Posts Tagged ‘IRS’

Why Did The IRS Delay The Start Of The 2014 Tax Season?

Wednesday, November 6th, 2013

Recently the Internal Revenue Service (IRS) announced that due to the 16-day government shutdown, they will begin processing tax returns one- to two-weeks later than planned. The original start date was Jan. 21, 2014. With this delay, the tax season could begin no earlier than Jan. 28 or as late as Feb. 4. The IRS will not process paper returns until the official start date, even if they are received before the official start date.  (more…)

What Is The Difference Between Fixed Asset Expensing And Capitalization?

Thursday, October 17th, 2013

If you’re about to acquire, produce or improve real or tangible personal property, and then turn around and use the property in a trade of business for income, stop right there. Under the Internal Revenue Code, you’re required to capitalize certain amounts of money you invested into the property.  (more…)

What’s The IRS Up To During The Government Shutdown?

Tuesday, October 1st, 2013

We’ve read for weeks that a government shutdown was possible, but at 12 a.m. this morning, it happened. It has been 17 years since the last government shutdown, and you, along with the rest of the American people, are probably wondering how the shutdown will impact their lives. Fortunately, last week the Internal Revenue Service published “FY 2014 Shutdown Contingency Plan (During Lapsed Appropriations) Non-Filing Season,” a set of guidelines that explains what will go on at the IRS during a shutdown.  (more…)

What are the Consequences of Having Misclassified Workers?

Thursday, August 29th, 2013

My co-worker, Maribeth Wright, recently wrote a blog post titled, “Are You Properly Classifying Your Workers?”. The post explained how to determine whether a worker is an employee or an independent contractor. The article mentioned that this is a hot button issue with the IRS, as well as other government agencies.  In fact, according to The Kiplinger Tax Letter, the IRS is currently in the process of conducting 6,000 random audits, which are focusing on several payroll and fringe benefit issues – one of which is worker misclassification. (more…)

Are You Properly Classifying Your Workers?

Wednesday, August 7th, 2013

You may employ hundreds, if not thousands of employees. Or maybe you only employ three to five. Regardless of the number of employees you have, the way you classify your workers is important to the federal government. Worker status is a hot button issue at the Internal Revenue Service (IRS), and Ohio Job and Family Services, Ohio Bureau of Workers’ Compensation and the U.S. Department of Labor are also challenging the way businesses report their payments to “independent contractors.”  (more…)

Need Some Cash Now?

Friday, July 19th, 2013

Are you in the market for a new home? Or maybe you’re looking to purchase a new car for your daughter or son? Don’t have enough cash for a down payment? No problem. There’s a nice workaround that can provide short-term relief for your immediate need.  (more…)

Part 2 | What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule?

Wednesday, June 5th, 2013

In the last issue of Illuminations, you read about some initial consequences you may face if you find that your 401(k) plan is out of compliance with an IRS or DOL rule. In this week’s issue, check out the second part of the article that explains the statute of limitations and how you can work to rectify any issues you may have with your business’s retirement plan. To refresh your memory, you can read the first part of the article here(more…)

What Happens if My 401(k) Plan is Out of Compliance with an IRS or DOL Rule?

Wednesday, May 22nd, 2013

With all of the rules in the business world, it sometimes can be difficult to know and understand all of the rules we need to follow – there are a lot of them. So what happens if you find yourself in an unintended situation where your business’s 401(k) plan is out of compliance? Simply put, a plan out of compliance with Internal Revenue Service (IRS) or Department of Labor (DOL) rules is subject to disqualification. But what does that mean? It is very important that you fix any compliance issues when they are identified – whether they are document-related issues, government reporting issues (5500) or plan operational issues. (more…)

Can Your Charity Profit from Instant Bingo?

Monday, March 25th, 2013

Between the new Ohio casinos, Ohio Lottery drawings and instant games, legalized gambling is all over the place. Have you ever considered how this pastime could benefit your charitable organization?

Qualifying charitable organizations can benefit from properly structured bingo operations, but the requirements could prove to be a burden. As an alternative, qualifying charitable organizations can receive proceeds from instant bingo activities. (more…)

How Does Getting Divorced Impact Your Taxes?

Friday, March 15th, 2013

Like so many Hollywood couples these days, maybe you are finding yourself a newly divorced person. With all the legal shenanigans that can happen during a divorce proceeding, have you taken the time to consider some of the more practical matters related to your finances? There are several tax-related items and helpful advice tidbits to be discovered after a change in your marital status. (more…)

Employee Welfare Benefit Plans Making Your Head Spin?

Friday, December 28th, 2012

Every year, we receive questions regarding whether a filing requirement exists for a client’s welfare benefit plan. Clients want to ensure that their plans remain ERISA compliant without taking on the burden of any unnecessary paperwork.  Here are answers to some of the most frequently asked questions about employee welfare benefit plans. (more…)

What Changes Do Pension Plans Need by Year-end?

Thursday, November 29th, 2012

In the midst of the publicity surrounding the new ERISA fee disclosures requirements, it is important not to lose sight of the fact that other recently enacted legislation may impact your retirement plan.  Changes to IRS regulations may require plan’s to adopt amendments before the end of the year.  (more…)

How Do You Get a Handle on Your Inventory?

Wednesday, November 28th, 2012

Inventory management can have a very direct impact not only on your profit but also the cash flow of your business. Inaccurate inventory will directly affect your business profit. If the inventory is too high, you may be paying tax on higher profits than you actually have. If it is too low, you run the risk of understating taxable income and, if audited, the IRS can hit you with back taxes and penalties. (more…)

How Does the IRS Treat Property Repair Expenses?

Wednesday, November 21st, 2012

Tax treatment of property repairs has long frustrated business owners and accountants alike. The system has been confusing, hard to follow and seemingly eternally inconsistent. Recent changes to the Internal Revenue Code have streamlined the treatments of property repairs, but not all the changes are as taxpayer-friendly as you may have hoped. (more…)

What are the Tax Rules for Gamblers?

Thursday, October 25th, 2012

With the new Cleveland Horeshoe Casino, gaming is becoming big business in Ohio.  From occasional slot machine players to poker pros, Ohioans are experiencing gambling and all the wins and losses that come with it.  While residents of Las Vegas may already be familiar with the IRS’s tax treatment of gambling wins and losses, Ohio gamers might not be  The IRS has special rules for gaming income and losses, which I’ll describe below, but the general rule is this: gambling winnings are taxable. (more…)

How Do Your Avoid IRS Penalties on Your IRA?

Friday, September 21st, 2012

With our government requiring more cash each year, there is growing sentiment is the financial community that the IRS is becoming more vigilant in obtaining all revenue available related to Individual Retirement Accounts (IRAs). According to a recent article, the Treasury Inspector General for Tax Administration estimates that the IRS failed to collect as much as $286 million of revenue in 2006 and 2007 alone. From a political aspect, it is easier to raise revenue by simply enforcing the existing rules, than it is to cut spending or pass a new tax increase. (more…)

You Got a Tax Notice… Now What?!

Wednesday, September 19th, 2012

You know the feeling well… you’re just going about your business, walking out to the mailbox to pick up the daily mail. For some reason, the pile feels a bit heavier today. And as you sort through the junk and the magazines and the bills, you find that you’ve received a little love note in the form of a tax notice from the Internal Revenue Service (IRS). No wonder the mail is so heavy today… the IRS is looking for more of your well-earned money. (more…)

Are Tax Credits Available for Hiring Veterans?

Friday, May 25th, 2012

Memorial Day is a great time to think about our veterans and what we can do to show our thanks for all that they’ve done for our country. One way to show your thanks: hire a veteran. All too often, our men and women returning from active duty come home to a weak economy and limited job prospects. But, as an employer, you have the unique ability to help ease their transition to civilian life – by giving them a job and a chance.

Hiring a veteran can be good for the veteran, the community and your business. The VOW to Hire Heroes Act of 2011 provides work opportunity tax credits to businesses that hire certain veterans. (more…)

What if you can’t pay your taxes?

Friday, April 13th, 2012

The April 17th tax deadline is looming closer and you know that you’ve got to get your payment in soon.  But, what if you don’t have the cash on hand?  Don’t panic, there are ways to file your taxes and avoid penalties – even if you can’t pay everything that you owe right away. (more…)

Do you need to report large cash payments to the IRS?

Wednesday, April 4th, 2012

$10,000 in cash is the same as a $10,000 check, right?  Not from the perspective of the IRS.  If your business receives $10,000 in cash from a single transaction (or multiple related transactions), you’re required to report it to the IRS. (more…)

Did you send a wedding announcement to Social Security?

Tuesday, April 3rd, 2012

When you’re newly married, there’s so much to think about.  Did you remember to thank Aunt Joan for that silver tray?  Did you remember to have your mail forwarded to your new address?  One thing that may not make the list: Did you remember to notify the Social Security Administration of your name change? (more…)

What red flags might get you audited?

Wednesday, March 21st, 2012

The IRS may audit only 1 percent of all tax returns annually, but if you’re one of the unlucky few, you may be wondering “Why me?” Since the agency doesn’t have enough personnel to closely review each and every tax return they receive, they rely very heavily on their computer systems flag items of “interest”.. Here are six of most common “red flags” that may impact a business owner filing a personal return. (more…)

How can you protect yourself from tax fraud?

Friday, March 16th, 2012

Tax identity theft is an increasingly enormous problem. The IRS has been bombarding us with warnings of identity theft and scams this tax season.

Here’s a summary of some of the latest information you should know. (more…)

How do you follow IRS regulations when gifting a business interest?

Friday, February 17th, 2012

Lately we’ve been surprised by how many people are thinking about filing a gift tax return without a business valuation. We’ve had a few conversations with people who are under the impression that they don’t need to attach a valuation of their business interest to the gift tax return.

Before you file your return without a valuatio (more…)

When Can You Expect to Receive Your Tax Refund?

Thursday, February 16th, 2012

If you’re expecting a federal tax refund this year, it could be delayed. The agency reports that new anti-fraud measures could slow the refund process by approximately one week. (more…)

Are You Ready for Tax Time? Have More Than a Shoe Box

Wednesday, February 8th, 2012

So it’s tax time. While that thought might conjure up images of lots of receipts in a shoe box, you don’t want to be that person. With a little preparation, you can help make your visit to your accounting professional less expensive and more enjoyable. Here are a few tips to help you prepare. (more…)

Does New 1099 Reporting Affect You?

Wednesday, January 25th, 2012

If your business has paid at least $600 in professional services or other payments in 2011, you may be subject to a new 1099 reporting requirement as you begin to file your 2011 taxes. (more…)

Wrong Worker Classification? IRS Offers Voluntary Settlement

Thursday, October 6th, 2011

Employers who have erroneously treated workers as nonemployees or independent contractors now have an opportunity to get into compliance with the IRS through a low-cost, voluntary reclassification program. (more…)

Have You Received an IRS Notice? Nine Things to Know

Monday, October 3rd, 2011

The Internal Revenue Service sends millions of letters and notices to taxpayers for a variety of reasons each year. Here are some things to know if you receive one. (more…)

So the Grass Wasn’t Greener? Time to Reverse Your Roth IRA Conversion

Tuesday, September 27th, 2011

If you converted a traditional IRA to a Roth IRA account last year, you may be facing an account that is worth much less than when you converted it. But you might also be facing a tax bill on value you no longer have. You do have an option, but only if you act quickly – reverse your 2010 Roth conversion.

If you converted your traditional IRA to a Roth IRA last year, the transaction triggered a taxable distribution from the traditional IRA, followed by a contribution to your Roth account. That tax will be based on the value of the traditional IRA on its conversion date. That means if your account is worth less now, you will owe taxes on money that no longer exists.

How to Reverse Your Roth IRA

Thankfully, the Roth conversion regulations allowed for the ability to reverse the conversion – but only if you do so before October 17. This involves completing the proper paperwork with your IRA custodian or trustee. When properly filed, the IRS considers your account as being “recharacterized” from a Roth account back to traditional IRA status. It’s as if the conversion never happened, and your tax liability disappears.

You’ll need to amend your 2010 tax return to allow for the reversal, or adjust your 2010 return if you have filed for an extension. Your reversal of the Roth conversion this year will also trigger some additional documentation requirements for your 2011 tax return.

Reconverting to Roth

Now that you’ve lessened your tax liability on phantom income that vanished due to the market’s versatility, you might consider using the down market to your advantage. You can reconvert your now traditional IRA back to a Roth – and pay less tax on it than you would have paid last year. You must wait 30 days after the reversal to reconvert it. Reconverting your traditional IRA account to a Roth can make sense if you expect your assets to appreciate quickly.

Your tax professional can assist you in amending your 2010 tax return or adjusting your extended 2010 return. He or she can also walk you through the reporting process that will be required should you decide to reconvert your IRA.

Have Offshore Income? Time is Running Out for Voluntary Disclosure

Friday, August 26th, 2011

If you have undisclosed income through offshore accounts, time is running out to voluntarily disclose it and bring your taxes current. The IRS is winding down a voluntary disclosure program that began February 8 and will end on August 31. (more…)

Higher Gas Prices Mean Higher Business Mileage Deduction

Friday, June 24th, 2011

In a nod to higher gas prices, the IRS has increased the business mileage rate deduction to 55.5 cents per mile.   The new rate becomes effective July 1 and raises the rate 4.5 cents.   The deduction for medical and moving expenses also increases 4.5 cents to 23.5 cents per mile.  (more…)

Want to Look Back in Time? See an 1864 Tax Return

Friday, June 3rd, 2011

Recently blogger Paul Caron, a professor of law at Cincinnati College of Law, shared an IRS tax form from 1864. The form was two pages, and 10 questions. As our country considers ways to simplify our current tax laws, it may make sense to look at where and how our tax laws began nearly 150 years ago. (more…)

Overwithheld FICA taxes in 2011? Here’s how to fix it

Thursday, May 5th, 2011

What is the proper procedure for those who over-withheld Social Security taxes early on in 2011, but failed to make the proper adjustment prior to the March 31 filing deadline? How should the first quarter 2011 Form 941 be filed?  Should adjustments be made as soon as possible?  I am unable to find any help on the government sites. (more…)

What’s the Latest on 1099 Reporting?

Friday, April 15th, 2011

When it comes to 1099 reporting rules, it’s out with the new and in with the old. (more…)

Is This Really A Message From The IRS?

Tuesday, April 5th, 2011

It’s that time of year when unsuspecting taxpayers receive suspicious emails, phone calls, faxes or notices claiming to be from the IRS. Many of the scams use the IRS name or logo to appear more authentic. (more…)

How can you avoid a tax audit?

Thursday, February 10th, 2011

There really is no way to totally prevent an IRS audit of your business income tax return. However, there are things you can do to lessen the chances. Here are a few tips published recently by the Wall Street Journal. (more…)

Did the IRS revise the federal tax deadline and date to accept itemized returns?

Wednesday, February 2nd, 2011

The IRS will not accept federal returns from taxpayers who claim itemized deductions until February 14. The delay is necessary for the IRS to program its systems to accommodate tax breaks included in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. (more…)

Does the IRS Tax Filing Delay Mean A Delay For You?

Tuesday, January 4th, 2011

You probably heard by now that the IRS won’t begin processing several types of tax returns, including tax returns with itemized deductions, until mid- to late February. Why? It needs time to reprogram its processing systems to accommodate the tax law changes that the lame duck session of Congress passed late last month. (more…)

Why can’t federal agencies communicate with us more clearly?

Monday, November 1st, 2010

Actually, federal agencies will soon be required to communicate more clearly with us. Earlier this month, President Obama signed the Plain Writing Act, which will require federal government agencies, including the IRS, to write public documents in easy-to-understand language. This means items such as tax forms, federal student aid applications, Veteran’s Administration forms and even form letters from the IRS will receive a makeover. (more…)

Recently Married, Divorced or Adopted? Remember to Notify Social Security

Friday, July 9th, 2010

Since we’ve just completed the month known for weddings in June, it’s a good time to make sure the name on your tax return matches the name registered with the Social Security Administration. Here’s what to do. (more…)