Thursday, February 24, 2011


Q. I worked for a company during 2010 as an employee but I can't get them to send me my W-2 so I can't file my return. I know I should have a refund. What do I do?

A. You should receive a Form W-2, Wage and Tax Statement by January 31, 2011. Maybe they are just a little slow. If you don't get the W-2 or if you can't find the company here are the steps you should take.

Next, since you did not receive your W-2 by February 14th, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, city and state, including zip code, Social Security number, phone number and have the following information:

• Employer’s name, address, city and state, including zip code and phone number
• Dates of employment
• An estimate of the wages you earned, the federal income tax withheld, and when you worked for that employer during 2010. The estimate should be based on year-to-date information from your final pay stub or leave-and-earnings statement, if possible.

Then, if you have not received your Form W-2 and contacted the IRS as stated above, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withholding taxes as accurately as possible. Note: There may be a delay in any refund due while the information is verified.

Wednesday, February 23, 2011


If you think that the government doesn't know that a lot of workers are being misclassified and that a lot of that money is not being reported, you are wrong. Obama is trying to fix this by requiring verification of worker status and possible withholding.

The proposal in his budget would require independent contractors who receive payments of $600 or more from a business to provide a certified taxpayer identification number (TIN) to the business. The business would then be required to verify the contractor’s TIN with the IRS, and, if the TIN cannot be verified by the IRS, the business would be required to withhold a flat-rate percentage of the gross payments.

Contractors could also require businesses to withhold a flat-rate percentage of their gross payments. The contractor could choose withholding at a 15%, 25%, 30% or 35% rate.

This is just proposed for now and would have to get through Congress. We will watch this for you.

Larry Kopsa CPA


Q. I can't find the form that the Social Security gave me showing my benefits for 2010. Now what do I do?

A. Easy just click on the following attachement.

Tuesday, February 22, 2011


If you followed my comments on the health care reform, one of my concerns was that much of the monitoring and regulations was going to fall in the lap of the IRS. Now if you have ever tried to deal with the IRS on a question you know how frustrating it can be. Imagine that they were going to be responsible for your health care. Now according to an article in the US News and World Report the IRS is going to be expanding.

The reports that "says it will need an battalion of 1,054 new auditors and staffers and new facilities at a cost to taxpayers of more than $359 million in fiscal 2012 just to watch over the initial implementation of President Obama's health care reforms." The story notes that "among the new corps will be 81 workers assigned to make sure tanning salons pay a new 10% excise tax." Of course, the new health care program "won't be fully implemented until about 2014."

We will keep watching this for you.

Larry Kopsa CPA

Monday, February 21, 2011


A couple of articles I read last weekend caught my attention.

Larry Kopsa CPA

State, local and federal debt in U.S. is highest since WWII

(Washington Post) The total debt of city, state and federal governments in the U.S. is greater than the size of the economy, the highest level since World War II, government data show. Debt declined quickly after 1946, but the level of indebtedness is increasing and stands to increase for years, regardless of action taken by Congress and President Barack Obama, according to this article. Rising interest rates and slow domestic growth make deficit reduction more difficult than it was after World War II, the newspaper noted.

World's economy is nearing a "breaking point," World Bank's Zoellick says

(Business Day) Commodity prices are driving the global economy to the "breaking point," World Bank President Robert Zoellick told finance ministers from the Group of 20 nations. Central banks throughout the world are under pressure to raise interest rates as surging commodity costs increase inflation.

Saturday, February 19, 2011


As I have mentioned on this blog in the past the federal government has been trying to limit the availability for schools to get loan funding. The rules were complex and most likely hard to meet. This would have meant less schools and therefore less graduates. But there is good news.

On February 18th members of the U.S. House of Representatives on a vote 289 - 136 - 1to adopt the Kline/Hastings "Gainful Employment" Amendment to H.R. 1 -- The Full-Year Continuing Appropriations for Fiscal Year 2011 Act.

This is a hard fought validation of over two years of concentrated focus on attempts by the American Association of Cosmotology Schools (AACS) to prevent the Department of Education from implementing the overly complex, unfair, and possibly unconstitutional attempts to define "gainful employment in a recognized occupation" as defined in the HEA. As prescribed in the House passed amendment, the U.S. Department of Education would be prohibited from implementing, administering, or enforcing the interim final regulations published on October 29, 2010 AND any issuance or further development pending final regulations until the end of fiscal year 2011 (September 30, 2011).

We will be keeping an eye on this and will keep you posted.

Larry Kopsa CPA

Friday, February 18, 2011


(MarketWatch) -- reports that even "with the new $5 million federal estate tax exemption for 2011 and 2012," there are still 20 states and D.C. that "impose estate or inheritance taxes that kick in below the $5 million mark, and some kick in below $1 million."

Ohio, New Jersey and Rhode Island have estate tax exemptions of less than $1 million (Ohio at $338,333; New Jersey at $675,000; and Rhode Island at $850,000).

MarketWatch reports, "The worst place to die is New Jersey with a combined effective estate and inheritance tax rate of 54.1%. ... In second place is Maryland at 50.9%." Meanwhile, "six states impose only inheritance taxes, which are assessed on the value of specific inherited assets in excess of the applicable exemption."

The inheritance tax rates "are 9.5% in Tennessee, 15% in Iowa and Pennsylvania, 16% in Kentucky, 18% in Nebraska, and 20% in Indiana." The story notes 28 states have no estate or inheritance taxes, and that "they are better places to die."

Thursday, February 17, 2011

Obama plan could bring employers higher taxes to pay for unemployment aid

The AP reports that U.S. employers "could face higher taxes in 2014 under an Obama administration budget proposal designed to help states hard hit by the recession and the weak recovery to refill their unemployment insurance funds and repay money borrowed from the federal government."

According to the story, "the proposal would give states the choice of increasing tax payments from businesses, altering their benefits or a combination of both." The AP notes that "the administration plan would increase the income level that is subject to unemployment insurance taxes from $7,000 to $15,000," and that the "states would be allowed to use the new income level to raise more money from employers." The story reports that 30 of the states owe the federal government $42 billion that was borrowed to make payments to individuals claiming unemployment.

Larry Kopsa CPA

Wednesday, February 16, 2011


I am reading Brian Tracy's new book called No Excuses! The Power of Self Discipline. In the book he says that we make excuses for one reason or another but if we looked around someone with that same problem that is stopping us is doing what we say we can't do.

After reading that I ran into the video below. I shared with my family and my staff. So I thought "why not share it with you."

Tuesday, February 15, 2011


Below is the announcement from the IRS that on February 14th they have started accepting returns. The problem is that there have been so many people waiting to file their returns that there is going to be a flood of returns filed and the IRS does not know if they can handle them all. Don't blame the IRS for this problem. Congress is to blame for waiting until late December to change the laws.

Here is what the IRS has to say.

WASHINGTON — The Internal Revenue Service announced today it has started processing individual tax returns affected by legislation enacted in December and reminded taxpayers that they can begin filing electronically immediately.

On Monday, IRS systems began to accept and process both e-file and paper tax returns claiming itemized deductions on Form 1040, Schedule A, as well as deductions for state and local sales tax, higher education tuition and fees and educator expenses.

“The IRS is now accepting all the 1040 forms,” IRS Commissioner Doug Shulman said. “We worked hard to update our systems and get the changes in place as quickly as possible. We appreciate the patience of those impacted by the delay. We urge taxpayers to use e-file with direct deposit, and they can get their refunds within days.”

In late December 2010, the IRS announced it would delay processing of some tax returns in order to update processing systems to accommodate the late tax law changes. These tax law provisions were extended by the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, which became law on Dec. 17.

For the vast majority of taxpayers, the filing season this year began on time in January. Most taxpayers claiming itemized deductions and the other delayed forms file later in the year.


Q. Help settle a bet with my wife. We had in individual come in and paint our house this last year. We paid him $3150. I say that since he is not a corporation and since the amount is over $600 I have to give him a 1099. My wife says I am wrong. Please say that I am right... movie selection over the next 3 months depends on your answer.


A. Walt, best disconnect your computer so your wife does not see my answer or get ready for three months of romantic comedies and tear jerkers.

Assuming that your house is not your business property you do not need to do a 1099. 1099's are for business expenses only. That may change some day, but for now your wife is right.

Larry Kopsa CPA

Thursday, February 10, 2011


Q. Are there any new rules on the purchase of energy saving items for my home?

A. The rules are stricter. You can claim a tax credit for energy saving home improvements you make this year, but the rules for 2011 are crazy.

• You can only claim a 10% credit for qualified energy property placed in service in 2011 up to a $500 lifetime limit (with no more than $200 from windows and skylights).

That’s not all…
• The credit you claim for any year can't exceed $500 less the total of the credits you claimed for 2006 through 2010.
• The amount you claim for windows and skylights in a year can't exceed $200 less the total of the credits you claimed for these items in 2006 through 2010.
• The credit is equal to the sum of: (1) 10% of the amount you pay for qualified energy efficient improvements (such as insulation, exterior windows or doors that meet certain energy efficient standards) installed during the year; and (2) the amount of the residential energy property expenses you paid during the year.

But that’s not all…
• There is a limit on the amount of “residential energy property expenses.”
• The credit for residential energy property expenses can't exceed: (A) $50 for an advanced main circulating fan; (B) $150 for any qualified natural gas, propane, or hot water boiler; and (C) $300 for any item of energy efficient property (advanced types of energy saving equipment, such as electric heat pumps, meeting specific energy efficient standards).

Final step: Then you divide the resulting number by your grandmothers age times you license plate.

Hey, just kidding about that final step. Who says accountants can’t make a joke.

Larry Kopsa CPA

Wednesday, February 9, 2011


We are very excited to announce that we had 12 clients in the Salon Today's Top 200 for 2011. Our team is proud to be associated with so many wonderful clients – those that won and those who never applied. Congrats to each and every winner!!!

Tuesday, February 8, 2011


Q. Is the 1040- Schedule A problem still causing a delay in filing the long form for 2010? When can we expect a resolution?

A. Maybe it is a coincidence but the IRS seems to be giving us a Valentine's Day present. They have announced that their programs will be up and running and that they will be processing returns on February 14th. And people say that the IRS does not have a heart.

Larry Kopsa CPA

Obama budget plan proposes an increase in payroll taxes

States would have more tools to collect additional payroll taxes from businesses under President Barack Obama's budget proposal. It would raise the level of wages on which companies must pay unemployment taxes to $15,000 from $7,000. This could potentially double the amount you are paying in state unemployment taxes.

Here is the latest from the Wall Street Journal.

Saturday, February 5, 2011


Q. Hi Larry, Hope things are going well for you this tax season. After reading some of your information I need to clarify some information. Do we need to give our renters 1099’s and do I need to give one to the guy that did some remodeling on our rental?

A. You do not need to give your renters a 1099. As far as the contractor that did the remodeling on your rentals you do not need to give that person a 1099 for 2010.

But watch out, this changes for 2011. In 2011 landlords/lady’s will need to give a 1099 for work done on rentals so keep track. Remember it is $600 for the entire year so, for example if someone does repairs of $200 in February and $500 in November then you will be required to give them a 1099.

There is some controversy in Washington about the 1099 requirements in Obama Care but that does not affect this requirement. In addition Congress just increased the penalty to $295 for each 1099 not prepared.

Let me know if you have any other questions. It is a pleasure serving you.

Larry Kopsa CPA


Q. I filed the 1040 for 2009 and had gambling winnings of $2500.00 but I lost that much and more so I did not put the winning on my return. Now I get a notice from IRS wanting $625.00. I did get a w-2g and I filed the short form, no itemized deductions. Do I owe the IRS since I lost more than I won?

A. Bad news. It sounds like you owe the money. Unfortunately, while you must claim all gambling winnings on your return, you can only deduct your losses if you itemize. So, if you’re not filing a Schedule A, you cannot deduct your gambling losses. For 2009, the standard deduction is $5700 for an individual taxpayer and $11,400 for married.

“Casual gamblers” (in other words, nonprofessional gamblers) must report winnings on line 21 (other income) of a form 1040.

There are some additional rules with respect to gambling losses. You must be able to document your losses by type of loss, date, name and location of the gambling establishment and amount. You will need records of your losses. In addition, you cannot deduct more in losses than you report in winnings; even though you stated you lost more than you earned, your actual deduction is limited to the smaller of the two.

More bad news… you can most likely expect a notice from the state wanting their share.

Larry Kopsa CPA

Friday, February 4, 2011


Below is a link to a summary of how income taxes serves to redistribute wealth and the common misconception that lower tax rates help the wealthy. I thought that you might find interesting.

Thursday, February 3, 2011


Q. I lost my old tax returns and now I need them to give to the bank. Is there anyway that the IRS keeps old copies that I can get?


A. It is a good idea to have a filing system that keeps good track of your records. If you go to the Kopsa Otte website at we have a record retention guide in the publications section.

As far as your current problem is concerned there are a couple of ways you can get the information that the bank is requesting. The quickest, easiest and cheapest way as to ask for a transcript. This is not a copy of your return, but rather pertinent numbers that are on the return. I would ask the bank if they would accept a transcript. If not, then you will need to request a full copy.

Requesting a Transcript
The IRS does not charge a fee for transcripts, which are presently available for the current tax year as well as the past three tax years. As mentioned above, a tax return transcript shows most line items from your tax return as it was originally filed, including any accompanying forms and schedules. It does not reflect any changes made after the return was filed. In addition a transcript shows any later adjustments either you or the IRS made after the tax return was filed. This transcript shows basic data – including marital status, type of return filed, adjusted gross income and taxable income.

To request a transcript online, go to and look for a online tool called Order A Transcript. To order by phone, call 800-908-9946 and follow the prompts in the recorded message.

To request a 1040, 1040A or 1040EZ tax return through the mail, complete IRS Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses, partnerships and individuals who need transcript information from other forms or need a tax account transcript must use the Form 4506T, Request for Transcript of Tax Return.

If you order online or by phone, you should receive your tax return transcript within 5 to 10 days from the time the IRS receives your request. Allow 30 calendar days for delivery of a tax account transcript if you order by mail using Form 4506T or Form 4506T-EZ.

Requesting An Actual Copy
If you still need an actual copy of a previously processed tax return, it will cost $57 for each tax year that you order. Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area. Copies are generally available for the current year as well as the past six years. Allow 60 days for actual copies of your return.

I hope that this helps.

Larry Kopsa CPA