There is an important October 15th date for small non profits. We have found that in small non profits, volunteers and the managment gets passed around. Because of this, sometimes notices from the IRS go to the wrong people. Here is a reminder that the IRS just sent out. If you are involved in a non profit, you might want to ask the current management if they have complied.
Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date
A crucial filing deadline of Oct. 15 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked. Nonprofit organizations that are at risk can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.
The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice, with the IRS and it also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Here are 10 facts to help nonprofit organizations maintain their tax-exempt status.
1. Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010.
2. Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.
3. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.
4. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
5. Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N also known as the e-Postcard. To file the e-Postcard go to the IRS website and supply the eight information items called for on the form.
6. Under the voluntary compliance program, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee.
7. The relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
8. Organizations that have not filed the required information return by the extended Oct. 15 due date will have their tax-exempt status revoked.
9. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status and any income received between the revocation date and renewed exemption may be taxable.
10. Donors who contribute to at-risk organizations are protected until the final revocation list is published by the IRS.
Friday, October 1, 2010
TAX BREAK FOR THE SELF EMPLOYED IN THE NEW JOBS BILL
As the debate over health care and health care costs continued to draw attention, it appeared as if the smallest of businesses, those who are self-employed, were being ignored. Most of the health care related tax breaks and credits have been focused on businesses with employees, but those who are self-employed or primarily family owned have been left out. Until now.
Self-employed persons are finally getting a break. Under section 2042 of the Business Jobs Act of 2010 recently passed by Congress, those who are self-employed and pay their own health insurance premiums now get a break.
Currently, if you are self-employed, you can only deduct health insurance premiums from income before computing “regular” federal income tax; however, SE tax (self-employment tax), or Social Security and Medicare tax, is computed on the entire amount. So-called W-2 employees were treated differently.
That will now change. Persons who are self-employed will be able to deduct the cost of health insurance premiums from income before calculating SE tax. That results in a savings of nearly 15% over the cost of those premiums: Social Security tax is payable at a rate of 12.4% and Medicare tax is payable at a rate of 2.9% – a combined rate of 15.3%. However, keep in mind that the income cap for Social Security tax for 2010 is $106,800 (there is no cap for Medicare tax), so the total amount of your savings will vary based on your income. But it’s still savings.
Of course, there’s a catch. There’s always a catch. It’s only for 2010. But hey, in this economy, beggars cannot, apparently, be choosers. It’s a break and we’ll take it.
Self-employed persons are finally getting a break. Under section 2042 of the Business Jobs Act of 2010 recently passed by Congress, those who are self-employed and pay their own health insurance premiums now get a break.
Currently, if you are self-employed, you can only deduct health insurance premiums from income before computing “regular” federal income tax; however, SE tax (self-employment tax), or Social Security and Medicare tax, is computed on the entire amount. So-called W-2 employees were treated differently.
That will now change. Persons who are self-employed will be able to deduct the cost of health insurance premiums from income before calculating SE tax. That results in a savings of nearly 15% over the cost of those premiums: Social Security tax is payable at a rate of 12.4% and Medicare tax is payable at a rate of 2.9% – a combined rate of 15.3%. However, keep in mind that the income cap for Social Security tax for 2010 is $106,800 (there is no cap for Medicare tax), so the total amount of your savings will vary based on your income. But it’s still savings.
Of course, there’s a catch. There’s always a catch. It’s only for 2010. But hey, in this economy, beggars cannot, apparently, be choosers. It’s a break and we’ll take it.
MORE ON NEW TAX ACT
I recently posted a short summary Small Business Jobs Act that was signed by the President on September 27, 2010. Here is a more extensive 7 page summary of the 110 page act. Let me know if you have any questions.
http://tax.cchgroup.com/legislation/Small-Business-Jobs-Act-7-23-10.pdf
http://tax.cchgroup.com/legislation/Small-Business-Jobs-Act-7-23-10.pdf
PROPERTY TAX COMPARISON
Want to see how your states property tax compares to other states. Here is a cool tool.
http://www.mytaxburden.org/propertytax/
http://www.mytaxburden.org/propertytax/
Wednesday, September 29, 2010
TAX BENEFITS ON THE NEW JOBS ACT
New Jobs Act brings tax benefits
On Monday, September 27, the president signed the Small Business Jobs Act of 2010 (H.R. 5297). Among its provisions:
• §179 expanded: For tax years beginning in 2010 and 2011, expense limit is increased to $500,000 and phaseout threshold increased to $2 million;
• §179 for (some) real estate: For tax years beginning in 2010 and 2011, taxpayers can elect to treat certain real estate as §179-eligible. Qualifying real estate includes:
o Qualified leasehold improvements;
o Qualified restaurant property; and
o Qualified retail improvement property.
• Bonus depreciation extended: Available for property purchased through December 31, 2010;
• Luxury auto depreciation increased: As a result of the extension of bonus depreciation, first-year depreciation of automobiles is bumped up $8,000;
• Deduction for start-up expenditures increased: Under IRC §195, increased from $5,000 to $10,000 for taxable years beginning in 2010 (only);
• Exclusion for small business stock: For purchases made after the date of enactment and before January 1, 2011, the exclusion for small business stock under IRC §1202 is increased to 100%;
• Five-year carryback for general business credits: Effective for credits determined in the taxpayer’s first taxable year beginning after December 31, 2009 (one year only), the carryback period for an “eligible small business” is increased from one to five years. In addition, the credit is not subject to the AMT limitation;
• Built-in gain period shortened to five years: For taxable years beginning in 2011 (only), the recognition period for the BIG tax is shortened to five years;
• Deduction for health insurance for SECA purposes: For 2010 (only), the deduction for self-employed health insurance is also a deduction for purposes of the SE tax;
• Cell phones removed from listed property: Permanent and effective for tax years ending after 2009;
• Information reporting required for rental property: Effective for payments made after December 31, 2010, rental real estate is treated as a trade or business for information reporting purposes. IRS to prescribe de minimis exceptions;
• Higher information return penalties: Penalties under IRC §6721 are substantially increased beginning in 2011; §457 plans can include Roth accounts: For tax years beginning after December 31, 2010; and Rollovers from elective deferral plans to in-plan Roth accounts allowed: Effective on the date of enactment. Will allow a two-year deferral (2011 and 2012) for rollovers done in 2010.
On Monday, September 27, the president signed the Small Business Jobs Act of 2010 (H.R. 5297). Among its provisions:
• §179 expanded: For tax years beginning in 2010 and 2011, expense limit is increased to $500,000 and phaseout threshold increased to $2 million;
• §179 for (some) real estate: For tax years beginning in 2010 and 2011, taxpayers can elect to treat certain real estate as §179-eligible. Qualifying real estate includes:
o Qualified leasehold improvements;
o Qualified restaurant property; and
o Qualified retail improvement property.
• Bonus depreciation extended: Available for property purchased through December 31, 2010;
• Luxury auto depreciation increased: As a result of the extension of bonus depreciation, first-year depreciation of automobiles is bumped up $8,000;
• Deduction for start-up expenditures increased: Under IRC §195, increased from $5,000 to $10,000 for taxable years beginning in 2010 (only);
• Exclusion for small business stock: For purchases made after the date of enactment and before January 1, 2011, the exclusion for small business stock under IRC §1202 is increased to 100%;
• Five-year carryback for general business credits: Effective for credits determined in the taxpayer’s first taxable year beginning after December 31, 2009 (one year only), the carryback period for an “eligible small business” is increased from one to five years. In addition, the credit is not subject to the AMT limitation;
• Built-in gain period shortened to five years: For taxable years beginning in 2011 (only), the recognition period for the BIG tax is shortened to five years;
• Deduction for health insurance for SECA purposes: For 2010 (only), the deduction for self-employed health insurance is also a deduction for purposes of the SE tax;
• Cell phones removed from listed property: Permanent and effective for tax years ending after 2009;
• Information reporting required for rental property: Effective for payments made after December 31, 2010, rental real estate is treated as a trade or business for information reporting purposes. IRS to prescribe de minimis exceptions;
• Higher information return penalties: Penalties under IRC §6721 are substantially increased beginning in 2011; §457 plans can include Roth accounts: For tax years beginning after December 31, 2010; and Rollovers from elective deferral plans to in-plan Roth accounts allowed: Effective on the date of enactment. Will allow a two-year deferral (2011 and 2012) for rollovers done in 2010.
Tuesday, September 28, 2010
NOTE IF YOU HAVE EMPLOYEES
Beginning in 2011, the U.S. Department of the Treasury is eliminating paper Form 8109 federal tax coupons, which means you will have to deposit them electronically. Failure to make payments using EFTPS online could result in a 10 percent failure-to-deposit penalty.
If you are doing your own payroll we can help. Contact Amanda Haumont ahaumont@kopsaotte.com if you would like more information on our payroll services.
If you are doing your own payroll we can help. Contact Amanda Haumont ahaumont@kopsaotte.com if you would like more information on our payroll services.
Friday, September 24, 2010
Bipartisan Poll Highlights Small Business Concerns Regarding Health Care Law
I thought that you might be interested in a new health care small business poll. This poll goes right along with what I am hearing from our clients.
Larry Kopsa CPA
(The FINANCIAL) -- FinChannel.com reports, "Six months after enactment of the new health reform law, the U.S. Chamber of Commerce has released a national bipartisan poll of 590 small business leaders." The survey finds nearly 80% of small business leaders "expect their costs to increase as a result of the new law, and a majority say they will be less likely to hire new employees and more likely to reduce current health care benefits."
The survey also finds that "regardless of whether the business is 20 employees or 200 employees, at least 75% of small business leaders across all sizes expected their costs to rise as a direct result of the legislation" -- and that "60% of small business leaders say that as a result of the new health care law, they are more likely to consider reducing healthcare benefits to their employees."
The article also reports that "owners of small businesses are deeply unsettled about the present and concerned about the future. Fully 56% of actual small business owners (with 5 to 200 employees) are 'somewhat' or 'very uncertain' about 'making long-term business decisions and future business investments.'" and almost half "are somewhat/very uncertain that they will still exist five years from now."
Larry Kopsa CPA
(The FINANCIAL) -- FinChannel.com reports, "Six months after enactment of the new health reform law, the U.S. Chamber of Commerce has released a national bipartisan poll of 590 small business leaders." The survey finds nearly 80% of small business leaders "expect their costs to increase as a result of the new law, and a majority say they will be less likely to hire new employees and more likely to reduce current health care benefits."
The survey also finds that "regardless of whether the business is 20 employees or 200 employees, at least 75% of small business leaders across all sizes expected their costs to rise as a direct result of the legislation" -- and that "60% of small business leaders say that as a result of the new health care law, they are more likely to consider reducing healthcare benefits to their employees."
The article also reports that "owners of small businesses are deeply unsettled about the present and concerned about the future. Fully 56% of actual small business owners (with 5 to 200 employees) are 'somewhat' or 'very uncertain' about 'making long-term business decisions and future business investments.'" and almost half "are somewhat/very uncertain that they will still exist five years from now."
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