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Thank you for visiting my website. If this is your first time here then I'll explain a little of what my website is about. If any of you have websites, you know how difficult they are to keep current and vital. I have finally found a way to personally go in and post the most current financial and tax planning information available for the Small Business Client and the Real Estate Investors. My "Front page" will have what I am seeing to be the most important to my clients that I am in touch with on a daily basis. In addition, you will see Article Titles to the right that are subjects that are always current and interesting but may have small changes to them due to new tax laws, financial projections and economic changes. I will be posting various issues on my Blog weekly and you will have an opportunity to post your experience with those issues, ask questions and simply comment on the site itself. I will try to address as many questions as possible in my weekly Blog. If you find any of my articles useful, why not consider enrolling in my free program to receive tax updates by email. That way you will recieve instant notice of major changes and opportunities in tax and financial planning. In the future we will be offering fee based Memberships for more detailed and comprehensive articles, interactive personal financial worksheets, Webinars and a more detailed Blog site. |
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Tax Alerts
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Written by Cathy Cavanagh
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Thursday, 31 December 2009 |
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NEW BUSINESS MILEAGE RATES for 2010 will be .50 cents per mile, medical mileage rate will be 16.5 cents per mile and Charitable Contribution rate will be .14 cents per mile.
IRS LETTERS AND AUDITS have really increased in the past year. We are seeing lots of clients recieved bills for not filing on time when in fact they did. You have to send copies of your extension with proof of certified mailing (which we have at the office). Quite often a phone call and fax will take care of this. I think they are counting on a lot of people simply assuming they owe it and paying it. Also, IRS is auditing Schedule C's (Sole Proprietorship) more than ever. Good records and proof of business intent is extremely important. This, again, makes consideration of filing all businesses as Sub-S Corporation a serious consideration.
THE REAL ESTATE PROFESSIONAL STATUS which allows those working over 750 hours per year in management of their real estate investments and/or business able to deduct 100% of their real estate losses (depending upon how high their Adjusted Gross Income is). This is audited very heavily. There is still questions as to whether Real Estate Agents qualify for this status (it is clear real estate Broker/Owners do). Currently there are no Tax Court rulings that define this but some indication the Tax Courts will all this. Agents just need to know there is some risk in claiming this status. As far as the 750 hours -IRS wants to see "Boots on the ground" - i.e. actually physically out managing properties not just sitting at the home offie. Diane Kennedy has my favorite website to keep up on business and real estate tax changes www.ustaxaid.com.
RECORDKEEPING I have had a few Schedule C audits this past year. All were claiming large losses. All have excellent documentation of business intent, travel logs, and documentation to back every expense claimed. All had "no change" audits. This is really importnat to note - recordkeeping is more important than ever.
REQUIRED E-FILING FOR 2010 TAX RETURNS Starting in 2011, all 2010 Individual tax returns will have to be e-filed by Tax Practioners doing more than 10 tax returns per year. If you owe taxes, you can elect to mail in a voucher with a check as opposed to allowing a direct deposit from you checking - or elect to pay in installments if you are unable to pay all at once.
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Tax Alerts
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Written by Cathy Cavanagh
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Tuesday, 22 December 2009 |
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The IRS is really evaluating continuing business losses to see if these are in fact “Hobbies”. One of the major tests to determine if a business is really a Hobby is to review the past five years of Taxable Income from the business. If the business shows income 3 out of the 5 prior years than it would be considered a business.
A lot of businesses will be showing losses for at least 2008 and 2009, but there are many more that show losses year after year. Here are some of the questions the IRS considers beyond the 3 out of 5 years of profit situation:
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Read more...
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Tax Alerts
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Written by Cathy Cavanagh
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Tuesday, 22 December 2009 |
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Net Operating Loss Carrybacks: There will still be a lot of Net Operating Loss (NOL) (i.e. net losses on tax returns) for 2009 which will be eligible for carryback refunds if Taxpayers owed taxes in two prior tax years. Otherwise, the NOL will be carried forward.
IRA Distributions: If you have a regular IRA and think you will have a net loss on your 2009 and/or 2010 tax return – you might want to consider rolling a portion of the IRA to a Roth IRA. Typically you have to pay ordinary income tax on that roll over, but if you have a loss to offset the rollover amount, there would be no tax due. In addition, there would be no tax due when you pull the funds from the Roth out. If you are over 59 ½, you may want to simply pull IRA funds out (with no penalty) without the roll over to extent they would be non-taxable. There are lots of rules regarding transferring or pulling out Regular and Roth IRA funds and there is lots of misleading information about that in the news. Make sure you know all the ramifications before you make those moves.
Up to $100,000 can be transferred from an IRA tax-free during 2009 to qualified charities.
Social Security and Medicare: We have more Seniors than ever and with that comes a lot of planning on how to utilize their Social Security and Medicare benefits to the maximum advantage. Many Taxpayers make financial decisions (i.e. gifting assets to children which could be attached later for nursing home care) without checking on the potential ramifications later. There are lots of resources that can assist you in sorting those financial options out. |
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Tax Alerts
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Written by Cathy Cavanagh
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Sunday, 15 November 2009 |
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New Tax Changes for 2009
$8000 First Time Home Buyer Credit
- Effective for closings Jan. 1, 2009 through July 1, 2010.
- Purchase and Sale Agreements must be signed prior to April 30, 2010.
- Must not have owned a primary residence for the past three years.
- Can use on your 2009 or 2010 return. File amended return if you have already filed.
- Credit is refundable. If you do not owe $8000 or more you will get the difference refunded – actual cash in pocket now.
- You do not have to pay the credit back.
- You must keep the house for at least three years.
- Cannot purchase from ancestors (i.e. up or down).
Current Homeowner Credit - $6500
1. Must have lived in home at least five consecutive years.
2. Same deadlines as above.
3. Have lots of detail requirements – regulations are being issued.
4. See Attachments. |
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