The Internal Revenue Service has a proposed regulation that will change the extension time for Partnerships, Corporations and Fudiciary Returns from Six Months to Five Months. It makes sense though. Think about it. If you corporate return is on extension till September 15 yet August 15 is the individual extension deadline then what?
This will be in effect for returns due January 1, 2009.
If you like leisure reading of IRS regulations, here is this one.
NATP has reported a few issues that have arisen with the economic stimulus package. See below.
Is it truly spending cash or are you paying down debt? You hear so much talk about what you should do with your money and what not to. The government wants you to use it to stir the economy. Common sense says pay some credit cards down. Others say it’s for a vacation.
So we want to hear from you. Comment and tell us what you are doing with your money now that checks are arriving.
Some are very upset that they may not get a check from the Internal Revenue Service with regards to this highly touted economic stimulus check. Watch this video and see if you fall in these 6 categories of people who won’t. Click here for the video
PS: Pay attention to the last reason why you may not get a check.
We are curious what every one will be doing with their rebate checks. Leave a comment below and let us know what you plan to spend yours on or save it in.
Have you ever thought about that question? Does it really irk you that you pay taxes that your employer should be paying? Man, do I have the answer for you. This, to me, is one of the most incredible new things the IRS has done. Starting in 2007 if you feel that your employer should be taking taxes out and they are not, you can file a specific form and it’s completely private. Your employer doesn’t have to know a thing! And the best part is, you don’t have to pay the self employment tax! Yes, you read this correctly.
So, if you have been really trying to stick it to your employer about him/her not paying your taxes and giving you that dreaded 1099. You know you pay that 15.3% tax and it just makes your stomach turn. Now, you can turn the tables on your boss without them knowing. Now, if you are the only “subcontractor” that works at your office or business establishment then it may be not in your best interest to play this card but you know what’s best for you.
Ladies and gentlemen, this is one of the most progressive moves the Internal Revenue Service has made. This will change the landscape of people who misclassify their workers. This has been a pain in the side of IRS for a long time, and this may be one of the smarter moves they have made.
On the flip side, it may be creating unnecessary work for agents of the IRS. They could be reading alot of disgruntled employees who really want to stick it to their employers. Who knows what will become of this? But this is HUGE.
If you think you may truly be an employee and yet your employer won’t do the right thing, you may want this form. Here is the form http://www.irs.gov/pub/irs-pdf/fss8.pdf
The payout schedule is now set. The first rebate will be wired on May 2 to taxpayers who had their 2007 refunds deposited directly to their bank accounts. IRS will finish wiring these rebates by May 16. The order depends on the last two digits of the social security number of the primary filer. the lower the number, the quicker payment. Paper checks will go out May 16 to non direct depositors based again on the last two digits of their social security number. If you owe back taxes are owed, the Service will grab a filer’s rebate.
This will be a popular post. Everybody has been asking if they efile and do direct deposit when will they get their money. Here is the Internal Revenue Service Schedule of deposits. Click here for the schedule.
January and early February always brings out the best in tax clients. I am sure you have thought about asking your accountant some crazy questions but refrained because they would feel like idiots. And you know what? I can respect that! I encourage that because 9.9 times out of 10 it is crazy and ludicrous. But for the majority that want to test out the patience, sanity and trigger finger of tax accountants I just want to give you a couple of hints of things not try. Here is the list.
1. No your dog is not a dependant. I know you feed him and provide for him but it won’t work. Sorry I don’t make the rules.
2. Your sister’s kid is not eligible to be a dependant on your return just because she does not need them on their return this year. I don’t make the rules.
3. You made $15,000 in income and have 30,000 in mortgage interest. Ok. Listen. There is a possibility this could happen but the stars have to align right. Probably not the smoothest move on your return but if it’s truly legit ok.But this is asking for an investigation.And a thorough one.
4. It’s 2008 right now. No, you can not go buy a car and claim it on last year’s return now. There is a date on most receipts. This won’t fly.
5. Botox and Breast implants are usually not deductions. Now, most woman probably just zoned in on the word “usually”. So when is it a deduction. There is a good shot if you are a stripper it will fly. That’s about all I care to talk about though. If you think of other ways please comment below.
6. You and your spouse don’t live together but you both want to claim the children. Who wins? I am not a marriage counselor nor do I claim to be one. So, you and your spouse need to work this out. Most divorce decrees have it outlined on them. But if divorce is not in the picture please try and play nice.
7. You must have done the tax return wrong because I owe money. HA! I love this one! Some accountants do make mistakes. Granted. However, you have 1 w-2 and you think it’s a mistake. Put the subpoena back in the purse. Check your w-4 at the office because they may not be taking enough taxes out of your checks. This happens alot.
Feel free to give me some more of your favorites.
It’s the dead of winter which means it’s tax time. Most people can’t stand this time of year. It’s full of paperwork and accounting/tax questions that you don’t care to answer. The fear of owing Uncle Sam an ungodly amount of money is enough to drive you mad. It’s a good thing we are knee deep in NFL football playoffs to keep us sane.
If you are a small business owner, one of the things I would recommend is having a good accountant AND having a good bookkeeper in your office using QuickBooks to handle your accounting. I can assure you this makes your job a lot easier. A LOT! That can make your accountant so much happier because of the ease of use of QuickBooks. Of course, make sure you have a bookkeeper that is proficient enough to make good entries in QuickBooks so that the Accountant doesn’t have to pull their hair out to understand what you have done.
But at this time, let’s look at a few tax deductions that may help you as you save as much as possible.
1. Put money in a fund or retirement savings plan such as Small Business 401K, IRA, SIMPLE, SEP and Keogh. Check out the new small business 401k. Small businesses are entitled to a tax deduction such as a $500 tax break on this new 401K.
2. It may be a little late for this one but at the end of the year, you should have been spending money to buy those needed supplies that you have been waiting to get. If you see yourself having some taxable income in the future, try to get those supplies or computers you need. Under the IRS tax code section 179 small businesses, including those who are sole proprietors, are entitled to deduct $125,000.
3. Keep track of your mileage. The IRS increased the rate to 48.5 cent a mile for 2007. Make sure you have a good mileage log though. The Internal Revenue Service is not stupid. They want good records for your miles or they will disallow the deduction. The mileage increases to 50.5 cents a mile in 2008.
4. Here is a SWEET new law for 2007 that all homeowners need to be aware of. Mortgage Insurance Premiums - Some borrowers may be able to deduct mortgage insurance premiums paid on mortgages taken out or refinanced during 2007. A borrower who prepays premiums for later years may deduct only the premiums that relate to 2007, except for prepayments for guarantees made by the Department of Veterans Affairs or the Rural Housing Service. Only mortgage insurance contracts issued during 2007, 2008, 2009 or 2010 qualify for this new itemized deduction. Proceeds of the mortgage, secured by a first or second home, must be used exclusively to buy, build or improve these homes, or alternatively, to refinance a mortgage, secured by the home and used for these purposes. Home-equity loans used for other purposes are not eligible. The deduction for mortgage insurance premiums is phased out for taxpayers with adjusted gross incomes exceeding $100,000 ($50,000, if married filing separately). Claim this deduction on Schedule A, Line 13. Further details are in Publication 936.
Now the biggest fear of most small business owners is to have trouble with the Internal Revenue Service, and I can’t blame you. They can pretty do what they want so make your life easy with these 5 simple tips.
1. Keep all your receipts. You know I can’t understand why this is so difficult for people. I have a fail safe idea here. Take a shoe box and keep it in your truck. Label it January 2008 and stick every receipt you have in that box. Then when February 1, 2008 comes, grab another shoe box. Now, if you do this right, it will make your life easy. Think about it. Most purchases you have will come thru your work truck at some point. So why not keep the box there? If you have proof of your deductions, the IRS will be happy.
2. Report your income ALL of it! I had a guy come to me who drive a 2006 Lexus SUV, a BMW and a house on the lake. He had on his books that he made 30,000 a year. He mostly dealt with cash and felt that he could get away with it. NO. You see the Internal Revenue Service has access to all your accounts. Cash, Credit, and your assets. They can do a lifestyle audit and see that some things don’t add up. Don’t be dishonest. It’s not worth it. These penalties will be more costly than any tax you will pay and you will spend more time in jail then OJ and Michael Vick combined.
3. Do not play around with payroll taxes. If you collect payroll withholding from employees and you get behind this is quite serious. IRS doesn’t mess around here. If you want to see their ugly side, start gambling on 941 taxes. This isn’t your money. I have seen big businesses go down because they choose not to pay these. Instead they use that money for something else. Bad move. If you collect taxes for your employees, consider that money gone. Stick it in another account or have a payroll company do it.
4. Have a bank account for your business AND one for your personal. I can not reiterate how important this is. The Internal Revenue Service hates to see the two intermingled. Imagine if you buy something from Wal-Mart and you can’t find the receipt. Now, you only have one account. Do you think the IRS is going to give you that deduction? No sir. How do they know that Wal-Mart purchase is not for some Huggies or that new Spider Man DVD? Keep it separate guys. If they see you have taking the effort to separate the two, you have a much better fighting chance defending deductions.
5. Don’t be afraid to owe money. Ok. It’s April 10th and your tax person says you owe $7,000. Ok, yes that stinks. Yes, it’s probably Jack Daniels time. Yes, your heart did just skip a beat. However, all is not lost. You may not have the money right then nor will you come up with it by the deadline on the 15th but just call them up and make payments. They are willing and happy to do it. What they can not stand is when they have to look for you. You won’t return calls or answer the letters. Now, they just go and get the money from your account and take as much as they can. So, if you had 5,000 in the bank for some down payment on a house, car or 60 inch plasma, they will keep it and not refund it.
Now with this being said, make sure you get a good accountant to handle your taxes. They know the laws and they know how to save you money.
Annie owns a small charter boat company down in Charleston, South Carolina. She pretty much started the company of a whim and a prayer. She had no accountant or accounting software. She got with our company and now she has a system that is nearly flawless. She keeps her shoe box in her SUV and has QuickBooks running on her computer. But, one thing she does is has us review her books once a quarter to help her with a few issues that she has no clue on. It’s cheaper than having to pay monthly for her accounting, and it keeps more profit in her pocket.
Her company is now netting around $68,000 a year, and she is still sane. How does she do it? Annie says, “ I can’t tell you how much getting trained on QuickBooks has helped. I won’t say I am an expert but I know how to move around in it without being scared. And my accountant reviews my account remotely so I don’t have to take time out of my day to even bring it in their office. It’s wonderful!
There are plenty of people like Annie around the country, and maybe you can relate to the start up anxities of a business. We can help with any questions you may have. Feel free to email us here info@capitalconcepts.net
