an independent member of
For business use of an automobile after Dec. 31, 2010, the rate is 51 cents a mile; for medical or moving expenses, 19 cents a mile; and for services to charitable organizations, 14 cents a mile.
For tax year 2010, the rates were 50 cents, 16.5 cents and 14 cents, respectively.
Because of recent tax law changes, the Internal Revenue Service says it will not be able to accept returns from taxpayers who itemize deductions until mid- to late February. Taxpayers who claim certain other deductions and credits will also have to wait to file until the IRS updates forms and reprograms its systems.
Enhanced Section 179 Depreciation Deductions: Under Section 179 of the Internal Revenue Code, a business can currently deduct the cost of qualified property placed in service during the year, within an annual limit. Prior to the new law, the limit for 2010 was $250,000, and the maximum deduction was subject to a phase-out for annual purchases above $800,000. The new law increases the maximum deduction to $500,000 for 2010 and 2011 with a phase-out threshold of $2 million. Eligible assets include computers, office equipment, and furniture. Certain real estate improvement costs now qualify for Section 179 deductions of up to $250,000.
“Bonus Depreciation” is Back for 2010: The new law also restores bonus depreciation, which expired after 2009. A business may claim a deduction equal to 50 percent of the cost of qualified assets, which include vehicles. (An additional year of bonus depreciation through 2011 is allowed for property with a cost recovery period of 10 years or longer and certain transportation property.)
Qualifying new assets must be placed in service by December 31, 2010.
Note: There is a tax-saving opportunity for businesses that are able to take advantage of both Section 179 and 50 percent first-year bonus depreciation. These two breaks can be combined to offset a large part, or perhaps all, of a company’s major acquisitions for the year. While larger businesses may be ineligible for the Section 179 deduction, 50 percent first-year bonus depreciation is available to any business regardless of size.
Our Internet based client portal provides a secured storage site 24/7. We store commonly requested client information such as tax return and source documents and all that has to be done is log-in to access the information. Clients are also able store documents of their choosing in a specified file. This gives a secured off-site storage location that can be accessed at anytime.
Please see our Fall 2010 Newsletter for more detailed information about portal utilization.
The cybercriminal gang “Avalanche” is sending out e-mails, purportedly warnings from the Internal Revenue Service, that can infect victims’ computers with malware known as the Zeus banking Trojan, which allows them to steal passwords to banking accounts and other information. Consumer-protection groups recommend opening e-mails only from sources you know and thinking twice about clicking any links you receive. CBSMoneyWatch.com (10/20)
Remember, the IRS will NEVER initiate an e-mail to a taxpayer.
August 21, 2010 Journal of Accountancy
The IRS has issued proposed regulations that would eliminate paper coupons for deposits of employment taxes, corporate income and estimated taxes, and many other taxes (REG-153340-09). The paper coupon payment system will be shut down at the end of this year.
With this change, taxpayers will be required to use the IRS’ Electronic Federal Tax Payment System (EFTPS) to make federal tax deposits of various withheld and estimated taxes. The preamble to the proposed regulations notes that over 97.5% of all federal tax deposits are already deposited electronically through EFTPS.
The proposed regulations do continue the exception under Temp. Treas. Reg. § 31.6302-1T(f)(4) for businesses that are depositing a minimal amount of withheld income and FICA taxes. Businesses that qualify can make their payments with their tax returns. Employers with a deposit liability of less than $2,500 for a return period can remit employment taxes with their quarterly or annual return.
The proposed regulations will require the following taxes to be deposited electronically:
1. Corporate income and corporate estimated taxes under Treas. Reg. § 1.6302-1;
2. Unrelated business income taxes of tax-exempt organizations under IRC § 511 under Treas. Reg. § 1.6302-1;
3. Private foundation excise taxes under IRC § 4940 under Treas. Reg. § 1.6302-1;
4. Taxes withheld on nonresident aliens and foreign corporations under Treas. Reg. § 1.6302-2;
5. Estimated taxes on certain trusts under Treas. Reg. § 1.6302-3;
6. FICA taxes and withheld income taxes under Treas. Reg. § 31.6302-1;
7. Railroad retirement taxes under Treas. Reg. § 31.6302-2;
8. Nonpayroll taxes, including backup withholding, under Treas. Reg. § 31.6302-4;
9. Federal Unemployment Tax Act (FUTA) taxes under Treas. Reg. § 31.6302(c)-3; and
10. Excise taxes reported on Form 720, Quarterly Federal Excise Tax Return, under Treas. Reg. § 40.6302(c)-1.
As proposed, the new rules would be effective for payments made on or after the date the final regulations are published in the Federal Register, but no earlier than Jan. 1, 2011, and the IRS says it expects to finalize the regulations before then.
The IRS has invited comments on the proposal, which can be submitted electronically at regulations.gov (IRS REG-153340-09). A public hearing will be held at the IRS Building in Washington on Sept. 21.
Yesterday, there was an article in the Arkansas Democrat Gazette, reporting that more than 3,000 nonprofit organizations in Arkansas are in danger of losing their nonprofit status for failure of filing a return with the IRS. All nonprofits are now required to file a return with the IRS, even if there was no revenue collected. If you are involved in a nonprofit, verify with the directors that the return has been filed. Miller & Company is experienced in the preparation of nonprofit reporting with the IRS. We can help bring a nonprofit back into compliance.
Now you can track your refund from a link on our website. Go to Other Support (left side of the middle of the page). Next click on Financial Tools. From the top of the list find Tax Refund Tracker and make your selections. It’s quick and easy and you don’t have to search a government agent website to get to it!
Did you know that if a student is a claimed dependent, only that taxpayer my claim the educational credit for the student’s qualified tuition and related expense. Qualified expenses paid by a dependent student are treated as paid by the person claiming the dependency deduction.
Tax planning consideration – A taxpayer who cannot claim the credit may want to consider not claiming a student as a dependent to allow the student to take the credit. However, in this case, the student’s personal exemption will be lost, since the personal exemption for a person who can be claimed as a dependent on another’s return is zero. Thus, this choice is most likely to be favorable for taxpayers who are subject to the phase-out of the personal exemption.
Beginning in 2012, under a little discussed mandate of the health care reform legislation, businesses will be required to report all payments in excess of $600 for services or merchandise to the Internal Revenue Service on a Form 1099.