As an independent business owner, your tax filing goal is to reduce your taxable income. Your whole year should be in pursuit of legitimately reducing this burden. Of course, it is easier said than done, but it needs to be done.

At one time or another in our professional lives, most of us have experienced the horror of tax season. Those that have been through a scary tax experience vow never to wait until April 14th to work on taxes.

“People should be scared of the IRS”, shares Stacie S. McClure, “but if they are doing things right and keeping the right records and filing what they are supposed to file, then they can easily survive an audit.”

Read the entire HFPN article by Jonathan Ashe.

I still am very envious of the summer days that my children get to spend at YMCA camp, but thinkcamp might have come close.  I had the opportunity to share my passion for taxes (yes, that is what I said, my passion for taxes!) with fellow members of thinkspace and others from the Puget Sound business community.  The audience seemed interested in what I had to say, and I definitely enjoyed learning more about some of my colleagues here at thinkspace and what they are accomplishing in their businesses (and how what they are doing might help me in what I’m doing!).  And that is the beauty of thinkspace – it’s a place of collaboration, innovation, and inspiration.  I get up each morning grateful to be coming here to work for another day.

But don’t just take my word for how great thinkcamp was – another writer’s blog caught my eye today – check it out:  Redmond Neighborhood Blog

According to a press release issued by the Office of the Press Secretary of the White House on January 25, 2010, the White House Task Force on Middle Class Families plans to propose several policy initiatives to help middle class families, including the following tax relief:

1. Nearly Doubling the Child and Dependent Care Tax Credit for middle class families making under $85,000 a year.  This is accomplished by increasing their tax credit rate from 20% to 35% of qualifying expenses.  The value of the tax credit nearly doubles for all families making under $85,000 a year, and every family that makes under $115,000 will see their tax credit increase.  
   Additionally, for families struggling to join the middle class, the administration will provide a $1.6 billion increase in child care funding, the largest one-year increase in 20 years, to help an additional 235,000 children.
2. Creating a system of automatic workplace IRAs, requiring all employers to give the option for employees to enroll in a direct-deposit IRA.
3. Expanding tax credits to match retirement savings and enacting new safeguards to protect retirement savings, making it easier for families to plan for retirement..

The Task Force’s final report, and full recommendations, will be released in February.  Stay tuned!

The complete press release can be found on the White House website.

A special tax relief provision was enacted on January 22, 2010 for cash contributions made to charities providing earthquake relief in Haiti. 

Cash contributions made to these charities after January 11, 2010 and before March 1, 2010 that are made specifically for the relief of victims in the areas affected by the January 12th earthquake in Haiti may be deducted as an itemized deduction on either the 2009 or 2010 returns (but not both).

This is a great option for taxpayers to take advantage of, giving themselves an extra tax break for 2009 and helping the earthquake victims in Haiti.  Please consider making a donation today!

Here are eight facts about the five filing status options the IRS wants you to know in order to choose the correct filing status for your situation.

1. Your marital status on the last day of the year determines your marital status for the entire year.
2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
3. Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
4. A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
5. If your spouse died during the year and you did not remarry during 2009, you may still file a joint return with that spouse for the year of death, provided the joint return election is not revoked by a personal representative for the deceased spouse.
6. A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2007 or 2008, you have a dependent child and you meet certain other conditions.

If you’d like to learn more about your options, click here to schedule your free initial consultation.

November 2009 marked the launch of the IRS’s National Research Program (NRP) Audit Initiative on Employment Taxes.  The initiative calls for approximately 6,000 audits over the next three years and will be focusing on four major employment tax areas listed below:

1) Worker Classification (Employee vs. Independent Contractor)
2) Fringe Benefits (Have all taxable fringe benefits been included in taxable compensation?)
3) Officer Compensation (Is it reasonable and deductible?  Are S-Corp Officers undercompensated?), and
4) Expense Reimbursements (Are accountable plan reimbursements met to allow reimbursements to be excludable from taxable compensation?)

Are you ready?  Are your current processes and documentation sufficient to support your tax filings?

Click here to contact me and request your free initial consultation.  I can help you review the requirements in these four areas and evaluate your current processes and documentation for compliance.

Are you aware of your federal tax obligations under the so-called “Nanny Tax.”  The “Nanny Tax” isn’t limited to a nanny.  It also applies to a housekeeper, maid, baby-sitter, gardener or other household employee who isn’t an independent contractor.  The tax doesn’t apply to a household employee who’s also a farm worker.

If you employ someone who’s subject to the “Nanny Tax” you aren’t required to withhold federal income taxes.  You have to withhold only if your nanny asks you to and you agree to withhold.  (In that case, have the nanny fill out a Form W-4 and give it to you, so you can withhold the correct amount.)  However, you may be required to withhold social security and Medicare tax (FICA).  And you may also be required to pay (but not withhold) federal unemployment (FUTA) tax.

You must satisfy your “Nanny Tax” obligations by increasing your quarterly estimated tax payments or increasing your withholding from your wages, rather than making an annual lump-sum payment.

As an employer of a nanny, you don’t have to file any of the normal employment tax returns for federal tax purposes, even if you’re required to withhold or pay tax (unless you own your own business, see below).  Instead, you just report the employment taxes on your tax return, Form 1040, Schedule H.

On your income tax return, you must include your employer identification number (EIN) when you report the employment taxes for your nanny.  The EIN isn’t the same number as your social security number.  If you already have an EIN from a previous nanny, you may use that number.  If you need an EIN, you must file Form SS-4 to get one.  This can be done online at www.irs.gov or I can provide you with the appropriate blank form.

Be sure to keep careful employment records for each nanny and domestic employee.  Keep the tax records for at least four years from the later of the due date of the return or the date when the tax was paid.  Records should include: employee name, address, social security number; dates of employment; dates and amount of wages paid; dates and amounts of withheld FICA or income taxes; amount of FICA taxes paid by you on behalf of your nanny; dates and amounts of any deposits of FICA, FUTA or income taxes; and copies of all forms filed.

I realize this is a lot of information to absorb.  I’d be happy to go over any questions you still have about how to comply with these employment tax requirements, as well as additional state filing requirements for state unemployment taxes.  If you think you might have any problems for earlier years I can also help.  Click here to contact me for a free initial consultation.

Expanded relief provided under the Worker, Homeownership, and Business Assistance Act of 2009 is applicable to any taxpayer with business losses, except those that received payments under the Troubled Asset Relief Program. The relief also applies to a loss from operations of a life insurance company.

Taxpayers may elect to carry back a net operating loss (NOL) for a period of three, four or five years, or a loss from operations for four or five years, to offset taxable income in those preceding tax years.

These expanded provisions open up many tax planning opportunities as we near the end of 2009.  Come on in for a free consultation to discuss opportunities that may apply to your business.

]]> http://www.staciecpa.com/will-your-business-take-advantage-of-the-expanded-net-operating-loss-provisions-for-2009/feed/ 0 http://www.staciecpa.com/obama-signs-homebuyer-jobless-bill-assistance/ http://www.staciecpa.com/obama-signs-homebuyer-jobless-bill-assistance/#comments Fri, 06 Nov 2009 18:58:54 +0000 Stacie http://www.staciecpa.com/?p=434

At the White House this morning, President Barack Obama signed into law a $24 billion economic stimulus bill providing tax incentives to prospective homebuyers and extending unemployment benefits to the longtime jobless who have been left behind as the economy veers toward recovery. The bill is referred to as the “Worker, Homeownership, and Business Assistance Act of 2009″ (the Act).  The key provisions are summarized below.  For more details on how these provisions will impact your personal or business tax situation, please contact me for your free initial consulation.

• Homebuyer Credit Extended and Liberalized
• Additional Homebuyer Liberalizations for Service Members
• Exclusion from Gross Income of Qualified Military Base Realignment and Closure Fringe
• Five-Year Carryback of NOLs Extended to Include 2009 NOLs and to Apply to Most Businesses
• Suspension of 90% Limitation on NOL for AMT purposes
• Increase in Carryback Period for Life Insurance Companies
• Some Categories of Businesses are Ineligible to Elect Extended Carryback Period
• Additional FUTA Surtax is Extended through June of 2011
• Estimated Tax Payments for Large Corporations Increased for 2014
• Increased Penalty for Failure to File Partnership or S Corporation Returns
• Expansion of Electronic Filing by Return Preparers

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 you should 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.

For more information on this and other key tax provisions of the Recovery Act, please feel free to contact my office.