Shulman. “We are aggressively pursuing cases across the nation with the Justice Department, and people will be going to jail. This is part of a much wider effort underway at the IRS to help protect taxpayers.”

“The Justice Department is working closely with the IRS to investigate, prosecute, and punish tax refund crimes committed through the theft of identities,” said Principal Deputy Assistant Attorney General John A. DiCicco of the Tax Division. “Now, more than ever, we must remain vigilant against the unauthorized use of identification information to defraud the U.S. government.”

The national effort is part of a comprehensive identity theft strategy the IRS has embarked on that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.

The law-enforcement sweep started last week across the country, reflecting investigative efforts stretching back months and even years.

The nationwide effort by the Justice Department and the IRS led to actions taking place in 23 locations across the country with 105 individuals. The actions included 80 complaints/indictments and informations, 58 arrests, 19 search warrants, 10 guilty pleas and four sentencings. A map of the locations and additional details on the actions are available on IRS.gov, the IRS Civil and Criminal Actions page and the Department of Justice Tax Division page.

Beyond the criminal actions, the IRS enforcement personnel conducted a special sweep last week and on Monday to visit 150 money services businesses to help make sure these businesses are not knowingly or unknowingly facilitating identity theft or refund fraud. The visits occurred in nine high-risk places identified by the IRS covering areas in and surrounding Atlanta, Birmingham, Ala., Chicago, Los Angeles, Miami, New York, Phoenix, Tampa and Washington, D.C.

In addition, the IRS has more than 250 check-cashing operations under audit across the country and will be looking for indicators of identity theft as part of the exam effort.

The information from these audits and compliance visits will be used to assist continuing IRS investigations into refund fraud and identity theft.

The IRS also is taking a number of additional steps this tax season to prevent identity theft and detect refund fraud before it occurs. These efforts includes designing new identity theft screening filters that will improve the IRS’s ability to spot false returns before they are processed and before a refund is issued, as well as expanded efforts to place identity theft indicators on taxpayer accounts to track and manage identity theft incidents.

To help taxpayers, the IRS earlier this month created a new, special section on IRS.gov dedicated to identity theft matters, including YouTube videos, tips for taxpayers and a special guide to assistance. The information includes how to contact the IRS Identity Protection Specialized Unit and tips to protect against “phishing” schemes that can lead to identity theft.

Identity theft occurs when someone uses another’s personal information without their permission to commit fraud or other crimes using the victim’s name, Social Security number or other identifying information. When it comes to federal taxes, taxpayers may not be aware they have become victims of identity theft until they receive a letter from the IRS stating more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past.

If a taxpayer receives a notice from the IRS indicating identity theft, they should follow the instructions in that notice. A taxpayer who believes they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. The taxpayer should contact the IRS Identity Protection Specialized Unit at 800-908-4490. The taxpayer will be asked to complete the IRS Identity Theft Affidavit, Form 14039, and follow the instructions on the back of the form based on their situation.

Taxpayers looking for additional information can consult the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS website.

IR-2012-13

Marriage Penalty Relief

2012-02-01T10:51:00.001-08:00

Marriage Penalty Relief
http://archive.constantcontact.com/fs088/1102707121899/archive/1109197899590.html

Do I Need to File a Tax Return This Year?

2012-01-31T06:00:00.000-08:00

You are required to file a federal income tax return if your income is above a certain level, which varies depending on your filing status, age and the type of income you receive. However, the Internal Revenue Service reminds taxpayers that some people should file even if they aren’t required to because they may get a refund if they had taxes withheld or they may qualify for refundable credits.

To find out if you need to file, check the Individuals section of the IRS website at www.irs.gov or consult the instructions for Form 1040, 1040A or 1040EZ for specific details
that may help you determine if you need to file a tax return with the IRS this year. You can also use the Interactive Tax Assistant available on the IRS website. The ITA tool is a tax law resource that takes you through a series of questions and provides you with responses to tax law questions.

Even if you don’t have to file for 2011, here are six reasons why you may want to:

1. Federal Income Tax Withheld You should file to get money back if your employer withheld federal income tax from your pay, you made estimated tax payments, or had a prior year overpayment applied to this year’s tax.

2. Earned Income Tax Credit You may qualify for EITC if you worked, but did not earn a lot of money. EITC is a refundable tax credit; which means you could qualify for a tax refund. To get the credit you must file a return and claim it.

3. Additional Child Tax Credit This refundable credit may be available if you have at least one qualifying child and you did not get the full amount of the Child Tax Credit.

4. American Opportunity Credit Students in their first four years of postsecondary education may qualify for as much as $2,500 through this credit. Forty percent of the credit is refundable so even those who owe no tax can get up to $1,000 of the credit as cash back for each eligible student.

5. Adoption Credit You may be able to claim a refundable tax credit for qualified expenses you paid to adopt an eligible child.

6. Health Coverage Tax Credit Certain individuals who are receiving Trade Adjustment Assistance, Reemployment Trade Adjustment Assistance, Alternative Trade Adjustment Assistance or pension benefit payments from the Pension Benefit Guaranty Corporation, may be eligible for a 2011 Health Coverage Tax Credit.

Eligible individuals can claim a significant portion of their payments made for qualified health insurance premiums.

For more information about filing requirements and your eligibility to receive tax credits please contact our office.

Gold's Gym Open House Winners

2012-01-28T18:07:00.000-08:00

Thank you to all who visited us at the Gold's Gym Open House today in Foxboro, MA!!

We had a day long drawing and gave away FIVE (5) FREE TAX PREPARATION Gift Certificates.

Here is the official winners list:

Kim Whalen - Wrentham, MA
Patti Welsh - Mansfield, MA
Robin Hazerjian - Norwood, MA
Eric Diamond - Norfolk, MA
Tammy Borden - Wrentham, MA

Thanks to all who entered!

Also, a reminder not to forget about the $50 Discount we gave out to be used towards your Income Tax Preparation!! If you lost the coupon or simply misplaced it in the middle of all the great open house info you picked up, just mention the discount to us and you got it!

Call us at 800-560-4637 x 14 to book an appointment now!!

We also spoke to many people about all of our services - Life Insurance, Financial Planning, Estate Planning, Investments, Accounting, Payroll, and Income Tax Preparation for Individuals & Small Business. We offer many "Financial Strategies That Fit YOUR Needs!"

If we can be of assistance in any of these areas, do not hesitate to call or email us today!

Free Income Tax Preparation Giveaway!!

2012-01-27T04:58:00.000-08:00

Free Income Tax Preparation Giveaway!!
Gold's Gym Foxboro MA - Open House
Saturday, January 28th, 2012
8:00am to 2:00pm

Join NFS at the Gold's Gym Open in house in Foxboro MA this Saturday from 8am-2pm. We will be giving away FIVE (5) FREE INCOME TAX PREPARATION Certificates!!! Other Door Prizes, Free Food, Free Drinks, Free Workouts, Kids Activities, Jumpy House, Face Painting, Temporary Tattoos & MORE!!!

IRS Warns of Tax Refund Delays

2012-01-27T04:52:00.000-08:00

WASHINGTON, D.C.- The Internal Revenue Service warned Thursday that tax refunds could be delayed a week this tax season because of new anti-fraud safeguards.

“The IRS has opened its filing season successfully this month, and refunds have started going out to many taxpayers,” the agency said in an email to tax professionals on Thursday. “As with the start of any tax season, there are system validations that occur requiring some fine-tuning of our systems. As part of this, some taxpayers will receive refunds approximately one week later than initial projections they may have received, but these are still in line with historical refund delivery times.”

The IRS noted that the one-week delay is related to the fine-tuning of IRS systems to adjust for new
safeguards that were put in place this tax season to provide for stronger protection against tax refund fraud. The agency has come under heavy criticism for the increasing number of identity theft cases related to tax refunds, and it recently added more stringent measures.

The IRS said it is providing additional screening for fraud this year before issuing refunds, but the vast majority of taxpayers can still continue to expect to receive their refunds in a timely fashion.

The IRS also noted that the refund time frames provided by the “Where’s My Refund” tool on its Web site are projected time frames and are subject to revision. “Many different factors can affect the timing of the refund after the IRS receives the return for processing,” said the agency. “The IRS apologizes for any inconvenience caused by the revised refund dates.”

When the IRS announced the opening of the 2012 filing season, it advised taxpayers who electronically file and select direct deposit that they could see their refunds in as few as 10 days and 90 percent of refunds are provided within 21 days, the IRS added. Some taxpayers are getting refunds much faster, according to the agency, but at this time taxpayers should expect refunds to be issued as indicated in the original IRS guidelines.

By Michael Cohn, Accounting Today

Tax Tips for the Self-employed

2012-01-26T06:09:00.000-08:00

There are many benefits that come from being your own boss. If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

Here are six key points the IRS would like you to know about self-employment and self- employment taxes:

Self-employment can include work in addition to your regular full-time business activities, such as part-time work you do at home or in addition to your regular job.
If you are self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax primarily for individuals who work for themselves. It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. You figure self-employment tax using a Form 1040 Schedule SE. Also, you can deduct half of your self-employment tax in figuring your adjusted gross income.
You file an IRS Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business, with your Form 1040.
If you are self-employed you may have to make estimated tax payments. This applies even if you also have a full-time or part-time job and your employer withholds taxes from your wages. Estimated tax is the method used to pay tax on income that is not subject to withholding. If you fail to make quarterly payments you may be penalized for underpayment at the end of the tax year.
You can deduct the costs of running your business. These costs are known as business expenses. These are costs you do not have to capitalize or include in the cost of goods sold but can deduct in the current year.
To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. An expense does not have to be indispensable to be considered necessary.

For additional help with your small business, give us a call.

IRS Tax Tip 2012-16

Living Wills

2012-01-25T18:49:00.000-08:00

What is a living will and why should you consider one?
http://archive.constantcontact.com/fs088/1102707121899/archive/1109072192279.html

Cell Phone Use by Drivers of Commercial Motor Vehicles

2012-01-25T18:38:00.000-08:00

On December 2, 2011 the US Department of Transportation released a final rule regarding Cell Phone
(Mobile Communications Device) by drivers of Commercial Motor Vehicles: Pipeline and Hazardous
Materials Safety Administration (PHMSA) and the Federal Motor Carrier Safety Administration (FCMSA).

This is a final rule in effect on January 3, 2012, which effectively prohibits the use of a cell phone for communications, either by voice or texting, while the driver is underway. The rules
may be viewed at 49 CFR Part 177 and 383.

This rule will apply to all drivers of commercial vehicles; trucks, busses and any vehicle that requires a
Commercial Driver’s License while on a public highway. Specifically, the rule requires that anyone
convicted the second time in 3 years of violating a State rule regarding the use of a hand held cell phone
be disqualified from driving for a minimum of 60 days and if convicted the third time in 3 years,
disqualified for 120 days. It also states that no employer may require the use of a hand held
communications device while operating a motor vehicle. The definition of driving, for the purposes of this
regulation, means the Commercial Vehicle is on the highway, even if stopped at a traffic control device or
stuck in traffic. To use a cell phone or mobile device, the vehicle must be off the highway and stopped.
Push-to-talk phone use is also prohibited.

The use of a radio with a push to talk microphone, GPS, or traffic management system is not covered by
this rule. If a phone or other mobile communications device is used, it must not require holding in the
driver’s hand and must be actuated by a single push of a single button. The driver must be able to
operate this device while seated and with the seat belt fastened in place.

Exemptions will be allowed for operation of Commercial Motor Vehicles by military and emergency
response personnel, firefighters, farmers and local government personnel engaged in snow and ice
removal operations. There is also a provision allowing for contact with law enforcement personnel by a
driver in the event of an emergency. Information regarding this regulation is contained in the websites
provided below.

Information regarding the Federal Cell Phone Use Policy:
http://www.fmcsa.dot.gov/about/news/news-releases/2011/Secretary-LaHood-Announces-Step-towards-
Safer-Highways.aspx

Frequently Asked Questions regarding the Cell Phone Use Ban:
http://www.fmcsa.dot.gov/about/other/faq/cellphone-ban-faqs.aspx

Free Income Tax Preparation Giveaway

2012-01-24T05:49:00.000-08:00

Romney Does Reversal on Releasing Tax Returns

2012-01-24T05:46:00.000-08:00

NEW YORK - Former Massachusetts Governor and Republican Presidential candidate Mitt Romney said he would release his 2010 tax return and an estimated tax return for 2011 on Tuesday in the wake of a stinging defeat in the South Carolina primary and renewed pressure from fellow Republicans.

Speaking on Fox News Sunday with host Chris Wallace, Romney admitted he had made a mistake in not releasing the tax returns earlier.

"I'm going to make it very clear to you right now, Chris, that I will release my tax returns for 2010, which is the last returns that were complete,” he said. “I will do that on Tuesday of this week. I will also release at the same time an estimate for 2011 tax returns.”

After initially saying he might not release his tax returns at all, Romney said last week that he would release the tax returns around April 15. But demands for his tax returns have been escalating over the past week. New Jersey Governor Chris Christie is among those who have publicly urged Romney to release his tax returns.

Romney also disputed accusations that his holdings in Bain Capital funds based in the tax haven of the Cayman Islands were intended as a way to evade taxes.

"The taxes paid on that are full U.S. taxes," he said. "I know people will try and find something. But we pay full fair taxes, and you'll see it is a substantial amount."

Romney said the tax returns would be posted to his campaign Web site for anyone to view.

“It will provide, I think, plenty of information for people to understand that the sources of my income are exactly as described in the financial disclosure statements that we put out several months ago,” said Romney.

His campaign also urged rival Newt Gingrich, who won the South Carolina primary on Saturday, to release his contract with Freddie Mac. Gingrich has insisted that he only acted as a “strategic advisor” for the housing agency, but rival candidates have accused him of being an unregistered lobbyist. Gingrich released his tax returns last week and on Monday evening his former consulting firm released the first year of his contract with Freddie Mac.

During a Republican candidate debate Monday evening in Tampa on NBC, Romney told the audience and his fellow candidates, "You'll see my income, how much taxes I've paid, how much I've paid to charity. I pay all the taxes that are legally required and not a dollar more. I don't think you want someone as the candidate for President who pays more taxes than he owes."

The Associated Press saw a preview of Romney's tax return and said he paid about $3 million in federal income taxes in 2010 on $21.7 million in earnings. Donations of close to $3 million to charity, about half of which went to the Mormon Church, lowered his effective tax rate to approximately 14 percent. In 2011, Romney is expected to pay approximately $3.2 million in taxes, an effective tax rate of about 15.4 percent.

By Michael Cohn, Accounting Today

Massachusetts Jobless Rate Drops to 6.8 Percent

2012-01-19T12:59:00.000-08:00

BOSTON -- State officials say the Massachusetts unemployment rate dropped to 6.8 percent in December, down from 7 percent in November, despite estimates that the state lost about 6,200 jobs last month.

The office of Labor and Workforce Development said Thursday the apparent discrepancy between the two figures may be explained by different methods used for calculating the unemployment rate and estimating the number of jobs in the state.

The 6.8 percent unemployment rate was the lowest in three years and remains well below the December national rate of 8.5 percent.

Gov. Deval Patrick told reporters he's excited about the continued decline in unemployment but isn't sure what to make of the separate accounting for jobs.

Patrick said he'll unveil initiatives aimed at further lowering the rate during his annual State of the State address on Monday.

Employer Health Care Benefit Problems

2012-01-18T13:15:00.000-08:00

In attempting to provide health care benefits, small employers and self-employed individuals face several problems:

http://archive.constantcontact.com/fs088/1102707121899/archive/1109072155235.html

Senior Circuit Breaker Credit Information Sessions Announced

2012-01-17T11:23:00.000-08:00

The Department of Revenue has planned an extensive two-month series of presentations to educate taxpayers 65 and older about the benefits of the Senior Circuit Breaker Tax Credit.

For tax year 2011, the credit is worth as much as $980 for eligible taxpayers 65 and older who either own or rent their home. The credit is refundable, meaning that if a taxpayer does not have an offsetting state tax liability, or has a liability that is smaller than the credit, they receive a check from the Commonwealth for either the entire credit or for the portion left after taxes are paid.

Seniors who live in public or subsidized housing are not eligible for the credit.

In tax year 2009, 80,566 taxpayers received $61.1 million in tax credits, an average of $759 per taxpayers. For more information on how the credit works and is calculated, go to this OpenDOR blog post.

Brian Lynch, of DOR's office of Advocacy, Training and Communication, will conduct 14 sessions on the credit in various Massachusetts Council on Aging (COA) offices. We hope to see you there!

Here’s the complete schedule:

Jan 18 1:00 p.m., Wellesley COA, 219 Washington St., 781-235-3961.

Jan 19 1:00 p.m., Plainville COA, 9 School St., 508-699-7384

Jan 20 1:00 p.m., Waltham COA , 488 Main St., 781-899-7228

Jan 25 1:00 p.m, Wayland COA, 4 Cochituate Rd., 508-358-2990

Jan 30 1:00 p.m, Bedford COA, 12 Mudge Way, 781-275-6825

Feb 1 12:30 p.m., Wrentham COA , 400 Taunton St., 508-384-5425

Feb 6 10:00 a.m., Carlisle COA, 66 Westford St., 978-371-2895

Feb 6 1:00 p.m., North Attleboro COA, 204 Elm St., 508-699-0131

Feb 7 10:00 a.m., Attleboro COA, 25 South Main St., 508-223-2235

Feb 7 1:00 p.m., Norfolk COA, 28 Medway Branch Rd., 508-528-4430

Feb 8 10:30 a.m., Chelmsford COA, 75 Groton Rd., 978-251-0533

Feb 15 11:00 a.m., Concord Senior Center, 1276 Main St., 978-318-0856

Feb 17 10:00 a.m., Franklin COA, 10 Daniel McCahill St., 508-520-4945

Feb 22 1:00 p.m., Natick COA, 90 Oak St., 508-647-6540

Using Your Retirement Savings To Get Credit

2012-01-16T12:57:00.000-08:00

You can benefit from a tax credit if you contribute to a given individual retirement arrangement or a retirement plan. However, the amount that you get will greatly depend on your credit rate and the amount that you contribute. The amount that you get in a year cannot exceed the amount of tax that you would have settled on that particular year. You will also not be entitled to tax credit if some other non-refundable credits reduce your tax liability to zero.

For you to claim a tax credit, there are some requirements that you must fulfill...

You should not be fully enrolled as a student- a full time student is one who is in a school with other regular students. There should also be some teaching staff who should be assisting in going through the course study. You are also a full time student if you are enrolled full time in a training course that is being offered by local government, state or a county. The period put into consideration in both cases is five months and these do not necessarily need to run consecutively.

Adjusted Gross Income (AGI) – for you to claim a tax credit, your AGI should not exceed:

$56,500 when you are married but filing jointly
$42,375 when you are filing as household head
$28,250 when you are married but filing separately and if you are single or a widow/widower

How much credit can you get?

As stated earlier, the amount that you can receive on tax credit will depend on the credit rate that you have and the amount that you contribute. The credit rate on the other hand depends on the filing status together with the income of the individual involved and this can fall anywhere between 10% and 50%. You can easily search online for a form that will help you in calculating your credit rate if you need to know this.

If you have a retirement plan that you contribute to, you should know that it is possible to claim some tax credit and this can really help you to sort out some financial needs rather than applying for funding. You shouldn’t be afraid of claiming such as this will not have any effect on any other tax credits. However, you should ensure that you satisfy all the other mentioned requirements and this will see the whole process run smoothly.

The Child Tax Credit

2012-01-13T11:32:00.000-08:00

What is The Child Tax Credit?
http://archive.constantcontact.com/fs088/1102707121899/archive/1109072154741.html

Paying For College May Now Be Less Taxing

2012-01-13T11:14:00.000-08:00

Education Tax Rules

Parents facing college expenses have several provisions in the tax law to consider. The benefits don’t apply to all, but there is something of interest for many families.

Tax Credits

The Hope credit (renamed the American Opportunity Tax Credit) is available for certain tuition and fees, and it allows you to reduce taxes annually up to $2,500 per student for four years of college. The credit is equal to 100% of the first $2,000 of qualified expenses and 25% of the next $2,000.

The lifetime learning credit covers any year of post-secondary education, with a maximum credit of $2,000, no matter how many students in the family are eligible.

Both the American Opportunity Tax Credit and lifetime learning credits phase out for taxpayers with higher incomes.

Other Education Tax Incentives

Education savings accounts. You may establish an education savings account (previously called an education IRA) with a nondeductible contribution for any child under 18. The annual contribution limit is $2,000. Funds can accumulate and be paid out tax-free for qualified college expenses, including tuition, fees, books, supplies, equipment, and certain room and board costs. The funds can also be used to pay for elementary and secondary (K-12) school expenses at public, private, or religious schools. Eligibility for an education savings account starts phasing out at $95,000 of AGI for single taxpayers and $190,000 for married folks.

Individual retirement accounts (IRAs). Existing IRAs can also be a source of college funds. You may make withdrawals before age 59½ without penalty for amounts paid for college or graduate school tuition, fees, books, room and board, supplies, and equipment.

Education savings bonds. Interest on Series EE and Series I bonds issued after 1989 is nontaxable when used to pay tuition and fees for you or your dependents. This tax break begins to phase out once income reaches certain levels.

Section 529 plans allow individuals to set up an account on behalf of someone else (say a child or grandchild) that can be used to pay college expenses. There are two types of plans:

Prepaid tuition plans are designed to hedge against inflation. You can purchase tuition credits, at today’s rates, that your child can redeem when he or she attends one of the plan’s eligible colleges or universities. Both state and private institutions can offer prepaid tuition programs. Using tuition credits from these programs is tax-free.

College savings plans are state-sponsored plans that allow you to build a fund to pay for your child’s college education. Your contributions are not tax-deductible, but once in the plan, your money grows tax-free. Provided the funds are used to pay for qualified college expenses, withdrawals are tax-free. Qualified expenses include tuition, fees, books, supplies, and certain room and board costs. Private institutions are not allowed to set up college savings accounts.

Student loan interest deduction. Interest on certain student loans can be deducted whether or not you itemize your deductions. The maximum deduction is $2,500 per year over the loan repayment period.

Other tax benefits. Most scholarships remain tax-free, nontaxable employer-paid tuition may be available, and education expenses related to your job still may be deductible.

When you start examining your situation, remember that many of these provisions are designed so that you can’t benefit from more than one in any given year. We can help guide you through the maze and help ensure that you receive the maximum possible benefit.

Please let me know if you have any questions or need assistance.

Organizing Your Tax Documents

2012-01-12T06:50:00.000-08:00

January is a good time to review your finances for the previous year and start organizing the documents and information you'll need for preparing your tax return. One technique I've been using with some of my clients is to make a list of various types of income and tax-deductible expenses you had for 2011.

When your tax documents arrive in the mail, you can check them off your list. In this way you'll know when all your documents have arrived, and then you'll be ready to file your tax return.

This technique is especially useful if you have lots of documents, as it can help both you and me, your tax preparer, ensure that all items have been accounted for.

Now each person's checklist will look a little bit different, since we all have slightly different financial situations.

Here's one sample checklist for married homeowners:

W-2 for the husband
W-2 for the wife
1099-INT for savings account
1098 for mortgage interest paid
Property tax statements
Receipts for any energy-efficient home improvements

Once you develop your checklist, you'll be able to tell when you have all your documents ready, and you'll be able to cross-check your progress in your tax software or be able to cross-check your tax preparer's work.

Your checklist can be as detailed or as simple as you need it to be. If you want to avoid having to create your own checklist, you can download a copy of my organizer here.

Misconceptions About the Unlimited Marital Deduction

2012-01-11T11:57:00.000-08:00

Misconceptions About the Unlimited Marital Deduction
http://archive.constantcontact.com/fs088/1102707121899/archive/1109072114396.html

IRS Offshore Programs Produce $4.4 Billion to Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens

2012-01-10T06:06:00.000-08:00

WASHINGTON — The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.

The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of
international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.

“Our focus on offshore tax evasion continues to produce strong, substantial results for the nation’s taxpayers,” said IRS Commissioner Doug Shulman. “We have billions of dollars in hand from our previous efforts, and we have more people wanting to come in and get right with the government. This new program makes good sense for taxpayers still hiding assets overseas and for the nation’s tax system.”

The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply. However, the terms of the program could change at any time going forward. For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.

“As we’ve said all along, people need to come in and get right with us before we find you,” Shulman said. “We are following more leads and the risk for people who do not come in continues to increase.”

The third offshore effort comes as Shulman also announced today the IRS has collected $3.4 billion so far from people who participated in the 2009 offshore program, reflecting closures of about 95 percent of the cases from the 2009 program. On top of that, the IRS has collected an additional $1 billion from up front payments required under the 2011 program. That number will grow as the IRS processes the 2011 cases.

In all, the IRS has seen 33,000 voluntary disclosures from the 2009 and 2011 offshore initiatives. Since the 2011 program closed last September, hundreds of taxpayers have come forward to make voluntary disclosures. Those who have come in since the 2011 program closed last year will be able to be treated under the provisions of the new OVDP program.

The overall penalty structure for the new program is the same for 2011, except for taxpayers in the highest penalty category.

For the new program, the penalty framework requires individuals to pay a penalty of 27.5 percent of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the eight full tax years prior to the disclosure. That is up from 25 percent in the 2011 program. Some taxpayers will be eligible for 5 or 12.5 percent penalties; these remain the same in the new program as in 2011.

Participants must file all original and amended tax returns and include payment for back-taxes and interest for up to eight years as well as paying accuracy-related and/or delinquency penalties.

Participants face a 27.5 percent penalty, but taxpayers in limited situations can qualify for a 5 percent penalty. Smaller offshore accounts will face a 12.5 percent penalty. People whose offshore accounts or assets did not surpass $75,000 in any calendar year covered by the new OVDP will qualify for this lower rate. As under the prior programs, taxpayers who feel that the penalty is disproportionate may opt instead to be examined.

The IRS recognizes that its success in offshore enforcement and in the disclosure programs has raised awareness related to tax filing obligations. This includes awareness by dual citizens and others who may be delinquent in filing, but owe no U.S. tax. The IRS is currently developing procedures by which these taxpayers may come into compliance with U.S. tax law. The IRS is also committed to educating all taxpayers so that they understand their U.S. tax responsibilities.

More details will be available within the next month on IRS.gov. In addition, the IRS will be updating key Frequently Asked Questions and providing additional specifics on the offshore program.

IR-2012-5

Can I move my company funds to a Roth IRA or Roth 401(k)?

2012-01-09T10:46:00.000-08:00

Q: I participate in a company 401(k) and have accumulated a large sum over the years. I would like to convert this money into either a Roth IRA or a Roth 401(k), neither of which is offered by my company for the employees. Is there any way (short of hardship or borrowing) to access this money?

A: If your company does not offer a Roth 401(k) plan option, you cannot
use a Roth 401(k). It is that simple. Your 401(k) plan document or summary plan description will state under what conditions you can withdraw from the plan. If you are eligible to take a withdrawal (watch out for adverse consequences), you can convert to a Roth IRA. A hardship withdrawal will not be eligible for conversion to a Roth IRA or for rollover to an IRA. You will, of course, pay income tax on the pretax dollars at the time of the conversion. It is always preferable to pay any income tax due on the conversion with outside money rather than using the IRA funds.

More Innocent Spouses Qualify for Relief Under New IRS Guidelines

2012-01-06T05:17:00.000-08:00

WASHINGTON — The Internal Revenue Service today released new proposed guidelines designed to provide relief to more innocent spouses requesting equitable relief from income tax liability.

A Notice proposing a new revenue procedure, posted today on IRS.gov, revises the threshold requirements for requesting equitable relief and revises the factors used by the IRS in evaluating these requests. The factors have been revised to ensure that requests for innocent spouse relief are granted under section 6015(f) when the facts and circumstances warrant and that, when appropriate, requests are granted in the initial stage of the administrative
process. The new guidelines are available immediately and will remain available until the finalized revenue procedure is published. The IRS will immediately begin using these new guidelines when evaluating equitable relief requests.

"
The IRS is significantly changing the way we determine innocent spouse relief," said IRS Commissioner Doug Shulman. "These improvements should dramatically enhance our process to make it fairer for victimized taxpayers facing difficult situations.”

This is the second major change made to the innocent spouse program. In July, the IRS extended help to more innocent spouses by eliminating the two-year time limit that previously applied to requests seeking equitable relief.

The IRS invites public comment on the proposed revenue procedure. There are three ways to submit comments.

E-mail to: Notice.Comments@irscounsel.treas.gov. Include “Notice 2012-8” in the subject line.
Mail to: Internal Revenue Service, CC:PA:LPD:PR (Notice 2012-8), Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
Hand deliver to: CC:PA:LPD:PR (Notice 2012-8), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue NW, Washington, DC, between 8 a.m. and 4 p.m., Monday through Friday.

The deadline is Feb. 21, 2012.

IR-2012-3

IRS EXTENDS TAX-FILING DEADLINE TO APRIL 17

2012-01-05T06:27:00.001-08:00

The Internal Revenue Service opened the 2012 tax season on Wednesday by extending the tax-filing deadline until April 17.

Taxpayers will have until Tuesday, April 17 to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays affect tax deadlines in the same way that federal holidays do, giving all taxpayers two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2011 tax returns. The IRS will begin accepting e-file and Free File returns on Jan. 17, 2012.

The IRS also announced a number of improvements to help make this tax season easier for taxpayers. This includes new navigation features and helpful information on IRS.gov and a new pilot program to allow taxpayers to use interactive video to get help with tax issues.

The IRS has updated the front page of the IRS Web site to make it easier for taxpayers to get key forms, information and file tax returns. The front page also has links to taxpayer-friendly videos on the IRS YouTube channel. More improvements are planned for IRS.gov in the months ahead.

“At the IRS, we’re working hard to make the process of filing your taxes as quick and easy as possible,” IRS Commissioner Doug Shulman said in a statement. “Providing quality service is one of our top priorities. It not only reduces the burden on taxpayers, but also helps in filing an accurate return right from the start.”

Tax Strategies for a Mobile Office

2012-01-03T05:48:00.000-08:00

If Starbucks is your headquarters and you spend much or most of your time out and about, you may be part of a growing group of business owners who work on a mobile basis. A laptop, tablet, and Smartphone enable you to set up an office just about anywhere. Certainly, not having to pay office rent cuts your overhead substantially. Being mobile also gives you more flexibility in scheduling and running your business. But you still have costs for working on a mobile basis. Here are the tax rules you need to know.

Home office deduction

Even if you don’t spend all your time working from home, you may still qualify to treat a portion of your residence as a home office. This entitles you to deduct costs related to the home office, including rent (if you are a tenant), real estate taxes, mortgage interest, and depreciation (if you own your home), utilities, insurance, etc.

To claim this deduction, your home office must be your “principal place of business.” Usually, this means the place where you earn your money. However, the tax law lets you treat your home office as your principal place of business if you use it to do substantial administrative activities and you have no other fixed location. Thus, if you use your home office to schedule appointments, keep your books, order supplies, do research, and do other business activities, the home office can qualify as your principal place of business.

Caution: The space you call your home office must be used regularly and exclusively for business. Your kitchen won’t work as an office because you eat there.

Travel costs

Once you establish that your home office is your principal place of business, then any travel to and from the office for business purposes—to see a customer, prospect, or vendor, or go to an office supply company, the post office, or the bank—becomes a deductible business expense. If you use your personal car, truck, or van for business travel, you can write off the business portion of vehicle usage in one of two ways:

Deduct your actual costs;
Deduct business mileage based on an IRS-set rate. For 2011, the rate is 51¢ per mile for the first half of the year and 55.5¢ per mile for the second half of the year.

Either way, you can also deduct your parking and tolls. However, to claim any deduction you must keep a good record of your business driving. For each trip, note the mileage (odometer reading), the date, destination, and purpose of the trip.

Technology costs

Usually, you have to depreciate the cost of any item that is expected to last for more than one year. However, two tax rules in 2011—the Section 179 deduction (first-year expensing) and 100% bonus depreciation—effectively allow you to write off the cost of a technology item purchased this year.

Laptops and tablets. The cost can be written off in the year you buy the item and place it in service (i.e., start to use it for business).

Smartphones. Monthly service fees are fully deductible. As long as you use the phone primarily for business, then any personal use can be ignored for deduction purposes.

Apps. While many apps are free, you may want to buy certain apps to help you work on a mobile basis. For example, you may need an app to process credit card payments on the fly, or other apps that increase your business productivity.

Final word

Work with us and will make sure you’re getting all the deductions you’re entitled to. Remember, while you’re pounding away at your laptop at Starbucks, you can’t deduct your latte!

Ring in the New Year with Financial Resolutions

2012-01-02T06:34:00.000-08:00

With the New Year comes the opportunity to improve your financial well-being. Here are four financial resolutions to help get you started:

Establish a budget based on what you spent last year, taking rising gas, heating and food prices into account.
Cut back on debt by paying off a credit balance, forgoing unnecessary purchases or adding $50 a month to your mortgage payment.
Prioritize major purchases you want to make and figure out how to pay for them out of your current income.
Meet with a legal professional to review your will or estate plan to ensure it reflects your current life situation.

For help achieving your 2012 financial strategy, please contact our office.

Happy New Year 2012!

2012-01-01T07:24:00.000-08:00

Happy New Year!!

From all of us here at NFS, Here's to a Happy & Prosperous 2012!!

Ensure Your Family's Security with an Estate Plan

2011-12-30T08:51:00.000-08:00

No matter what your net worth, you should have an estate plan in place. Such a plan ensures that your family is cared for and your assets maximized upon your death. An estate plan consists of your will, health care documents, powers of attorney, life insurance coverage, and post-mortem letters.

For those of you with an estate plan already, good for you! But we have a piece of additional advice: make it a priority to review the plan every two years to see whether it needs updating.

Here are the life events that necessitate an update to your plan:

Divorce
Marriage or remarriage
Birth/adoption of child
Death of spouse or child
Sale of a residence or purchase of new residence
Retirement
Enactment of new tax laws

When updating your estate plan you may need to do the following:

Name a different executor
Revise your will, especially if your assets have increased significantly
Reassess your life insurance needs
Add or change a power of attorney
Change legal documents to comport with state laws if you move to a different state
Change wills or trust instruments to account for changes in beneficiaries
Change your post-mortem letter to reflect new assets, changes in executors, or other changes

Due to recent changes in estate tax laws, many estate plans may need to be revised. Give us a call to review your current situation.

5 Things to Do Now For 2012 Payroll

2011-12-29T06:13:00.000-08:00

While 2011 is not yet over, it’s not too early to starting planning ahead for 2012. If your business has employees, here are some things to help you get ready for next year.

1. Decide on wage increases

If you can afford to give raises, you probably want to keep up with what your competitors may be offering. According to one survey, most companies are giving raises of 3%. Raises are running higher for technology jobs.

2. Set retirement plans in motion

To enable employees to make salary elective deferrals to 401(k) and other similar plans throughout the year, be sure to implement the plan now and let employees set their deferrals for 2012. The contribution limit for 2012 is $17,000 ($22,500 for employees who will be more than 50 years old by the end of 2012).

3. Plan for fringe benefits

What types of benefits does your company provide to employees, besides retirement plan savings? Here are some things that could influence your decision:

Health coverage. If you pay more than half of your employees’ premiums, you may be eligible for a federal tax credit. The credit is restricted to small employers. The credit is not new, but the Treasury Inspector General for Tax Administration says many small employers continue to be unaware of its availability.
Transportation fringe benefits. If you give free parking or pay for monthly transit passes for your staff, the numbers change in 2012. The limit on the value of monthly free parking is $240 (up from $230 in 2011). The limit on monthly transit passes is $125 (down from $230 in 2011). Bicycling assistance stays at $20 per month.

4. Budget for payroll tax increases

Do you have many employees making over $100,000 a year? It may cost you more for employment taxes in 2012. The wage base for the Social Security portion of FICA increases to $110,100 (up from $106,800 in 2011). This means an increase of about $200 per employee whose earnings are at the new wage base. All earnings, without limit, continue to be subject to the Medicare portion of FICA.

If you do in-house payroll, now is the time to adjust your systems for 2012.

Changes:

Adjust withholding to account for the new amounts needed to be withheld from employee wages.
Change the withholding rate. In 2011, the employee share of Social Security portion of FICA is 4.2%; in 2012, it is set to rise to the level of 6.2% that had applied before 2011. Congress is currently debating whether to retain the lower rate for another year, so keep watch for any development.

Note: If you are self-employed, you’ll pay self-employment tax on the higher wage base. As long as your net earnings from self-employment in 2012 are at least $110,100, you’ll pay about $400 more than in 2011; half the payments are deductible.

5. Plan for new income tax withholding

As an employer, you are required to withhold federal income taxes. You may also be required to withhold state income taxes. Again, if you handle payroll in-house, look for new federal withholding tables in IRS Publication 15, Circular E (the 2012 tables are not yet out, but should be available shortly using the same link). Also check with your state; Maryland and Oklahoma have already announced that their withholding tables will change for 2012.

Final thoughts

Factor in any pay raises, new fringe benefit costs, and increased employment taxes into your 2012 budget. If you need assistance with your payroll processing, we offer an affordable full service payroll package. Contact us for details.

Goals & Charitable Giving

2011-12-28T09:44:00.000-08:00

Goals & Charitable Giving
http://archive.constantcontact.com/fs088/1102707121899/archive/1108967566949.html

IRS Promotes Saver's Credit

2011-12-27T08:12:00.000-08:00

WASHINGTON, D.C. - The Internal Revenue Service is encouraging more taxpayers to take advantage of the "saver's credit."

The credit enable low- and moderate-income workers to begin to save for their retirement while earning a special tax credit in 2011 and the years ahead, the IRS noted.

The saver’s credit helps offset part of the first $2,000 that workers voluntarily contribute to individual retirement arrangements, 401(k) plans and similar workplace retirement programs. Also known as the retirement savings contributions credit, the saver’s credit is available in addition to any other tax savings that apply.

Eligible workers still have time to make qualifying retirement contributions and get the saver’s credit on their 2011 tax return, according to the IRS. Taxpayers have until April 17, 2012, to set up a new individual retirement arrangement or add money to an existing IRA and still get credit for 2011. However, elective deferrals must be made by the end of the year to a 401(k) plan or similar workplace program, such as a 403(b) plan for employees of public schools and certain tax-exempt organizations, a governmental 457 plan for state or local government employees, and the Thrift Savings Plan for federal employees. Employees who are unable to set aside money for this year may want to schedule their 2012 contributions soon so their employer can begin withholding them in January.

The saver’s credit can be claimed by:

• Married couples filing jointly with incomes up to $56,500 in 2011 or $57,500 in 2012;
• Heads of households with incomes up to $42,375 in 2011 or $43,125 in 2012; and
• Married individuals filing separately and singles with incomes up to $28,250 in 2011 or $28,750 in 2012.

Like other tax credits, the saver’s credit can increase a taxpayer’s refund or reduce the tax owed. Though the maximum saver’s credit is $1,000, $2,000 for married couples, the IRS cautioned that it is often much less and, due in part to the impact of other deductions and credits, may, in fact, be zero for some taxpayers.

A taxpayer’s credit amount is based on the taxpayer’s filing status, adjusted gross income, tax liability and amount contributed to qualifying retirement programs. Form 8880 is filed to claim the saver’s credit. The form’s instructions provide the details on figuring the credit correctly.
In tax year 2009, the most recent year for which complete figures are available, saver’s credits totaling just over $1 billion were claimed on just over 6.25 million individual income tax returns. The saver’s credits claimed on these returns averaged $202 for joint filers, $159 for heads of household, and $121 for single filers.

The saver’s credit supplements other tax benefits available to people who set money aside for retirement. For example, most workers may deduct their contributions to a traditional IRA. Though Roth IRA contributions are not deductible, qualifying withdrawals, usually after retirement, are tax-free. Normally, contributions to 401(k) and similar workplace plans are not taxed until withdrawn.

Other special rules that apply to the saver’s credit include the following:

• Eligible taxpayers must be at least 18 years of age.
• Anyone claimed as a dependent on someone else’s return cannot take the credit.
• A student cannot take the credit. A person enrolled as a full-time student during any part of 5 calendar months during the year is considered a student.
• Certain retirement plan distributions reduce the contribution amount used to figure the credit.

For 2011, this rule applies to distributions received after 2008 and before the due date, including extensions, of the 2011 return. Form 8880 and its instructions have details on making this computation.

The saver’s credit began in 2002 as a temporary provision. However, it was made a permanent part of the Tax Code in legislation enacted in 2006. To help preserve the value of the credit, income limits are now adjusted annually to keep pace with inflation.

By Michael Cohn, Accounting Today

Payroll Tax Cut Temporarily Extended into 2012

2011-12-23T12:16:00.000-08:00

WASHINGTON — Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011. The Temporary Payroll Tax Cut Continuation Act of 2011 temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2 percent to 4.2 percent of wages paid through Feb. 29, 2012. This reduced Social Security withholding will have no effect on employees’ future Social Security benefits.

Employers should implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. For any Social Security tax over-withheld
during January, employers should make an offsetting adjustment in workers’ pay as soon as possible but not later than March 31, 2012.

Employers and payroll companies will handle the withholding changes, so workers should not need to take any additional action.

Under the terms negotiated by Congress, the law also includes a new “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision.

The IRS will issue additional guidance as needed to implement the provisions of this new two-month extension, including revised employment tax forms and instructions and information for employees who may be subject to the new “recapture” provision. For most employers, the quarterly employment tax return for the quarter ending March 31, 2012 is due April 30, 2012.

IRS Issue Number: IR-2011-124

Money-Saving Year-End Tax Tips for Small Business

2011-12-22T06:04:00.000-08:00

Although tax season is still a few weeks away, now is the time to take advantage of a basket of tax opportunities that can help your small business reduce its tax liability and save money come April 2012.

Read on for seven tips that can help you maximize your deductions and claim the credits you deserve.

Spend Some Money Before Deduction Limits are Cut – This is definitely the year to take advantage of the Section 179 deduction, which allows businesses to deduct expenses for a variety of capital equipment purchases including computers, furniture, certain business software, vehicles, manufacturing equipment, and more. Thanks to both the 2010 Tax Relief Act and the Small Business Jobs Act, deduction limits under Section 179 have increased to $500,000 as long as you spend less than $2 million in new purchases.

This means that if your small business makes any purchase before the end of the year, you may be able to deduct most of your outlays for capital equipment. Even if you don’t think you need to make new purchases, review your inventory and equipment and use this time to replace obsolete or aging assets.

If possible, take advantage of this temporary opportunity before the end of the year. Next year, the deductible limit drops to $139,000 on purchases only up to $560,000, unless there is an extension from Congress. Be sure to talk to your tax advisor or accountant for more specifics on qualifying purchases and read more about the ins and outs of business expenses and tax deductions from SBA.

Hire a Returning or Disabled Veteran – In November, the President signed into law specific tax credits for businesses that hire unemployed veterans. The Returning Heroes Tax Credit provides businesses that hire unemployed veterans with a maximum credit of $5,600 per veteran, and the Wounded Warriors Tax Credit offers businesses that hire veterans with service-connected disabilities with a maximum credit of $9,600 per veteran. Read more in this White House fact sheet: Returning Heroes and Wounded Warrior Tax Credits

Defer your Income – If you think you will be in the same or lower tax bracket next year, deferring income might make sense for you (more income next year could push you into a higher tax bracket and a bigger tax bill).Billing late in December will defer your taxable income for 2011 (since it’s unlikely you’ll get paid until 2012.) You can also defer income by taking capital gains in 2012 instead of in 2011.

While you can’t defer income or wages for your employees, you might consider delaying the payment of bonuses until the new year. Note that if you operate on an accrual accounting basis, you can claim a deduction for the bonuses this year even though the bonuses aren’t paid until next year. However, the bonuses must be paid within 2.5 months of year-end.

Take Advantage of the R&D Tax Credit (It’s Not Just for High Growth Startups) – Another tax saving that’s up for expiration unless Congress extends it in 2012 are certain credits for research and development. This one doesn’t apply only to high tech or bio tech, but extends to certain companies that employ engineers, outsource product testing, or are seeking to diversify a product line. This article from Bloomberg Businessweek explains more about how small businesses can benefit from and claim the credits. Again, talk to your tax advisor to see if you qualify.

Set Up a Retirement Plan or Fully Fund One Before Year-End – If you are self-employed, now is the time to set up a retirement plan or add pre-tax money to your existing plan to reduce this year’s income. If you still can, max out your pre-tax contributions to your traditional IRA, 401k, or 403b, and get a tax deduction to lower your taxable income. This year, sole proprietors can put $16,500 (pre-tax) into a solo 401(k), ($22,000 if you are 50 or over). Check with your plan administrator for limits and deadlines for different types of plans.

Contribute to Charity– With the holiday season upon us, now is the time to consider making a business charitable contribution. You can donate money and/or usable items such as clothing, toys, and other goods, and claim a deduction for the fair market value. Be sure to get proper documentation or a receipt for your records.

Keep your Records Straight – Keeping your books in order throughout the year is critical. Use the time now to make sure everything is up-to-date and accurate so that you maximize your deductions and save your accountant time and billable hours when tax season rolls around. Read these tips from the SBA about Managing Your Small Business Tax Obligations.

By Caron Beesley, SBA.gov

Consider the Odds of a Business Owner Becoming Disabled

2011-12-21T13:36:00.000-08:00

Consider the Odds of a Business Owner Becoming Disabled
http://archive.constantcontact.com/fs088/1102707121899/archive/1108967516471.html

Must I take my required minimum distribution as cash?

2011-12-20T13:45:00.000-08:00

Q: Is it mandatory that my required minimum distribution (RMD) be taken as cash or can a specific stock the value of my RMD be moved from the IRA account to a regular taxable account? How about a specific stock used as an RMD to a Roth conversion account? Would this be taxed as a conversion and an RMD?

A: An RMD can be satisfied by distributing an asset in-kind or in cash. If you are distributing an asset to satisfy an RMD, it will be based on the fair market value of that asset upon distribution. You will have to check with your IRA custodian to determine if they will allow an in-kind distribution to satisfy an RMD.

An RMD in cash or in-kind cannot be rolled over to a Roth IRA. You can, however, use the cash to make a contribution to a Roth IRA - if you are eligible to make a contribution.

Are You Looking For That Last Minute Gift Idea?

2011-12-19T07:36:00.000-08:00

Seasons Greetings!

Are You Looking For That Last Minute Gift Idea?

Look no further...how about giving the gift of INCOME TAX PREPARATION this holiday season? Our Gift Certificates can be given in any amount you want. It is totally up to you!

Call Jeff today at 800-560-4637 extension 14 to get your Gift Certificate for Tax Prep today. We accept all major credit cards, checks, money orders and cash. The Gift Certificate can be picked up in person, mailed or even emailed directly to the recipient! You decide.

From all of us here at NFS, THANKS and HAPPY HOLIDAYS!!

Looking Ahead…Federal Estate and Gift Taxation

2011-12-19T07:33:00.002-08:00

Looking Ahead…Federal Estate and Gift Taxation

http://archive.constantcontact.com/fs088/1102707121899/archive/1108967516043.html

Individual Income Tax Reductions

2011-12-19T07:33:00.000-08:00

Individual Income Tax Reductions
http://archive.constantcontact.com/fs088/1102707121899/archive/1108967461450.html

IRS Announces 2012 Standard Mileage Rates

2011-12-15T10:22:00.000-08:00

WASHINGTON — The Internal Revenue Service today issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

55.5 cents per mile for business miles driven
23 cents per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

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

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

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the

Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical or charitable expense are in Rev. Proc. 2010-51.

Notice 2012-01 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

IRS Offers Tips for Year-End Giving

2011-12-15T10:18:00.001-08:00

WASHINGTON — Individuals and businesses makingcontributions to charity should keep in mind several important tax lawprovisions that have taken effect in recent years. Some of these changesinclude the following:

Special Charitable Contributions for Certain IRAOwners

This provision, currently scheduled to expire at the end of 2011,offers older owners of individual retirement accounts (IRAs) a different way togive to charity. An IRA owner, age 70½ or over, can directly transfer tax-freeup to $100,000 per year to an eligible charity. This option, created in 2006,is available for distributions from IRAs, regardless of whether the ownersitemize their deductions. Distributions from employer-sponsored retirementplans, including SIMPLE IRAs and simplified employee pension (SEP) plans, arenot eligible.

To qualify, the funds must be contributeddirectly by the IRA trustee to the eligible charity. Amounts so transferred arenot taxable and no deduction is available for the transfer.

Not all charities are eligible. For example,donor-advised funds and supporting organizations are not eligible recipients.

Amounts transferred to a charity from an IRA arecounted in determining whether the owner has met the IRA’s required minimumdistribution. Where individuals have made nondeductible contributions to theirtraditional IRAs, a special rule treats transferred amounts as coming firstfrom taxable funds, instead of proportionately from taxable and nontaxablefunds, as would be the case with regular distributions. See Publication590, Individual Retirement Arrangements (IRAs), for more informationon qualifiedcharitable distributions.

Rules for Clothing and Household Items

To be deductible, clothing and household itemsdonated to charity generally must be in good used condition or better. Aclothing or household item for which a taxpayer claims a deduction of over $500does not have to meet this standard if the taxpayer includes a qualifiedappraisal of the item with the return. Household items include furniture,furnishings, electronics, appliances and linens.

Guidelines for Monetary Donations

To deduct any charitable donation of money,regardless of amount, a taxpayer must have a bank record or a writtencommunication from the charity showing the name of the charity and the date andamount of the contribution. Bank records include canceled checks, bank orcredit union statements, and credit card statements. Bank or credit unionstatements should show the name of the charity, the date, and the amount paid.Credit card statements should show the name of the charity, the date, and thetransaction posting date.

Donations of money include those made in cash orby check, electronic funds transfer, credit card and payroll deduction. Forpayroll deductions, the taxpayer should retain a pay stub, a Form W-2 wagestatement or other document furnished by the employer showing the total amountwithheld for charity, along with the pledge card showing the name of thecharity.

These requirements for the deduction of monetarydonations do not change the long-standing requirement that a taxpayer obtain anacknowledgment from a charity for each deductible donation (either money orproperty) of $250 or more. However, one statement containing all of therequired information may meet both requirements.

Reminders

To help taxpayers plan their holiday-season andyear-end giving, the IRS offers the following additional reminders:

· Contributions are deductible in the year made. Thus, donationscharged to a credit card before the end of 2011 count for 2011. This is trueeven if the credit card bill isn’t paid until 2012. Also, checks count for 2011as long as they are mailed in 2011.

· Check that the organization is qualified. Only donations toqualified organizations are tax-deductible. IRS Publication 78, searchable andavailable online, lists most organizations that are qualified to receivedeductible contributions. It can be found at IRS.gov under Search forCharities. In addition, churches, synagogues, temples, mosques and governmentagencies are eligible to receive deductible donations, even if they are notlisted in Publication 78.

· For individuals, only taxpayers who itemize their deductions onForm 1040 Schedule A canclaim deductions for charitable contributions. This deduction is not availableto individuals who choose the standard deduction, including anyone who files ashort form (Form 1040A or1040EZ).A taxpayer will have a tax savings only if the total itemized deductions(mortgage interest, charitable contributions, state and local taxes, etc.)exceed the standard deduction. Use the 2011 Form 1040 Schedule A to determinewhether itemizing is better than claiming the standard deduction.

· For all donations of property, including clothing and householditems, get from the charity, if possible, a receipt that includes the name ofthe charity, date of the contribution, and a reasonably-detailed description ofthe donated property. If a donation is left at a charity’s unattended dropsite, keep a written record of the donation that includes this information, aswell as the fair market value of the property at the time of the donation andthe method used to determine that value. Additional rules apply for acontribution of $250 or more.

· The deduction for a motor vehicle, boat or airplane donated tocharity is usually limited to the gross proceeds from its sale. This ruleapplies if the claimed value is more than $500. Form 1098-C,or a similar statement, must be provided to the donor by the organization andattached to the donor’s tax return.

· If the amount of a taxpayer’s deduction for all noncashcontributions is over $500, a properly-completed Form 8283 mustbe submitted with the tax return.

· And, as always it’s important to keep good records and receipts.

IRS.gov has Additional information on charitablegiving including:

· Charities & Non-Profits

· Publication526, Charitable Contributions.

· On-line mini-course, Can I Deduct My Charitable Contributions?

IRS Tip IR-2011-118

What Can Be Given to a Charity?

2011-11-30T10:05:00.001-08:00

What Can Be Given to a Charity?
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Taxpayers Wrongly Deducted $700M for Investment Theft Losses

2011-11-28T06:01:00.001-08:00

WASHINGTON, D.C. - More than $697 million a year in deductions for investment theft losses may have been erroneously claimed by taxpayers, according to a new government report, resulting in a revenue loss of over $41 million to the Treasury.

The report, by the Treasury Inspector General for Tax Administration, reviewed a sampling of tax returns filed for tax year 2008. The Internal Revenue Service estimated that more than 19,200 taxpayers filed returns for tax year 2008 claiming a total of more than $8 billion in property income casualty and theft loss deductions.

TIGTA conducted its review to assess the IRS’s efforts at ensuring the validity of the investment theft loss deductions claimed by taxpayers. The number of investment theft loss victims as a result of Ponzi schemes increased significantly in tax years 2008 and 2009 in the aftermath of such notorious cases as those of Bernard Madoff, Allen Stanford and others.

With the potentially large number of victims filing tax returns claiming these losses, IRS officials issued guidance to minimize both the administrative burden on the agency and the burden on the victims of Ponzi schemes.

Based on a review of a statistically valid sample of 140 electronically filed returns for tax year 2008 on which taxpayers reported an investment theft loss deduction, TIGTA estimated that 1,788 out of 2,177 taxpayers, or 82 percent, may have erroneously claimed deductions totaling more than $697 million. The potential revenue loss estimate of $41 million was conservative as it only represented electronically filed tax returns for one year, TIGTA noted.

“The IRS did a good job of addressing the tax implications of Ponzi scheme losses and providing guidance to affected taxpayers,” said TIGTA Inspector General J. Russell George in a statement. “However, our review identified that some taxpayers may be erroneously claiming investment theft loss deductions. Revenue losses associated with potentially erroneous deductions could be substantial.”

TIGTA made four recommendations in its report, including revising the Form 4684 to include specific information supporting key eligibility requirements, establishing a compliance initiative project to measure noncompliance for investment theft loss claims, and analyzing processes and historical data to determine the changes needed in the IRS’s processes and forms. IRS management agreed with TIGTA’s recommendations and said they plan to take the appropriate corrective actions.

The IRS’s response indicates that the erroneous investment theft loss claims were not simply mistakes either. “We have investigated promoters of abusive investment theft loss schemes and the taxpayers who participated in such schemes,” wrote Faris R. Fink, commissioner of the IRS’s Small Business/Self-Employed Division. “To maximize these compliance efforts, we have worked closely with other impacted IRS business units and our internal counsel.”

BY MICHAEL COHN
ACCOUNTING TODAY

Tax Brackets' Impact on Funding Business Insurance

2011-11-23T09:07:00.001-08:00

Tax Brackets' Impact on Funding Business Insurance
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How Much Do You Know About Estate Planning?

2011-11-16T09:46:00.001-08:00

How Much Do You Know About Estate Planning?
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2011-11-11T06:18:00.001-08:00

Happy Veterans Day
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2011-11-10T18:25:00.001-08:00

Capital Gains and Dividend Taxation
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Most Retirees Will Not See Full COLA in 2012 Social Security Checks

2011-11-01T08:42:00.000-07:00

The Bureau of Labor Statistics has unveiled a 3.6% cost of living adjustment for Social Security recipients, but most retirees will not see the full benefit increase in 2012.

The Bureau of Labor Statistics, Washington, D.C.,says this is due to the expected increase in Medicare Part B premiums, which are deducted from recipients’ Social Security payments. This will affect the approximately 75% of Social Security recipients who were exempted from Part B premium increases in 2010 and 2011 when there was no COLA.

“It is evident that Americans can no longer rely solely on Social Security and pensions to provide guaranteed income through retirement,” said Cathy Weatherford, chief executive officer of the Insured Retirement Institute, Washington, commenting on the bureau’s announcement. “It is vitally important for all Americans to create holistic retirement plans that will truly guarantee retirement income.

“As an historic number of Americans approach retirement, we are seeing growing uncertainty in sources of retirement income that have traditionally been considered a ‘guarantee,’ such as Social Security and pensions,” she added. “This has left many boomers concerned about retirement.”

-Warren S. Hersch, LifeHealthPro.com

Six Ways to Manage Cash Flow as a Seasonal Business Owner

2011-10-24T12:29:00.000-07:00

Do you operate a seasonal business? If your revenue peaks and declines depending on the time of year, or you only operate your business during a certain season—then you can be considered a seasonal a business owner.

If this is you, then you know that monitoring and managing your cash flow and revenues through these fluctuations is essential. Below are six ways you can better plan and manage for the ebb and flow of seasonal business cash flow.

Make a Budget that Includes Cash Flow Projection

Every business operates off a set budget, but if you operate a seasonal business it’s important to include a cash flow projection template as part of your financial planning process. This will help alleviate the guesswork involved in predicting your income and outgoings over the year, and inform you of the best ways to conserve cash flow throughout the year.

If you can, plan your cash flow over a year. Use historical reports from previous years to forecast your revenue, your busiest months, and your estimated sales for each month. You’ll also need to consider your fixed expenses (rent, utilities, etc.) and your variable expenses (salaries, inventory, taxes, etc.) as well as when these variable expenses will hit.

Now that you have a view of your revenues and outgoings you can develop strategies to manage cash flow throughout the year.

Steam Roll Your Invoicing

One way of expediting the flow of cash as you head into your quiet season is to modify your invoicing policies. If you can, try to secure a percentage payment upfront. This will also help you deal with slow paying customers.

Negotiate Flexible Payment Terms from Your Suppliers

Just as you want to expedite the flow of cash in, you should also consider negotiating extended payment terms from your suppliers. This is especially useful as you head into your busy season and incur most of your variable expenses (inventory, marketing, etc.). The trouble is you won’t see any immediate returns on those investments until your revenues kick in, so an extended payment plan can help ease the pain of these pre-season costs.

Find Alternative Sources of Income

Earning income from alternative sources or diversifying your products or services to include ones that will be popular during your off-season is a great way of keeping cash flowing and your business top of mind. Don’t forget to check whether you need any additional business licenses or permits to do this, SBA.gov's "Permit Me" tool can help you find the paperwork that you might need.

Consider a Short-Term Loan or Line of Credit

Government-backed small business loans are a useful option if your cash flow projections show potential tight spots in your calendar. One option to consider is the Small Business Administration (SBA) CAPLine Loans umbrella program which helps small businesses meet their short-term and cyclical working-capital needs. Part of the CAPLine program is the Seasonal Line short-term working capital loan program which provides advances against anticipated inventory and accounts receivable to help businesses with seasonal sales fluctuations.

Another option is a revolving line of credit (RLC). An RLC is a flexible method of borrowing cash for your seasonal small business needs. It is very similar to a credit card in the sense that an RLC has an established credit limit that you can borrow up to, only without a plastic card.

Use Your Downtime for Planning

Use your off-season wisely. Regroup, review, and plan ahead to ensure a profitable busy season. How did your business perform against its plans? Did your marketing campaigns pan out as well as you’d hoped? What new products and services can you introduce in the new season? What’s the competition up to? How can you position yourself against them?

About the Author

Caron Beesley is a small business owner, a writer, and marketing communications consultant. Caron works with the SBA.gov team to promote essential government resources that help entrepreneurs and small business owners start-up, grow and succeed.

2011-10-19T10:27:00.001-07:00

Qualified Retirement Plans Discriminating?
http://ping.fm/bEfGl

Can I convert part of an active SEP to a Roth IRA?

2011-10-14T13:35:00.000-07:00

Q: I have an active SEP (Simplified Employee Pension) IRA. I’ve been hearing about the positives involved with Roth IRAs and would like to take advantage of the tax-free savings as soon as possible. Can I convert part of it to a Roth IRA right now?

A: As long as the SEP agreement allows you access to the funds (and most SEPs will allow you access), you can do a conversion from the SEP account to a Roth IRA. If you will be receiving future SEP contributions in the account, make sure that you leave enough money in the account to keep it active. Enjoy the benefits of a Roth IRA and make sure you have enough outside money to pay the tax on the conversion.

IRS Wrongly Demanded Repayments of First-Time Homebuyer Tax Credit

2011-10-13T06:10:00.000-07:00

The Internal Revenue Service mistakenly sent notices to approximately 80,000 taxpayers telling them they needed to repay the First-Time Homebuyer Tax Credit.

A new report by the Treasury Inspector General for Tax Administration found that 27,728 taxpayers were notified they had a repayment obligation even though they had purchased their homes in 2009, when there was no repayment obligation. In addition, the information provided by a vendor hired by the IRS to use third-party data to identify individuals who may have disposed of their principal residences was unreliable, resulting in 53,558 individuals who incorrectly received notices to repay the Homebuyer Credit.

The First-Time Homebuyer Tax Credit was a program aimed at stimulating the housing industry. While it helped prop up the industry, especially in the wake of the mortgage crisis, the quick ramp-up and shifting requirements left the IRS issuing the tax credits to thousands of taxpayers who did not fit the qualifications, including minors. The IRS was then forced to demand repayments of the tax credits that had been issued incorrectly, as well as from homeowners who fit into the various recapture provisions if they didn’t hold onto their homes long enough.

The TIGTA report found that the IRS is having difficulty determining which taxpayers have to repay the First-Time Homebuyer Credit. The report acknowledged that the IRS accurately issued the vast majority of the notices, over 5.2 million, informing taxpayers of the need to repay the credit.

However, at the same time, the IRS did not send notices or sent incorrect notices to 61,427 households due to programming errors or incorrect information on the tax accounts. Of those 61,427 households, 12,495 individuals were notified that they did not have to repay the Homebuyer Credit, when in fact they did have a repayment obligation; 27,728 taxpayers were notified that they had a repayment obligation despite having purchased their home in 2009 (only 2008 purchases have a repayment obligation); 2,152 individuals who bought their house in 2008 were incorrectly notified that they did not have a repayment obligation unless they sold their house; 18,220 did not receive a notice reminding them of their repayment requirement; and 832 deceased individuals may have been sent an incorrect notice regarding repayment.

“The IRS processed the vast majority of Homebuyer Credit Claims accurately,” said TIGTA Inspector General J. Russell George in a statement. “However, IRS officials still need to eliminate the programming errors that resulted in thousands of taxpayers being misinformed about their repayment status.”

The Homebuyer Credit was created by Congress in 2008 to help stimulate the housing industry by encouraging people to purchase their first homes. Subsequent legislation in 2009 and 2010 revised, extended and expanded the Homebuyer Credit in an attempt to help boost a sluggish real estate market. The Homebuyer Credit was a refundable credit that could result in a tax refund when the credit exceeded the tax liability, even if no income tax was withheld or paid.

Each of the laws with Homebuyer Credit provisions contained different credit amounts, qualification requirements and repayment requirements. Individuals who received the Homebuyer Credit for a home purchased in 2008 are required to pay back the total amount received for the Homebuyer Credit over 15 years beginning in 2010. There are some exceptions. In addition, individuals who received the Homebuyer Credit in 2008, 2009 or 2010 generally must repay the entire amount they received, if, during the three-year period beginning on the purchase date and after the year for which the individual received the homebuyer credit, they dispose of the home or it ceases to be their principal residence. If the disposition is a sale, the repayment requirement is applicable to the extent there is a gain on the sale of the home.

“The scope of the FTHBC was unprecedented in that it required the development of a comprehensive and balanced strategy to administer the credit amid the many unique situations that could trigger the recapture provisions, and to provide information to affected taxpayers to assist them in complying with their tax reporting obligations,” wrote IRS Wage and Investment Division Commissioner Richard C. Byrd Jr. in response to the report.

TIGTA recommended that the IRS ensure that Homebuyer Credit repayment notices are accurately issued; correct erroneous purchase dates on tax accounts; and discontinue using third-party vendor data to identify individuals who may have disposed of their principal residents unless the reliability can be significantly improved.

The IRS agreed with two of TIGTA’s recommendations. For the remaining recommendation relating to accurately issuing notices, the IRS indicated it is replacing some of its notices with an online tool for taxpayers to obtain their Homebuyer Credit repayment status. It plans to make the Web-based tool available to taxpayers for the 2012 filing season.

Michael Cohn, Accounting Today

2011-10-12T09:39:00.001-07:00

Do I Need a Will?
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Couples Not Doing Social Security Planning

2011-10-10T13:41:00.000-07:00

A majority of married couples in their 60s lack the knowledge about how to maximize their Social Security benefits and whether or not to expect Social Security advice from a financial planner.

According to a recent survey of 532 married couples between the ages of 60 and 66 by SocialSecurityTiming.com, a company that provides retirement planning software, Social Security planning is becoming an expected service from financial planners. However, the vast majority of people are unaware of strategies that could increase their lifetime Social Security benefit by $20,000 to $40,000 or more.

Awareness of the various planning options available was more common among those wih higher incomes and net worth. People who expected financial planners to perform Social Security planning and analysis for them were more commonly those with higher incomes and net worth.

Seventy-four percent of people with household income exceeding $200,000 would expect to receive advice on Social Security benefit options from a financial planner, compared to only 48 percent of those with household incomes less than $50,000.

The survey found that 77 percent of the respondents expect to receive advice from the Social Security Administration on how to maximize their Social Security retirement benefits. However, most SSA personnel are not trained to provide more information than monthly benefit amounts at different election ages, and the SSA prohibits its representatives from dispensing advice.

Financial planners were the second most popular choice, with 56 percent of the survey respondents saying they would expect to receive Social Security advice from their financial planner.

-Michael Cohn Accounting Today

Moving Out of the Home Office — Four Tips for Growing Businesses

2011-10-06T09:44:00.000-07:00

Did you know that an astonishing 52 percent of small businesses are home-based? That’s according to the SBA’s Office of Advocacy.

Running a home-based business must have numerous advantages for many business models, and for businesses of different ages. For example, during the start-up phase it represents a low-cost and low-risk avenue for conducting business. However, a home office has its limitations. Small business owners often find that they are not cut out to work from home, or they’ve found their enterprise growing and need to hire employees, or they simply need a more professional space in which to conduct business.

But how do you make a seamless and cost-effective transition from a home-based business to a professional office space? Here are some best practices to consider as you expand beyond your home-based business environment.

Assess Your Needs and Your Budget

If you are considering a commercial property lease, make sure you have a clear sense of your budget on a per-square-foot basis. Ask yourself how many offices, cubes, or workstations you’ll need, now and in the future. If you anticipate further growth, preempt the need for multiple moves by looking for a building that has extra space you can expand into should you need it. For advice on negotiating a commercial lease, read: 6 Tips for Negotiating a Commercial Property Lease without Getting Burned.

Your budget should also include cost estimates for furniture, utilities, and IT needs. Don’t go overboard though; as you transition from home to an office, invest your resources wisely. One option is to rent office furniture and equipment, or buy government surplus equipment (a little known but very cost-effective way to equip your business.) Alternatively, you may want to introduce a hot-desking policy or shared office space. This will allow employees to literally share a “hot-desk” on a rotating basis. So if one employee is teleworking or taking flex time, another employee can use the same desk space.

Consider Serviced Offices or Suites

A great option for making the transition from a home office to a professional environment is to rent a serviced office or executive suite. Usually located in busy business districts, these premises are fully equipped and managed by a facility management firm. The rental agreements for these spaces are often more flexible than commercial leases and also give you the option of easily scaling up if you need to. Typically a serviced office broker can help you locate the right space.

Decide on a Location

Deciding on a location for you new office or retail outlet will take some research. You want your presence to be felt, but you also want to make sure you’re visible and within reach of your target customers. If you are in the retail service industry, having a store concept or design in mind is also a good idea; this will help you pitch your business to commercial leasing companies seeking the “right kind of tenant” for their property.

For more tips on choosing the right business location, read SBA’s Tips for Choosing a Business Locationand don’t forget to be aware of zoning restrictions at your new location.

Update Your Business Regulatory Paperwork

When you relocate your business to a new city, county, or state you’ll need to update several key business requirements. For example, both your business licenses and permits and your “Doing Business As” name (DBA) filing will need to be updated with your local government. Visit the Incorporating and Registering Your Business page for more information on how to re-register your business in a new location. If you move to a new state you’ll also need to understand your new city/county tax requirements, as well as notify your previous state of your move. Find links to your state revenue office here.

From Caron Beesley of SBA...

Caron Beesley has over 15 years of experience working in marketing, with a particular focus on the government sector. Caron is also a small business owner and works with the SBA.gov team to promote essential government resources for entrepreneurs and small businesses.

2011-10-06T06:37:00.001-07:00

What Is An Annuity?
http://ping.fm/nowF2

And the Winner is...

2011-10-05T11:24:00.000-07:00

As you may be aware, September was National Life Insurance Awareness Month sponsored by LIFE - A Nonprofit Organization.

Going along with this theme, Life Insurance Selling Magazine sponsored a video contest called "Life Now!" which ran for the entire month of September. since I help folks with their overall financial picture, I felt inclined to enter a video into this contest. Well, with YOUR help and support, I WON the video contest. Not only will I receive a free IPad2 for winning, I will also get a piece in one of the upcoming issues of the magazine.

So, I just wanted to say THANKS!!!!!!!!

2011-09-28T12:41:00.001-07:00

Evaluate your Long Term Care?
http://ping.fm/XxZ1z

First Time Homebuyer Seminar

2011-09-26T10:15:00.000-07:00

First Time Homebuyer Seminar

November, 8, 2011 6:00 pm to 8:30 pm

Make a well-informed decision when you buy your first home.

This seminar provides you the opportunity to get answers to your questions from professionals involved in the home buying process.

HarborOne Mortgage Originator, Donald Cross
Buyers Agent & Realtor, Kathy Doherty
Real Estate Attorney Roxanne Richard
Insurance Agent, Merideth Kaeppel
Tax Advisor, Jeffrey Schweitzer

A light dinner is Served.

Please visit the HarborOneU Website to reserve your spot - space is limited.

What a story!

2011-09-21T18:20:00.000-07:00

Dorsey and Hattie Hoskins, twinsisters, lost their father when they were just toddlers. They are teens todayand they’re still OK financially because of the smart life insurance planning theirparents did. Such an amazing story! http://youtu.be/dTTVfJ7PDrY

2011-09-21T17:56:00.001-07:00

NFS Business Briefs for September
http://ping.fm/AkKvo

2011-09-15T13:26:00.001-07:00

NFS Raffle Winners at Wrentham Day 2011
http://ping.fm/OvO09

2011-09-14T11:36:00.001-07:00

Paying the Estate Tax Bill
http://ping.fm/tLxPa

Life Insurance: Why Do I Need It? What Does It Do?

2011-09-08T13:43:00.000-07:00

So, why do you need life insurance?

What often comes to mind when thinking about life insurance is that you can use it to pay final expenses. You’ve seen the commercials: Funeral expenses, burial costs and medical bills can add up to a hefty amount. The last thing you want is for your loved ones to shoulder this extra burden. Life insurance can be used to plan for these final expenses. Permanent life insuranceis available in various amounts, so you can pick a death benefit that meets your needs.

But there are other considerations to keep in mind. You can use life insurance …

As mortgage protection. Whether you live by yourself, with a spouse or significant other, you may want to buy life insurance as mortgage protection. Think about it: You don’t want the person you live with to be homeless if you die unexpectedly, do you? Term life insurance can be used to pay off an outstanding mortgage balance. Just select a term that matches the length of your mortgage payment period. Some companies even offer decreasing term insurance, which means the death benefit decreases along with your mortgage balance.

For income replacement. You and your significant other may have planned for a future based on two incomes, but what if one of you passes away unexpectedly? Life insurance can be used to replace the lost income so the survivor can maintain the same standard of living.

For college funding. Yeah, I know. You don’t have kids, so this one only applies if you do or if you have grandchildren you want to help. Have you seen the tuition rates lately? Life insurance can help fund a college education. If you die, the death benefit may be invested and potentially grow to the needed amount by the time your children or grandchildren reach college age. If you have permanent policies, the cash value may be used to help fund tuition costs. Feel better knowing that you helped prepare for their future—even if you are not there to see it.

There are also a few provisions—additional benefits, if you will—that you may not be aware of.

Probate protection. If the beneficiary of a life insurance policy is a named person and not your estate, the death benefit is free from probate costs.

Incontestability. After the policy has been in force for two years, it becomes incontestable, meaning that the policy cannot be revoked, unless it was fraudulently obtained.

Free from the claims of creditors. In many states, the cash values of the life insurance policy are free from the claims of creditors if the policy is personally owned.

So, are you starting to see the need for life insurance? You will call me right now, right? The number is 800-560-4637 x14. Don’t put it off! Remember, the younger you are when you get insurance, the lower the cost and the easier it is to get approved.

Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

2011-09-08T13:08:00.001-07:00

Visit NFS at Wrentham Day!
http://ping.fm/bfVoz

2011-09-07T13:36:00.001-07:00

What Sources of Funds May Be Available to Help You Financially Survive a Critical Illness?
http://ping.fm/WHZ4k

2011-09-07T12:39:00.001-07:00

Be a part of the “larger picture.” Join hundreds of others who are posting photos of those they’ve protected with life insurance. The result will be an incredible online Insure Your Love picture mosaic. Let me know once your photo’s up so I can find it in the mosaic. A great bonus: For every photo that gets posted, $1 will go to providing tuition assistance to students who’ve lost a parent. www.facebook.com/lifehappens.org

2011-09-06T11:46:00.001-07:00

You may think you have nothing in common with Los Angeles Lakers and reality TV star Lamar Odom, but you’d be wrong. No matter how famous (or not!) you are, there’s a need to protect your family with life insurance: www.lifehappens.org/lamar-video.

Life Happens

2011-09-01T05:52:00.000-07:00

No one knows what the future holds. Hopefully, only good things are in store for you.

But realistically, bad things will happen too.

Even if you don’t consider yourself a cautious person, you take little steps every day to improve the odds that good things will happen and guard against the possibility of bad things happening.

You wear seatbelts.

You lock your doors when you leave home.

You try to eat well and exercise.

In other words, you may not be able to control the future, but you can stand up to it. You don’t have to get wet when it rains. You can carry an umbrella.

True, it’s easy to take these little steps. The bigger steps, though, can require contemplating some pretty unpleasant things.

What would happen to your family if you became ill or injured and couldn’t work? Or, worse yet, if you died? Or if your spouse died?

Standing up to the future means making sure you and your family can carry on, even in the face of a disaster. That’s where life insurance and other forms of insurance come in.

Life insurance won’t guarantee you’ll never face a tragic situation, just as wearing a seat belt won’t keep you from crashing your car. But it will provide your family with financial protection. And whatever hopes and dreams you have for your loved ones can still be realized, even if the worst were to happen.

That’s why we say LIFE Happens. It really does. No matter what the future throws at you. September is Life Insurance Awareness Month and in the coming weeks we will be presenting you with some great information on Life Insurance and how you and your loved ones can benefit from having coverage.

Please do not hesitate to contact us for more details!

2011-08-27T05:54:00.001-07:00

President Declares Emergency For Massachusetts http://ping.fm/W3lKt

President Declares Emergency For Massachusetts

2011-08-27T05:52:00.001-07:00

WASHINGTON -- The U.S. Department of Homeland Security's Federal Emergency Management Agency (FEMA) announced that federal aid has been made available to Commonwealth of Massachusetts to supplement the commonwealth and local response efforts in the area due to the emergency conditions resulting from Hurricane Irene beginning on August 26, 2011, and continuing.

2011-08-24T10:29:00.001-07:00

The Long-Term Care Insurance Solution
http://ping.fm/IcN8I

Seven Tax Tips for Recently Married Taxpayers

2011-08-22T11:47:00.000-07:00

With the summer wedding season in full swing, the Internal Revenue Service advises the soon-to-be married and the just married to review their changing tax status. If you recently got married or are planning a wedding, the last thing on your mind is taxes. However, there are some important steps you need to take to avoid stress at tax time. Here are seven tips for newlyweds.

Notify the Social Security Administration Report any name change to the Social Security Administration so your name and Social Security number will match when you file your next tax return. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.ssa.gov, by calling 800-772-1213 or at local offices.
Notify the IRS if you move If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from www.IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
Notify the U.S. Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence or refunds.
Notify your employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
Check your withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on www.irs.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will give you the information you need to complete a new Form W-4, Employee's Withholding Allowance Certificate. You can fill it out and print it online and then give the form to your employer(s) so they withhold the correct amount from your pay.
Select the right tax form Choosing the right individual income tax form can help save money. Newly married taxpayers may find that they now have enough deductions to itemize on their tax returns. Itemized deductions must be claimed on a Form 1040, not a 1040A or 1040EZ.
Choose the best filing status A person’s marital status on Dec. 31 determines whether the person is considered married for that year. Generally, the tax law allows married couples to choose to file their federal income tax return either jointly or separately in any given year. Figuring the tax both ways can determine which filing status will result in the lowest tax, but usually filing jointly is more beneficial.

For more information about changing your name, address and income tax withholding visit www.irs.gov.

IRS Summertime Tax Tip 2011-20

Credit Reports: What You Should Know

2011-08-18T13:11:00.000-07:00

How do lenders determine who is approved for a credit card, mortgage, or car loan? Why are some individuals flooded with credit card offers while others get turned down routinely?

Because creditors keep their evaluation standards secret, it is difficult to know just how to improve your credit rating. It is important, however, to understand the factors and to review your credit report periodically for any irregularities, omissions, or errors. Reviewing your credit report annually can help you protect your credit rating from fraud and ensure its accuracy.

Credit Evaluation Factors

Many factors determine your credit. Here are some of the major factors considered:

Age
Residence
"Authorized user" payment history
Checking and savings accounts
Bankruptcy
Charge-offs (Forgiven debt)
Child support
Closed accounts and inactive accounts
Jobs
Payment history
Recent loans
Collection accounts and charge-offs
Cosigning an account
Credit limits
Credit reports
Debt/income ratios
Department store accounts
Payment history/late payments
Finance company credit cards
Income/income per dependent
Mortgages
Revolving credit
Name/alias
Number of credit accounts
Fraud
Inquiries

These factors may be used, and weighted, in determining credit decisions. Credit reports contain much of this information.

Obtaining Your Credit Reports

Credit reports are records of consumers' bill-paying habits. Credit reports are also called credit records, credit files, and credit histories and are collected, stored, and sold by three credit bureaus, Experian, Equifax, and TransUnion.

Recent changes to the Fair Credit Reporting Act (FCRA) require that each of the three credit bureaus provide you with a free copy of your credit report, at your request, every 12 months.

If you have been denied credit or believe you've been denied employment or insurance because of your credit report, you can request that the credit bureau involved provide you with a free copy of your credit report - but you must request it within 60 days of receiving the notification.

Disputing Errors in Your Credit File

The Fair Credit Reporting Act (FCRA) protects consumers in the case of inaccurate or incomplete information in credit files. The FCRA requires credit bureaus to investigate and correct any errors in your file.

Tip: If you find any incorrect or incomplete information in your file, write to the credit bureau and ask them to investigate the information. Under the FCRA, they have about thirty days to contact the creditor and find out whether the information is correct. If not, it will be deleted.

Be aware that credit bureaus are not obligated to include all of your credit accounts in your report. If, for example, the credit union that holds your credit card account is not a paying subscriber of the credit bureau, the bureau is not obligated to add that reference to your file. Some may do so, however, for a small fee.

Fair Credit Reporting Act (FCRA)

This federal law was passed in 1970 to give consumers easier access to, and more information about, their credit files. The FCRA gives you the right to find out the information in your credit file, to dispute information you believe inaccurate or incomplete, and to find out who has seen your credit report in the past six months.

Understanding Your Credit Report

Credit reports contain symbols and codes that are abstract to the average consumer. Every credit bureau report also includes a key that explains each code. Some of these keys decipher the information, but others just cause more confusion.

Read your report carefully, making a note of anything you do not understand. The credit bureau is required by law to provide trained personnel to explain it to you. If accounts are identified by code number, or if there is a creditor listed on the report that you do not recognize, ask the credit bureau to supply you with the name and location of the creditor so you can ascertain if you do indeed hold an account with that creditor.

If the report includes accounts that you do not believe are yours, it is extremely important to find out why they are listed on your report. It is possible they are the accounts of a relative or someone with a name similar to yours. Less likely, but more importantly, someone may have used your credit information to apply for credit in your name. This type of fraud can cause a great deal of damage to your credit report, so investigate the unknown account as thoroughly as possible.

We recommend an annual review of your credit report. It is vital that you understand every piece of information on your credit report so that you can identify possible errors or omissions.

If you need help obtaining your credit reports or need assistance in understanding what your credit report means, give us a call.

2011-08-17T10:59:00.001-07:00

Key Employee Death Impacts Your Business...
http://ping.fm/P6lMX

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

2011-08-16T11:11:00.000-07:00

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

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

1. American Opportunity Credit This credit, originally created under the American Recovery and Reinvestment Act, has been extended for an additional two years – 2011 and 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment. The full credit is generally available to eligible taxpayers whose modified adjusted gross income is below $80,000 ($160,000 for married couples filing a joint return).

2. Lifetime Learning Credit In 2011, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student, but to claim the credit, your modified adjusted gross income must be below $60,000 ($120,000 if married filing jointly).

3. Tuition and Fees Deduction This deduction can reduce the amount of your income subject to tax by up to $4,000 for 2011 even if you do not itemize your deductions. Generally, you can claim the tuition and fees deduction for qualified higher education expenses for an eligible student if your modified adjusted gross income is below $80,000 ($160,000 if married filing jointly).

4. Student loan interest deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, if your modified adjusted gross income is less than $75,000 ($150,000 if filing a joint return), you may be able to deduct interest paid on a student loan used for higher education during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

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

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

For more information,please do not hesitate to contact me for help.

Five Tax Scams to Avoid this Summer

2011-08-11T13:12:00.000-07:00

Hiding income offshore, identity theft and return preparer fraud topped the IRS’s list of tax scams in 2011. The Internal Revenue Service issues an annual list of the top 12 tax scams, known as the “Dirty Dozen.” These scams are illegal and can lead to significant penalties and interest and possible criminal prosecution.

Here are five year-round scams every taxpayer should know about.

1. Hiding Income Offshore The IRS aggressively pursues taxpayers involved in abusive offshore transactions and the promoters who facilitate or enable these schemes. Taxpayers have tried to avoid or evade U.S. income tax by hiding income in offshore banks and brokerage accounts, or by using offshore debit cards, credit cards, wire transfers, foreign trusts, employee-leasing schemes, private annuities or life insurance plans.

In February, the IRS announced a second voluntary disclosure initiative to bring offshore money back into the U.S. tax system. The new voluntary disclosure initiative will be available through Aug. 31, 2011.

2. Phishing Scam artists use phishing to trick unsuspecting victims into revealing personal or financial information. Scams take the form of e-mails, phony websites or phone calls that offer a fictitious refund or threaten an audit or investigation to lure victims into revealing personal information. The IRS never initiates unsolicited e-mail contact with taxpayers about their tax issues. Phishers use the information to steal the victim’s identity, access their bank accounts and credit cards or apply for loans. Please forward suspicious scams to the IRS at phishing@irs.gov. You can also visit www.irs.gov, keyword phishing, for additional information.

3. Return Preparer Fraud Dishonest tax return preparers cause trouble for taxpayers by skimming a portion of the client’s refund or charging inflated fees for tax preparation. They attract new clients by promising refunds that are too good to be true. To increase confidence in the tax system, the IRS now requires all paid return preparers to register with the IRS, pass competency tests and attend continuing education. Taxpayers can report suspected return preparer fraud to the IRS on Form 3949-A, Information Referral.

4. Filing False or Misleading Forms The IRS continues to see false or fraudulent tax returns filed to obtain improper tax refunds.

Scammers often use information from family or friends to file false or fraudulent returns, so beware of requests for such data. Don’t claim deductions or credits you are not entitled to and never willingly allow others to use your information to file false returns. If you participate in such schemes, you could be liable for financial penalties or even face criminal prosecution. The IRS takes refund fraud seriously, has programs to aggressively combat it and stops the vast majority of incorrect refunds.

5. Frivolous Arguments Promoters of frivolous schemes encourage people to make unreasonable and outlandish claims to avoid paying the taxes they owe. If a scheme seems too good to be true, it probably is. The IRS has a list of frivolous legal positions that taxpayers should avoid on www.irs.gov. These arguments are false and have been thrown out of court repeatedly.

For the full list of 2011 Dirty Dozen tax scams or to find out how to report suspected tax fraud, visit www.irs.gov.

2011-08-10T09:48:00.001-07:00

The Choice is Yours - Plan Now OR Pay Later!
http://ping.fm/LAPn0

August 13th and 14th is the 2011 Massachusetts Sales Tax Holiday Weekend

2011-08-09T13:13:00.000-07:00

The following information has been provided by the Massachusetts Department of Revenue.

I. Introduction

A recently enacted statute provides for a Massachusetts “sales tax holiday weekend,” i.e., two consecutive days during which most purchases made by individuals for personal use will not be subject to Massachusetts sales or use taxes. St. 2011, c. 86 (“the Act”). The Act provides that the sales tax holiday will occur on August 13 and 14, 2011and on those days, non-business sales at retail of single items of tangible personal property costing $2,500 or less are exempt from sales and use taxes, subject to certain exclusions. The following do not qualify for the sales tax holiday exemption and remain subject to tax: all motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products and any single item whose price is in excess of $2,500. The Act charges the Commissioner of Revenue with issuing instructions or forms and rules and regulations necessary to carry out the purposes of the Act.

II. Purchases Qualifying for the Exemption

The exemption applies to sales of tangible personal property bought for personal use only. Purchases by corporations or other businesses and purchases by individuals for business use remain taxable. Purchases exempt from the sales tax under G.L. c. 64H are also exempt from use tax under G.L. c. 64I. Therefore, eligible items of tangible personal property purchased on the Massachusetts sales tax holiday from out-of-state retailers for use in Massachusetts are exempt from the Massachusetts use tax.

III. Specific Rules

The following rules are to be applied by retailers in administering the Massachusetts sales tax holiday exemption:

A. Non-Exempt Sales. All sales of motor vehicles,[1] motorboats,[2] meals,[3] telecommunications services,[4] gas,[5] steam, electricity, tobacco products[6] and of any single item whose price is in excess of $2,500, do not qualify for the sales tax holiday exemption and remain subject to tax.

B. Threshold. When the sales price of any single item is greater than $2,500, sales or use tax is due on the entire price charged for the item. The sales price is not reduced by the threshold amount. For example, if an item is sold for $3,000, the entire sales price of the item is taxable, not just the amount that exceeds $2,500.

Exception: Under G.L. c. 64H, § 6(k) there is no sales tax on any article of clothing unless the sales price exceeds $175; in that case, only the increment over $175 is subject to tax. If, on the sales tax holiday, the price of an article of clothing exceeds the threshold, the first $175 may be deducted from the amount subject to tax. The $2,500 threshold amount is not increased by $175.

Examples: A customer buys a suit on the sales tax holiday for $600. No tax is due.

A customer buys a wedding dress on the sales tax holiday for $2,550. Tax is due on $2,375 ($2,550 – $175).

C. Multiple Items on One Invoice. Where a customer is purchasing multiple items on the sales tax holiday, separate invoices do not need to be prepared. As long as each individual item is $2500 or less, there is no upper limit on the tax-free amount each customer may purchase.

Example: A customer purchases a television, a stereo receiver, and a computer. The three separate items costing $1,500, $1,200 and $2,000 can be rung up together, all tax free.

D. Bundled Transactions. When several items are offered for sale at a single price, the entire package is exempt if the sales price of the package is $2,500 or less. For example, a computer package including a CPU, keyboard, monitor, mouse, and printer with a single sales price of $3,500 would not qualify for the sales tax holiday exemption because the single sales price of the package ($3,500) is more than the sales tax holiday threshold amount of $2,500.

Items that are priced separately and are to be sold as separate articles will qualify for the sales tax holiday exemption if the price of each article is $2,500 or less. For example, a customer purchases a personal computer for $3,000, and a computer printer for $200, each of which is priced separately. The purchase of the personal computer will not qualify for the exemption because the sales price ($3,000) is in excess of the sales tax holiday threshold amount of $2,500. However, since the sales price of the computer printer ($200) is less than $2,500, the printer would be exempt from tax.

E. Coupons and Discounts. If a store coupon or discount provided by a retailer or manufacturer reduces the sales price of the property, the discounted sales price determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less. If a store coupon or discount applies to the total amount paid by a purchaser rather than to the sales price of a particular item and the purchaser has purchased both eligible property and taxable property, the seller should allocate the discount on a pro rata basis to each article sold.

Example: A furniture store customer has a coupon for 20% off her entire bill. She purchases a dining room table for $1,800, and a sofa for $3,500. The total discount available is $1,060 ($5,300 x .20), of which $360 is attributable to the table ($1,800 x .20), and $700 is attributable to the sofa ($3,500 x .20). No tax is due on the sale of the table. Tax of $140 is due on the sales price of the sofa, $2,800 ($3,500 – $700), as even its discounted price exceeds the $2,500 threshold.

F. Exchanges. Consistent with the Department’s usual practice, if a customer purchases an item of eligible property during the sales tax holiday, but later exchanges the item for an identical or similar eligible item, for the same price (“an even exchange”), no tax is due even if the exchange is made after the sales tax holiday, see LR 03-8.

G. Layaway Sales. A layaway sale is a transaction in which property is set aside for future delivery to a customer who makes a deposit, agrees to pay the balance of the purchase price over a period of time and receives the property when the last payment is made. Layaway sales do not qualify for the sales tax holiday, even if the last required payment (or payments necessary to complete the transaction) are made on August 13 and 14, 2011.

H. Special Order Items; Transfer of Possession after Sales Tax Holiday. Special order items such as furniture are eligible for the sales tax holiday so long as they are ordered and paid in full on the sales tax holiday weekend, and the cost of each item is $2,500 or less, even if delivery is made at a later date. Generally, a customer pays for an item when the seller receives cash, a credit card number, a debit authorization, a check, or a money order or the buyer and seller enter into financing arrangements with a third party, including an affiliated entity (but excluding seller financing where the seller extends credit to the customer). A prior special order purchase with a deposit paidbefore August 13, 2011 will not qualify for the holiday, even if the retail customer pays the entire remaining balance due on August 13 or 14, 2011.

I. Rain checks. When a customer receives a rain check because an item on sale was not available, property bought with the use of the rain check will qualify for the exemption regardless of when the rain check was issued if the rain check is used on the sales tax holiday weekend. Issuance of a rain check during the sales tax holiday weekend will not qualify otherwise eligible property for the sales tax holiday exemption if the property is actually purchased after the sales tax holiday.

J. Rentals. Generally, rentals for thirty days or less of tangible personal property other than motor vehicles and motorboats are eligible for the sales tax holiday, even if the rental period covers days before or after the holiday, providing payment in full is made during the sales tax holiday weekend. The sales tax holiday does not apply to rentals or leases of tangible personal property of any type if the term of the rental or lease contract is longer than thirty days.

K. Rebates. A rebate is a refund of an amount of money by the manufacturer of a product to the retail purchaser of the product. If a vendor sells tangible personal property to a customer who applies a manufacturer’s rebate to reduce the sales price at the time of the sale, the rebate is generally treated as a cash discount and is excluded from the sales price. The discounted sales price determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less.

If a vendor sells tangible personal property to a customer who will receive a rebate after the sale (e.g., by mailing a coupon to the manufacturer), the full purchase price of the property determines whether the sales price is within the sales tax holiday price threshold of $2,500 or less, and tax must be charged on the full purchase price if it is over $2,500.

If a vendor offers a customer a cash discount upon the purchase of tangible personal property and the customer also receives a rebate from the manufacturer of the property after the sale, only the cash discount given by the retailer is excluded from the sales price for purposes of the sales tax holiday exemption. The amount of the manufacturer’s rebate is not deducted from the sales price.

L. Internet Sales. If a customer orders an item of eligible property over the Internet, the item is exempt if it is ordered and paid for onAugust 13 or 14, 2011 Eastern Daylight Time. Generally, a customer pays for an item when the seller receives a credit card number, a debit authorization, a check, or a money order. The actual delivery can occur after the holiday period. For example: a customer orders a computer over the Internet with a sales price of $2,000 and charges the sale to his credit card at 1:00 p.m. (EDT) onAugust 13 or 14, 2011; the computer has a delivery date of September 20, 2011. The sale is exempt since the computer was ordered and paid for during the sales tax holiday.

M. Splitting of Items Normally Sold Together. Articles normally sold as a single unit must continue to be sold in that manner. Such articles cannot be priced separately and sold as individual items in order to obtain the sales tax holiday exemption.

N. Returns. Generally, sales tax may only be refunded to a retail customer on returns within 90 days of the sale. G.L. c. 64H, § 1. For the 90 day period following August 13 or 14, 2011, when a customer returns an item that could have qualified for the sales tax holiday exemption, the vendor may not credit or refund sales tax to the retail customer unless (1) the customer provides a receipt or invoice that shows the tax was paid or (2) the seller’s records show that tax was paid. Sellers may set their own return policies. This requirement is not intended to change or extend a seller’s return policy.

O. Erroneously Collected Taxes. Customers who were erroneously charged sales tax by a vendor for an exempt purchase should take their tax paid receipt to the vendor to obtain the refund. If the vendor has previously remitted the erroneously collected tax to the Department, the vendor may file an application for abatement of the erroneously collected tax within 3 years upon satisfactory evidence that the vendor has credited or refunded the tax to the purchaser.

IV. Responsibilities of Retailers

A. Participation. All Massachusetts businesses normally making taxable sales of tangible personal property that are open on August 13 or 14, 2011must participate in this sales tax holiday.

B. Erroneous Collection. Any sales or use tax erroneously or improperly collected by a retailer on August 13 or 14, 2011 must be remitted to the Department of Revenue.

C. Certification of Nonbusiness Use by the Purchaser. Normal business records showing the date of sale, item(s) purchased, and selling price must be kept by the retailer/ vendor. However, a separate certification from the purchaser on transactions of $1,000 or more will not be required for the 2011 Sales Tax Holiday. The requirement that purchases under the Sales Tax Holiday be for nonbusiness use is unchanged and purchasers paying for tangible personal property with business credit cards or checks must be charged tax on the items purchased.

D. Out-of-State Retailers. Out-of-state retailers registered to collect Massachusetts sales and use taxes must participate in this sales tax holiday. Such retailers should not collect sales/use tax for items ordered and paid for onAugust 13 or 14, 2011 in accordance with the rules of this technical information release. The retailers must keep records sufficient to verify the date of sale, item(s) purchased, and selling price.

E. Penalties. Retailers that back-date sales occurring after August 14, 2011 or that forward-date sales that occurred beforeAugust 13, 2011 in order to make them appear to qualify for the sales tax holiday or otherwise fail to follow the rules in the TIR in order to improperly avoid collecting and remitting sales or use tax may be subject to the tax evasion penalties of G.L. c. 62C, § 73, including a felony conviction, a fine of not more than $100,000 or $500,000 in the case of a corporation, or by imprisonment for not more than five years, or both, and may also be required to pay the costs of prosecution.

Ten Tax Tips for Individuals Selling Their Home

2011-08-08T07:45:00.000-07:00

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

1. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale.

2. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases).

3. You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home.

4. If you can exclude all of the gain, you do not need to report the sale on your tax return.

5. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses.

6. You cannot deduct a loss from the sale of your main home.

7. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude.

8. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time.

9. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return.

10. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change.

For more information about selling your home, please do not hesitate to contact me with your questions. For some helpful moving info, click here for a complimentary NFS Moving Day Guide.

S&P downgrades US credit rating from AAA to AA-plus, first debt downgrade in US history

2011-08-05T18:26:00.001-07:00

WASHINGTON -- Credit rating agency Standard & Poor's on Friday downgraded the United States' credit rating first time in the history of the ratings.

The credit rating agency said that it is cutting the country's top AAA rating by one notch to AA-plus. The credit agency said that it is making the move because the deficit reduction plan passed by Congress on Tuesday did not go far enough to stabilize the country's debt situation.

A source familiar with the discussions said that the Obama administration feels the S&P's analysis contained "deep and fundamental flaws."

S&P said that in addition to the downgrade, it is issuing a negative outlook, meaning that there was a chance it will lower the rating further within the next two years. It said such a downgrade to AA would occur if the agency sees less reductions in spending than Congress and the administration have agreed to make, higher interest rates or new fiscal pressures during this period.

S&P first put the government on notice in April that a downgrade was possible unless Congress and the administration came up with a credible long-term deficit reduction plan and avoided a default on the country's debt.

After months of wrangling and negotiations with the administration, Congress passed this week a debt reduction package at the 11th-hour that averted a possible default.

In its statement, S&P said that it had changed its view "of the difficulties of bridging the gulf between the political parties" over a credible deficit reduction plan.

S&P said it was now "pessimistic about the capacity of Congress and the administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government's debt dynamics anytime soon."

House Approves Debt Ceiling Raise

2011-08-02T06:15:00.000-07:00

WASHINGTON, D.C. - The House of Representatives voted to raise the debt ceiling, only a day before the August 2 deadline for averting a default on the federal government’s debt obligations.

The vote Monday evening saw the measure approved by a 269-161 margin, with 95 Democrats voting for the bill and 95 voting against it. Sixty-six Republicans also rejected the bill, including many Tea Party freshmen, but 174 voted in favor. Rep. Gabrielle Giffords, D-Ariz., returned to the Capitol for the first time since she was shot in the head in January to cast a vote in favor of the bill and was greeted effusively by her fellow lawmakers. The Senate is expected to vote on the bill at noon on Tuesday.

The bill would give the Treasury Department the ability to borrow an additional $400 billion immediately, allowing it to avoid a default on interest payments on Treasury bonds. Payments will also go out on time for Social Security and veterans’ benefits, Medicare, unemployment insurance and other expenses.

The bill would raise the $14.3 trillion debt ceiling in several increments, getting it past the November elections. The initial infusion of $400 billion will be followed by another $500 billion in the fall, unless two-thirds of both chambers reject it. A “super committee” made up of lawmakers from both parties will meet to approve up to $1.5 billion more in borrowing authority, balanced by spending cuts and possible tax reforms. However,

Republicans are not expected to go along with any tax increases that aren’t “revenue neutral.” The committee’s recommendations will then go to Congress for an up or down vote in November. If the recommendations are rejected, the bill would set up a trigger to force deep cuts in spending, including defense.

“Tonight’s vote marks a victory for our economy and the American people,” said House Ways and Means Committee Chairman Dave Camp, R-Mich., in a statement. “The legislation not only cuts spending and reforms how Washington manages its budget, it also prevents default on our financial obligations. Importantly, the package does not increase taxes, which is critical to making sure job creators have the resources they need to invest and hire more workers. Finally, the legislation establishes the clearest path yet to a balanced budget amendment—something I have long supported and that is long overdue.”

However, many Democrats and Republicans remained unhappy with the package, including House Minority Leader Nancy Pelosi, D-Calif., who nevertheless voted for the package.

Rep. Emanuel Cleaver, D-Mo., the chairman of the Congressional Black Caucus, called it a “sugar-coated Satan sandwich” on MSNBC because it would deeply cut spending on social programs for the poor without any tax increases on the wealthy or corporations. Pelosi agreed, telling ABC News that it was a “Satan sandwich with Satan fries on the side.” However, she voted for the package to avoid a first-ever default by the U.S. government and the broader impact it would have on the economy.

On the right, Tea Party members were also unhappy with raising the debt ceiling at all. “Throughout this process, the President has failed to lead and failed to provide a plan,” said Rep. Michele Bachmann, R-Minn., the leader of the Tea Party Caucus, according to The Guardian. “The ‘deal’ he announced spends too much and doesn’t cut enough. Someone has to say no. I will.”

2011-08-01T13:51:00.001-07:00

Seven Tax Tips for Job Seekers
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Seven Tax Tips for Job Seekers

2011-08-01T13:50:00.000-07:00

Many taxpayers spend time during the summer months updating their résumé and attending career fairs. The Internal Revenue Service reminds job seekers that you may be able to deduct some of the expenses on your tax return.

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

To qualify for a deduction, the 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 receive 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 an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. 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 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 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 on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.

For more information about job search expenses, please do not hesitate to contact me.

2011-07-30T19:32:00.001-07:00

Need for Long Term Care?
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2011-07-25T09:02:00.001-07:00

How to Fund a Business Buy-Sell Plan?
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IRS & Per Diem Rates

2011-07-21T09:09:00.000-07:00

Every year IRS releases a Revenue Procedure outlining the rules for paying Meal & Lodging Per Diems or claiming a deduction for these. The Revenue Procedure also provides us with the special Meal Per Diem allowed for the Transportation Industry. Part of the Revenue Procedure also gives us a High/Low option that can be used by employers as an alternative to using the tables based on actual cities.

During the summer of 2010 IRS asked for comments from taxpayers and tax practitioners regarding the High/Low option. After receiving NO COMMENTS at all, IRS has decided to no longer accept the High/Low option, presumably as of October 1, 2011, since October 1st is the day the amounts have changed each year. IRS further announced it would issue a Revenue Procedure this year with the rules for Meals and Lodging per Diems and future Revenue Procedures would not be issued unless the rules change. IRS will continue publishing an annual notice for the special transportation rate.

We expect IRS to release the Revenue Procedure for 2011 sometime within the next two months and we will produce a summary at that point. Please contact us if you need any assistance today.

2011-07-20T10:22:00.001-07:00

How does the Estate Analysis Process work?
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IRS Withholding Calculator Can Help Figure Your Tax

2011-07-19T07:49:00.000-07:00

If you have too little federal tax withheld from your pay, you could end up owing a lot of money when you file your taxes. If you withhold too much, you will get a large refund next year, but that means you gave up the use of your money for several months during the year.

You may want to adjust your federal tax withholding with your employer. You should also evaluate your withholding if you have recently married or divorced, added a dependent, purchased a home, changed jobs or retired.

The withholding calculator at IRS.gov can help you figure the correct amount of federal withholding and provide information you can use to complete a new Form W-4, Employee’s Withholding Allowance Certificate.

Before you begin, have these items:

Your most recent pay stubs.
Your most recent federal income tax return.
Here are some tips for using the withholding calculator:
Fill in all information that applies to your situation.
Estimate when necessary. But remember, the results are only as accurate as the information you provide.
Check the information links embedded in the program whenever you have a question.
Print out the final screen that summarizes your entries and the results. Use it to complete a new Form W-4 (if necessary) and give the completed W-4 to your employer. Keep the print of the final screen and a copy of your new W-4 with your tax records.

For many people, the withholding calculator is a great tool that can simplify the process of determining your withholding.

However, if you are subject to the alternative minimum tax or self-employment tax or if your current job will end before the end of the year, you will probably achieve more accurate withholding by having us run an analysis for you. Please let us know.

After I Do - Best Filing Status for Married Couples

2011-07-18T12:42:00.000-07:00

Summer is wedding season. If you are getting married this summer, remember to give some attention to your 2011 tax filing status.

You have two filing status options: married filing jointly, or married filing separately.

Married Filing Jointly

You can choose married filing jointly as your filing status if you are married and both you and your spouse agree to file a joint return. On a joint return, you report your combined income and deduct your combined allowable expenses. You can file a joint return even if one of you had no income or deductions.

According to the IRS, if you and your spouse decide to file a joint return, your tax may be lower than your combined tax for the other filing statuses. Also, your standard deduction (if you do not itemize deductions) may be higher, and you may qualify for tax benefits that do not apply to other filing statuses.

We recommend that if you and your spouse each have income, you figure your tax both on a joint return and on separate returns (using the filing status of married filing separately). You can choose the method that gives you the lower combined tax.

Joint Responsibility. Both of you may be held responsible, jointly and individually, for the tax and any interest or penalty due on your joint return. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

Married Filing Separately

You can choose married filing separately as your filing status if you are married. This filing status may benefit you if you want to be responsible only for your own tax or if it results in less tax than filing a joint return.

We Can Help

Drop us a line if you're unsure of which status to file under.

2011-07-14T11:20:00.002-07:00

Getting a Tax Credit for Your Honey Do List
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Getting a Tax Credit for Your Honey Do List

2011-07-14T11:20:00.000-07:00

Summer is a great time to tackle home improvements - and, happily, it's not too late to receive a tax credit when making your home more energy efficient. Although significantly reduced from 2010 levels, energy-efficiency tax credits are still available in 2011.

The home energy credit applies to energy-related improvements, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air-conditioning systems to an existing home that is your primary residence. The tax credit is not available on rental properties or new construction.

The tax credit is 10% of the cost of the home improvement, up to a maximum of $500. There is a lifetime limit of $500, so if you took a $500 credit in 2010, you do not qualify in 2011. The tax credit expires December 31, 2011.

The credit on some items have been reduced below $500:
• Windows limited to $200; Energy Star qualification.
• Air conditioners, water heaters, and biomass stoves limited to $300.
• Furnace and boiler improvements limited to $150 and must meet certain standards.
• $50 credit for advanced main air circulating fans.

Further, the Residential Energy Efficient Property Credit is a nonrefundable energy tax credit that helps individual taxpayers pay for certain alternative-energy equipment, such as solar hot water heaters, geothermal heat pumps, and wind turbines. The maximum amounts for a credit equal 30% of the cost of qualified property, with no upper limit. This credit expires on December 31, 2016, and is available for new and existing homes, whether primary or second. Rentals do not qualify.

We're happy to help you sort out the tax credits available for your home improvements this summer. Just give us a call or send us an email.