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|Posted on January 4, 2013 at 12:44 PM||comments (125)|
After Congress held many small business owners and self employed persons hostage for the latter part of 2012, here are a few adjustments we have to make personally for 2013.
Social security tax - Employees tax rate will revert back to the 6.2% instead of the previous rate for 2012 of 4.2%, and the wage base limit will increase to $113,700.
This rate should be implemented by employers as soon as possible but no later than February 15, 2013. If employers for one reason or other fail to adjust the rate on the first pay check of 2013, then they must make an adjustment in a subsequent pay period to correct any underwithholding of social security tax as soon as possible, but not later than March 31, 2013, or in other words, before you file and submit first quarter payroll information.
Medicare tax - The medicare tax for most employees and employers remains unchanged at 1.45%. However, employees earning more than $200,000 in a calendar year are expected to pay an additional medicare tax of .09% on the first dollar over $200,000. Employers are not expected to match this additional .09%
|Posted on April 16, 2012 at 3:33 PM||comments (63)|
Even though the tax filing deadli
Here are seven important things you need to know about filing an extension:
1. File on time even if you can't pay - If you completed your return but you are unable to pay the full amount of tax due, do not request an extension. File your return on time and pay as much as you can. To pay the balance, apply online for a payment plan using the Online Payment Agreement application at www.irs.gov or send Form 9465, Installment Agreement Request, with your return. If you are unable to make payments, call the IRS at 800-829-1040 to discuss your options.
2. Extra time to file - An extension will give you extra time to get your paperwork to the IRS, but it does not extend the time you have to pay any tax due. You will owe interest on any amount not paid by the April 17th deadline, plus you may owe penalties.
3. Form to file - Request an extension to file by submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return to the IRS. It must be postmarked by April 17, 2012. You also can make an extension-related electronic credit card payment. For more information about extension-related credit card payments, see Form 4868.
4. E-file extension - You can e-file an extension request using tax preparation software with your own computer or by going to a competent tax preparer who has the software. You must e-file the request by midnight on April 17, 2012. The IRS will acknowledge receipt of the extension request if you e-file your extension.
5. Traditional Free File and Free File Fillable Forms - You can use both Free File options to file an extension. Acess the Free File page at www.irs.gov.
6. Electronic funds withdrawal - If you ask for an extension via one of the electronic methods, you can also pay any expected balance due by authorizing an electronic funds withdrawal from a checking or savings account. You will need approriate bank routing and account numbers.
7. How to get forms - Form 4868 is available for download from the IRS website or you can pick up the form at your local IRS office.
Any questions call us at 954-612-1591.
|Posted on March 19, 2012 at 11:40 AM||comments (27)|
The Internal Revenue Service reminds U.S. citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2011, that they may have a U.S. tax liability and a filing requirement in 2012.
The IRS offers the following tips for taxpayers with foreign income:
1.Filing deadline - U.S. citizens and resident aliens residing overseas or those serving in the military outside the U.S. on the regular due date of their tax return have until June 15, 2012 to file their federal income tax return. To use this automatic two-month extension beyond the regular April 17, 2012 deadline, taxpayers must attach a statement to their return explaining which of the two situations above qualifies them for the extension.
2. World-wide income - Federal law requires U.S. citizens and resident aliens to report any worldwide income, including income from foreign trusts and foreign bank and securities accounts.
3. Tax forms - In most cases, affected taxpayers need to fill out and attach Schedule B, Interest and Ordinary Dividends, to their tax return. Certain taxpayers may also have to fill out and attach to their return the new Form 8938, Statement of Foreign Financial Assets. Some taxpayers may also have to file Form TD F 90-22.1 with the Treasury Department by June 30, 2012.
4. Foreign earned income exclusion - Many Americans who live and work abroad qualify for the foreign earned income exclusion. If you qualify for tax year 2011, this exclusion enables you to exempt up to $92,900 of wages and other foreign earned income from U.S. tax.
5. Credits and deductions - You may be able to take either a credit or a deduction for income taxes paid to a foreign country or a U.S. possession. This benefit is designed to lessen the tax burden that results when both the U.S. and another country tax income from that country.
For any questions or concerns as it relates to your personal or corporate taxes, give us a call at 954-612-1591 or e-mail us at [email protected].
|Posted on February 1, 2012 at 12:23 PM||comments (124)|
The Earned Income Tax Credit is a financial boost for workers earning $49,078 or less in 2011. Four of five eligible taxpayers filed for and received their EITC last year. The IRS wants you to get what you earned also, if you are eligible.
Here are the top 8 things the IRS wants you to know about this valuable credit, which has been making the lives of working people a little easier since1975.
1. As your financial, marital or parental situations change from year to year, you should review the EITC eligibility rules to determine whether you qualify. Just because you didn't qualify last year doesn't mean you won't this year.
2. If you qualify, the credit could be worth up to $5,751. EITC not only reduces the federal tax you owe, but could result in a refund. the amount of your EITC is based on your earned income and whether or not there are qualifying children in your household. The average credit was around $2,240 last year.
3. If you are eligible for EITC, you must file a federal income tax return and specifically claim the credit - even if you are not otherwise required to file. Remember to include Schedule EIC, Earned Income Credit when you file your Form 1040 or, if you file Form 1040A, use and retain the EIC worksheet.
4. You do not qualify for EITC if your filing status is Married Filing Separately.
5. You must have a valid Social Security number for yourself, your spouse - if filing a joint return - and any qualifying child listed on Schedule EIC.
6. You must have earned income. You have earned income if you work for someone who pays you wages, you are self-employed, you have income from farming, or - in some cases - you receive disability income.
7. Married couples and single people without children may qualify. If you do not have qualifying children, you must also meet the age and residency requirements, as well as dependency rules.
8. Special rules apply to members of the U.S. Armed Forces in combat zones. Members of the military can elect to include their nontaxable combat pay in earned income for the EITC. If you make this election, the combat pay remains nontaxable.
For more information call Capital One Accounting Solutions P.A. at 954.612.1591 if you have any questions or concerns.
|Posted on February 1, 2012 at 10:28 AM||comments (119)|
For those of you who have had a personal experience with identity theft, know that it is no easy task in getting your credit back on track without a lot of hard work. Similarly, those of you who have been affected by someone else claiming your dependents or impersonating you and claiming your refund, knows the pain of not receiving the refund you anticipated. Months of carefully budgeting and hoping for the year to end; thinking that now you will be receiving a refund and will be able to keep your feet one in front of the other is wash down the drain.
As we all know, some of us use our refunds as our savings accounts as we are not discipline enough to save on our own due to one reason or the other. Today most of us will breathe a little easier, knowing the results of the Internal Revenue Service and the Justice Department massive national sweep cracking down on suspected identity theft perpetrators as part of a stepped-up effort against refund fraud and identity theft.
Working with the Justice Department's Tax Division and local U.S. Attorneys' offices, the nationwide effort targeted 105 people in 23 states. The coast-coast effort took place over the last week and included indictments, arrests and the execution of search warrants involving the potential theft of thousands of identifies and taxpayer refunds. In all, 939 criminal charges are included in the 69 indictments and informations related to identity theft.
In addition, IRS auditors and investigators conducted extensive compliance visits to money service businesses in nine locations across the country in the past week. The approximately 150 visits occurred to help ensure these check-cashing facilities aren't facilitating refund fraud and identity theft.
"This unprecedented effort against identity theft sends a strong, unmistakable message to anyone considering participating in a refund fraud scheme this tax season," said IRS Commissioner Doug Shulman. "We are aggressively pursuingcases across the nation with the Justice Department, and people will be going to jail. This is part of a much wider effort underway at the IRS to help protect taxpayers."
"The Justice Department is working closely with the IRS to investigate, prosecute, and punish tax refund crimes committed through the theft of identities," said Principal Deputy Assistant Attorney General John A. DiCicco of the Tax Division. "Now, more than ever, we must remain vigilant against the unathorized use of identification information to defraud the U.S. government."
The national effort is part of a comprehensive identity theft strategy the IRS has embarked on that is focused on preventing, detecting and resolving identity theft cases as soon as possible. In addition to the law-enforcement crackdown, the IRS has stepped up its internal reviews to spot false tax returns before tax refunds are issued as well as working to help victims of the identity theft refund schemes.
The law-enforcement sweep started last week across the country, reflecting investigative efforts stretching back months and even years.
The nationwide effort by the Justice Department and the IRS led to actions taking place in 23 locations across the country with 105 individuals. The actions included 80 complaints/indictments and informations, 58 arrests, 19 search warrants, 10 guilty pleas and four sentencings. A map of the locations and additional details on the actions are available on IRS.gov, the IRS Civil and Criminal Actions page and the Department of Justice Tax Division page.
Beyond the criminal actions, the IRS enforcement personnel conducted a special sweep last week and on Monday to visit 150 money services businesses to help make sure these businesses are not knowingly or unknowingly facilitating identity theft or refund fraud. The visits occurred in nine high-risk places identified by the IRS covering areas in and surrounding Atlanta, Birmingham, Alabama, Chicago, Los Angeles, Miami, New York, Phoenix, Tampa and Washington, D.C.
In addition, the IRS has more than 250 check-cashing operations under audit across the country and will ne looking for indicators of identity theft as part of the exam effort.
The information from these audits and compliance visits will be used to assist continuing IRS investigations into refund fraud and identity theft.
The IRS also is taking a number of additional steps this tax season to prevent identity theft and detect refund fraud before it occurs. These efforts includes designing new identity theft screening filters that will improve the IRS's ability to spot false returns before they are processed and before a refund is issued, as well as expanded efforts to place identity theft indicators on taxpayer accounts to track and manage identity thft incidents.
To help taxpayers, the IRS earlier this month created a new, special section on IRS.gov dedicated to identity theft matters, including YouTube videos, tips for taxpayers and a special guide to assistance. The information includes how to contact the IRS Identity Protection Specialized Unit and tips to protect against "phishing" schemes that can lead to identity theft.
Identity theft occurs when someone uses another's personal information without their permission to commit fraud or other crimes using the victim's name, Social Security number or other identifying information. When it comes to federal taxes, taxpayers may not be aware they have become victims of identity theft until they receive a letter from the IRS stating more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past.
If a taxpayer receives a notice from the IRS indicating identity theft, they should follow the instructions in that notice. A taxpayer who believes they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. The taxpayer should contact the IRS Identity Protection Specialized Unit at 800-908-4490. The taxpayer will be asked to complete the IRS Identity Theft Affidavit, Form 14039, and follow the instructions on the back of the form based on their situation.
Taxpayers looking for additional information can contact us at Capital One Accounting Solutions P.A. at 954.612.1591
These are the beginning steps, but as victims of the process, we hope that the Justice Department will continue to move swiftly so that citizens can have faith in the process. We will not advocate for saving through your tax return, but we all know that some of us are not discipline enough, to save otherwise.
|Posted on January 31, 2012 at 3:22 PM||comments (123)|
Mke sure you have all the needed documents, including all your Forms W-2, before you file your 2011 tax return. You should receive an IRS Form W-2, Wage and Tax Statement, from each of your employers. Employers have until January 31, 2012 to issue your 2011 Form W-2 earnings statement. If you haven't received your W-2, follow these four steps:
1. Contact your employer - If you have not received your W-2, contact your employer to inquire if and when the W-2 was mailed. If it was mailed, it may have been been returned to the employer because of an incorrect or incomplete address. After contacting the employer, allow a reasonable amount of time for them to resend or issue the W-2.
2. Contact the IRS - If you do not receive your W-2 by February 14, contact the IRS for assistance at 800-829-1040. When you call, you must provide your name, address, Social Security number, phone number and have the following information:
3. File your return - You still must file your tax return or request an extension to file by April 17, 2012, even if you do not receive your Form W-2. If you have not received your Form W-2 in time to file your return by the due date, and have completed steps 1 and 2, you may use Form 4852, Substitute for Form W-2, Wage and Tax Statement. Attach Form 4852 to the return, estimating income and withhollding taxes as accurately as possible. There may be a delay in any refund due while the information is verified.
4. File a Form 1040X - On occassion, you may receive your missing W-2 after you file your return using Form 4852, and the information may be different from what you reported on your return. If this happens, you must amend your return by filing a Form 1040X, Amended U.S. Individual Income Tax Return.
Any questions or concerns call Capital One Accounting Solutions, P.A. @ 954-612-1591
|Posted on January 24, 2012 at 12:43 PM||comments (18)|
Your kids can be helpful at tax time. That doesn't mean they'll sort your tax receipts or refill your coffee, but those charming children may help you qualify for some valuable tax benefits. Here are ten things the IRS wants parents to consider when filing their taxes this year.
1. Dependents - In most cases, a child can be claimed as a dependent in the year they were born.
2. Child Tax Credit - You may be able to take this credit for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit.
3. Child and Dependent Care Credit - You may be able to claim this credit if you pay someone to care for your child or children under age 13 so that you can work or look for work.
4. Earned Income Tax Credit - The EITC is a tax benefit for certain people who work and have earned income from wages, self-employment or farming. EITC reduces the amount of tax you owe and may also give you a refund.
5. Adoption Credit - You may be able to take a tax credit for qualifying expenses paid to adopt an eligible child. If you claim the adoption credit, you must file a paper tax return with required adoption-related documents.
6. Children with earned income - If your child has income earned from working, they may be required to file a tax return.
7. Children with investment income - Under certain circumstances a child's investment income may be taxed at their parent's tax rate.
8. Higher eduacation credits - Education tax credits can help offset the costs of higher education. The American Opportunity and the Lifetime Learning Credits are education credits that can reduce your federal income tax dollar-for-dollar.
9. Student loan interest - You may be able to deduct interest paid on a qualified student loan, even if you do not itemize your deductions.
10. Self-employed health insurance deduction - If you were self-employed and paid for health insurance, you may be able to deduct any premiums you paid for coverage for any child of yours who was under age 27 at the end of the year, even if the child was not your dependent.
For any additional questions you may have, call Capital One Accounting Solutions, P.A. at 954-612-1591 for a free consultation.
|Posted on January 23, 2012 at 11:16 AM||comments (12)|
If your pay from work involves compensation through tips, then the IRS would like you to be aware of a few facts about tip income. Here are four key points to keep in mind:
1. Tips are taxable - Tips are subject to federal income, Social Security and Medicare taxes. The value of non-cash tips, such as tickets, passes or other items of value, is also considered income and subject to tax.
2. Include tips on your tax return - You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip-splitting arrangement with fellow employees.
3. Report tips to your employer - If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
4. Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.
|Posted on January 17, 2012 at 2:38 PM||comments (15)|
Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax.
Some people may qualify for more than one filing status. Here are eight facts about filing status that the IRS wants you to know so you can choose the best option for your situation.
1. Your marital status on the last day of the year determines your marital status for the entire year.
2. If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
3. Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
4. A married couple may file a joint return together. The couple's filing status would be Married Filing Jointly.
5. If your spouse died during the year and you did not remarry during 2011, ususally you may still file a joint return with that spouse for the year of death.
6. A married couple may elect to file their returns separately. Each person's filing status would generally be Married Filing Separately.
7. Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
8. You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2009 or 2010, you have a dependent child, have not remarried and you meet certain other conditions.
Any questions about your filing status contact Capital One Accounting Solutions at 954-612-1591 or e-mail [email protected].
|Posted on January 11, 2012 at 11:00 PM||comments (14)|
Even though each individual tax return is different, some tax rules affect every person who may have to file a federal income tax return. These rules include dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help file your 2011 tax return.
1. Exemptions reduce your taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. For each exemption you can deduct $3,700 on your 2011 tax return.
2. Your spouse is never considered your dependent. On a joint return, you may claim one exemption for yourself and one for your spouse. If you're filing a separate return, you may claim the exemption for your spouse only if they had no gross income, are not filing a joint return, and were not the dependent of another taxpayer.
3. Exemptions for dependents. Yoy generally can take an exemption for each of your dependents. A dependent is your qualifying child or qualifying relative. You must list the Social Security number of any dependent for whom you claim an exemption.
4. If someone else claims you as a dependent, you may still be required to file your own tax return. Whether you must file a return depends on several factors including the amount of your unearned, earned or gross income, your marital status and any special taxes you owe.
5. If you are a dependent, you may not claim an exemption. If someone else - such as your parent - claims you as a dependent, you may not claim your personal exemption on your tax return.
6. Some people cannot be claimed as your dependent. Generally, you may not claim a married person as a dependent if they file a joint return with their spouse. Also, to claim someone as a dependent, that person must be a U.S. citizen, U.S. resident alien, U.S. national or resident of Canada or Mexico for some part of the year. There is an exception to this rule for certain adopted children.
Any questions or concerns call Capital One Accounting Solutions, P.A. at 954-612-1591 or email [email protected].