Category Archives: General Information

How Can You Avoid the New 3.8 % Obamacare Tax

A TAX BY WHATEVER NAME IS STILL PAINFUL

Cropped Doctor Patient Pic copyWhatever the name, taxes can be painful and the new tax is known by a few: the Affordable Care Act tax, the Obamacare tax, the Net Investment Income Tax (NIIT), or Medicare Tax.  Most media (and even the President) is using the name “Obamacare Tax”, so we will use that name for this writing.  For a full Q&A on the new tax, please see our Q&A on NIIT aka Obamacare Tax.

This is a tax on UNEARNED INCOME.  Unearned income is defined as income derived from sources other than  employment, such as interest and dividends from investments, or from rental property (source: investorwords.com). The types of income that will be affected by the new Obamacare tax are. Continue reading →

IRS Forms and Schedules You’ll Need

January 29 Header for ChildCare Site

On Your Mark… Get Set ….. Go!

Image Credit Market Watch MW-BN104_taxtim_20131014120127_MG

GETTING NERVOUS? CALL ME! 619-589-8680

The IRS has recently announced that they will not start processing 2013 tax returns until January 31, 2014. This means there is no reason to efile or mail in your tax forms before then.

Before sending in your tax forms, here’s a review of the key business tax forms you must file and the order you should be filling them out. Continue reading →

 

DO YOU KNOW WHAT YOU NEED TO BRING TO YOUR TAX INTERVIEW?

THIS TAX INTERVIEW CHECKLIST WORKS LIKE A CHARM

This is one of our most popular checklists.  It is the one we give our clients when we set up their appointments.  If your tax preparer hasn’t provided a checklist, you might find this helpful.  Whatever your preference, there are checklists out there for you.  If you like the look of this checklist, click HERE to download a PDF version.

 

 

 

 

 

 

 

 

 

 

 

 

 

Getting Tax Ready & Organized for 2014

CHECKLISTS TO HELP MAKE LIFE & ORGANIZING EASIER BEGINNING WITH BUSINESS TAX ORGANIZER

Business Tax OrganizerNo time like the present to get organized and we love checklists that help business owners increase their level of record keeping.  Some are more detailed than others, but we will be providing some of our favorites.

For starters, here is a Business Tax Organizer that can work for you.  You can set up files labeled with subjects exactly like the organizer document.
You can download and change to your specifications.  This is a 4-page document provided in PDF and Excel if you want to customize.

For the Excel document, like HERE, for the PDF version, click HERE.

 

 

 

Sacramento County Woman Sentenced to 3 years for Tax Evasion and Embezzlement Scheme

Franchise Tax Board, State of CASacramento –An Elk Grove Woman was sentenced to 3 years  in state prison for grand theft with a white collar crime enhancement, forgery,  and filing a false state income tax return, the Franchise Tax Board (FTB) announced.

Rosa Contreras, 45, was formerly employed as the  office manager for a Sacramento County dermatologist. Between 2007 -2010,  Contreras abused her position of trust and embezzled more than $182,000 through  forged checks, which she then deposited into her personal bank accounts.
Contreras also failed to claim this illegal income on her state income tax  returns for the same years. All income is subject to taxation including income  from illegal sources.

Contreras was also ordered to pay restitution  of more than $256,000 to her former employer representing the amount of the  embezzlement plus fees, penalties, and interest.

Sacramento County Superior Court Judge Laurel  D. White handed down the sentence Thursday, Jan. 2, in Department 8 of the  Sacramento County Superior Court. Sacramento County Deputy District Attorney  Ron Linthicum prosecuted the case.

Source: https://www.ftb.ca.gov/aboutFTB/Press/2014/release_02.shtml

Anyone who has knowledge of tax fraud may  call the FTB informant hotline at 1-800-540-3453.

FTB’s criminal investigation program identifies and  investigates cases of tax evasion and tax fraud to encourage compliance with  California income tax laws and maintain the public trust.

Affordable Care Act Tax Provisions: Employer Provided Health Coverage in Form W-2

Reporting Employer Provided Health Coverage in Form W-2

Cropped Doctor Patient Pic copyThe Affordable Care Act requires employers to report the cost of coverage under an employer-sponsored group health plan on an employee’s Form W-2, Wage and Tax Statement, in Box 12, using Code DD. Many employers are eligible for transition relief for tax-year 2012 and beyond, until the IRS issues final guidance for this reporting requirement.

The amount reported does not affect tax liability, as the value of the employer excludable contribution to health coverage continues to be excludable from an employee’s income, and it is not taxable. This reporting is for informational purposes only, to show employees the value of their health care benefits.

More information about the reporting can be found on Form W-2 Reporting of Employer-Sponsored Health Coverage.

Source: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions

Image Credit: ClipArt

Affordable Care Act Tax Provisions : Small Business Health Care Tax Credit

Financial PlanSmall Business Health Care Tax Credit

This credit helps small businesses and small tax-exempt organizations afford the cost of covering their employees and is specifically targeted for those with low- and moderate-income workers.

The credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have.

In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees. On Aug. 23, 2013, the Department of Treasury and the IRS issued proposed regulations which include information on the transition of eligibility for the credit and requiring the purchase of insurance coverage through an Exchange. Additionally, IRS Notice 2014-06 provides transition relief for employers in certain counties in Washington and Wisconsin with no SHOP coverage available. Learn more by browsing our page on the Small Business Health Care Tax Credit for Small Employers.

Source: http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions

Related Links:  http://www.irs.gov/uac/Affordable-Care-Act-Tax-Provisions-Home

 

 

 

What You Need to Know about NFP 501(c)(4) organizations

New Definition in 501(c)(4) Social Welfare Organizations

IR-2013-92, Nov. 26, 2013

WASHINGTON — The U.S. Department of the Treasury and the Internal Revenue Service today will issue initial guidance regarding qualification requirements for tax-exemption as a social welfare organization under section 501(c)(4) of the Internal Revenue Code. This proposed guidance defines the term “candidate-related political activity,” and would amend current regulations by indicating that the promotion of social welfare does not include this type of activity. The proposed guidance also seeks initial comments on other aspects of the qualification requirements, including what proportion of a 501(c)(4) organization’s activities must promote social welfare. Continue reading →

3 Tax Tips You Need to Know Heading Into 2014

Countdown to the New Year.

FoxNews irs-logo-tax-1040-formThe budget deal that Congress and President Obama struck at the beginning of the year to avoid the fiscal cliff resulted in seven tax increases. If you throw in the six tax hikes that are part of Obamacare,  that means there are 13 new taxes that may have hit you in 2013.

1.) The biggest potential taxes for wage earners include: Continue reading →

Do you need to issue a Form 1099-MISC for services rendered?

CAUTION TAX FORMS NEEDED!Who Must Issue 1099’s?

Businesses.  You must report payments to others for services.
Nominees.  If you are receiving income – but part of the income belongs to another.

BUSINESSES
If you paid $600.00  or more to a person or business during 2013 and may need to issue a form. This applies to business expenses only.  You don’t need to report payment for personal expenses or any payments made to a corporation.
This is true even if you are a one-person office.

Continue reading →

January Brings Important Tax Information

 DO YOU KNOW WHAT TO LOOK FOR?

CAUTION TAX TIME AHEAD!The IRS receives copy of all your tax-related forms. They are compared to your return.  You can’t miss any of these documents.  Watch the mail.

Envelopes will have “IMPORTANT TAX INFORMATION ENCLOSED” clearly printed.  You need those.

  • 1099’s.  You will either get 1099-INT or 1099-DIV for any account paying interest or dividends.  Keep them all together.  Make sure you have one for each account.
  • Real estate sales are on 1099-S.
  • Stock sales, 1099-B.
  • Pensions or IRAs, 1099-R. Continue reading →

For Child Care Providers: How To Calculate Time-Percent

Child Care Tax Specialists Website

What do we mean by Time Percent?

This percent is determined by adding up the number of hours you are using your home for business purposes and dividing this number by the total number of hours in the year (8,760). There are two types of hours to include: hours when day care children are present in your home and hours when children are not present but you are engaged in business activities.

For more information, read full post on How To calculate Time-Percentage

Interest Rates Remain the Same for the First Quarter of 2014

For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Larger IRS

 

IR-2013-96, Dec. 9, 2013

WASHINGTON ― The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Jan. 1, 2014.  The rates will be:

  • three (3) percent for overpayments [two (2) percent in the case of a corporation];
  • three (3) percent for underpayments;
  • five (5) percent for large corporate underpayments; and
  • one-half (0.5) percent for the portion of a corporate overpayment exceeding $10,000.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis.  For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during Oct. 2013 to take effect Nov. 1, 2013, based on daily compounding.

Revenue Ruling 2013-25 announcing the quarterly rates will be published  in Internal Revenue Bulletin 2013-52, dated Dec. 23, 2013.

Troubled or Modified Loans?

If you had a loan modified, or lost a property in foreclosure or short sale in 2013, I will need to have all the details.  You can’t put behind you until we deal with the tax issues.

For instance, you might have income from cancellation of part of the mortgage.  Look for Forms 1099-A and/or 1099-C in the mail.  I must see these.

What I also need from you are all the details surrounding what happened.  I need the history of all the loans associated with the property.  It will help to see mortgage statements.  Many times these cases involve more than simply tax law, so please be as thorough as possible.

If you have any questions – don’t hesitate to call.  The number is 619-589-8680.

Recordkeeping and Taxes Go Hand-In-Hand

January 29 Header for ChildCare Site

More than half of my clients are child care providers, and many of them became clients after attending one of my tax and record keeping seminars to the child care community through YMCA Child Resource Services. According to a recent report, the Bureau of Labor claims that one-third of all child care providers operate as self-employed businesses, and many of these child care providers care for children in their home.

Did you know that child care providers are 2.5 times more likely to be audited than non-self-employed filers?

To read the full article, go here.