5. February 2010 by admin.

Cost Segregation is a VERY BENEFICIAL tax angle used by real estate owners to ACCELERATE DEPRECIATION deductions.

In the past it was primarily used by large accounting firms and larger clients.  The ability for smaller building owners to utilize these techniques is now becoming popular.

It takes an engineering study and an accounting firm that understands the issues.

Generally here is how it works…..

An engineering study is completed to identify components in a buiding that can be depreciated over 5, 7 and 15 years instead of 39 years for commercial property and 27.5 for residential property.

We then prepare what is called an ACCOUNTING CHANGE and the prior year(s) of lower depreciation are now adjusted in one year!

This is alot of paperwork but it is often worth it.  You are welcome to contact us if you have questions www.USATaxHelp.com

Posted in International Taxation, Sub S Corporations, LLC's, Income Tax | 1 Comment »

4. February 2010 by admin.

No.  They are considered cosmetic.  But what if they are implanted in conjunction with a deductible procedure?

Tax Court Case O’Donnabhain (2010), 134 TC No. 4 The Tax Court has held that an individual could deduct as a medical care expense under Code Sec. 213 amounts paid for hormone therapy and sex reassignment surgery that were incurred in connection with a condition known as gender identity disorder, which the Tax Court found to be a disease. However, it found that breast augmentation surgery that the individual also had in connection with the disorder was cosmetic surgery and amounts paid for it were not deductible under Code Sec. 213(d)(9).

Posted in Income Tax | 1 Comment »

26. January 2010 by admin.

This credit is available in 2009 and 2010.  According to IRS instructions, taxpayers who received the $250 economic stimulus payment in 2009 (Social Security recipients, SSI, railroad retirement and Veteran’s Disability or Pension benefits) must reduce the Form 1040 credit by this amount.

The math is simple BUT we forsee a few problems.  Since the check is probably directly deposited, many taxpayers are going to say “don’t know if I received it”.  YUP, that’s what they will say.  Then the question is, how do we know for sure when preparing a return (and trying to avoid preparer penalties)……

IRS instructions say if you “if you do not know” you should personally contact the Social Security or the paying agency.  IRS nor Social Security has any electronic link to obtain this information (we had a link for the Economic Stimulus Rebate in 2009 for 2008).

Here is a link to more specific information on the IRS website Making Work Pay Questions and Answers: Economic Recovery Payments

Posted in Income Tax | 1 Comment »

26. January 2010 by admin.

Depending on your AGI (Adjusted Gross Income - that is the bottom line of the first page of your personal Form 1040), you may be eligible for a $400 credit ($800 if married filing joint). 

For 2009, if your filing status is Single, Head of Household or Married filing separate, the phase out of the credit begins at $75,000 and ends at $95,000.  That means if you made less than $75k, you get the whole $400.  If you made $95k, you get none.

If your filing status if Married Filing Joint, the phase out begins at $150k and ends at $190k.

We do not know at this time whether the AGI restrictions will be exactly the same for 2010.

You MAY have already received up to $250 of the credit if you are a recipient of Social Security, SSI, railroad retirement, Veteran’s disability compensation or pension benefits.

Posted in Income Tax | 1 Comment »

26. January 2010 by admin.

Until you know you are going to stick with it (no offense, many clients try stuff and change their mind), I would not consider the extra paperwork involved with having the NEW LLC taxed as a corporation.  You can find more information on our website for Sub S Corporations www.USATaxHelp.com and also the why you really want at least an LLC as a business entity.

 If you know for sure you are continuing, then the “S” corp election for the LLC is usually an excellent decision.  Seriously, read the two handouts on our main website for “S” Corps and LLC’s at www.USATaxHelp.com

Posted in Sub S Corporations, LLC's, Income Tax, General | No Comments »

22. January 2010 by admin.

Per IR-2010-010 the Pension Protection Act of 2006 REQUIRES a non-profit organiztions that does not file the necessary information form for three consecutive years to AUTOMATICALLY lose their Federal tax-empt status.  This has been in effect since January 1, 2007.

 ENUF SAID!  Contact us for more info at USATaxHelp.com

Posted in Income Tax, General | 1 Comment »

16. January 2010 by admin.

The deduction increases to 9% in 2010, up from 6%.

Posted in Sub S Corporations, LLC's, Income Tax | No Comments »

16. January 2010 by admin.

Some confusion out there about Roth changes.  The following are effective in 2010….

The tax that has to be paid when you  CONVERT a REGULAR IRA to a ROTH IRA can be paid either

• all in 2010
• all in 2011
• OR 1/2 in 2011 and 1/2 in 2012

Additionally, the limits on Roth contributions do not exist for 2010.

It would seem like a good deal to wait and pay 1/2 in 2011 and the other half in 2012 BUT that may not be the best answer.  We anticipate the highest marginal tax rate will go up (anybody want to bet it don’t?) in the next two years.  That means the same amount of income might be taxed as at higher rate.

 It could be taxed at a higher rate because you are going to have a better year and your tax situation calls for a higher rate than the one you are in now… regardless of the increase in tax rates.

Also, if you have Net Operating Losses in either 2010 or 2011, these may be used to offset the tax on the conversion and it worth more in 2010 than in 2011 or 2012.

That’s alot of concenses tax info on Conversions to Roth.  If you have any questions, please post a comment on this blog, or contact us at USATaxHelp.com.

Happy New Year!

Posted in Retirement Accounts, Income Tax | 1 Comment »

7. December 2009 by admin.

If you participate in an Employer sponsored Simple IRA, you can put an max of $11,500 in 2009 PLUS $2,500 for being over age 50.  That total is $14,000 maximum as an employee deferral.  Additionally, the employer has some matching options.  By far we have found the most popular Employer matching option to be… the employer matches up to the lower of 3% of your wages or whatever you put in as an employee.

Whatever is withheld from the paycheck must be withheld in no later than the end of December for 2009 and paid in by the employer no later than January 31^st, 2010.

i.e.  Your wages for 2009 are $36,000 x 3% = $1,080.  If you only contribute $800, Employer can only put in $800.  If you contribute $3,000, Employer can only put in $1,080.

There is no commitment to put to the maximum, nor is there a commitment that you continue to participate in a subsequent year.

Note:  Participation in an employer sponsored plan subjects you to limits on Regular IRA contributions.  Contact us for more info at www.USATaxHelp.com

Posted in Retirement Accounts, Payroll Tax, Sub S Corporations, LLC's, Income Tax | 1 Comment »

7. December 2009 by admin.

$5,000 into a REGULAR IRA is the max for a single individual UNDER age 50 who does not participate in an employer sponsored retirement plan and still receive a tax deduction.  Add $1,000 if over age 50.

Can contribute till April 15^th, 2010 for 2009.  Note:  There is NO tax deduction for contributing to a ROTH IRA.  The benefit of the ROTH is the earnings are not taxed during the growth phase of the investment (same as any retirement account) BUT the gains when taken out in retirement are NOT taxed.

The amount you or your spouse can contribute may be reduced depending on your Adjusted Gross Income.  Contact us if you need more details at www.USATaxHelp.com

Posted in Retirement Accounts, Sub S Corporations, LLC's, Income Tax | 1 Comment »