Tuesday, September 28, 2010

1099 Reporting...What's New???

Recently while speaking with a construction client, the topic of 1099’s came up and my client asked me if he was going to have to give a 1099 to every vendor that he does business with (he has a lot of vendors) and when would this start. As I gave him the details (i.e. requires businesses to file information returns if they pay more than $600 to a single vendor, won’t have to start until 2012) I could tell he did not want to deal with the burden of filing all those 1099’s. Well it seems Congress doesn’t want to deal with the burden of repealing the new 1099 reporting rules either.

The new 1099 reporting requirements will raise about $19 billion as part of the Patient Protection and Affordable Care Act. The burdens that the requirements put on the small business owner are sure to increase their administrative duties/costs considerably. There have been a couple of ideas being kicked around in Congress lately. One was to increase the amount required to file reports from $600 to $5000 and another was to exempt businesses with 25 or fewer employees. Obviously neither idea was passed.

So where do we stand now? Congressional leaders say that they have heard the cry from the masses and will repeal the law sometime before the first of the year (hopefully). I guess this will have to be as separate legislation since it was not attached to recent small business legislation signed into law. We will be sure to keep you posted on any changes in the 1099 reporting requirements as they are made.

The Tech Accountant

Saturday, September 25, 2010

IRS Introduces Widgets to Inform Taxpayers

The IRS continues to embrace technology and is quickly moving into the realm of social media with their new widgets. The widgets can be placed on websites, and social media sites to inform taxpayers about new developments with the IRS and tax breaks. Topics for the widgets include EITC (Earned Income Tax Credit), IRS Retirement Plans; HIRE Act tax breaks, due diligence, and non-profits. Be sure to keep a lookout for the new widgets on your tax professional’s website and social media pages. Examples are below:

The Tech Accountant

Tuesday, September 07, 2010

Fishing with the EFTPS

Back in July, I posted about a new e-mail scam that had been circulating to get taxpayers personal data. Well, the crooks seem to be at it again according to the IRS, and this time the “fish hook” is the EFTPS (Electronic Federal Tax Payment System). Now before everyone jumps to conclusions and says “See another reason to not use technology”, let me outline the details of the scam.

The scam claims to be from the IRS and states that it comes from the Anti-Fraud Commission (and many of the words are misspelled). The e-mail goes on to say that someone has used the taxpayer’s credit card information to pay a tax liability. The e-mail continues and says that taxpayer’s bank accounts have been used for fraud and money has been lost. To help recover the funds, taxpayers must click on a link within the e-mail to start the recovery process.

How to spot scam IRS e-mails

1. Misspelled words

2. E-mail does not end with IRS.gov

3. Link does not end with IRS.gov

4. IRS does not send e-mails to taxpayers

Hope the following tips will keep taxpayers safe when surfing the internet and checking their e-mails

The Tech Accountant

Saturday, September 04, 2010

Don’t lose this late summer tax saving opportunity

With the end of the summer near (or for most already here), brings about time for back to school for many students. Taxpayers that have students in college will be relieved to know that there is still time to capitalize on a tax credit opportunity for college expenses paid. The American Opportunity Tax Credit is still available until December 31st 2010 and will help students and their parents offset the cost of college. According to the IRS there are six (6) important factors taxpayers need to know to claim the credit:

1. This credit, which expands and renames the existing Hope Credit, can be claimed for qualified tuition and related expenses that you pay for higher education in 2009 and 2010. Qualified tuition and related expenses include tuition, related fees, books and other required course materials.

2. The credit is equal to 100 percent of the first $2,000 spent per student each year and 25 percent of the next $2,000. Therefore, the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualifying expenses for an eligible student.

3. The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return. The credit is gradually reduced, however, for taxpayers with incomes above these levels.

4. Forty percent of the credit is refundable, so even those who owe no tax can get up to $1,000 of the credit for each eligible student as cash back.

5. The credit can be claimed for qualified expenses paid for any of the first four years of post-secondary education.

6. You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.

For additional details on how you can claim the credit, be sure to visit the IRS website or speak to your tax professional.

The Tech Accountant