Monday, November 30, 2009

My 100th Post! Estate Tax Fix

Well, now, maybe, they're actually going to make a permanent fix. Keep watching. Maybe this Wednesday.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Tuesday, November 24, 2009

Taking Aim at the Tax Gap

For those of you paying close attention to the Tax Gap, which is a sum total of all the under-reporting of income and all the over-reporting of expenses, among other things, you know that Congress has enacted a whole slew of new regulations aimed at reducing the tax gap. (Incidently, the tax gap is estimated to be over $350 BILLION.)

Well, one of the new provisions, among the many that have been enacted, concerns businesses and the new reporting requirements of credit card processing companies (on the new Form 1099-K). According to the IRS press release, beginning with tax year 2011, credit card companies will now have to report the amount they process for merchants who accept credit cards from their customers. Theoretically, by reporting this, the IRS will have data they can match to gross receipts as reported by businesses.

Will this work? My opinion is that it will weed out some bad apples, but you can never be sure. An unscrupulous business entity could just report the minimum or slightly more and IRS cross-checking might not catch it.

More reporting requirements will be following, including capital gains and loss reporting from brokers. Stay tuned.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Sunday, November 22, 2009

Extension of tax breaks likely

Well, at least for 2010. We'll see what happens.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Thursday, November 19, 2009

The number 17 may mean something this year

The Joint Committee on Taxation has published a list of the 17 tax increases in the Senate health care bill, which are estimated to raise $370.2 billion in revenues over ten years:

  1. 40% excise tax on health coverage in excess of $8,500/$23,000 ($149.1 billion)
  2. Employer W-2 reporting of value of health (negligible revenue effect)
  3. Conform definition of medical expenses ($5.0 billion)
  4. Increase penalty for nonqualified health savings account distributions to 20% ($1.3 billion)
  5. Limit health flexible spending arrangements in cafeteria plans to $2,500 ($14.6 billion)
  6. Require information reporting on payments to corporations ($17.1 billion)
  7. Additional requirements for section 501(c)(3) hospitals (negligible revenue effects)
  8. Impose annual fee on manufacturers & importers of branded drugs ($22.2 billion)
  9. Impose annual fee on manufacturers & importers of medical devices ($19.3 billion)
  10. Impose annual fee on health insurance providers ($60.4 billion)
  11. Study and report of effect on veterans health care (no revenue effect)
  12. Eliminate deduction for expenses allocable to Medicare Part D subsidy ($5.4 billion)
  13. Raise 7.5% AGI floor on medical expenses deduction to 10% ($15.2 billion)
  14. $500,000 deduction limitation on taxable year remuneration to health insurance officials ($0.6 billion)
  15. Additional 0.5% hospital insurance tax on wages > $200,000 ($250,000 joint) ($53.8 billion)
  16. Modification of section 833 treatment of certain health organizations ($0.4 billion)
  17. Impose 5% excise tax on cosmetic surgery ($5.8 billion)
Update: See CCH's Special Report.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Wednesday, November 18, 2009

Instead of a fix, it's a patch?


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Monday, November 16, 2009

Not to beat a live horse, but ...


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

69% hike in capital gains?

It may be coming --- if the health-care bill passes.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Tsk tsk Zsa Zsa


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

And if you don't believe me ...


Here's Yahoo's take on the MWPC. They call it a "pickle." A "pickle"? That's a good one!

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

A tax credit for jobs ...


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

The estate tax (again)


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

What you don't know CAN hurt you ...

That's right, the stimulus package passed last February may indeed cause you to OWE more money come tax time.

Most of this has to do with the changes to the withholding tables. Sure, it was nice to take home $13 extra per week, but the changes to the withholding tables did not take into consideration:
  • dependents who receive wages;
  • single taxpayers with more than one job; and
  • joint filers where one or both spouses have more than one job or both spouses work.
Other groups potentially affected include:
  • individuals who file a return with an Individual Taxpayer Identification Number;
  • those who receive pension payments; and
  • Social Security recipients who receive wages.
According to J. Russell George, the Treasury Inspector General for Tax Administration: "More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes because their withholdings were reduced by more than the Making Work Pay Credit. If corrective actions are not taken, this problem will continue to plague taxpayers in 2010."

For the full report, click here.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Friday, November 6, 2009

OK, well, they did it.

Here's the skinny, courtesy of the California Society of Enrolled Agents:

As part of the government's efforts to encourage people to spend money to help revive the economy, the House voted 403-12 Thursday to expand a popular tax credit for homebuyers. The bill, which also extends unemployment benefits and expands a tax break for money-losing businesses, was signed on Friday by President Obama.

The new Act contains several key provisions for both taxpayers and tax professionals. End of year tax planning puts you in the best position to minimize tax. Your Enrolled Agent can fill you in on the details of this latest tax package, the other law changes that have occurred in this new administration, as well as year-end moves sure to affect your tax bill for 2009.

Enrolled Agents (EAs) are tax professionals licensed by the federal government to represent taxpayers and assist them with tax planning and the preparation of tax returns. Key tenets of the new Act:

New/Extended Credit:
Buy a home before May 1, 2010 and collect up to $6,500 from the government (up to $8,000 if you're a qualifying first-time homebuyer).

Net Operating Loss Carryover: Small businesses with a loss in 2008 or 2009 can claim refunds of taxes paid within the prior five years. There's no limit on carrybacks for the first four years of the period, but for the fifth year the carryback is limited to 50% of the company's taxable income.

E-Filing: The Act calls for mandatory e-Filing beginning in 2011 for any tax professional who expects to file more than 10 individual, trust, or estate returns.

End of Year Tax Planning

With these, other recent tax law changes, and an increase in concern about tax issues as the economy continues to struggle, Members of the California Society of Enrolled Agents urge taxpayers to sit down with their tax professionals for end-of-year tax planning. Planning now will save you money and reduce your tax liability not only with your federal taxes but also with your state taxes. Here are a few tax tips that will help you accomplish your goal.

Basic Numbers

Because many tax benefits are tied to or limited by adjusted gross income (AGI)--IRA deductions for example--a key aspect of tax planning is to estimate both your 2009 and 2010 AGI. Also, when considering whether to accelerate or defer income or deductions you should be aware of the impact this action may have on your AGI and your ability to maximize itemized deductions that are tied to AGI. Your 2008 tax return and your 2009 pay stubs and other income- and deduction-related materials are a good starting point for estimating your AGI.

Another important number is your "tax bracket," i.e., the rate at which your last dollar of income is taxed. The tax rates for 2009 range from 10% to 35%. Although tax brackets are indexed for inflation, if your income increases faster than the inflation adjustment, you may be pushed into a higher bracket. If so, your potential benefit from any tax-saving opportunity is increased (as is the cost of overlooking that opportunity).

Deferring Income to 2010

If you expect your AGI to be higher in 2009 than in 2010 or if you anticipate being in the same or a higher tax bracket in 2009, you may benefit by deferring income into 2010. Deferring income will be advantageous so long as the deferral does not bump your income to the next bracket and subject to a 20% additional tax.

Accelerating Income Into 2009

In limited circumstances you may benefit by accelerating income into 2009. For example you may anticipate being in a higher tax bracket in 2010 or perhaps you will need additional income in order to take advantage of an offsetting deduction or credit that will not be available to you in future tax years. Note however that accelerating income into 2009 will be disadvantageous if you expect to be in the same or lower tax bracket for 2010. In any event, before you decide to implement this strategy you should "crunch the numbers."

Members of the California Society of Enrolled Agents are required to fulfill 20% more education than required by the IRS and to adhere to a strict code of ethics.

Now, for the "fatty" (as opposed to the "skinny"), see the Joint Committee on Taxation's Technical Explanation. Actually, it may be technical, but it's not all that!

And, you may be interested in a specific Q & A about the New Home Buyer Credit.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

What's the INFLATION Tax?


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Seven Facts about the Nonbusiness Energy Property Credit

Taxpayers who take energy saving steps this year may get bigger tax savings next year. The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes has been increased as part of the American Recovery and Reinvestment Act of 2009.

Here are seven things the IRS wants you to know about the Nonbusiness Energy Property Credit:

1.

The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.

2.

The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.

3.

To qualify as "energy efficient" for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.

4.

Manufacturers must certify that their products meet new standards and they must provide a written statement to the taxpayer such as with the packaging of the product or in a printable format on the manufacturers' Website.

5.

Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.

6.

The improvements must be made to the taxpayer's principal residence located in the United States.

7.

To claim the credit, attach Form 5695, Residential Energy Credits to either the 2009 or 2010 tax return. Taxpayers must claim the credit on the tax return for the year that the improvements are made.

Homeowners who have been considering some energy efficient home improvements may find these tax credits will get them bigger tax savings next year.


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

This time the IRS wants to GIVE you money!!!


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Thursday, November 5, 2009

Looks like they're getting closer ...

That's right, the home buyer credit is just THAT close to being extended! Maybe today!

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Tuesday, November 3, 2009

Is the IRS disclosing your tax return data?

Probably not, but they could do better at strengthening their internal controls according to TIGTA.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Monday, November 2, 2009

A 95.2% Tax Rate?????


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Challenge - Turbo Tax & Complex Tax Laws


Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Apparently the IRS isn't doing so well on collecting ...

...or at least their notices are not working. So says the Government Accountability Office.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services

Sunday, November 1, 2009

Start digging deeper in your pockets, California workers!

That's right, the withholding is going up, starting today.

Owen S. Arnoff, Enrolled Agent
Admitted to Practice Before the Internal Revenue Service
http://www.betterbusinessventures.com
Sacramento Tax Consulting
Sacramento Tax Preparation
Sacramento Tax Representation
IRS Tax Help, Bookkeeping Services, Payroll Services
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