New Developments in the Tax World
This is a really screwy year for taxes but I'll try to let you know what things might be of interest to you. If you are a landlord, you need to make sure that you start keeping track of your payments to vendors who provide services to you in excess of $600 for 2011 in that you WILL be required to provide them with a 1099 Misc. So I am suggesting that you have all un-incorporated vendors fill out a W-9 form with their information prior to making any payments to them so you will have the appropriate information available. If you need one of these forms please contact our office.
The Small Business Act of 2010 provided for the fact that Self Employed health insurance paid can not only be deducted 100% on the front of the tax return, but it can also be used to reduce your Self Employment tax. This is for 2010 only and was not restored in the bill passed in December for future years.
The Hire Act of 2010 provided for a tax holiday for employers who have hired employes after February 3, 2010 who have been unemployed 60 days and have not worked 40 hours in that time. If you think that you have hired someone who falls in this category, please contact us so we can further explain it to you.
The Patient Protection Act which is fondly called the Health Care Reform Bill provides that older children can now be claimed on their parents group plans at work under certain circumstances. Also this bill provides for s Small Business Health Insurance Credit. If you have less that 25 employees and want to determine if this might apply to you, let us know and we'll give you the information that we need in order to make the calculation. As of January 20, 2011 the House of Representatives has voted to completely repeal this bill, however, the Senate has not acted on this as of yet.
For your information, IRS auditors now have the authority to request QuickBooks files (ie on a CD) in order to conduct an audit. I would like to make a strong suggestion that you start backing up your files at the end of each year and renaming them for that year only and save them on CD. Then you can continue to use your regular file going forward but you will not be providing them, if requested, with information they are NOT authorized to have.
This is the year that the people who took the first time home buy in 2008 will have to begin paying it back. I was hopeful that this provision would be repealed in light of the subsequent home buy credit for 2009, but no such luck so far. Additionally, there is still a credit available under certain circumstances for new home buyers and repeat home buyers for 2010. If you have done a home buy in 2010, please let me know so I can determine if it might apply to you.
The new mileage rates for business mileage in 2011 have been released and are up from 50 cents in 2010 to 51 cents in 2011.
As of the beginning of 201, it is no longer possible to convert traditional IRA's to Roth IRA's without regard to AGI limitations and also be able to amortize the tax consequence over a two year period.
The Bush tax cuts were scheduled to expire at the end of 2010. Congress was able to come to an agreement on a plan for the extension of these provisions in a bill that was passed on December 17, 2010,
Here are the provisions:
Tax brackets will remain the same as they have been for the last 10 years.
Last years stimulus cuts will be restored. Does not include the home buy credit.
The social security withholding will be reduced from 6.2% to 4.2% for all employees for one year only.
The estate tax will be temporarily lowered having a $5M marital deduction.
Unemployment benefits will be extended for another 13 months.
Businesses will get an enhanced ability to write off their asset investments for 2011.
The biggest problem that we have with this having passed at such a late date is that IRS has announced that certain tax returns may not be filed before mid to late February, a date to be announced later. They have also stated that this applies to both paper and electronic filings. If you file a paper return before the allowed date and you fall into this category, they have said that they will put them in a pile to be processed after the correctly filed returns are processed, so I would advise against doing that in that it could potentially put the processing clear back to April.
IRS has mandated that if we prepare more than 10 tax returns, we are required to e-file the returns. But as with the State of Ohio there is an opt out availability for you. I will have those forms for you should you not want to e-file the return.
Nancy is no longer with us and so along with Tucker and Bailey, you will see me, Tyler, Sheila and Nada when you visit with us for your appointed date with Uncle Sam.
We are gearing up for seeing you and are looking forward to it. If you like our services and feel that we could be of service to anyone that you know either for tax preparation or business and accounting services, please feel free to refer them to us. If you would like for us to contact them, we will be happy to do so, if you provide us with their information.