Monday, May 16, 2011

A Belated Farewell: 1099 Reporting Mandate is Eliminated

I could come up with a number of excuses how I missed this story... On April 14th, 2011 President Obama signed H.R. 4, the “Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act of 2011," putting an end to the pending requirement mandating all businesses 1099 any other business (Sole Prop, LLC, Corporation, etc.) they purchase goods and/or services from. You may recall our initial article about Section 9006 of H.R. 3590 where we outlined the mandate that many believed added undue financial burden to businesses throughout the country through extra data collection and accounting procedures.

Well I am happy to report that there is no more need to be alarmed, since, for now, this requirement has been officially repealed.

To learn more about the repeal and H.R. 4, please visit the links below:
White House Press Release on H.R. 4
Article from Forbes shortly after Congress agreed on the repeal

Friday, April 29, 2011

We're Back! Top-Three News Stories I Missed Because of Tax Season

It has been a very busy tax season, but I am happy to report that our blog is back and I'll be posting away. After sifting through the hundreds of Google Alerts (and thousands of news stories held within) in my inbox, I am ready to unveil my top news stories I neglected during tax season.

#3: Justice Dept. Goes After HSBC To Name Possible US Tax-Dodgers In India
It appears as though the Justice Department is ready to move on from UBS and start courting HSBC, who is apparently helping many US Citizens/Residents invest money in India and take advantage of they very high interest rates. That said, it does appear as though the IRS may start focusing more of their energy on higher bank account balances (see this story). The way the law is currently written, the Department of Treasury wants anyone with more than $10k invested abroad to be reporting their accounts annually via the TDF 90-22.1.

#2: AICPA's Call for AMT Repeal, Simplification Strikes Chord With Lawmakers
It seems like every year, I get to sit down and have that "fun" conversation with more and more clients about the Alternative Minimum Tax and how their deductions will provide them with no benefit. And while we try to tell our clients stories about how someday congress will get it right, we never see any progress. Well, the AICPA is lobbying hard, and they may have a few more people on board this year. Are we expecting much to come from this? Not really. But we can only hope some change is on the horizon.

#1: IRS Commissioner Seeks Changes in Annual Tax Filing Process
Are we getting closer to pre-filled 1040's? Possibly. Commissioner Shulman is trying hard provide taxpayers with up-front information so they can prepare their tax returns knowing that they have covered all of the bases. While Commissioner Shulman feels this is a step in the right direction for lowering the massive amounts of letter audits sent every year, many others believe this may actually increase the tax gap even further. While taxpayers are required to report ALL income earned during the year, many people often report income because they don't want to be caught forgetting an item the IRS may already know about. So what is going to happen when taxpayers know from the beginning how much income the IRS is expecting them to report?

Friday, January 21, 2011

The IRS Announces Processing Date For Delayed Returns

You can finally mark the date on your calendar the IRS has announced that they will begin processing tax returns, that were delayed to accommodate last minute changes to the 2010 tax law, on February 14th. This comes as a relief to many people who anticipated they may not be able to file early this year.

To find out if your filing will be delayed until the 14th, please read this article.

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.