Accounting World CPA & Consulting, PLC

13430 N. Scottsdale Rd. Suite 201, Scottsdale, AZ 85254
(480) 990-2727 | cpas@awcpas.com

Fri, 02/10/2012 - 09:59 — Accounting World

Work Opportunity Credit Expanded for Businesses Hiring Unemployed Veterans

The Vow To Hire Heros Act of 2011 provides a credit to businesses hiring eligible unemployed veterans. Both for profit and not for profit businesses can benefit, and the IRS just made it easier to claim by extending the deadline on filing the required certification and by authorizing the use of electronic transmission of signatures and necessary forms.

For employees hired between November 22, 2011 and May 22, 2012, employers have utnil June 19, 2012 to file their certification. The previously existing 28 day rule for certification will remain in place for hires on or after May 22, 2012.

The credit tops out at $9,600 for for-profit businesses and at $6,240 for non-profits. The amount of the credit an employer can qualify to receive depends on several factors, like the length of time the new hire was unemployed and the amount of wages paid.

For more information, see your CPA, or visit irs.gov.

Wed, 02/08/2012 - 09:29 — Accounting World

A Friendly IRS?

A Friendly IRSMention the IRS to nearly anyone and you'll likely get moans and groans. Tax time and the rigorous mental exercise that is tax filing are just part of that.

There is also the fearsome spectre of an IRS that can (and will) check your figures, your deductions, your life itself, and come back at you with levies and penalties if - somehow - you failed to achieve compliance.

Compliance is the issue. The current approach to compliance is to look back - sometimes long after a return has been filed - and look for inaccuracies. Then, when the circumstances warrant, long after taxes are paid and refunds issued, the IRS comes calling... often with a set of unattractive options and warnings.

But, IRS commissioner Doug Shulman has a different vision for the IRS in the future. Shulman's vision is for a modern, responsive and proactive IRS. If Shulman's vision comes to life, the IRS would implement a "real time" check of returns against a vast store of data and provide tax payers an opportunity to correct errant returns at the time of filing.

Just imagine... A friendly IRS.

Fri, 02/03/2012 - 10:03 — Accounting World

Tax Season Deadline Extended in 2012

This year, April 15, 2012 (the standard tax deadline date) falls on a Sunday. That would push the tax dealine back to the 16th this year, but...

On the following Monday, Emancipation Day will be observed in the District of Columbia pushing the deadline back yet another day.

That means the tax season deadline for 2012 is Tuesday, April 17, giving tax payers a couple of extra days to file for the second year in a row. 

Tue, 01/17/2012 - 08:56 — Accounting World

Small Business Tax Tip: Hiring Credits

The Hiring Incentives to Restore Employment (HIRE) Act, passed last March, provides  a credit to businesses that hired and kept a formerly unemployed worker on payroll throughout the year.

Businesses can apply for a 6.2% credit on wages paid to such employees, essentially offsetting the employer's obligation toward employee withholding.

According to the IRS, "In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns". 

http://www.irs.gov/newsroom/article/0,,id=220326,00.html

Mon, 01/16/2012 - 14:48 — Accounting World

Small Business Tax Tip: Health Care Credit

Last year's federal health care reform package included the Small Employers Health Care Tax Credit.

It applies to small business owners for tax years 2010 through 2013. This credit is aimed at:

  • companies with less than 25 employees
  • and where the average salary per employee is less than $50K.

The credit equals 35% of health care premiums paid by the company.

Fri, 12/16/2011 - 10:33 — Accounting World

Residential Energy Efficient Property Credit - Revised 2011

 

The Residential Energy Efficient Property Credit provides relief to individuals who installed alternative energy equipment like solar water heaters, solar electric panels, geothermal heat pumps and wind turbines. Part of the American Recovery and Reinvestment Act of 2009, it provides incentive to "go green" by implementing a variety of alternative energy sources.

This credit, which runs through 2016, allows 30% of the cost of qualifying residential alternative energy equiptment. But, a number of items covered previously won't be covered after 2011. The deadline for placing those items in service is Decmber 16, 2011.

Coming off the list are biomass heaters, central air conditioning units, insulation, roofing, conventional water heaters, windows, doors and skylights. These items will not qualify for the credit beginning 2012.

Items still qualifying include: heat pumps, solar energy systems, wind energy systems and fuel cells. The deadline for placing these items into service is December 16, 2016. But remember... you can only claim the credit on taxes for the year the item was put into service.

Fri, 12/16/2011 - 09:46 — Accounting World

Maximize Your Flexible Spending Accounts For 2011

If you have a Flexible Spending Account (FSA) set up with your employer, now is the time to prepare to get that money back by gathering all the receipts and invoices you can for expenses covered in your FSA.

Collect all of your receipts for covered services - from hospitals, clinics, doctors and pharmacies. Compare your receipts with your FSA allotment. Over the counter medications were covered in  previous years, but not for 2011.

Dental work, eye care - including glasses and contact lenses - and a number of other health programs may qualify as medical expenses. If you don't have all of your receipts, you can easily contact your clinic, pharmacy and other providers and ask them to print out your payments from their records. And, remember, expenses for which you are reimbursed through your insurance can't be deducted.

Wed, 10/05/2011 - 09:03 — Accounting World

1099 Amnesty Program

In its continuing effort to close the gap between taxes owed and taxes paid, the Internal Revenue Service (IRS) is investigating whether businesses have misclassified employees as independent contractors, thereby avoiding employment taxes like Social Security and Federal Unemployment withholding.

The IRS encourages businesses to come forward on their own and address the misclassification of employess by offering the Voluntary Worker Classification Settlement Program (VWCSP) popularly called 1099 Amnesty.

Under the VWCSP, part of the IRS "Fresh Start" initiative, businesses could avoid their liability for years of unpaid taxes by voluntarily reclassifying workers and by paying a minimal payroll tax obligation now.

Scottsdale Arizona CPA firm Accounting World encourages businesses to take advantage of the program noting that businesses with misclassified workers could face years of back taxes, penalties and late fees. In today's economy, a large, sudden and unexpected tax burdern might be more than many businesses could withstand.

In response to the overwhelming need to address this issue, and to save businesses the potentially catastrophic result of missing this opportunity, Accounting World encourages businesses to take advantage of the VWCSP and has instituted a specialized 1099 Amnesty Program to help businesses determine whether they are compliant - and to guide them through the reclassification and payment process.

If you're not sure where you and your company stand on this important issue, don't wait for the IRS to come calling. Find out now. If you wait until you're under investigation or audit, you won't qualify for the program and could be liable for a crippling tax burden.

Wed, 09/28/2011 - 09:04 — Accounting World

The Expanded Adoption Tax Credit

If you are adopting a child in 2011, you'll be happy to know that the Affordable Care Act increased the adoption credit and made it refundable.

Qualified adoption expenses are those expenses that are essential and necessary to the legal adoption of a minor child (under 18 years of age) or of one incapable of caring for him or herself due to physical or mental limitations or both. If you adopt a special needs child, you may qualify for the full amount of the credit even if your expenses were minimal. At certain income levels the amount of the credit is reduced, and at just over $222,000 it phases out completely.

Adoption can be a long, tedious and expensive process. Expenses can include adoption fees, attorney fees, court costs and travel. As always, document every expense. Please note that taxpayers seeking the adoption credit must file a paper return and Form 8839 and attach all documents supporting the adoption and expenses.

An IRS announcement early this month included a note about processing times for the credit. Because the IRS must safeguard against improper claims, it expects some delay in processing. If your claim is held up for review, you will still receive any refund due beyond the adoption credit while the review is conducted.

IRS Form 8839, Qualified Adoption Expenses, is available for download through the IRS website. Also, you can order the form by calling 800-TAX-FORM (800-829-3676).

Fri, 09/23/2011 - 10:07 — Accounting World

Can I Deduct Work Expenses on My Taxes?

If you've purchased business related equipment, paid tuition for work related education, or paid for business travel and lodging, you probably want relief. Paying taxes on money spent on work related expenses doesn't seem fair. If you haven't  been (and won't be) reimbursed for those expenses, you'll want to itemized them as deductions using Schedule A of form 1040.

 

As always, we recommend that you document everything. Keep records of your expenses, and keep receipts. There are some qualifiers to be met, of course, and not every expense is deductible. What follows should get you started, but please do check with your CPA.
 
To qualify as a deduction, expenses must be for the sole purpose of conducting your business. Qualifying expenses must be common to persons in your field of business. For instance, if you're the only sales executive your niche claiming pony rentals as a business expense deduction, the IRS might find that a bit strange. And, expenses for which you have been (or will be in the future) reimbursed do not qualify. And, finally, your itemized deductions must exceed 2% of your adjusted gross income. You will only be allowed to deduct the amount in excess of that 2%.
 
Exactly which expenses qualify will be specific to your business and circumstances, so do check with your CPA . But, here are some of the more common expenses you'll want to keep in mind.
 
  • Liability insurance premiums that you pay. 
  • The cost of continuing education, if job related.
  • Union Dues and Fees, and trade association fees.
  • Professional license fees.
  • Business Mileage, Lodging and Meals while on business away from home.
  • Home office expenses, if a home office is essential and required by your employer.
  • Equipment.
  • Furnishings.
  • Some clothing and dry cleaning, particularly uniforms, where the clothing is not suited for everyday use.
Exactly what you can and can't write off will depend on your type of business and unique situation. You'll need to talk to your CPA about your exact circumstance. They'll help you get a handle on business related expenses and start planning to reduce your tax liability.