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Tax Tips. PBS Tax.

When can I get Social Security retirement benefits?

You can begin getting Social Security retirement benefits as early as age 62. But this can reduce your benefits by as much as 30 percent below what you would get if you waited to retire until your full retirement age. If you wait until your full retirement age (66 for most people), you will get your full benefit. You also can wait until age 70 to start your benefits. Then, we will increase your benefit because you earned “delayed retirement credits.”

New Standard Mileage Rates, Business Rate to Rise in 2015

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car, van, pickup or panel truck will be:

  • 5 cents per mile for business miles driven, up from 56 cents in 2014
  • 23 cents per mile driven for medical or moving purposes, down half a cent from 2014
  • 14 cents per mile driven in service of charitable organizations

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile, including depreciation, insurance, repairs, tires, maintenance, gas and oil. The rate for medical and moving purposes is based on the variable costs, such as gas and oil. The charitable rate is set by law.

Taxpayers always have the option of claiming deductions based on the actual costs of using a vehicle rather than the standard mileage rates.

 

Getting Organized

If you don’t have your W-2 and 1099 forms, you can’t do your taxes. Put them where you can find them. And keep good records of your deductions. If you keep good records, you won’t overpay, and you’ll be able to answer any questions from the Internal Revenue Service easily.

 

Per Diem

I am a company driver. What is deductible when I’m on the road?

While self-employed individuals can generally deduct any expenses incurred to earn their income, company drivers are limited to non-reimbursed expenses required by their employer. You are entitled to per diem for overnights and motel expenses. A good rule to follow for deductions would be any expenses incurred that are necessary or required in the performance of your job and/or operation of the truck but are not reimbursed by your company, such as uniforms, gloves, logbooks, maps, cell phone, CB, tools, Windex, paper towels, showers, etc. Remember, as a company driver, these deductions are only available if you itemize and are not available if you take the standard deduction.

What is the per diem rate?

The Per Diem rate for meals in 2015 was 80% of $59 until September 30, 2015 then the rate changed to $63 effective October 1, 2015 

The per diem rate for meals in 2014 was 80% of $59 per day.

The per diem rate for meals in 2013 was 80% of $59 per day.

The per diem rate for meals in 2012 was 80% of $59 per day.

The per diem rate for meals in 2011 was 80% of $59 per day.

The per diem rate for meals in 2010 was 80% of $59 per day.

The per diem rate for meals in 2009 was 80% of $52 per day.

The per diem rate for meals in 2008 was 80% of $52 per day.

The per diem rate for meals in 2007 was 75% of $52 per day.

The per diem rate for meals when in Canada is 80% of $65 per day and effective October 1, 2015 the rate changes to $68

Per Diem can only be taken when the driver spends the night away from home

IRA CONTRIBUTION LIMITS

Roth and Traditional IRA Contribution limits for 2014 incomes taxes are $5500. If you are age 50 or over the limit is $6500. If attained age 70 ½ during 2014 you can no longer make traditional IRA contributions. However,you can still contribute to a Roth IRA.

EMPLOYEE BUSINESS EXPENSES

Company drivers can deduct as an itemized deduction, unreimbursed business expenses incurred in connection with driving for your employer that are required by your employer. They include per diem, communication services, tolls, work boots etc. Make sure your company does not have a reimbursement plan.

 

CHARITABLE CONTRIBUTION

If you are going to make a donation to a charity do so before the end of the year. It could lower your taxes. You must have a written record for all donations in order to claim a deduction. Contributions of $250 or more must have written acknowledgment from the organization.

SEC 179 DEPRECIATION RULES (LATE TAX PLANNING)

REMINDER: For 2014, under current law, Sec 179 first year depreciation write off is limited to $500,000.

SELF EMPLOYED 401K RETIREMENT PLAN FOR 2014 TAXES

If you are thinking about making a retirement plan contribution for 2014 you may open a 401K Plan by December 31 without making a contribution. You will have until 4/15/15 or 10/15/15 with extension to fund the plan.

AGE 70 ½ RETIREMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMD S)

REMINDER: Those of you who have attained age 70 1/2 during 2014 must start withdrawing from their IRA s based on their life expectancy whether you are working or not.

THE PREMIUM TAX CREDIT (HEALTH INSURANCE)

If you get your health insurance coverage from the Health Insurance Marketplace, check out your eligibility for the premium tax credit. Open enrollment begins November 15, 2014.

SOCIAL SECURITY AND WORK

If you are at full retirement age and you are drawing social security you may increase your monthly check by continuing to work or by going back to work. Ask your local Social Security office the effects of working has on your account.

PER DIEM

The Special Per Diem Rates for Transportation Industry remains the same for the period 10/1/14 201C 09/30/15 at $59 per day at 80% deductible.

SIMPLE IRA

If you are a sole proprietor and want to open a 0153Simple IRA retirement plan, you must do so by October 1, 2014 for the 2014 tax year. Employer contributions are due by the due date of the 2014 return including extensions. Employees must be covered. 0153Simple IRA Plans contributions can be higher than IRA limits.

SELF EMPLOYED 201C BUSINESS LOSS AND THE IRS

If you are self employed, and your business lost money, it is still essential to file a income tax return. By doing so, it will establish the loss on your records which could save you taxes in the future or get you a refund from prior returns.

STOCKS AND RECORD HIGHS

If you own stocks personally, in your 401k or IRA, have your portfolio specialist review your holdings. Because of record highs in some sections, your portfolio may be in need of re-allocation.

2013 PARTNERSHIP/ S-CORPORATION TAX RETURNS FILING DEADLINE

REMINDER 201C Partnership tax returns (Form 1065) and S-Corporations (Form 1120-S) for 2013 are due September 15, 2014.

STOCKS AND RECORD HIGHS

If you own stocks personally, in your 401k or IRA, have your portfolio specialist review your holdings. Because of record highs in some sections, your portfolio may be in need of re-allocation.

CASUALTY LOSSES

If you are unlucky to live in a federally declared disaster zone and suffered damages from a disaster, you may qualify for a casualty loss deduction on your income tax return.

CUT YOUR CREDIT CARD INTEREST CHARGES

Transfer high balance credit cards to new credit cards with no interest for 12 months. They are out there. Do it now!

EARNED INCOME TAX CREDIT
CHILD AND DEPENDENT CARE CREDIT (PAYING FOR SUMMER CAMPS)

Taxpayers can claim a non-refundable credit for dependent care expenses. Both the taxpayer (and spouse if married) must have earned income. Any paid care throughout the year qualifies. Be sure to get the social security or federal ID number of those providing the care.

UNDERWATER BORROWERS (Trouble Refinancing?)

If you owe more than your home is worth or having trouble refinancing you may qualify for loan relief under the governments Home Affordable Refinance Program (HARP) www. harpprogram.org 888-666-5019

LOW INTEREST RATES

Interest rates are still at historic lows. Check your current loan rates to see if refinancing makes sense

ALERT 201C PER DIEM ELECTRONIC LOGS

Some truckers say they can print the last six months of logs only. The IRS wants the full year in case of audit. Schedule your printing for June 30 and December 31 to obtain a full year of logs.

TAXABILITY OF LOANS

Money received from loans or advances is not income. Consequently, the payments are not deductible except for the interest portion. Loans do not affect gain or loss upon the sale of equipment.

TAX LIENS

If you have an IRS lien against you and it s hindering your financing abilities, filing past tax returns and/or creating a payment program may get the lien released.

IMPORTANT TAX LAW CHANGE REMINDER

Starting 2014, Section 179, first year depreciation (bonus) write off limit is $25,000, down from $500,000 last year. Plan for you taxes accordingly.

WHAT IF I CANNOT FILE ON TIME? IRA DEADLINE

If you are not able to file your tax return by April 15, 2014, you may choose to file an Application of Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2014. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465. April 15th is the last day to contribute to your Traditional or Roth IRA regardless of extension.

ROTH OR TRADITIONAL IRA

Be aware of your tax savings. If you are not saving enough income taxes with your traditional IRA contribution consider a Roth because qualified distributions from a Roth IRA are not taxable, while those of a Traditional IRA are.

AFFORDABLE CARE ACT PENALTY

Not having health insurance can hurt you. The penalty for 2014 is $95 for each member of your household ($47.50 if under 18) or 1% of household income. Penalties increase the following year.

ROTH OR TRADITIONAL IRA<

Be aware of your tax savings. If you are not saving enough income taxes with your traditional IRA contribution consider a Roth because qualified distributions from a Roth IRA are not taxable, while those of a Traditional IRA are.

TAX SCAM ALERT!

Fictitious IRS AGENTS are calling taxpayers saying they owe money and to pay immediately with debit cards or wire transfer. The callers give taxpayers a phony IRS ID and know the last 4 digits of your Social Security number. DON T FALL FOR THIS SCAM. The IRS will never call you unsolicited asking for money

MARCH 31 201C HEALTH INSURANCE DEADLINE (For those without Health Insurance)

Open enrollment expires March 31. Next time to get individual coverage is 2015. You also face a penalty on your 2014 tax returns. There are exceptions, beyond the deadline, pertaining to qualifying life events, such as: Loss of job based Health Insurance / Expiration of existing insurance Marriage, divorce or death of Spouse Becoming a parent Moving beyond coverage area

HOME OFFICE DEDUCTION 201C SIMPLE METHOD

Using part of your home for business may qualify you for the home office deduction. Make sure you meet the IRS guidelines. Effective 2013, the simplified method allows $5 per square foot of business use with maximum of $1500. Choose either method that works best for you.

MISSING 1099

If you misplaced or never received a 1099 (earnings from your company) you are still responsible to report those earnings. You should ask your company or reconstruct your earnings adding up your deposits and / or comparing your expenses to your income.

CREDITS

If preparing your own tax return or reviewing yours that someone else prepared, do not forget the following possible credits: Child Tax, Child and Dependents Care, Earned Income Tax, Adoption, Education, and Savers Credit.

DEPENDENTS

Your spouse is never considered a dependent. A dependent is a Qualifying Child or Relative with no residency requirements. All others, including Boyfriend, Girlfriend or Domestic Partner can be claimed if they live with the taxpayer for an entire year. In addition, a dependent must meet the other four tests (gross income, support, citizenship, joint return).

E-FILE TAX RETURNS

The IRS will begin processing 2013 tax returns January 31, 2014. The delay was due to the government shut down

CHARITABLE CONTRIBUTION If you are going to make a donation to a charity do so before the end of the year. It could lower your taxes. You must have a written record for all donations in order to claim a deduction.
SEC 179 DEPRECIATION RULES NOTE: For 2014 under current law, Sec 179 first year depreciation write off is limited to $25,000. That is down from $500,000 in 2013. We will alert you if anything changes.
BONUS DEPRECIATION Starting 2014, any personal property (trucks, trailers) placed into service is no longer subject to accelerated depreciation by using bonus depreciation of 50 percent. In other words, the bonus depreciation is no longer available. If any changes occur we will alert you.
AGE 70 ½ RETIRMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMDs) REMINDER: Those of you who have attained age 70 1/2 during 2013 must start withdrawing from their IRAs based on their life expectancy whether you are working or not. You can delay the first year withdrawal but must then take two the following year. Next week 201C 401k info
AGE 70 ½ RETIRMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMD S) PART II

Required Minimum Distributions (RMD s) from employer retirement plans including 401k s for those reaching 70 ½ can be delayed until the year you retire unless you own more than 5% of the business sponsoring the plan.

AGE 70 ½ RETIRMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMD S)

REMINDER: Those of you who have attained age 70 1/2 during 2013 must start withdrawing from their IRA s based on their life expectancy whether you are working or not. You can delay the first year withdrawal but must then take two the following year. Next week 201C 401Ks Los Angeles Truck Accident Lawyer

SOCIAL SECURITY AND WORK

If you are at full retirement age and you are drawing social security you may increase your monthly check by continuing to work or by going back to work. Ask your local Social Security office the effects of working has on your account.

IRS TELEPHONE SCAM – WARNING

Calls are occurring saying taxpayer owes money to the IRS and must pay immediately. They say they have a pre-loaded debit card or wire transfer. If you do not pay you are then threatened with arrest, deportation or loss of your drivers license.

HEALTH CARE PENALTY

As far as we know if you obtain Health Insurance effective as of April 1st you will not be subject to a penalty. However, it takes about six weeks after enrollment to become effective, therefore, enroll by February 15th.

PER DIEM RATES

Special Per Diem Rates for Transportation Industry Taxpayers have remained unchanged and continue to be $59 per day at 80% deductible.

SPECIAL ALERT

Colorado Flood Disaster Area and Business Taxpayers � Individuals impacted by the floods have until December 2, 2013 to file their business and/or personal returns due 9/16/13 and 10/15/13. It�s possible this may impact truckers who live outside of the disaster area but were affected by it.

MANDATORY NOTICES TO EMPLOYEES (OCTOBER 1, 2013)

If your company has revenue in excess of $500,000 and have one or more employees, the Department of Labor is requiring you to send a notice to your employees about the Health Insurance Marketplace Coverage Option. Send these notices by October 1, 2013 whether you offer health insurance or not.

DEADLINE REMINDER � HIGHWAY USE TAX FORM 2290

The Heavy Highway Use Tax Form 2290 is due and payable by September 3, 2013, if your truck was first used in July 2013. If your truck was first used in August 2013 Form 2290 is due September 30, 2013 etc�

2012 INDIVIDUAL TAX RETURN FILING DEADLINE

Reminder � Filing deadline for 2012 Individual Tax Returns on extension is October 15, 2013.

SIMPLE IRA

If you are a sole proprietor and want to open a �Simple IRA� retirement plan, you must do so by October 1, 2013 for the 2013 tax year. Employer contributions are due by the due date of the 2013 return including extensions.

2012 INCOME TAX FILING DEADLINE To avoid the late filing penalty, taxpayers on extension must file their 2012 income tax return no later than October 15, 2013.
IRS TRANSCRIPTS

You can request records such as a tax return, a tax account (payments, balance due, refund information) or income information. These can be ordered online, by phone or by mail.

DUE DATE PARTNERSHIP/ S-CORPORATIONS TAX RETURNS ON EXTENSIONS

REMINDER: Partnership tax returns (Form 1065) for 2012 are due September 16, 2013. S-Corporations (Form 1120S) for 2012 are also due September 16, 2013.

IRS COLLECTION NOTICES

Can the IRS withhold your earnings from your employer without notice? No. Can the IRS levy your bank account without notice? No. The IRS will send many notices to you. Contact them before they take your money. A problem exists for the trucker on the road for long periods who never see their IRS notices. A good idea is to have someone check your mail periodically and have your employer notify you upon receiving any levy notices.

SHORTEN THE LENGTH OF YOUR HOME MORTGAGE

Refinance Now! Incredibly low 15 year mortgage rates make the 15 year loan more affordable.

JOB SEARCH EXPENSES DEDUCTIBLE

If you are looking for a new job in your same line of work for any reason, you may get a tax deduction. Keep track of your expenses including mileage.

IRS INACCURANCY NOTICES (CP2000)

One third of CP2000 Notices (Reflecting IRS Corrections and additional tax due to your original return) result in no additional taxes owed, but you must respond to them by the CP 2000 deadline.

TAXABLITY OF LOANS

Money received from loans or advances is not income. Consequently, the payments are not deductible except for the interest portion.

TAX LIENS

If you have an IRS lien against you and it s hindering your financing abilities, filing past tax returns and/or creating a payment program may get the lien released.

LOW INTEREST RATES

Banks have become more aggressive in their lending policies. Check your current loans for refinancing.

UNDERWATER BORROWERS

If you owe more than your home is worth you may qualify for loan relief under the governments Home Affordable Refinance Program (HARP) www. harpprogram.org 888-666-5019

NEW EMPLOYEES AND FORM I-9

Reminder 201C Whenever you hire a new employee you must fill out IRS Form I-9

EDUCATION EXPENSES

Cost incurred to maintain or improve skills required in your business are deductible including seminars or conventions, but costs incurred for a new business or profession are not.

INDEPENDENT CONTRACTORS TO EMPLOYEES AMNESTY

REMINDER 201C The IRS s expanded Voluntary Classification Settlement Program (VCSP) is set to expire June 30, 2013. It permits the reclassification of workers to employees (with limited past payroll taxes and penalties) even though 1099 s were never filed. The original VCS Program remains in force and is not yet scheduled to expire.

TAX DEADLINE TIPS

Payments can be made online by phone using debit or credit cards or through the Electronic Federal Tax Payment System (EFTPS). You can also pay by check made out to the 0153United States Treasury and include Form 1040-V. April 17th is the last day to contribute to your Traditional or Roth IRA regardless of extension. Reminder 201C If your return is completed but you cannot pay, file it with Form 9465 to set up your own payment plan. You can minimize your penalty and interest by paying as mush as you can by April 17. See our Tax Tip posted last week about extensions.

IRS NOTICE

The IRS sends notices for a number of reasons. However, due to a lack of manpower, more audits are being conducted through correspondence. If you receive a notice, do not panic. The notice may request a payment, ask for additional information or notify you of any changes. The notice will be specific on what you are asked to do.

WHAT IF I CAN T FILE ON TIME?

If you are not able to file your tax return by April 15, 2013, you may choose to file an Application of Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2013. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465.

PROPER FILING STATUS

If married as of December 31 you may file either married filing jointly or married filing separately. No other option. Compare the two to see which results in the lowest tax.

WHAT IF I CAN T FILE ON TIME?

If you are not able to file your tax return by April 15, 2013, you may choose to file an Application of Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2013. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465.

NO 1099?

If you cannot get a 1099 from the company you worked for and you do not have any pay statements or settlement sheets, reconstruct the income by adding up your deposits. Verify by comparing income and expenses.

INHERITANCE

Inheritance is not taxable unless it comes from a retirement plan. However, any income resulting from inheritance is taxable.

FORM 1120 S DUE DATE

REMINDER 201C 2012 S-Corporation tax filings are due by March 15, 2013. You may file Form 7004 to extend the filing date to September 16, 2013.

HOBBY LOSSES

Large Schedule C losses from activities such as car racing, horse breeding etc can increase your chances of an IRS audit. You should not claim a loss for those activities.

IF MARRIED, SHOULD YOU FILE MARRIED FILING SEPARATELY (MFS) ?

Prepare your taxes jointly and as married filing separate to see which results in combined lower taxes. Hint 201C If the lower earning spouse has higher medical expenses or there are tax reporting issues, MFS may apply to you.

� DEPENDENTS

Your spouse is never considered a dependent. A dependent is a Qualifying Child or Relative with no residency requirements. All others, including Boyfriend, Girlfriend or Domestic Partner can be claimed if they live with the taxpayer for an entire year. In addition, a dependent must meet the other four tests (gross income, support, citizenship, joint return)..

� MORTGAGE INSURANCE PREMIUMS

Form 1098, Mortgage Interest Statement, does not contain a box for Qualified Mortgage Insurance. Be aware so you do not miss this deduction.

� E-FILE TAX RETURNS

The IRS will begin processing 2012 tax returns January 30, 2013. The delay was due to the end of year tax changes made by Congress.

� RETIREMENT SAVER S CREDIT

Individuals are allowed a non-refundable credit of up to $1000 if Single or $2000 MFJ for contributions to an IRA or Employer-Sponsored Retirement Plan (including the self employed). There are adjusted gross income limitations. Consider this benefit when deciding whether to contribute to a retirement plan or not.

� 2013 TAXES

GOOD NEWS 201C No Income Tax Increase – BAD NEWS – Higher Payroll Tax For 99% of us there are apparently no income tax changes for 2013. However, the payroll and self-employment tax will be 2% higher. Payroll tax increase about $1000 per $50,000 of income.

� HAPPY HOLIDAYS

HAPPY HOLIDAYS from all of us at PBS Tax & Bookkeeping Service!

� LOAN MODIFICATION

Check it out 201C if your home is underwater and your income is low you may qualify for a Loan Modification of your mortgage.

� STOCKS AND 2013 TAXES

If you are planning on selling any stocks (not in your retirement account) next year where you have a profit, you should consider taking the profit this year instead since next years taxes MAY be higher.

� MEDICAL INSURANCE DEDUCTIBLE

If you have met your deductible for 2012, schedule medical treatment you have been delaying prior to the end of year as you will get those expenses reimbursed.

� AGE 70 ½ RETIRMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMD S) PART II

� Required Minimum Distributions (RMD s) from employer retirement plans including 401k s for those reaching 70 ½ can be delayed until the year you retire unless you own more than 5% of the business sponsoring the plan.

AGE 70 ½ RETIRMENT WITHDRAWAL REQUIRED MINIMUM DISTRIBUTIONS (RMD S)

� REMINDER: Those of you who have attained age 70 1/2 during 2012 must start withdrawing from their IRA s based on their life expectancy whether you are working or not. You can delay the first year withdrawal but must then take two the following year.

GOOD CREDIT

You should periodically request a copy of your credit report to see what s in it. To get a copy of your credit reports go to annualcreditreport.com or call 877-322-8228.

PENNSYLVANIA PER DIEM

� Pennsylvania tax law does not comply with the federal when deducting per diem meals. For Pennsylvania you must have your meal receipts and they are 100% deductible.

2011 INCOME TAX FILING DEADLINE

To avoid the late filing penalty, taxpayers on extension must file their 2011 income tax return no later than October 15, 2012.

PER DIEM

The per diem rate of $59 per day at 80% deductible did not change as of October 1, 2012. Therefore, the above rate is good through at least September 30, 2013 pending any tax changes affecting Per Diem.

IRS FAST TRACK SETTLEMENT PROGRAM (FTS)

� The IRS Fast Track Settlement Program for small business and self 201C employed taxpayers can help you resolve tax disputes. Easy application process.

� SOCIAL SECURITY AND WORK

� If you are at full retirement age and you are drawing social security you may increase your monthly check by continuing to work or by going back to work. Ask your local Social Security office the effects of working has on your account.

SIMPLE IRA

� If you are a sole proprietor and want to open a ‘Simple IRA’ retirement plan, you must do so by October 1, 2012 for the 2012 tax year. � Employer contributions are due by the due date of the 2012 return including extensions. � ‘Simple IRA’ Plans contributions can be higher than IRA limits.

FORMS 1065, 1120 AND 1120 S DUE SEPTEMBER 17, 2012

� REMINDER: Partnership and Corporation Tax Returns are Due September 17, 2012. � No further extensions available!!

HEAVY HIGHWAY VEHICLE USE TAX ELECTRONIC FILING EXTENSION

� Taxpayers who file Form 2290 Heavy Vehicle Use Tax electronically have until September 7 to file and pay any tax due without penalty.

DEADLINE REMINDER 201C HIGHWAY USE TAX FORM 2290

� The Heavy Highway Use Tax Form 2290 is due and payable by August 31, 2012. The form and � payment must be mailed by August 31, 2012.

DUE DATE PARTNERSHIP/S-COPRORATIONS TAX RETURNS ON EXTENSIONS

REMINDER – Partnership tax returns (Form 1065) for 2011 ar due September 17, 2012. S-Corporatons (Form (1120S) are also due September September 17, 2012.

TAX ALERT – PLAN AHEAD PART III BONUS DEPRECIATION

The bonus depreciation for NEW equipment acquisitions now limited to 50% write off is set to expire December 31, 2012 unless extended.

TRANSFERRING MUTUAL FUNDS

If you transfer your mutual fund balance to another mutual fund within the same mutual fund family a taxable event has occurred (same as if you sold it).

SECTION 179

� Section 179 write off for equipment acquisitions limited to $25,000 beginning in 2013 unless congress extends it. For 2012 limit is $139,000

TAX ALERT 201C PLAN AHEAD PART I

� The payroll tax cut and the Bush era tax cuts are both set to expire at the end of the year. Plan ahead. Increase income in 2012 and delay paying some expenses to 2013.

EXTREMELY LOW INTEREST RCUT YOUR CREDIT CARD INTEREST CHARGES

Transfer high balance credit cards to new credit cards with no interest for 12 months. They are out there. Do it now!

EXTREMELY LOW INTEREST RATE ENVIRONMENT

Examine any loans you have with the goal to lower the interest rate! Do not let the opportunity pass.

SHORTEN THE LENGTH OF YOUR HOME MORTGAGE

Refinance Now! Incredibly low 15 year mortgage rates make the 15 year loan more affordable.

ESTIMATED TAXES (NEXT PAYMENT DUE 6/15/12)

Following is an example of not paying your estimated taxes. Taxpayer s total tax was $6155 all paid by 4/17/12, the final filing date. Taxpayer was hit with underpayment penalties in excess of $200 because they did not pay their quarterly estimated taxes. Please pay your estimated taxes. Due dates for the estimated tax payments are: 4/17, 6/15, 9/17, 1/15

HOBBY LOSSES

Deducting expenses for a business is illegal, unless you created it with the reasonable expectation of making a profit.

CANCELLATION OF CREDIT CARD DEBT

Generally, debt forgiveness is taxable unless one of the following applies: Title 11 Bankruptcy Taxpayer is insolvent Qualified Farm Indebtedness Residential foreclosure (Acquisition Debt)

TAXABILITY OF LOANS

Money received by loans or advances is not income. Consequently, the payments are not deductible except for the interest portion.

HOME OFFICE DEDUCTION

A home office deduction, while legal, can raise flags. For better tax planning, if you take the deduction, don’t claim the depreciation. You may have to show the depreciation as income upon the sale of your home.

HIRE YOUR CHILDREN

If you are self-employed you can hire your child and if they are under age 18, they are exempt from FICA. They can earn up to $5800 without paying income tax.

TAX DEADLINE TIPS

Payments can be made online by phone using debit or credit cards or through the Electronic Federal Tax Payment System (EFTPS). You can also pay by check made out to the United States Treasury and include Form 1040-V. April 17th is the last day to contribute to your Traditional or Roth IRA regardless of extension. Reminder %u2013 If your return is completed but you cannot pay, file it with Form 9465 to set up your own payment plan. You can minimize your penalty and interest by paying as mush as you can by April 17. See our Tax Tip posted last week about extensions.

ALIMONY

Alimony paid is deductible to the payer and included in the recipient’s income. Payments must be required by a decree. Payments may not be for child support.

WHAT IF I CAN’T FILE ON TIME?

If you are not able to file your tax return by April 17, 2012, you may choose to file an Application of Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2012. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465.

PAYING TAXES BY CREDIT CARD

Using your credit card to pay the IRS is expensive. Your credit card company will charge a convenience fee in the 2 to 3% range. Interest charges are high. Your credit card rewards won’t make up the difference.

HOME OFFICE DEDUCTION

Using part of your home for business should qualify you for the home office deduction. Make sure you meet the IRS guidelines.

EMPLOYEE BUSINESS EXPENSES

Company drivers can deduct as an itemized deduction, unreimbursed business expenses incurred in connection with driving for your employer that are reasonable and necessary. They could include per diem, communication services, tolls, work boots etc.

FORM 1120 S DUE DATE

REMINDER — 2011 S-Corporation tax filings are due by March 15, 2012. You may file Form 7004 to extend the filing date to September 17, 2012.

TRACK YOUR REFUND

Once your Federal Tax Return is filed, you can find the status of your refund at www irs gov or using the IRS 2 Go Phone APP (look for Where’s My Refund .) f your meals.

PER DIEM AND S CORPS

When you operate as an S-Corporation, you are not eligible to claim Per Diem amounts for meals on your corporate income tax return. You can claim them as a business expense on your personal tax return, or you can have the corporation reimburse you for the actual cost of your meals.

DEPENDENTS

Your spouse is never considered a dependent. A dependent is a Qualifying Child or Relative with no residency requirements. All others, including Boyfriend, Girlfriend or Domestic Partner can be claimed if they live with the taxpayer for an entire year. In addition, a dependent must meet the other four tests (gross income, support, citizenship, joint return).

FORMS W-2 AND 1099<

You should receive these by the first week in February. If not, contact your employer. If you still cannot get them you will need to use any paperwork you have to estimate your earnings to enable you to complete your income taxes. If you are estimating your earnings and withholdings for missing W-2’s, attach IRS Form 4852 to your return. If you are estimating your 1099 income, attach a footnote, explaining your situation, to your income tax return.

RETIREMENT SAVER’S CREDIT (Often Missed)

Individuals are allowed a non-refundable credit of up to $1000 if Single or $2000 MFJ for contributions to an IRA or Employer-Sponsored Retirement Plan (including the self employed). There are adjusted gross income limitations. Consider this benefit when deciding whether to contribute to a retirement plan or not.

2011 INCOME TAX ORGANIZERS

You can now access our 2011 Income Tax Organizer on our website. Also, company drivers may access our company driver section to see if you qualify to itemize your deductions and save on your income taxes.

HAPPY HOLIDAYS

We at PBS wish all of you a safe and joyous holiday season and we will see you next year!

REPORTING 1099’S AND NEW HEALTH CARE PLAN

Year 2012 is the start of the new 1099 reporting requirements. The good news is you will not be responsible to keep track of any credit or debit cards used for purchases of goods or services. Landlords must start the new 1099 reporting requirements in 2011.

GUARD DOGS

Even though many truckers deduct the cost of maintaining a guard dog for their rig, the fact is, to be legitimate, the dog should have papers certifying that is in fact a trained guard dog.

UNI (SOLO) 401K

December 31 is the last day to open a 401k Retirement Plan to benefit you for the 2011 tax year. Once opened you will have until the return due date including extensions to fund the plan.

HAPPY THANKSGIVING

Have a Happy and Safe Thanksgiving from All of Us at PBS Tax & Bookkeeping Service!

LARGE FIRST YEAR DEPRECIATION WRITE OFFS EXPIRING

Sec 179 first year expensing of equipment acquisitions of up to a $500,000 write off expires at the end of 2011 where it adjusts to a limit of $125,000 for 2012.

ESTIMATED TAXES

You should do a 2011 Income Tax Projection based on YTD Operations for tax planning and estimated tax adjustments.

ESTIMATED TAXES

You should do a 2011 Income Tax Projection based on YTD Operations for tax planning and estimated tax adjustments.

OBTAIN CREDIT REPORTS You can get free access to your credit reports at www (dot) annualcreditreport.com.That will include the three reporting agencies that make up your FICO Report. Take an average of the three to get your FICO Score.
SOCIAL SECURITY BENEFITS

For workers who are receiving Social Security Benefits for 2012 the earnings limit for those under full retirement age is $14,640. There is a $1 deduction from benefits for each $2 earned over $14,640.

PRE RETIREMENT WITHDRAWALS (FINANCING EQUIPMENT)

It is bad planning to take an early withdrawal from your retirement plan to finance the purchase of a truck. The taxes and penalties are huge and a truck decreases in value.

PER DIEM

The per diem rate of $59 per day at 80% deductible did not change as of October 1, 2011. Therefore, the above rate is good through at least September 30, 2012 at which time we will check to see if it has been revised.

2010 INDIVIDUAL TAX RETURN FILING DEADLINE

Reminder %u2013 Filing deadline for 2010 Individual Tax Returns on extension is October 17, 2011

SIMPLE IRA CORRECTED DATE

If you are a sole proprietor and want to open a Simple IRA retirement plan, you must do so by October 3, 2011 for the 2011 tax year. Employer contributions are due by the return due date including extension. The contribution limits can be higher than the Traditional IRA limits.

IRS COLLECTION NOTICES

Can the IRS withhold your earnings from your employer without notice? No. Can the IRS levy your bank account without notice? No. The IRS will send many notices to you. Contact them before they take your money. A problem exists for the trucker on the road for long periods who never see their IRS notices. A good idea is to have someone check your mail periodically and have your employer notify you upon receiving any levy notices.

HURRICANE IRENE TAX FILING EXTENSIONS

For victims in North Carolina, New Jersey, and New York %u2013 more will be added in coming days. The following tax returns filings and payment deadlines have been extended to October 31, 2011 * Corporations and Partnerships on extension until September, 15 2011 * Individuals on extension until October 17, 2011 * Estimated Tax Payments due September 15, 2011

EYEGLASSES

Truck drivers can claim as a deduction the cost of safety and sunglasses to protect your eyes if you do work during the day. You cannot claim the cost of prescription glasses unless they are sunglasses.

DUE DATE PARTNERSHIP/ S-CORPORATIONS TAX RETURNS

REMINDER %u2013 Partnership tax returns (Form 1065) for 2010 are due September 15, 2011. S-Corporations (Form 1120S) for 2010 are also due September 15, 2011.

FORM 2290 EXTENSION

Form 2290 Heavy Highway Vehicle Use Tax Return due August 31, 2011 has been extended to November 30, 2011. This will give congress time to decide if the tax is to be continued and or adjusted. The tax is currently set to expire September 30, 2011.

PREPARE FOR A DISASTER

Paperless records can be useful at times of disaster. All bank statements and important documents should be e-mailed to you. You can scan important papers such as W-2’s and 1099’s. Your tax returns should be emailed to you. You can then set-up an electronic file and also keep a back up accessible to you. You should be able to find the file you set up through your email.

HELP PREVENT ID THEFT

Never carry around your social security card. Just memorize your number. Avoid carrying your checkbook. A check has your address, bank account number and possibly an imprint of your signature. Prevent someone from writing out many of your blank checks. If you know you are going to write a check, have one or two with you.

INCORPORATION/LLC

I hear a lot about incorporating and/or forming an LLC from other drivers, but I don’t know if it’s applicable for me?There are several factors to consider when trying to determine if incorporating or filing an LLC is in your best interest. What is good for one trucker is not necessarily good for another. The most common reasons to change your business entity are asset protection and tax savings. Make sure what you are trying to accomplish will be accomplished.

REACHING RETIREMENT GOAL

Hiring a fee only Certified Financial Planner (CFF) should be your first or next step to reach your financial goals. Avoid Financial Planners who make money on your investments.

CREDIT SCORE

Periodically check your credit score (FICO) to clear any problems that should not be there. Once a year should do it. Ask your banker if it hurts your score if you check more often.

FINANCING EQUIPMENT

It is best to start a relationship with a bank that actively makes equipment loans. This way when you need financing you will be good to go.

BUSINESS MILEAGE RATE INCREASE

Effective July 1, 2011, the IRS has increased the standard mileage rate for deductible business miles to $.55 � cents per mile from $.51 cents per mile for operating your automobile for business.

HIRE YOUR CHILDREN

If you are self-employed you can hire your child and if they are under age 18, they are exempt from FICA. They can earn up to $5700 without paying income tax.

ESTIMATED TAXES (NEXT PAYMENT DUE 6/15/11)

Following is an example off not paying your estimated taxes. Clients total tax was $6155 all paid by 4/14/11. Client was hit with underpayment penalties in excess of $200 because they did not pay their quarterly estimated taxes. Please pay your estimated taxes. Due dates for the estimated tax payments are: 4/15, 6/15, 9/15, 1/16

IRS NOTICE

The IRS sends notices for a number of reasons. If you receive a notice, do not panic. The notice may request a payment, ask for additional information or notify you of any changes. The notice will be specific on what you are asked to do. If you receive a correction notice, review it and compare it to the original tax return. Respond as needed and if you agree with the notice and no payment is due no reply would be necessary.

CREDIT

If your credit is bad and you are having trouble paying your bills, try to consolidate your credit card debt into one package with low monthly payments. You can also check with credit unions as they may be able to help you. Check with a credit counselor to see if you have enough income to pay off your cards over five years. Also, check your options with a bankruptcy attorney. Try to settle your debt for less than what is owed. But remember, until you have paid off your debt, your credit gets worse. CANCELLATION OF CREDIT CARD DEBTGenerally, debt forgiveness is taxable unless one of the following applies: Title 11 Bankruptcy Taxpayer is insolvent Qualified Farm Indebtiness Residential foreclosure (Acquisition Debt)

CREDIT

If your credit is bad and you are having trouble paying your bills, try to consolidate your credit card debt into one package with low monthly payments. You can also check with credit unions as they may be able to help you. Check with a credit counselor to see if you have enough income to pay off your cards over five years. Also, check your options with a bankruptcy attorney. Try to settle your debt for less than what is owed. But remember, until you have paid off your debt, your credit gets worse.

REFINANCE YOUR HOME LOAN

As you are aware interest rates are the lowest they have been in 50 years. If you have good credit, you should explore refinancing your home mortgage to obtain a lower interest rate.

TAX LIENS

If you have a Lien against you issued by the IRS, and it is hindering your financing abilities, contact them as the IRS has made favorable changes to their lien issuing process. You may be able to get rid of it.

TAX DEADLINE TIPSPayments can be made online by phone using debit or credit cards or through the Electronic Federal Tax Payment System (EFTPS). You can also pay by check made out to the United States Treasury and include Form 1040-V. April 18th is the last day to contribute to your Traditional or Roth IRA regardless of extension. Reminder %u2013 If your return is completed but you cannot pay, file it with Form 9465 to set up your own payment plan.
WHAT IF I CAN’T FILE ON TIME?

If you are not able to file your tax return by April 18, 2011, you may choose to file an Application for Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 17, 2011. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465. Note: Even if you set up a payment plan the IRS may still file a federal tax lien until you make a final payment. .

SELF EMPLOYED HEALTH INSURANCE DEDUCTION

Health Insurance Premiums deductible as self-employed health insurance are also deductible for self-employment tax. This is for 2010 tax returns only.

EMPLOYEE BUSINESS EXPENSES

Company drivers can deduct as an itemized deduction, unreimbursed business expenses incurred in connection with driving for your employer that are reasonable and necessary. They could include per diem, communication services, tolls, work boots etc.

CHILD AND DEPENDENT CARE CREDIT

The credit is available for expenses paid for the care of your children under 13. The credit is nonrefundable, meaning it can be used to reduce your taxes but you cannot get a refund from it.

MAKING WORK PAY TAX CREDIT

The credit is a refundable credit of up to $400 for individual taxpayers and $800 if married filing jointly. The credit for taxpayers receiving a paycheck has been handled by their employer through automated withholding changes. If you received less than the full amount, you can claim that on your 2010 tax return. Schedule M on your tax return will help determine if any more credit is due. Independents and owner operators who do not have taxes withheld will claim their credit on their 2010 tax return.

DEDUCTING MOTELS

Lodging is not part of your daily per diem rate of $59. In order to deduct motels you must have paid receipts to substantiate the deduction.

DEDUCTING MOTELS

Lodging is not part of your daily per diem rate of $59. In order to deduct motels you must have paid receipts to substantiate the deduction.

SEPARATE BUSINESS BANK ACCOUNTS

Self-employed individuals (owner-operators, independent contractors) should maintain a separate business bank account from their personal one. Though not required, you will have better control of your money.

REPORT ALL INCOME

The IRS uses information returns such as 1099s to match to your income tax returns. Any discrepancies will lead to an audit. Upon receiving the audit letter, a legitimate explanation showing you are correct will clear the matter up. We urge you to report all your income.

UPDATED INFORMATION %u2013 1099 REPEAL AMENDMENT

The expanded 1099 information reporting requirements that was attached to the Health Care Reform Law and that was set for 2012 has been repealed by the senate and appears dead. The house must also approve it and then the President will have to sign it.

MISSING FORMS W-2 AND 1099

If you have not received your forms contact your employer. If you still cannot get them you will need to use any paperwork you have to estimate your earnings to enable you to complete your income taxes. If you are estimating your earnings and withholdings for missing W-2’s, attach IRS Form 4852 to your return. If you are estimating your 1099 income, attach a footnote, explaining your situation, to your income tax return.

RETIREMENT SAVER’S CREDIT

Individuals are allowed a non-refundable credit of up to $1000 if Single or $2000 MFJ for contributions to an IRA or Employer-Sponsored Retirement Plan (including the self employed). There are adjusted gross income limitations. Consider this benefit when deciding whether to contribute to a retirement plan or not.

EARLY FILING TAX PROBLEM

If you itemize your deductions using Schedule A Form 1040, claim the first time homebuyer credit or tuition and fees deduction, you must wait to file your 2010 income tax returns due to the extension of the Bush Era tax cuts. The IRS will let us know when they will begin accepting the above type tax returns. Best guess is mid to late February.

2010 INCOME TAX ORGANIZERS

You can now access our 2010 Income Tax Organizer on our website. Also, company drivers may access our company driver section to see if you qualify to itemize your deductions and save on your income taxes.

HAPPY HOLIDAYS

We at PBS wish all of you a safe and joyous holiday season and we will see you next year!

REPORTING 1099’S AND NEW HEALTH CARE PLAN

Year 2012 is the start of the new 1099 reporting requirements. The good news is you will not be responsible to keep track of any credit or debit cards used for purchases of goods or services. Landlords must start the new 1099 reporting requirements in 2011.

EARLY GIFT

Congress has extended the current tax structure so your rates will not be increased. For 2011, apparently the self-employed (owner-operators) will be paying less social security taxes as well as W-2 wage earners(co-drivers).

STANDARD BUSINESS MILEAGE RATE

Beginning 2011, the standard business mileage rate changes to 51 cents per mile from 50 cents.

PAYROLL TAX DEPOSITS

Beginning 2011, all employers with IRS payroll tax liabilities exceeding $2500 per quarter must make all payments electronically via EFTPS. Go to www. EFTPS .gov or call 1-800-555-4477.

HAPPY THANKSGIVING

Have a Happy and Safe Thanksgiving from All of Us at PBS Tax & Bookkeeping Service!

SMALL BUSINESS JOBS ACT OF 2010

First-year expensing of equipment purchases has been increased again. For purchases in 2010 and 2011 the write off limit is raised to $500,000. Phase out begins when total purchases exceed $2 million.

DEBT FORGIVNESS FROM LOAN MODIFICATION

If your debt forgiveness is for qualified principal residence indebtedness, it is excluded from taxable income via form 982 when filing your income tax return.

TAX RETURN DEADLINE FOR 2011

IRS extends the filing date for 2010 federal income tax returns to Monday April18, 2011. The previous date was Friday April 15, 2011.

SOCIAL SECURITY BENEFITS

The earnings limit for those under full retirement age is $14,160. There is a $1 deduction from benefits for each $2 earned over $14,160
ESTIMATED TAXES

Do a 2010 Income Tax Projection based on YTD Operations for tax planning and estimated tax adjustments.

CHILDREN’S COLLEGE FINANCIAL AID

Withdrawals from retirement plans could reduce your child?s eligibility for financial aid the next year it will add to your income. A 529 college savings plan is more efficient.

PER DIEM RATE CHANGE

Per Diem remains at $59 per day through September 30, 2011 and is still 80% deductible.

INHERITANCE GIFTS

In response to many inquiries, people who receive inheritance gifts such as cash and property, will not owe income taxes. If the gifts received were from IRS distributions received from decedent prior to death, they could be taxed.

GARNISHMENT OF WAGES AND 1099 INCOME

Can the IRS withhold earnings from your employer without notice? No. The IRS must send you a final Notice of Levy and then wait 45 days before taking your money. The amount that they can take varies. A problem exists for the trucker on the road for long periods who never see the IRS notice. A good idea is to have someone check your mail or have your employer notify you upon receiving the garnishment order. Employer contributions are due by the return due date including extension. The contribution limits can be higher than the Traditional IRA limits.

SIMPLE IRA

If you are a sole proprietor and want to open a Simple IRA retirement plan, you must do so by October 1, 2010 for the 2010 tax year. Employer contributions are due by the return due date including extension. The contribution limits can be higher than the Traditional IRA limits.

DUE DATE PARTNERSHIP TAX RETURNS

REMINDER %u2013 Partnership tax returns (Form 1065) for 2009 are due September 15, 2010. This was also true for 2008. Prior to that they were due October 15.

FORM 1099 REPORTING REQUIREMENTS UNDER THE NEW HEALTH CARE ACT

The current law for 1099’s requiring a person engaged in a trade or business to file one if payments total $600 or more remains in effect through 2011. After that date most payments to corporations will no longer be exempt from receiving 1099’s.

PAYROLL TAX PAYMENTS

Beginning 1/1/2011 the IRS will no longer accept payment coupons unless you (the employer) has $2500 or less quarterly payroll tax liability and you pay it when filing your employment tax returns. All others will be required to make the payments electronically. You can register with EFTPS at www.eftps.gov or call 800-555-4477.

PREPARE FOR A DISASTER

Paperless records can be useful at times of disaster. All bank statements and important documents should be e-mailed to you. You can scan tax and other important papers such as W-2’s. Your tax returns should be emailed to you. You can then set-up an electronic file and also keep a back up

ELECTRONIC LOGS

Problems exist as to protection against malfunction and retention of logs to support your per diem deduction. Software will be developed to enable the trucker to keep a copy of their logs. In the meantime, retain all meal receipts and keep a copy of your fuel receipts. At least there will be proof as to where you were, when and where you refueled. Updates to follow.

BACK INCOME TAXES

What do I do if I haven’t filed a tax return in years? Not filling your income tax return can get you into serious trouble. If you don’t file for one year, the odds are you are going to be afraid to file for the next year. And suddenly you haven’t filed for 3, 4, or 5 years because you are afraid to contact the IRS. The IRS is more interested in getting delinquent taxpayers back in the system and will work with you

INCORPORATION/LLC

I hear a lot about incorporating and/or forming an LLC from other drivers, but I don’t know if it’s applicable for me? There are several factors to consider when trying to determine if incorporating or filing an LLC is in your best interest. What is good for one trucker is not necessarily good for another. The most common reasons to change your business entity are asset protection and tax savings. Make sure what you are trying to accomplish will be accomplished.

REFINANCE YOUR LOANS (Revisited)

Is it a good idea to refinance my home or equipment now? Absolutely. Interest rates are at records lows. That is a plus. You can now lower mortgage payments considerably by refinancing. There are various programs available. It may also be possible to take cash out of your home and keep your payment the same. You might consider going to a fifteen year mortgage to get even a lower rate.

STOCK MARKET

If you are in the stock market via mutual funds and/or stocks, you should review your holdings with a portfolio manager, stock broker or yourself to make sure what you are invested in is still solid or if your holdings need to be rebalanced. The same would hold true for bonds.

INSURANCE PROCEEDS ON EQUIPMENT

A trucker has totaled his truck. The insurance proceeds would be reported on his tax return when the truck is taken off the books. The proceeds are treated similar to a sale.

DEADHEAD MILES

A common misconception concerns deadhead miles. There are many owner-operators and tax preparers who think that income lost as a result of deadhead miles is a deductible item. That is not the case. Only the cost to operate the truck, i.e., fuel, repairs, and maintenance covering those deadhead miles is deductible.

OVERPAID TAXES

You may have overpaid your taxes by failing to itemize! Over 2 million filers could have cut their income tax by claiming itemized deductions (for items such as mortgage interest, property taxes, state and local taxes, medical and charitable contributions). But they, or their preparers, failed to do so and used the simpler standard deduction instead. If you didn’t itemize on your return within the last three years, check to see if the total itemized deductions you could have claimed exceeded the standard deduction. If so, you can file an amended income tax return to take your extra deductions now-and get a tax refund.

ESTIMATED TAXES

Following is an example of not paying your estimated taxes. Clients total tax was $6155 all paid by 4/15/10. Client was hit with underpayment penalties in excess of $200 because they did not pay their taxes quarterly. Please pay your estimated taxes. Due dates for the estimated tax payments are: 4/15, 6/15, 9/15, 1/15

ANSWERING NEW HEALTH CARE LAW QUESTIONS

A business with fewer than 50 employees will not be required to offer health coverage. This has been a major concern of some of our clients.

IRS NOTICE

The IRS sends notices for a number of reasons. If you receive a notice, do not panic. The notice may request a payment, ask for additional information or notify you of any changes. The notice will be specific on what you are asked to do. Respond as needed and if you agree with the notice and no payment is due no reply would be necessary.

CREDIT

If your credit is bad and you are having trouble paying your bills, try to consolidate your credit card debt into one package with low monthly payments. You can also check with credit unions as they may be able to help you. Check with a credit counselor to see if you have enough income to pay off your cards over five years. Also, check your options with a bankruptcy attorney. Try to settle your debt for less than what is owed. But remember, until you have paid off your debt, your credit gets worse.

EMAIL AND THE IRS

Please do not open any e-mails received from the IRS. The IRS will not communicate via e-mail. Common this time of year are e-mails alluding to the tax refund you may be waiting for. Play it safe. Delete those.

REFINANCE YOUR HOME LOAN

As you are aware interest rates are the lowest they have been in 50 years. If you have good credit, you should explore refinancing your home mortgage to obtain a lower interest rate.

TAX DEADLINE TIPS

If you owe the IRS you may pay online or by phone. Call 1-877-754-4413 or visit www. officialpayments. com/debit ($3.95 fee). For credit card payments visit www. officialpayments. com (2.35% fee) or call the above number (2.35% fee). You can also make partial payments. This will alleviate some penalties and interest. April 15th is the last day to contribute to your Traditional or Roth IRA regardless of extension. Reminder %u2013 If your return is completed but you cannot pay, file it with Form 9465 to set up your own payment plan.

WHAT IF I CAN’T FILE ON TIME?

If you are not able to file your tax return by April 15, 2010, you may choose to file an Application for Automatic Extension of Time, Form 4868, which will extend the time you have to file your return until October 15, 2010. By filing the extension, you will eliminate a late filing penalty. However, an extension is not an extension of time to pay taxes due. So if you are going to owe taxes, you should send in the money along with your extension. There are various ways to avoid or reduce underpayment penalties. If your return is completed, file it even if you are unable to pay the tax due. The IRS will bill you. You can also set up your own payment plan by filing Form 9465.

DISHONEST TAX PREPARERS

Do not become a victim of dishonest tax preparers. These scam artists promise large refunds and skim a portion of their refunds to pay their inflated preparation fees. Be wary of fraudulent fuel tax credits to recover taxes paid in prior years.

INSURANCE PROCEEDS

Money received from your insurance company for a totaled truck is reported on your income tax return and treated as the sale price when you take the truck off the books.

HIRE ACT

New act just passed by congress provides a payroll tax break if you hire a previously unemployed worker. This is effective as of February 3, 2010 and expires December 31, 2010. The hiring of relatives are excluded. There are pertinent details in the act that you should be aware of before hiring someone.

MAKING WORK PAY TAX CREDIT

The credit is a refundable credit of up to $400 for individual taxpayers and $800 if married filing jointly. The credit for taxpayers receiving a paycheck has been handled by their employer through automated withholding changes. If you received less than the full amount, you can claim that on your 2009 tax return. Schedule M on your tax return will help determine if any more credit is due. Independents and owner operators, who do not have taxes withheld, will claim their credit on their 2009 tax return.

MISSING FORM W-2

If you have not received a W-2 and you have contacted your employer, contact the IRS @ 800-829-1040. You will need an estimate of wages earned. Even though a W-2 is missing, you must still file your return or get an extension. If filing, estimate the earnings and withholding on IRS Form 4852 and attach the form to your return. If after you filed and the missing W-2 is received file form 1040X, amended tax return, if there is a difference.

INCORRECT 1099

The 1099 you received shows the wrong amount of income. You should request a corrected copy of the 1099. If you are unable to get a corrected copy of the 1099 you should report the incorrect 1099 information as it appears on the form. Then add or subtract the amount of the error when computing your total. Be sure to include a letter of explanation with your return. If you do not receive a 1099 you still are responsible to show the income.

TAX WITHHOLDING

Beware %u2013 The Making Work Pay Credit resulted in lower withholding tax for 2009 so prepare for smaller refunds or balance due to the IRS. The credit is up to $400 for individuals and up to $800 for married taxpayers filing joint returns. Taxpayers receiving less than the full amount of the allowable credit can claim the remaining credit when they file their tax return.

PER DIEM

For your overnights, deduct $52 per day from January 1 %u2013 September 30, 2009 and $59 per day thereafter. For 2010 it is $59 per day. Per Diem is 80 percent deductible. You must have motel receipts to deduct lodging.

401K WITHDRAWALS

If you took or are contemplating taking an early 401k withdrawal, you can avoid the 10% penalty if you stopped working, got laid off, quit or retired in the year you turn 55 or thereafter.

GET A JUMP ON YOUR TAXES

Follow the checklist: 1. Make sure you have all the records you need, including W-2’s and 1099’s. 2. Compare amounts on 1099’s and W-2’s with your records to make sure they agree. 3. If the amounts don’t agree call the payor or use the amount you think it is by doing an adjustment on your tax return 4. You must have receipts and back up information for everything that appears on your tax return. Using an income tax organizer that outlines everything you need will be very helpful. 5. E-file your tax return. E-filing catches errors and provides confirmation your return has been received and gives a faster refund. 6. Get the fastest refund. When you e-file early, you receive your refund sooner. When you choose direct deposit, you will receive your refund sooner than waiting for a check. 7. If recently married or divorced and/or changed your last name including hyphenating your last name you will need to notify the social security administration. 8. Every dependent claimed must have a social security number, even newborns.