Sunday, October 31, 2010
Saturday, October 30, 2010
As you probably recall, the tax went into effect on July 1. Providers of indoor tanning services collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720. Here is a good link to the IRS with Q&A on the tanning tax.
Friday, October 29, 2010
Many of you may be involved as volunteers for non profits. If the non profit has has employees and provides health insurance you might pass this on to the nonprofit.
The Health Care Act created a credit for small businesses and small non profits that provide health insurance to their employees. At the time it appeared to us that many non profits might qualify for this credit. The problem was we were not given any guidance on how to get the credit for nonprofits. Now the IRS has given us the answer.
The Internal Revenue Service has posted information on how a nonprofit under Section 501(c) can claim the Small Business Health Care Tax Credit by filing a Form 990-T with an attached Form 8941 that explains how the claimed credit was calculated. The credit, which is designed to encourage small businesses to offer coverage to their employees, stipulates that the employer must cover half or more of coverage costs for some employees based on the single rate. Companies must have fewer than 25 full-time workers, or the equivalent, to qualify. Here is a complete explanation.
Let me know if you have any questions or need more information.
Larry Kopsa CPA
Wednesday, October 27, 2010
You always hear motivational speakers say that you should have a personal mission statement. That is good advice. I have one and I try to live my life around my mission. I thought that I would share with you Jessica's mission statement. She really lived this.
Aim high. Ask questions.
Listen well. Continue to study
and learn. Teach. Volunteer.
Travel. Develop a hobby.
Above all, enjoy.
There is time for everything.
Unfortunately her time was cut short.
Tuesday, October 26, 2010
Larry Kopsa CPA
Nearly 9 percent of Americans get at least one massage every year, and they’re probably healthier for it: A new study suggests that massage not only relaxes the body, but also boosts the immune system and prompts beneficial hormonal changes. Researchers at Cedars-Sinai Medical Center in Los Angeles subjected volunteers to what was perhaps the most pleasant experiment ever devised: Half received 45 minutes of deep-tissue Swedish massage, while the rest received light-touch massage for the same period.
Just a single massage session induced marked physiological changes. Blood and saliva samples from the Swedish group registered lower levels of cortisol, a hormone elevated by stress, and arginine vasopressin, a hormone that can elevate cortisol; they also showed a rise in lymphocytes, white blood cells that aid the immune response. The light-massage recipients showed a greater increase in the “Love hormone” oxytocin and a greater drop in a different hormone that prompts the release of cortisol.
Despite the popularity of massage, psychiatrist and study author Mark Hyman Rapaport tells The New York Times, “there hasn’t been much physiological proof of the body’s heightened immune response following massage until now.”
Health and Science
October 8, 2010
I mentioned above that this was a “feather in my hat.” I thought you might be interested in where that expression comes from. It apparently originated back in the olden days when regularly men wore hats. Attorneys in Washington DC that would argue a case before the Supreme Court would stand at a lectern in front of the Supreme Court judges and make their argument. On the table was a pen. In those days the pen had a quill (feather). After the attorney had made his argument, and attorneys being attorneys, he would shoplift the pen as he left the podium. He would then put the feather in their hat to let everyone that saw him know that he was an important attorney whom had testified before the court. If attorney’s testified more than once they would have two or more “feathers in their hat.”
Wednesday, October 20, 2010
The IRS will never request financial information via e-mail. Never give financial information over the phone or by e-mail.
Monday, October 18, 2010
Thursday, October 7, 2010
The Jobs bill encourages the purchase of heavy SUVs with the new 50% bonus depreciation’s return for 2010 Here are the tax breaks for firms buying a new heavy SUV:
If your business buys a new $50,000 SUV with a loaded weight of over 6,000 pounds and puts it in service by Dec. 31
You can can expense $25,000, the maximum for vehicles
It can claim $12,500, half of the remaining $25,000 cost, as bonus depreciation
Normal depreciation is 20% of the $12,500 balance
Total first-year write-off...$40,000
Assuming 100% business use
For new only, used heavy SUVs do not get bonus depreciation
Enhanced small business expensing (Section 179 expensing). To help small businesses quickly recover the cost of capital outlays, small business taxpayers can elect to write off these expenditures in the year they are made instead of recovering them through depreciation. Under the old rules, taxpayers could generally expense up to $250,000 of qualifying property—generally, machinery, equipment and software—placed in service in during the tax year. This annual limit was reduced by the amount by which the cost of property placed in service exceeded $800,000.
Under the Small Business Jobs Act, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment limit to $2,000,000. The Small Business Jobs Act also makes certain real property eligible for expensing. Thus, for property placed in service in any tax year beginning in 2010 or 2011, the $500,000 amount can include up to $250,000 of qualified leasehold improvement, restaurant and retail improvement property.
Extension of 50% bonus first-year depreciation. Before the Small Business Jobs Act, Congress already allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property placed in service in 2008 or 2009 by permitting the first-year write-off of 50% of the cost.
The Small Business Jobs Act extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (as well as 2011 for certain aircraft and long production period property).
Deductibility of health insurance for the purpose of calculating self-employment tax. The Small Business Jobs Act allows business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in calculating their 2010 self-employment tax.
Cell phones no longer listed property. This means that cell phones can be deducted or depreciated like other business property, without onerous recordkeeping requirements.
Boosted deduction for start-up expenditures. The Small Business Jobs Act allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010. The amount that a business can deduct is reduced by the amount by which startup expenditures exceed $60,000. Previously, the limit of these deductions was capped at $5,000, subject to a $50,000 phase-out threshold.
100% exclusion of gain from the sale of small business stock Ordinarily, individuals can exclude 50% of their gain on the sale of qualified small business stock (QSBS) held for at least five years (60% for certain empowerment zone businesses). This percentage exclusion was temporarily increased to 75% for stock acquired after Feb. 17, 2009 and before Jan. 1, 2011.
Under the Small Business Jobs Act, the amount of the exclusion is temporarily increased yet again, to 100% of the gain from the sale of qualifying small business stock that is acquired after September 27, 2010 and held for more than five years. In addition, the Small Business Jobs Act eliminates the alternative minimum tax (AMT) preference item attributable to such sales.
S corporation holding period for appreciated assets shortened to five years. Generally, a C corporation converting to an S corporation must hold onto any appreciated assets for 10 years or face a built-in gain tax at the highest corporate rate of 35%.
The 2010 Small Business Jobs Act temporarily shortens the holding period of assets subject to the built-in gains tax to 5 years if the 5th tax year in the holding period precedes the tax year beginning in 2011.
Revenue raisers. These tax breaks come at a cost. To mention a few of these unfavorable provisions, information reporting will generally be required for rental property expense payments made after Dec. 31, 2010, and increased information return penalties will be imposed.
Please keep in mind that I've described only the highlights of the most important changes in the Small Business Jobs Act. If you would like more details about any aspect of the new legislation, please let me know.
Larry Kopsa CPA
Friday, October 1, 2010
Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date
A crucial filing deadline of Oct. 15 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked. Nonprofit organizations that are at risk can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.
The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice, with the IRS and it also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Here are 10 facts to help nonprofit organizations maintain their tax-exempt status.
1. Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010.
2. Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.
3. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.
4. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
5. Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N also known as the e-Postcard. To file the e-Postcard go to the IRS website and supply the eight information items called for on the form.
6. Under the voluntary compliance program, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee.
7. The relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
8. Organizations that have not filed the required information return by the extended Oct. 15 due date will have their tax-exempt status revoked.
9. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status and any income received between the revocation date and renewed exemption may be taxable.
10. Donors who contribute to at-risk organizations are protected until the final revocation list is published by the IRS.
Self-employed persons are finally getting a break. Under section 2042 of the Business Jobs Act of 2010 recently passed by Congress, those who are self-employed and pay their own health insurance premiums now get a break.
Currently, if you are self-employed, you can only deduct health insurance premiums from income before computing “regular” federal income tax; however, SE tax (self-employment tax), or Social Security and Medicare tax, is computed on the entire amount. So-called W-2 employees were treated differently.
That will now change. Persons who are self-employed will be able to deduct the cost of health insurance premiums from income before calculating SE tax. That results in a savings of nearly 15% over the cost of those premiums: Social Security tax is payable at a rate of 12.4% and Medicare tax is payable at a rate of 2.9% – a combined rate of 15.3%. However, keep in mind that the income cap for Social Security tax for 2010 is $106,800 (there is no cap for Medicare tax), so the total amount of your savings will vary based on your income. But it’s still savings.
Of course, there’s a catch. There’s always a catch. It’s only for 2010. But hey, in this economy, beggars cannot, apparently, be choosers. It’s a break and we’ll take it.