Thursday, December 30, 2010

Why You Might Not Be Able To File Your Taxes Early This Year

After months of wheel-spinning and debates over the future of the Bush Tax Cuts, we finally have certainty regarding the tax code for the next two years. Unfortunately for the IRS, these decisions came in a little later than expected. As a result, it doesn't look like the IRS will be ready to start accepting tax returns for a significant percentage of taxpayers until mid-February at best.

The taxpayers primarily affected include those who:
  • Itemize their deductions through a Schedule A. This includes anyone who would like to write off Mortgage Interest, Medical Expenses, Charitable Contributions, etc.
  • Have Casualty or Theft Losses to deduct through Form 4684
  • Take a tuition and fees deduction through Form 8917
  • Take a deduction for classroom materials purchased (only applies to qualifying educators)
  • Claim the District of Columbia First-Time Homebuyer Credit

Additionally, a smaller percentage of taxpayers will be affected if they need to use any of the following forms:
  • Form 3800, General Business Credit
  • Form 5405,  First-Time Homebuyer Credit and Repayment of the Credit
  • Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit
  • Form 8834, Qualified Plug-In Electric and Electric Vehicle Credit
  • Form 8910, Alternative Motor Vehicle Credit
  • Form 8936, Qualified Plug-In Electric DriveMotor Vehicle Credit

It has been estimated that roughly 1/3 of taxpayers itemize deductions. However, it is unlikely that the majority of taxpayers falling in the aforementioned categories will be ready to file early regardless, as most of the documentation required to file does not arrive until February.

Friday, December 17, 2010

It's Official: The "Middle-Class Tax Cuts" Have Been Inked In

With a few pen strokes, President Obama has signed the $858 billion tax bill. Most of the bills provisions will take effect for the next two years, while some are set to expire at the end of 2011. Will it further stimulate the economy? Only time will tell.

Here's a video from today's signing:

Wednesday, December 8, 2010

Bush...errrr....Obama Tax Cuts: Whats New and How Will They Affect You?

While you will be hard-pressed to find anyone who agrees entirely with the extension and additions to the Bush-Era Tax Cuts (or Middle Class Tax Cuts as the White House has been calling them), it looks like we finally have some certainty moving into 2011. Will we see a decrease in unemployment and significant economic growth as a result of the cuts? That is to be determined.

President Obama held a press conference yesterday to address the extension of the tax cuts:

Thursday, December 2, 2010

The Small Business Health Care Tax Credit: What You Need to Know

Earlier today, the IRS released the Form 8941 for qualifying employers to use when claiming the Small Business Health Care Tax Credit. The greatest beneficiaries of this credit will be companies employing 10 or fewer full-time equivalent employees earning an average of $25,000 or less (and pay at least half of the premiums for their employees' health insurance coverage). This credit is not indexed for the cost of living throughout the US, so it is likely that you won't see very many Los Angeles based employers receiving the maximum credit. The credit is phased out for companies employing 25 or more full-time equivalent employees earning an average of $50,000 or more.

Thursday, November 11, 2010

2010 Filing Season Statistics

Yesterday, the IRS released statistics from the 2010 filing season. What shouldn't come as a surprise is that the percentage of federal returns e-filed continues to rise. This is largely due to an increase of taxpayers who self-prepared their returns this year. At the same time, the number of returns filed dropped by 2 million from '09. Additionally, the percentage of filers who received a refund dropped by only half a percent.

Wednesday, November 10, 2010

Where Do We Currently Stand with the AMT Patch? Bush Tax Cuts?

Taxpayers are getting nervous. The IRS is getting nervous. Lawmakers are...working on it. With so many questions still lingering regarding the fate of AMT and the Bush tax cuts following the midterm elections, uncertainty is clouding  many taxpayers' year-end tax planning efforts.

So where do we currently stand with AMT? This article from The Hill sheds some light on the widely expected patch that will yet again surface. And what about the Bush Tax Cuts? Forbes has provided some potential outcomes along with their likelihood in this recent article.

In the end, it is hard to believe that any significant changes will take place between now and December 31st. Rather, we will likely see a year-end scramble to preserve  the status quo and table discussions about their future until 2011, when a similar chain of events will likely repeat itself.

Monday, November 8, 2010

A Closer Look at the 1099 Reporting Requirements Coming in 2012

It wasn’t long after the passing of the Patient Protection and Affordable Care Act (H.R. 3590) that people were alerted to the adjustments made to the business expense reporting requirements taking effect in 2012. These changes, which were thought to have been introduced to help fund the health reform bill, are a game-changer in the 1099 reporting world which had mostly been reserved for reporting payments to independent contractors. Simply stated, businesses (sole proprietors, partnerships, corporations, etc.) will now be required to issue a 1099 for all goods and services purchased with a cumulative total of $600 or more received from ANY, non tax-exempt business.