Audits are Up

The IRS’s ongoing effort to close the tax gap are paying off it would appear. By stepping up their audit and compliance activities, the IRS has seen an increase in their revenues. Examinations of personal tax returns have increased from every 1 in 202 returns to every 1 in 97 tax returns. Returns for small businesses rose around 4percent. Good information to know and keep in mind as the next tax season is around the corner.

Keeping Your Business N Synergy

Windows XP rides into the Sunset

In a move that will more than likely affect the small business owners more so than anyone, Microsoft will end the sales of Windows XP products on June 30, 2008. The majority of small businesses have been quite reluctant to migrate to the newer Windows Vista operating systems due to glitches and problems running many of their older software titles.

What’s a Small Business Owner To Do?

If you still want an XP operating system in a new computer purchase, the computer makers will provide several options with downgrade rights to XP. What this means is that your system will be equipped with the newer operating system (Vista) and you can reload XP on to the system. Mainstream support for Windows XP will continue through April 14, 2009. Additionally, Microsoft Extended Support will be available until April 8, 2014.

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Didn’t Pay Your Taxes? Know Your Options

The April 15th tax deadline has come and gone and there are some taxpayers out there that may have missed filing and extension. Interest and penalties add up for taxpayers that do not pay as much as they can along with filing their extension. For those that did not pay tax with their extension, the interest currently at the rate of 6 percent per year and late payment penalties, normally 0.5 percent (1/2 of 1 percent) per month, apply to any tax paid after the April 15 deadline.

What are the Options Now?

Many options for taxpayers are available including:

EFTPS – payments can be made via internet or phone
Credit or Debit card payments – 1-800-2PAY-TAX, or 1-888-PAY-1040
Online payment agreement – will provide a taxpayer with a short term extension or payment plan
Form 9465 – Installment agreement request

Of course the best approach is to file your tax return on time and make payments sooner.

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Proposed Changes for Small Businesses

There are some interesting developments in the small business arena right now. New laws that are aimed at cutting down on tax cheating by the self-employed will more than likely just be more paperwork for the self-employed. Two important small business changes include:

1. Detailed reporting of credit card transactions to the Internal Revenue Service.
2. Another would require most owners of small businesses to report any payments above $600 to corporations for things such as delivery services.

This increased reporting will make it quite burdensome form self-employed small business owners if the proposals are passed. We will keep you posted on any other proposals that are on the horizon to ensure that your small business’s reporting requirements are not increased.

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Small Business Woes Continue???

A recent study conducted by the Discover Small Business Watch for March indicated that economic conditions in the small business arena were getting worse according to over three quarters of the small businesses polled. This is definitely a sign that the economy for the small business owner is getting worse. Almost one half of the small business respondents indicated that their economic outlook for the next six months getting worse.

It is important as a small business owner to keep track of trends that occur in your particular industry and look for ways to run a “lean” operation when economic times look bad. A great way is to be sure to have a strong support staff around you at all times. Small business owners spend the majority of their time operating the business that there is little time for keeping track of planning for the future. According to Discover’s study small business owners are also more likely to partner with a financial consultant to keep track of trends and economic downturns.

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Stimulus Payment Delivery

Taxpayers by now have received their letter from the IRS stating that they will receive a check in the late spring early summer, taxpayers who file their return by April 15th, can now track when their stimulus payment will be deposited (for E-filers) or mailed (for paper returns) with IR-2008-44. Be sure to heck out the charts for the payment schedules to track when your payment will arrive.

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The Good and Bad Stimulations

Since the passing of the stimulus package by Congress, I am sure many tax advisors have been receiving a great deal of questions about filing returns and getting the rebate check. One such question that came up in our Tax Tips Seminars last week was regarding the E-filing a stimulus return when there is no adjusted gross income.

The Good

According to Revenue Procedure 2008-21, the IRS will NOT challenge returns that claim at least $1 in adjusted gross income for e-filing.

And Now the Bad

An earlier post touched on the amount it would cost to send you a letter that tells you your stimulus check is in the mail (about $42 million). Well now the IRS reports that it will loose around $681 million answering phone calls regarding the rebate checks. Also expect a lower level of service when you call the IRS asking questions. Hmmmm.

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Your First Four Years

Small business owners in need of information regarding the first fours years of start-up will really enjoy the new study by the Kauffman Foundation. The study provides a sample of about 5,000 small businesses and details the operations and demographics of the businesses since their 2004 start date.

This is great information for a small business owner to compare your business against especially in the areas of growth strategy, innovation, and survival. Hope you enjoy the information.

Keeping Your Business N Synergy

The Cost of Stimulation

The IRS will begin mailing out letters to about 130 million taxpayers this month. The cost to mail out these letters that simply notify taxpayers that they will receive a check in May is $42 million. I wonder who is paying for these letters to be mailed. It seems there may be other ways these funds could be used.

So what to do with your rebate check? The best bet is to invest it and not spend it. The stimulus bill also includes some tax breaks for small businesses. One of the more important breaks for small businesses is the double section 179 expensing limit for 2008 (allowing a write-off of up $250K) for equipment purchases. Be sure to speak to your tax advisor on the benefits of this change and remember tax planning is done year-round…tax time is too late.

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I Got That Receipt ….Somewhere!?!?

The IRS has provided us taxpayers with some important information regarding preparing returns with questionable deductions. If a taxpayer can not locate all their receipts to justify a deduction on their return, the tax preparer may be in their best interest to not add the deduction.

The IRS used to penalize preparers $250 for a tax return containing questionable deductions; now the penalty is $1,000, or 50 percent of their fees, whichever is greater.

Be sure to have ALL your receipts to justify your tax deductions for the rules are definitely changing. Most professional tax preparers go through a formal checklist once a return is completed. For more information check IRS Notice 2008-13.

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Frivolous Claim….Got $5000?

Recently the IRS has amended their list of “frivolous” legal claims used by people who attempt to avoid paying taxes. Four new claims were added to the listed and include:

1. Misrepresentation of the 9th Amendment regarding objections to military spending
2. Erroneous claims that taxes are owned only by persons with a fiduciary relationship to the US
3. A non-existent “Mariner’s Tax” deduction for meals
4. The excessive use of the Section 6421 fuels credit

If you think you can use any of these claims on your tax return, well I hope you have an extra $5000 laying around for that is the penalty for filing. For more information regarding the new additions to the frivolous claims list, be sure to speak to your tax advisor and review IRS Notice 2008-14.

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Georgia Taxes on My Mind?

News from the home state are that the Georgia State Senate approved a bill that will do away with the state portion of the property tax. The planned tax relief would provide Georgia taxpayers with about $94 million per year in tax savings. Additional amendments will put a freeze on property tax rates at the 2008 rates until the property is sold.

More Georgia tax details

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Economic Stimulus….Stimulate YOUR Economy

With the president signing the economic stimulus package into law recently, many taxpayers may be unclear how and if they qualify for the stimulus payment. This has been one of the most asked topics at our weekly tax tips workshops. Based on information from the IRS, the return must show at least $3,000 in qualifying income. Low-income workers, Social Security recipients, disabled veterans and retired railroad workers who might not otherwise need to file a tax return must do so in order to receive the tax rebate.

Tax rebates checks will range from $300 to $600 for individuals and $600 to $1,200 for joint filers. Taxpayers may also receive $300 for each qualifying child. In most cases, low-income recipients will get $300 each, or $600 for joint filers.

What are you going to do with YOUR rebate check?

Check out what personal finance guru Suze Ormam thinks (not a bad idea either IMO)

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Microsoft Outlook’s “Outlook”

Microsoft states that the most recent version of Microsoft’s Outlook (along with Business Contact Manager) will now be offered as stand-alone software. Many small business owners use Outlook to manage their contacts, appointments and such; however many times client data is spread out over various different places making it difficult to mange sales and marketing efforts. The stand alone product should provide small business owners with a solution to this.

Another plus,

By using Outlook with your accounting software, a small business owner can create a small CRM (customer relationship management) system opening the possibilities of improved billing, better efficiency, and of course cash flow.

Using technology can improve your outlook too.

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Are You Making these Tax Errors?!?

The IRS has listed the top errors made when filing tax returns and it is a must read for this tax season. It compiles all the possible errors that a person or their tax advisor may make when filing a tax return.




For those in the Atlanta area, be sure to stop by the College Park Library for “Tax Tips” every Wednesday 6:30 – 7:00 pm (except for those Wed. when there will be seminars…see here) thru the April 15th tax deadline. We will review the common errors and other tax changes that will affect your return this year and beyond.

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Today's The Day

The end of January is here and by now taxpayers should receive their income tax information (W-2’s and 1099’s) for correct tax filing. I am sure for the small business owner, “information returns” had to be one of your many priorities for the first month. It is important that workers are properly classified when preparing W-2 and 1099’s to ensure that the small business is in compliance with IRS regulations. The IRS looks at 3 areas to determine if a worker is an employee or independent contractor.

1. Behavioral control – the right to direct the performance of specific tasks

2. Financial control – the right to direct the financial opportunities of the worker

3. Relationships – Actions and agreements between the two parties

Be sure to review these areas before submitting your information returns in the coming months. The next deadlines will be here before you know it.

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News Regarding IRA’s and the IRS

With the US economy trying to get a boost recently, those nearing retirement are worried about how their investments will perform. Well the IRS has stepped in and has given a bit more flexibility on penalties for early withdrawals (before age 59 ½). In a private ruling, the IRS stated a divorce related transfer will not incur a 10% penalty. Distributions from an IRA before age 59 ½ will not incur a penalty if the owner takes substantially equal annual payments over at least 5 years.

Watch Out though…if a payout change is made due to financial need and the payments change, all prior withdrawals will be hit with a penalty. Speak to your tax advisor for the details regarding IRA’s and their tax advantages.

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What’s In What’s Out This Tax Season

Thanks to everyone who attended our “Are You Getting All Your Tax Deductions?” seminar at the College Park Library this past Saturday. We will be having another session for tax season a week from today Wednesday Jan 23 2008 6:30-7:30PM if you were not able to attend. Reservations are required.

One of the topics was the expiring federal tax provisions for the upcoming years (actually to the year 2020). Check out the following information to ensure that you get all your tax deductions this season and beyond.

Listing of Expired Federal Tax Provisions

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The 411 on 2/11

The IRS officially starts accepting tax returns for the 2007 tax season today, but the problem now lies with those taxpayers who file certain forms affected by the AMT patch. Those returns will be accepted a whole month. (February 11th 2007). If you file any of these forms you will have to wait another month:

New Features in QuickBooks 2008

- Education credits (Form 8863)
- Residential energy credits (Form 5695)
- Mortgage interest credit (Form 8396)
- Child and dependent care expenses on Schedule 2 of their Form 1040A

Be sure to speak with your tax advisor to see if you will be delayed this tax season

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Winter Seminars for Individuals and Small Businesses

New topics to help individuals and small business owners save money, start your business successfully, and operate your business more efficiently. All seminars are FREE and will be at the College Park Library Meeting Room

3647 Main Street
College Park GA 30337
404-762-4060

Saturday Jan. 12 2008 2-3PM "Are You Getting All Your Tax Deductions?"

Wednesday Jan 23 2008 6:30-7:30PM "Are You Getting All Your Tax Deductions?"

Saturday February 9 2008 2-3PM "Start Your Business Successfully"

Wednesday February 20 2008 6:30-7:30PM "Start Your Business Successfully"

Saturday March 8 2008 2-3PM "Using Technology to Grow Your Business"

Wednesday March 19 2008 6:30-7:30PM "Using Technology to Grow Your Business"

Space is limited and reservations are required.