Posted by TJ on Tuesday September 15, 2009 @ 11:03 AM
[Tags: scam, business, taxes]

If you EVER receive an email claiming to be from the IRS (Internal Revenue Service) that email is a scam. IRS agents are not even allowed to send emails as their current internal policy is they are only able to receive emails (and respond with a fax if needed).

Use common sense before clicking a link in any email you receive.

Here is the email that prompted this public service announcement:


Note also that "Underreported" is not even an English word. Most of the time if you're good with English you're good at catching these scams because these scammers put no effort in writing their "official" emails.

Below is additional information straght from: IRS.gov

Posted by TJ on Sunday September 6, 2009 @ 11:56 PM
[Tags: business, accounting, taxes]

My friend recently asked me about taxes and structure for starting his own landscaping business. Here is my response.

Should I do business as LLC or a S corp?
If your only going to have one partner (yourself) you would set up a single member LLC. A single member LLC doesn't need a separate tax return as the income is reported on Schedule C of your individual tax return. I believe the annual fee for a Delaware LLC is $250 (this doesn't include additional income taxes).

Can I deduct mileage?
You can deduct all business expenses against the business income. If you use your personal automobile the easiest method to use would be to use the standard mileage rate where you would use the IRS standard mileage rate (2009 is $.55/mile) and keep track of all business mileage and deduct that instead of taking the actual expenses for gas, auto insurance, repairs, etc.
(see IRS Pub 463 for more information) . If you form an LLC I would suggest opening a separate bank account under the business to properly segregate your business from personal expenses.

For equipment like lawn mowers you may need depreciate over the 7 year life, however currently you can deduct the whole cost in the year purchased with section 179.

Do I have to go on payroll?
If create an LLC and you don't have any employees you would not need to file payroll. Once you make money you can take distributions from the business. Distributions are generally not taxed because as a partner you will pay tax on the income of the business each year. The profit of the business is subject to self employment tax (15.3%) (see
Self Employment Tax ) so to calculate roughly your tax:

Income - Expense = Income * (15.3% + Effective tax rate (mine is 27%)) = Tax

So if you had 20k in revenue and 12k in expenses your tax is:

$20,000 - 12,000 = 8,000 * (.153 + .27) = $3,384 Tax

Also, you wont have to worry about this the first year but next year you may
need to make estimated tax payments, or increase your withholding's from you
teaching W-2 to cover the tax owed on the income from the business.

The laws regarding LLC are actually a lot more complex then I stated here but I tried to summarize it.


Disclaimer: Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.

Posted by TJ on Saturday June 13, 2009 @ 10:19 PM
[Tags: accounting, taxes, business]

The government plans to start stringently enforcing a 1989 rule that classified employer-provided mobile phones as a taxable benefit if they employee uses the phone for personal use as well as business use.

The portion used for personal use should be included on your annual W-2 as taxable wages. The IRS requires employees to keep records distinguishing the personal and business portion of your bill. To make reporting easy the IRS would allow employee to adopt a simplified method which would tax employees on 25% of the monthly cell phone bill under their plan. So if your employer pays $1500/year for your cell phone you would be taxed on an additional $375 of income. Not much really on the individual level but the IRS expects this to generate millions of additional tax revenue.

source: IRS Notice 2009-46 [irs.gov]

Posted by TJ on Sunday May 17, 2009 @ 10:26 PM
[Tags: taxes, accounting, guide]

Obama issued the "Making Work Pay" tax credit for 2009 and 2010 tax payers as a form of stimulus which would increase the paychecks of workers through 2009 and 2010. You may of noticed that your paycheck has increased this year due to this credit. This credit could be headache for some filers come April 15th.

The credit changed the withholding tables that employers use to calculate your withholdings. Since your employer doesn't know your tax situation you should always keep an eye on your withholdings.

With the new credit the federal withholdings tables are adjusted so that if a single filer makes less than $75,000 his withholdings are lowered by $400 and a married filers withholdings are decreased by $600.

If you are single you will be able to claim the credit on your 2009 tax return for $400 (if you made less $75,000). If you are married you can claim a credit for $800 (if you made less than $150,000).

This could be lead to a problem in the following circumstances:

• You earn income from more than one job. Both employers will give you the withholding deduction when in reality you can only claim one credit, $400 if single, $800 if married.
  
• If you are married and both you and your spouse work you will each have received $600 more in 2009. However the credit is only $800 for a joint filer making your withholding's less than the tax anticipated.
  
• Over the limits -- The credit starts to phaseout at $75000 adjusted gross income for single filers ($150,000 for Joint filers). If you are over the limit you employer may still give you the credit if you are not over the limit for that one job leading to your withholdings being less than they usually would.

Note that this credit may also lead to additional late payment penalty if your withholdings are less than the tax due with your 2007 tax return. The IRS requires your withholdings (or estimated tax payments) to be 100% of the previous year tax liability or 90% of the current year tax due.

----------------
Circular 230 Disclaimer: Please be advised that, unless otherwise stated by the author, any tax advice contained in this message is not intended or written to be used, and cannot be used, by the recipient to avoid any federal tax penalty that may be imposed on the recipient.

Posted by TJ on Monday April 13, 2009 @ 03:51 PM
[Tags: accounting, taxes, guide]

NYC Board of Education employees are not subject to Form 1127 (Sec. 1127)

I was looking this up for a client and confirmed on phone with NYC department of finance and on their website.

If you were a nonresident of the New York City while working for certain city agencies you are subject to
1127 of the New York City Charter
and must file Form NYC-1127

If you are subject to that law, you are required to pay to the City an amount by which a City personal income tax on residents, computed and determined as
if you were a resident of the City, exceeds the amount of any City tax liability computed and reported by you on the City portion of your New York State tax return.

Exemptions:
Section 1127 of the New York City Charter does not apply to:
• Department of Education
• City University of New York
• District Attorneys Offices
• New York City Housing Authority.

Also, you are exempt if you are a NYC Housing Authority or Transit Police transferred into the New York Police Department.

source: http://www.nyc.gov/html/opa/html/faqs/tax_related_2.shtml

Posted by TJ on Tuesday March 31, 2009 @ 07:23 PM
[Tags: taxes, accounting, guide]

Elgible Insulated Garage Doors may qualify for a ta tax credit if installed in 2009 or 2010

The new American Recovery and Reinvestment Act of 2009 was signed by President Obama on Feb. 17, 2009, U.S.

Tax credits are available for qualifying garage door purchases placed in service from Jan. 1, 2009, to Dec. 31, 2010. The maximum tax credit a taxpayer may claim is 30 percent of the cost of each product and $1500 over the lifetime of the tax credit periods (2009 and 2010).

A qualifying garage door installation is all of the following:
* The door must be an insulated residential garage door, installed on an insulated garage.
* The door's U-factor must be less than or equal to 0.30, even if the door contains windows.
* The door perimeter must be able to control air infiltration.
* The door must be expected to remain in service for at least five years.
* The garage must be part of the taxpayer's principal U.S. residence.

As well as receiving the credit a new garage door can also significantly improve a curb appeal and value.

Other Federal Tax Credits for Energy Efficiency includes:

* Tax Credits for Consumers
o Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only) for:
+ Windows and Doors
+ Insulation
+ Roofs (Metal and Asphalt)
+ HVAC
+ Water Heaters (non-solar)
+ Biomass Stoves
o Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for:
+ Geothermal Heat Pumps
+ Solar Panels
+ Solar Water Heaters
+ Small Wind Energy Systems
+ Fuel Cells
* Cars
* Tax Credits for Home Builders
* Tax Deductions for Commercial Buildings
* For More Information

As you may know, a tax credit is more advantageous than a tax deduction since it decreases your tax liability dollar for dollar, as opposed to a tax deduction which decreases your taxable income subject to tax.

Source: http://www.energystar.gov/index.cfm?c=products.pr_tax_credit

Posted by TJ on Wednesday March 25, 2009 @ 04:25 PM
[Tags: taxes, accounting, guide]

Mortgage Interest Deduction

Most people are able to deduct fully the amount of mortgage interest paid during the year as an itemized deduction any mortgage paid during the tax year. Mortgage Interest is deducted on Lines 10-14 of Schedule A of Form 1040.

However, the deduction does have some limitations. The deduction is limited to mortgages you took out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt). You also can only fully deduct mortgages that had balances totaling $1 million or less ($500,000 if married filing separately). If the balances on your mortgages totaled $1,000,000 million or more see the table below to see if you qualify for a partial deduction.
Read More...

Posted by TJ on Friday February 27, 2009 @ 04:07 PM
[Tags: accounting, taxes, business]

Below is a table summarizing the numerous payroll limits for 2004-2009.
Read More...

Posted by TJ on Wednesday February 4, 2009 @ 12:55 PM
[Tags: accounting, taxes, guide]

Here are tips to save time and money by preparing to meet with your CPA professional tax return accountant:

1. Take your documents out of envelopes - neatly organized files saves you time.
   
2. If your going to new preparer bring copies of prior year return (fed and state)
   
3. Unless you want to pay your preparer to sort, organize, and add up receipts. Have your receipts organized and totaled by category. Have other relevant documents organized by category.
   
4. Provide relevant computer data files - If you track your finances with a program such as Quicken or Excel, bring the data file with you OR provide category reports to the accountant. He may see a deduction you missed or need additional information then. You also may want to provide a year end credit card statement for same reason.
   
5. have SS#, birthdate, and names of all dependents
   
6. Have your bank account information (routing# and account#) for direct deposit of refunds
   
7. Have cost basis of any stocks sold
   
8. Provide closing documents if you bought/sold home.
   
9. A summary sheet with all information you are providing is always helpful but not necessary. This will make sure we don't miss anything.

Posted by TJ on Thursday June 19, 2008 @ 01:19 AM
[Tags: accounting, links, taxes]

Below is handy drop down box which will open up the website to find where your federal or state income tax refund is and when you can expect to receive your tax refund.

_
Read More...

Posted by TJ on Wednesday June 4, 2008 @ 04:06 PM
[Tags: accounting, taxes, hints]

For all you home buyers out there Private Mortgage Insurance (PMI) is deductible for contracts signed in 2007 or after. This was enacted into law as part of the Homeowners Protection Act of 1998 as in effect on December 20, 2006. PMI is required for mortgage where less than 20% is put down on a home purchase.

Source: http://www.irs.gov/publications/p936/ar02.html#d0e1576

Also make have your lender cancel your PMI once your equity in the home is greater than 20%.
More: http://bankrate.com/brm/green/mtg/basics7-4a.asp?caret=38

Posted by TJ on Friday February 8, 2008 @ 05:25 PM
[Tags: accounting, taxes, guide]

Most people will be receiving a credit from the Government as they hope to stimulate the economy and reduce fears of recession. Will it work? Probably not, but that's a whole other story. Here is the lowdown on the credits.

When will I get the check?
If you are eligible you will most likely see your check in May or July.

Your credit is $600 if single and $1,200 combined if married. You also receive an additional $300 per child.

Calculating the credit
Add $600 - If you filed Form 1040 for the 2007 tax year
Add $600 - If your married
Add $300 - for each of you dependent children
Total = Your potential household refund (see partial refunds below)

To be fully eligle
Your 2007 adjusted gross income(AGI) has to be less than $75,000 single or $150,000 married. You can find your AGI by look on line 7 of Form 1040.

Partially elgible?
If your adjusted gross exceed 75,000(single) or 150,000 (married) you may still receive a partial refund.

Take your Adjusted Gross income from your 2007 1040, Line 37
Then subtract $75,000 if you filed single or $150,000 if you filed a joint return
Now multiply the result by 5%. This is the amount you reduce your credit by (see "calculating your credit above").

Posted by TJ on Thursday January 24, 2008 @ 11:34 AM
[Tags: accounting, links, taxes]

Want to be an instant millionaire?

Report tax evasion to the IRS.

Under IRC Section 7623 the IRS authorizes the payment of awards from the proceeds of amounts the IRS collects by reason of the information provided by an individual (aka the Whistleblower). The reward is between 15-30% of the tax recovered depending on the amount of information you provide. So if you provide information that leads to the IRS recovering $10 million in taxes you could be an instant millionaire!

To be eligble the amount in dispute must exceed $2 million dollars (including tax,interest,penalties, etc.) and taxable income for the violator must exceed 200k in any year of issue.

Oh and don't forget to claim your reward on your tax return, as yes... it is subject to income tax.

To file a claim use Form 211 Download Here

Posted by TJ on Monday July 23, 2007 @ 04:04 PM
[Tags: taxes, guide, accounting]

Here is how your Taxes work out in a very summarized manner.

+ Income Earnings from wages, dividends, interest, capital gains - Less: The greater of the Standard or Itemized Deductions Here's where you can deduct Medical, State Income and Property taxes, business expenses, and mortgage interest - Less Dependency Exemptions (in 2006 this was $3,300 per dependant) = Adjusted Gross Income (AGI) X Tax rate = Tax Liability - Less Tax Credits (Foreign tax credit, Child and dependant care expenses, education credit, child tax credit) - Less Withholdings during the year = Total Due (refund)

This formula should help resolve a couple misconceptions about your income tax including:

Misconception #1 All tax deductions are a direct deduction of my tax liability - This is not the case. Most tax deductions are 'above the line' deductions which means they reduce the amount of income subject to tax. A tax credit only reduces the amount of tax you pay dollar-to-dollar.

Misconception #2 Tax refunds are a good thing - not necessarily. A tax refund is an interest-free loan to the goverment. A tax refund does not reduce the tax you pay during the year it only effects the time you pay it. If you owe money at the end the year, this means, that you did not withhold enough from your paychex during the year, if you get a refund you withheld too much taxes during the year. If you are good with savings, a refund means that you lost out on the interest that refund would of earned had it been in your bank account the whole year.



Disclaimer: Any tax advice included in this written or electronic communication was not intended or written to be used, and it cannot be used by the taxpayer, for the purpose of avoiding any penalties that may be imposed on the taxpayer by any governmental taxing authority or agency.

Posted by TJ on Thursday April 19, 2007 @ 06:25 AM
[Tags: accounting, taxes, humor]

Top Ten signs you need a new accountant
by TJ


10. He still does not have a email address
09. He claimed your pet hamster as an dependency exemption
08. You call him on March 10th and only receive a message that hes on vacation and will return on April 18th
07. The office watercooler is filled with vodka
06. Counts your traffic tickets as a charitable donation
05. He called you on Easter to talk about your tax return
04. He tells you can get a huge refund if you move to the Caymans
03. He answers every question with "Well I'm not good with numbers"
02. Tells you he donated your refund to the Hillary Campaign
01. Files your tax return with amounts marked "roughly a few thousand"

Posted by TJ on Thursday February 15, 2007 @ 05:33 AM
[Tags: accounting, faq, taxes]

I have a snow day today so... I figured I'd put together a frequently asked question (AKA FAQ) about accounting. Oh my.. My life is so intense.


Who are you to be able to address this important issue? I have a B.S. in accounting, am a CPA and have been working in public accounting for 3 years

Does the musical "The Producers" accurately describe the accounting profession?

In some regards yes. My boss treated the whole office to this musical in NYC and we found the musical quite funny in how accurataly it really was. We were of course all drunk though since we were drinking in our limo on the ride down.

Accountants only do taxes... right? Right?
NO. Taxes only make up about 20% of an the average public firms revenue. There are audits, consulting, and other services that accountants perform. Engaged accountants can be responsible for a company accurately depicting their financial condition, this has nothing to do with taxes.

Accountant are always dull, boring, and like to pick their nose
There are some people like this that we work with, but not all of us are like this. Though you probably run into these people in every profession.

Is the work always repetitive, mundane work?
Not always. It all depends where you work. If you work in at a large CPA firm your probably specialize in one department and maybe be doing the same everyday. However if you work for a small firm you may get to do a little bit of everything. I work for a small firm so one day I could be doing a tax return and the next I could be auditing a corporations books, it keeps it interesting.

Will you do my Taxes?
Yes sign up for 2007 will begin after April 15th, 2008 once I'm done with the busiest time of my work year. Late fees may apply.