Don't you just hate preparing those year end W-2 forms, giving copies to the employees and sending the information off to the IRS. Well if President Obama gets his way you will be filing W-2's more often.
In President Obama's 2012 budget there is a provision that would require W-2s to be reported on a quarterly basis, rather than annually. But don't worry. That same provision was in prior years budget and did not get passed.
We will keep you posted.
Larry Kopsa CPA
Wednesday, March 9, 2011
Tuesday, March 8, 2011
TAXES AND BREAST PUMPS
The IRS has changed their minds on the cost of breast pumps and other lactation supplies and now have classified as a medical expense that can be reimbursed by flexible spending accounts.
Late last year the IRS privately ruled that those costs weren’t deductible medical expenses and could not be reimbursed. I wonder why they changed their mind?
Late last year the IRS privately ruled that those costs weren’t deductible medical expenses and could not be reimbursed. I wonder why they changed their mind?
Saturday, March 5, 2011
ACCRUAL BASIS CORPS CAN STILL GET A 2010 DEDUCTION
If you are a calandar year corporation you can still reduce your corporate tax bill for 2010. Businesses that are using the accrual method of accounting (not the cash method) can take a 2010 deduction for payments of accrued salary and bonuses made to workers on or before March 15.
Unfortunately this does not apply to owner employees. Accrued amounts paid to them can be deducted for 2010 only if the payments are reported on their 2010 returns. The same rule applies to owners of any interest in an S corporation, personal service firm or partnership.
Additionally, charitable contributions can be made up to March 15th and be deducted on the accrual basis 2010 corporate return.
Larry Kopsa CPA
Unfortunately this does not apply to owner employees. Accrued amounts paid to them can be deducted for 2010 only if the payments are reported on their 2010 returns. The same rule applies to owners of any interest in an S corporation, personal service firm or partnership.
Additionally, charitable contributions can be made up to March 15th and be deducted on the accrual basis 2010 corporate return.
Larry Kopsa CPA
Thursday, March 3, 2011
DO YOU BARTER?
Occasionally I get questions about bartering. There are even companies out there that organize bartering opportunities. These companies claim that you increase sales because potential clients have "barter points," and they look for companies that will accept their barter points. You get barter points and then need to look for someone that you can spend the points on. The normal bartering is someone saying that they will repair my car if I do their tax return.
There are income tax consequences and the IRS is concerned that people are avoiding paying tax by trading taxable services for personal items. There is even a question on the tax return asking if you barter. The IRS auditor always asks about bartering.
The IRS released the following information about bartering. It thought you might be interested.
Larry Kopsa CPA
Four Facts About Bartering
There are income tax consequences and the IRS is concerned that people are avoiding paying tax by trading taxable services for personal items. There is even a question on the tax return asking if you barter. The IRS auditor always asks about bartering.
The IRS released the following information about bartering. It thought you might be interested.
Larry Kopsa CPA
Four Facts About Bartering
In today’s economy, small business owners sometimes look to the oldest form of commerce – the exchange of goods and services, or bartering. The IRS wants to remind small business owners that the fair market value of property or services received through barter is taxable income.
Bartering is the trading of one product or service for another. Usually there is no exchange of cash. However, the fair market value of the goods and services exchanged must be reported as income by both parties.
Here are four facts about bartering that the IRS wants small business owners to be aware of:
1. Barter Exchange A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves. Whether this activity operates out of a physical office or is Internet based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS.
2. Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.
3. Taxes Income from bartering is taxable in the year it is performed. Bartering may result in liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss.
4. Reporting The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.
3. Taxes Income from bartering is taxable in the year it is performed. Bartering may result in liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss.
4. Reporting The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.
For more information see the Bartering Tax Center in the Business section at http://www.irs.gov.
Wednesday, March 2, 2011
COMMENT ON WHY NO COMMENT ON OBAMA BUDGET
Q. I have been following your blog and I have been waiting for you to chime in on the tax consequences of President Obama’s budget proposal. Did I miss your take?
A. Actually I have not commented much on the tax proposals for a couple of reasons. First of all it’s probably all talk. The chances of his proposal getting through Congress are slim. Secondly, it can get confusing. When people read about a proposed change then next thing you know is that someone get’s it wrong and think that it is the real deal. You know what happens next. It hits the social network and people even get more confused. Finally, there has been a lot written about the proposal so I thought that people that were interested probably already had read the articles.
If you want a summary here is a piece from the Journal of Accountancy.
http://r.smartbrief.com/resp/BeiYvscgyzgKoOqkajaoyAalPcWE?format=standard
A. Actually I have not commented much on the tax proposals for a couple of reasons. First of all it’s probably all talk. The chances of his proposal getting through Congress are slim. Secondly, it can get confusing. When people read about a proposed change then next thing you know is that someone get’s it wrong and think that it is the real deal. You know what happens next. It hits the social network and people even get more confused. Finally, there has been a lot written about the proposal so I thought that people that were interested probably already had read the articles.
If you want a summary here is a piece from the Journal of Accountancy.
http://r.smartbrief.com/resp/BeiYvscgyzgKoOqkajaoyAalPcWE?format=standard
Tuesday, March 1, 2011
HOW TO FIX OVERPAYMENT INTO AN IRA
Q. I accidentally contributed more than $6,000 to my Roth IRS for 2010. I am 61. Am I going to jail?
A. No jail time for this. As a matter of fact you can most likely solve this problem with a call or two. Call your IRA custodian and he or she should be able to walk you through the steps that you need to take.
Generally, the amount that must be withdrawn is computed on Form 5329 Additional Taxes on Qualified Plans (including IRS’s) and Other Tax Favored Accounts. This is a large form not because of the information that goes on it but rather to just fit the title.
If you fail to withdraw the excess contribution you will be liable for a 6% penalty for every year you have over contributed.
Larry Kopsa CPA
A. No jail time for this. As a matter of fact you can most likely solve this problem with a call or two. Call your IRA custodian and he or she should be able to walk you through the steps that you need to take.
Generally, the amount that must be withdrawn is computed on Form 5329 Additional Taxes on Qualified Plans (including IRS’s) and Other Tax Favored Accounts. This is a large form not because of the information that goes on it but rather to just fit the title.
If you fail to withdraw the excess contribution you will be liable for a 6% penalty for every year you have over contributed.
Larry Kopsa CPA
BERKSHIRE HATHAWAY ANNUAL LETTER
Here is Warren Buffett's annual letter. Even if you are not an investor it is interesting to learn how he thinks about business and business climate.
http://www.berkshirehathaway.com/letters/2010ltr.pdf
http://www.berkshirehathaway.com/letters/2010ltr.pdf
Subscribe to:
Posts (Atom)
