Q. Help settle a bet with my wife. We had an individual come in and paint our house this last year. We paid him $3,150. I say that since he is not a corporation and since the amount is over $600 I have to give him a 1099. My wife says I am wrong. Please say that I am right... movie selection over the next 3 months depends on your answer.
Walt
A. Walt, best disconnect your computer so your wife does not see my answer or get ready for three months of romantic comedies and tear jerkers.
Assuming that your house is not your business property, you do not need to do a 1099. 1099's are for business expenses only. That may change some day, but for now your wife is right.
Larry Kopsa CPA
Tuesday, February 15, 2011
Thursday, February 10, 2011
NEW 2011 ENERGY TAX CREDIT RULES FOR INDIVIDUALS
Q. Are there any new rules on the purchase of energy saving items for my home?
A. The rules are stricter. You can claim a tax credit for energy saving home improvements you make this year, but the rules for 2011 are crazy.
• You can only claim a 10% credit for qualified energy property placed in service in 2011 up to a $500 lifetime limit (with no more than $200 from windows and skylights).
That’s not all…
• The credit you claim for any year can't exceed $500 less the total of the credits you claimed for 2006 through 2010.
• The amount you claim for windows and skylights in a year can't exceed $200 less the total of the credits you claimed for these items in 2006 through 2010.
• The credit is equal to the sum of: (1) 10% of the amount you pay for qualified energy efficient improvements (such as insulation, exterior windows or doors that meet certain energy efficient standards) installed during the year; and (2) the amount of the residential energy property expenses you paid during the year.
But that’s not all…
• There is a limit on the amount of “residential energy property expenses.”
• The credit for residential energy property expenses can't exceed: (A) $50 for an advanced main circulating fan; (B) $150 for any qualified natural gas, propane, or hot water boiler; and (C) $300 for any item of energy efficient property (advanced types of energy saving equipment, such as electric heat pumps, meeting specific energy efficient standards).
Final step: Then you divide the resulting number by your grandmothers age times you license plate.
Hey, just kidding about that final step. Who says accountants can’t make a joke.
Larry Kopsa CPA
A. The rules are stricter. You can claim a tax credit for energy saving home improvements you make this year, but the rules for 2011 are crazy.
• You can only claim a 10% credit for qualified energy property placed in service in 2011 up to a $500 lifetime limit (with no more than $200 from windows and skylights).
That’s not all…
• The credit you claim for any year can't exceed $500 less the total of the credits you claimed for 2006 through 2010.
• The amount you claim for windows and skylights in a year can't exceed $200 less the total of the credits you claimed for these items in 2006 through 2010.
• The credit is equal to the sum of: (1) 10% of the amount you pay for qualified energy efficient improvements (such as insulation, exterior windows or doors that meet certain energy efficient standards) installed during the year; and (2) the amount of the residential energy property expenses you paid during the year.
But that’s not all…
• There is a limit on the amount of “residential energy property expenses.”
• The credit for residential energy property expenses can't exceed: (A) $50 for an advanced main circulating fan; (B) $150 for any qualified natural gas, propane, or hot water boiler; and (C) $300 for any item of energy efficient property (advanced types of energy saving equipment, such as electric heat pumps, meeting specific energy efficient standards).
Final step: Then you divide the resulting number by your grandmothers age times you license plate.
Hey, just kidding about that final step. Who says accountants can’t make a joke.
Larry Kopsa CPA
Tuesday, February 8, 2011
WHEN WILL THE IRS BE PROCESSING RETURNS
Q. Is the 1040- Schedule A problem still causing a delay in filing the long form for 2010? When can we expect a resolution?
A. Maybe it is a coincidence but the IRS seems to be giving us a Valentine's Day present. They have announced that their programs will be up and running and that they will be processing returns on February 14th. And people say that the IRS does not have a heart.
Larry Kopsa CPA
A. Maybe it is a coincidence but the IRS seems to be giving us a Valentine's Day present. They have announced that their programs will be up and running and that they will be processing returns on February 14th. And people say that the IRS does not have a heart.
Larry Kopsa CPA
Obama budget plan proposes an increase in payroll taxes
States would have more tools to collect additional payroll taxes from businesses under President Barack Obama's budget proposal. It would raise the level of wages on which companies must pay unemployment taxes to $15,000 from $7,000. This could potentially double the amount you are paying in state unemployment taxes.
Here is the latest from the Wall Street Journal.
http://r.smartbrief.com/resp/AXhgvscgyzgAdZnwajaoyAalBuHh?format=standard
Here is the latest from the Wall Street Journal.
http://r.smartbrief.com/resp/AXhgvscgyzgAdZnwajaoyAalBuHh?format=standard
Saturday, February 5, 2011
1099'S ON RENTS AND CONTRACT WORK ON RENTALS?
Q. Hi Larry, Hope things are going well for you this tax season. After reading some of your information I need to clarify some information. Do we need to give our renters 1099’s and do I need to give one to the guy that did some remodeling on our rental?
A. You do not need to give your renters a 1099. As far as the contractor that did the remodeling on your rentals you do not need to give that person a 1099 for 2010.
But watch out, this changes for 2011. In 2011 landlords/lady’s will need to give a 1099 for work done on rentals so keep track. Remember it is $600 for the entire year so, for example if someone does repairs of $200 in February and $500 in November then you will be required to give them a 1099.
There is some controversy in Washington about the 1099 requirements in Obama Care but that does not affect this requirement. In addition Congress just increased the penalty to $295 for each 1099 not prepared.
Let me know if you have any other questions. It is a pleasure serving you.
Larry Kopsa CPA
A. You do not need to give your renters a 1099. As far as the contractor that did the remodeling on your rentals you do not need to give that person a 1099 for 2010.
But watch out, this changes for 2011. In 2011 landlords/lady’s will need to give a 1099 for work done on rentals so keep track. Remember it is $600 for the entire year so, for example if someone does repairs of $200 in February and $500 in November then you will be required to give them a 1099.
There is some controversy in Washington about the 1099 requirements in Obama Care but that does not affect this requirement. In addition Congress just increased the penalty to $295 for each 1099 not prepared.
Let me know if you have any other questions. It is a pleasure serving you.
Larry Kopsa CPA
QUESTION ON GAMBLING WINNINGS AND DEDUCTIONS
Q. I filed the 1040 for 2009 and had gambling winnings of $2,500.00 but I lost that much and more so I did not put the winning on my return. Now I get a notice from IRS wanting $625.00. I did get a w-2g and I filed the short form, no itemized deductions. Do I owe the IRS since I lost more than I won?
A. Bad news. It sounds like you owe the money. Unfortunately, while you must claim all gambling winnings on your return, you can only deduct your losses if you itemize. So, if you’re not filing a Schedule A, you cannot deduct your gambling losses. For 2009, the standard deduction is $5,700 for an individual taxpayer and $11,400 for married.
“Casual gamblers” (in other words, nonprofessional gamblers) must report winnings on line 21 (other income) of a form 1040.
There are some additional rules with respect to gambling losses. You must be able to document your losses by type of loss, date, name and location of the gambling establishment and amount. You will need records of your losses. In addition, you cannot deduct more in losses than you report in winnings; even though you stated you lost more than you earned, your actual deduction is limited to the smaller of the two.
More bad news… you can most likely expect a notice from the state wanting their share.
Larry Kopsa CPA
A. Bad news. It sounds like you owe the money. Unfortunately, while you must claim all gambling winnings on your return, you can only deduct your losses if you itemize. So, if you’re not filing a Schedule A, you cannot deduct your gambling losses. For 2009, the standard deduction is $5,700 for an individual taxpayer and $11,400 for married.
“Casual gamblers” (in other words, nonprofessional gamblers) must report winnings on line 21 (other income) of a form 1040.
There are some additional rules with respect to gambling losses. You must be able to document your losses by type of loss, date, name and location of the gambling establishment and amount. You will need records of your losses. In addition, you cannot deduct more in losses than you report in winnings; even though you stated you lost more than you earned, your actual deduction is limited to the smaller of the two.
More bad news… you can most likely expect a notice from the state wanting their share.
Larry Kopsa CPA
Friday, February 4, 2011
INCOME TAXES - IT IS NOT AS IT SEEMS
Below is a link to a summary of how income taxes serves to redistribute wealth and the common misconception that lower tax rates help the wealthy. I thought that you might find interesting.
Subscribe to:
Posts (Atom)
