IRS Tax Talk

1099s - Should I do them?

admin — Sat, 03 Mar 2012 16:32:19 +0000

Some companies prepare 1099’s for everyone eventhough it may not be required. If you paid any individual more than $600 for personal services, then a 1099 is required (that includes paying an unincorporated landlord).

When we say individuals, that may be confusing. Clearly if you wrote the check to JONES, INC, that is a corporation but I’d get a W9 just in case.

Your vendors should complete a Form W9 available on irs.gov or click here http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=103. THIS tells you what you need to know to determine whether a 1099 is required.

You do not have to do 1099’s for C Corps, S Corps, Partnerships or Trusts/Estates.

You also do not have to do 1099’s for LLC’s if they are taxed as a C, S or partnership.

You should have a W9 on file for each of your vendors to determine if a 1099 is requried.

So, if Individua/sole proprietor, or LLC without a tax classification is checked, then YES to do 1099.

As long as you are doing any, you should have a RECIPIENT’s identification number completed, else IRS may send a penalty notice.

The RECIPIENT’s identification number is usually the social security number but may be the federal ID# of a sole member LLC.

Clear as mudd? I doubt it. Been doing this for over 25 years and I’m still confused!

Sale of Business BUT What did you Sell?

admin — Tue, 21 Feb 2012 22:54:57 +0000

You don’t buy or sell a business.

You buy or sell either

Ownership position in a corporation is evidenced by Stock. It is like selling stock in a publically traded corporation. The business is not selling assets. The ownership of the business changed but not the assets nor the liabilities. The new owners just operate the business with the same federal identification number. Everything is the same but with new owners.

The above also applies to selling ownership interest in a non-disregarded entity (multiple member LLC or partnership).

Assets are sold. The business accounts for profit or loss based on the allocation of purchase price to the fair market value of the equipment, inventory, receivables, goodwill and non-compete (and maybe a few other things). Point is ASSETS were sold by the business. The ownership of the business did not change. The tax differences to the buyer and seller are different and often at odds. What is best for the seller may not be best for the buyer.

We often see new clients who… “sold a business”. Once we discover the underlying facts we have often found a significant after tax difference based on what was actually sold.

Florida State Unemployment Tax Rates 2012

admin — Wed, 01 Feb 2012 15:46:35 +0000

Florida

Contribution Rates
For 2012, the minimum rate is 2.02% and the maximum rate is 5.4%, except that employers participating in the short-time compensation program will be subject to a maximum rate of 6.4%. New employers pay 2.7% in 2012. The noncharge ratio is .0057, the excess payment ratio is .0089, the gross benefit ratio is .0275, the multiplier is 1.1382, the fund size ratio is .0167, and the final adjustment ratio is .0313. There also will be a special tax assessment in effect for 2012 to assist in repaying the interest on the state’s Title XII loan, but that amount is not available yet. (DEO Communication.)

2011 Health Insurance MUST be on W2 for >2% Sub S shareholder

admin — Sat, 21 Jan 2012 14:27:01 +0000

HERE IS HOW TO REPORT IT

Health Insurance for the entire family goes on Shareholder’s W2

Box 1 & Box 14 (Does not affect FICA).

W3 Box 1 only

Form 941 Box 2 only (Does not affect FICA).

Form 940 Included in Total Payments Line 3 & Box 4 - excluded from FUTA tax

UCT-6 (Florida’s Unemployment Tax) Not shown

Health Insurance for employees does NOT appear any payroll reports (YET!).

2012 Mileage Rates

admin — Tue, 17 Jan 2012 13:17:45 +0000

The 2012 federal mileage rates for the use of a car (also vans,

pickups or panel trucks) will be:

• $0.555 per mile driven for business purposes

• $0.23 per mile driven for medical or moving purposes

• $0.14 per mile driven in service of charitable organizations

Vacation Homes - sometimes you don’t declare the rent!

admin — Fri, 13 Jan 2012 14:52:24 +0000

Vacation homes are taxed under one of three sets of rules depending on how long the homeowner rents the property.

If you rent your vacation home for fewer than 15 days during the year, no rental income is includible in gross income.

If you rent the property for 15 or more days during the tax year and it is used by you for the greater of (a) more than 14 days or (b) more than 10% of the number of days during the year for which the home is rented, the rental deductions are limited. Under this limitation, the amount of the rental activity deductions may not exceed the amount by which the gross income derived from such activity exceeds the deductions otherwise allowable for the property, such as interest and taxes.

How Often Does Tax Law Change….

admin — Wed, 11 Jan 2012 15:39:46 +0000

There were approximately 4,430 changes to the tax code from 2001 through 2010, an average of more than one a day, including an estimated 579 changes in 2010 alone.

2012 Payroll Tax Cut Extended 1st Two months

admin — Mon, 26 Dec 2011 16:53:30 +0000

A 2-Month Extension to the Payroll Tax Cut Signed

Friday, December 23, 2011 a 2-month extension of the payroll tax cut was signed. This means the employee social security rate will remain at 4.2% through February 29, 2012. Paycor has updated the tax rate to 4.2% for January and February 2012. We continue to closely monitor this legislation and will relay any additional updates.

Ballgames - can you deduct?

admin — Sun, 27 Nov 2011 14:46:15 +0000

Now that the NBA fiasco is settled, can you deduct the cost of tickets?

The answer is YES either as (1) business entertainment or (2) a business gift.

• If you attend the game with the business client, the cost of the tickets can be deducted only as business entertainment. To qualify, the entertainment must be “directly related to” or “associated with” the conduct of business. A game that precedes or follows a substantial business discussion is “associated with”.

• If you are like me and cannot attend all the games, and you give the tickets away to a client or potential client, you have a choice:

The expense may be deducted as business entertainment or a business gift.

Key differences:

Business Gift: The deduction for a business gift is limited to $25 per person a year.

Entertainment: There is no dollar limit on entertainment expenses, but only 50% of the cost is deductible.

WHAT IS HIGH DEDUCTIBLE HEALTH PLAN

admin — Tue, 15 Nov 2011 14:03:41 +0000

For 2011, the health plan will have a minimum annual deductible of $1,200 for single coverage and $2,400 for family coverage.

The annual out-of-pocket maximum is no more than $5,950 for single coverage and $11,900 for family coverage.