5. February 2010 by admin.

That depends on the AMOUNT of income AND the TYPE of income.  Filing is not required if all of your income is from W2 Wages, Interest, Dividends and Other Miscellaneous Inocme (excluding Social Security) AND if the total income is less than the Standard Deduction plus personal exemptions.

2009 example:A Single person’s standard deduction is $5,700.  Add a personal exemption of $3,650.  Total $9,350.  That means on the first $9,350 of income there is no Income Tax liability and NO filing requirement.  If the taxpayer is 65 or older, or blind add another $1,400 to the standard deduction for a total of $10,750.

But it’s not really that simple.  Let’s assume this single person’s only source of income was $1,000 of self employment income.  The Income Tax is zero BUT the return must be filed due to Self Employment Tax liability on Self Employment Income of $400 or greater!

Suppose the person’s self employment income is $200 and that’s all.  Sounds like no filing requirement.  The self employment income bottom line may be only $200, but let’s say the business of the self employed person generated $1,000,000 in sales with enough expenses to generate only a $200 profit. 

YES, there is a filing requirement!  Think about it.. a million dollars passing through a self employed person’s hand should be accounted for.  

Posted in Income Tax, General | No Comments »

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 »

6. January 2010 by admin.

CONSUMER ALERT! Please be aware that COMPLIANCE SERVICES (not to be confused with the Florida corporation, Compliance Services, Inc.) is mailing notices to new business entities wanting “Annual Minutes” and a fee of $125. be paid for filing.

These notices are NOT from the Dept. of State, Division of Corporations. “Annual Minutes” are NOT required to be filed with any agency (in an audit the IRS may ask for them to prove you are acting as a corporation.. if it looks like a duck and quacks like a duck kind of thing….. if you need to know more about the QUACKing thing, contact us at www.USATaxHelp.com 

Annual Minutes are to be kept by the business entity itself. Please do not confuse these notices with the messages sent by the Division of Corporations reminding each business entity to file its 2010 Annual Report.

Posted in Newsletter Topics, Sub S Corporations, LLC's, General | 1 Comment »