Revised Rules for Reporting Sales of Capital Assets | Tax Tip of the Week | No. 136 March 7, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentNew Form and Rules for 2011
When you sell stocks, mutual funds or other capital assets you will still report the gains or losses on Form Schedule D when you prepare your 2011 tax return. But this year you must first show the sales activity on a new form—Form 8949 .
This new form is where you show: description of property, date acquired, date sold, sales price and cost basis. Of particular note, however, you must also check a box indicating if the long- term or short-term cost basis is (A) reported to the IRS on Form 1099-B, (B) cost basis is not reported on Form 1099-B, or (C) when you cannot check Box A or B (when proceeds are not reported on a Form 1099-B).
A separate Form 8949 should be completed, grouping all transactions by type (Box A, Box B or Box C) and also by short-term or long-term trades.
The summary information from Form 8949 then flows to the revised Form Schedule D.
This new form was created as a result of the new cost basis reporting requirements for brokers. The new Form 8949 will help the IRS better compare your reporting with the brokers, Form 1099-B statements. It also opens an easy audit target when you show asset sales where the cost basis is not reported on a Form 1099-B. Be prepared to substantiate cost basis calculations if you mark boxes B or C on Form 8949.
Check with your broker to determine if they have their basis. If not, take steps to determine the basis and update their records.
We will let you know about other tax law changes in the coming weeks.
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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Rules on Charitable Contributions| Tax Tip of the Week | No. 135 February 29, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentCharitable Giving – Up Close and Personal
This week we are going to look at a couple of fundraising efforts that are going on in our firm.
A couple of weeks ago I was involved in the planning and running of a chili cook-off/silent auction/raffle that was held in a local tavern. The event was to raise money for a 21 year old young lady named Rachel. Rachel had just graduated from OSU and was starting her adventure in life when she was diagnosed with a very rare and aggressive form of cancer.
Fortunately the fund raiser was a success and we donated over $11,000 to Rachel and her family to help pay some of their mounting debts.
I had to point out to all the participants, however, that any contributions made were NOT tax deductible. Contributions made to a specific individual are considered non-deductible gifts. In order to be a tax deductible contribution, the donation must be made to a qualified non-profit organization.
Recently, the owners of our firm, Mark & Dawn Bradstreet, were devastated to learn that the nine year old son of their friends and neighbors was diagnosed with ALL Leukemia. This lively young boy (his name is Caulin) is currently undergoing a three year chemotherapy treatment plan at Children’s Hospital.
Motivated by the young boy’s courageous spirit in fighting this disease, Mark and Dawn are going to run in the upcoming Flying Pig Marathon in Cincinnati. Both are going to run a half marathon, Dawn is running for Team in Training on his behalf.
Dawn has created a web site http://pages.teamintraining.org/soh/flypig12/flypigdb to provide updates on Caulin’s progress and to raise money for the Leukemia & Lymphoma Society (a qualified 501(c)(3) non-profit group).
We invite you visit Dawn’s web site and make a tax deductible contribution to their marathon runs if you would like to help.
Helping others is the right thing to do—whether it is tax deductible or not. But I have to say, I think it is a lot more fun eating chili and drinking beer in a tavern than it is running 13.1 miles up and down hills!
Give us a call if you have any questions about your involvement in charity events.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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News From a Recent Court Case | Tax Tip of the Week | No. 134 February 22, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentNo Tenants?–Still a Write-off
In a recent Tax Court case (Bonds, TC Summ. Op. 2011-122) the Court said that a lack of tenants is not sufficient grounds to deny a rental expense deduction.
In this case, the IRS audited Ms. Bonds’ rental activity and denied her any rental losses due to lack of rental income. The Tax Court overruled the audit findings and allowed rental losses for the two years after the last tenant moved out. In the Court’s view, the property was still held for income-producing purposes and she actively participated in the rental activity.
Editors Note– Good for Ms. Bonds! However, it is still a good rule of thumb, if possible, to show a profit in at least three out of every five years in any business endeavor.
Do you have any losses you want to discuss? Just give us a call.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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How to Save on Workers’ Comp | Tax Tip of the Week | No. 133 February 15, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentOhio’s Workers’ Compensation
For businesses that have workers in the state of Ohio, Workers’ Compensation (OBWC) premiums can be a sizable, but necessary, expense. What can you do to help reduce costs in this area?
Ohio’s Group Rating Program: The maximum group rating discount can save you up to 53% of your premium beginning in July 2012. This is great news, as the maximum discount for the fiscal year July 2011- June 2012 was 51%. If you are currently in a group, you should have recently received renewal forms to return to remain in that group. If you are not currently in a group, and are a private employer, you have until the last day of February to enroll for the period beginning July 1, 2012. Rates for group membership can vary, but the maximum savings will not differ.
Other Program Options: OBWC also offers discounts related to various programs. A new program option called “Destination: Excellence” will be available beginning July 1, 2012 and will offer additional financial rebates and premium discounts to employers who meet claims management and safety related goals.
Call us if you are interested in keeping your workers’ compensation premiums to a minimum and want to make sure you are getting all of the discounts available to you.
This week’s author – Linda Johannes, CPA
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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A New Tax Credit….. | Tax Tip of the Week | February 8, 2012 | No. 132 February 8, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentHire A Vet!
A new tax credit for businesses that hire unemployed veterans is now in effect. The credit amount varies with how long the veterans have been unemployed. It is 40% of the first $14,000 of wages paid to a veteran ($24,000 in wages if the vet is disabled) who have been jobless for six months or more in the year before they were hired. The credit is 40% of the first $6,000 of wages for vets who have been out of work at least four weeks but less than six months.
The credit applies for eligible veterans starting work after November 21, 2011 and before January 1, 2013.
Tax exempt groups can take the credit as an offset against payroll taxes.
Think of those who have served our country the next time you need to hire someone!
As always, give us a call if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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Start the New Year Right! | Tax Tip of the Week | No. 131 February 1, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentGetting Your Books in Order
If you own your own business, it is imperative that you have a solid bookkeeping/accounting system in place. Not only will you need these records to complete your tax return, but you also need the information available to you to make the proper management decisions throughout the year.
You probably already have some sort of system in place. But is it adequate and are you taking advantage of its features, both reporting and time-saving features? For example, can you print an Aged Receivables Report? Is everything organized for closing out your 2011 books?
If you are not currently using accounting software in your business, the beginning of the year is a great time to start. If you are currently using a software package like QuickBooks or some other software solution, this is the time of year to “clean-up” your books. Don’t let too much of the New Year slip by … now is the time to get your accounting system organized!
Looking for help using or getting started with QuickBooks? We are a Certified QuickBooks ProAdvisor. We assist many business owners in using this software efficiently so that you can concentrate on running the business rather than doing the bookkeeping. It is well worth your time and money to invest in getting some help as you start the 2012 tax year.
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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IRS Audits Its Own Activity | Tax Tip of the Week | No. 130 January 25, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentMore Reports of Tax Fraud
After the enactment of the refundable American Opportunity Credit, Treasury inspectors estimate tax filers erroneously received $3.2 billion in credits for 2009 and 2010. Inspectors found the IRS was doing a poor job of policing returns, which contained these educational credits. (See TTW#87 for a refresher on refundable vs. non refundable credits).
In many of these cases, the IRS didn’t have a Form 1098-T from the college that the student supposedly attended. Colleges and universities are required to issue a Form 1098-T to students and the IRS. The IRS is now in the process of recovering these credits when there is no 1098-T that matches the IRS records and filer’s tax returns.
Editor’s Note: The IRS is getting increasingly better, and more aggressive, in matching all forms of 1099s and 1098s to tax returns.
As always, you need to be able to substantiate any information on your tax return with good records.
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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Not Much Changed From 2011 | Tax Tip of the Week | No. 129 January 18, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , add a commentIRS Announces 2012 Mileage Rates
The 2012 optional standard mileage rate used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes is:
- 55.5 cents per mile for business purposes
- 23 cents per mile for medical or moving purposes
- 14 cents per mile driven in service of charitable organizations
The rate for business miles driven is unchanged for the mid-year adjustment that became effective on July, 1 2011. The medical and moving rate has been reduced by 0.5 cents per mile. The charitable mileage rate is set by Congress and remains unchanged.
The depreciation component of the business mileage rate is 23 cents per mile.
Taxpayers always have the option of calculating the actual costs of using their vehicles rather than using the standard mileage rates.
However, you cannot use the standard mileage rates for business if you made the election to take a deprecation deduction in the year you placed the vehicle in service.
Regardless of which method you choose to deduct vehicle expenses, the IRS requires that you keep contemporaneous records to substantiate your deductions.
Stay safe while driving in 2012—and keep track of those miles!
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
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2011 Form 1099 Reminder | Tax Tip of the Week | No. 128 January 16, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , 1 comment so farSpecial Tax Alert
We wanted to take an opportunity to remind all our business owners that the 2011 Form 1099s are due to be filed in the coming weeks. Here’s a quick update.
In 2010, a law was passed that would have required companies and many individuals to issue 1099s to practically all vendors. Due to public outcry that law was repealed. However, beginning with the 2011 tax returns, the IRS has added some new disclosure requirements.
The following questions have been added to all business returns, including Schedule C, Schedule F and Schedule E on individual returns (1040), as well as corporation (1120) and partnership (1065) returns.
. “ Did you make any payments in 2011 that would require you to file Form(s) 1099?”
• “If “YES,” did you or will you file all required Forms 1099?”
Generally, if you are operating a business and you pay anyone other than a Corporation $600 or more during the year for services provided (including parts and materials), you are required to issue a 1099 to that entity (Person or Business “Service Provider”) by January 31, 2012.
The penalty for not filing a required 1099 with the IRS is $100 per 1099. There is also a $100 penalty for each 1099 not provided to the recipient Service Provider. If it is determined that a taxpayer willfully neglected to file 1099s, the penalty is $250 per 1099 not filed with the IRS and another $250 per 1099 penalty for not providing a copy to recipients.
Given that this is an area of greatly increased IRS scrutiny this year, we recommend that all business owners review your vendors’ payments for 2011, and determine who may or should receive a 1099. Verify that you have the entity’s proper name, address and federal ID number.
You are welcome to contact our office if you have any questions or would like our help with Form 1099s. They are due to be filed by January 31, 2012.
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
…until next week.
Increase in Social Security Wage Base | Tax Tip of the Week | No. 127 January 11, 2012
Posted by bradstreetblogger in : Tax Tip, Taxes, Taxes, Uncategorized , 2commentsYou May Pay More in Social Security Taxes in 2012
For the first time since 2009 the earnings subject to Social Security is going up. In 2009 and 2010, the first $106,800 in earnings was subject to this 6.20% tax (12.40% if self-employed).
In 2011, the wage base was also $106,800 but the tax rate was reduced from 6.20% to 4.20% (10.40% if self-employed).
In 2012, the wage base increases to $110,000. It is unclear at the time of this writing if Congress will extend the reduction of the tax rate beyond the current two month extension. We will keep you posted on that.
The reason for the change is because the law does not allow an increase in the wage base for years when there is no cost-of-living increase for Social Security recipients. Since Social Security checks will be higher in 2012, you may be subject to having a larger share of your income subject to the tax.
Remember, there is no wage limit to the Medicare portion of your FICA tax. The Medicare tax is 1.45% (2.90% if self-employed) regardless of your earned income.
Sometimes, change is a bad thing.
Let us know if you have any questions.
You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504. Or visit our website.
Rick Prewitt – the guy behind TTW
Tax Tip of the Week Video Series:
…until next week.
