Accounting Solutions Group

The IRS released their “Dirty Dozen” list

Paul — Fri, 17 Feb 2012 20:32:04 +0000

The IRS has just released their annual list of the top twelve tax fraud schemes for 2012. The dirty dozen listing, compiled by the IRS each year, lists a variety of common scams taxpayers can encounter at any point during the year. But many of these schemes peak during filing season as people prepare their tax returns. The following is the Dirty Dozen tax scams for 2012.

IRS Dirty Dozen 2012

53 Tax Breaks officially expired on January 1, 2012

Paul — Fri, 06 Jan 2012 21:40:20 +0000

By now almost everyone knows that most of the so-called “Bush tax cuts” provisions will expire at the end of 2012, but there are 53 tax breaks that officially expired on January 1, 2012, including:

The expanded exemption amounts for the Alternative Minimum Tax (AMT), also referred to as the “AMT patch”, which protects approximately 30 million middle-class taxpayers from the AMT, at a cost of $70 billion a year;
The research and development tax credit;
100% bonus depreciation;
100% expensing under section 179 of the Internal Revenue Code

Of course, as has been the case in the past, Congress is expected to revive a number of these provisions, and, since this is an election year, it will probably happen later rather than sooner, after the usual political wrangling. A case in point is the two month extension of the payroll tax cut, which was scheduled to expire on January 1, 2012, but was extended for two months at the eleventh hour, only because it affected payrolls beginning January 1 and action had to be taken to prevent the chaos of a retroactive change.

2011 Form 1099

Paul — Fri, 16 Dec 2011 22:02:04 +0000

Just a reminder that every person engaged in a trade or business, including partnerships and non-profit organizations, must file information returns (Form 1099) each calendar year for payments made for certain types of services. This is an Internal Revenue Code requirement and the penalty for failure to file is $30-$250 for each informational return missed. The recipient needs to receive this information by February 15, 2012.

The following is a list of some common payments required to be reported to the Internal Revenue Service if paid to individuals, partnerships or estates:

Rents (office space, machine rentals) greater than $600.00
Amounts paid to non-employees for services totaling $600.00 or more during the year (i.e. fees, commissions, professional, clerical, consulting, etc.)
Amounts paid to medical or health care providers greater than $600; both incorporated or unincorporated.
Prizes and awards greater than $600.00
Payment of interest or dividends (at least $10.00 or more) to individuals
Distributions made from profit sharing plans to plan participants
Attorneys’ fees paid in the course of your trade or business for legal services incurred during the year for all attorneys; both incorporated or unincorporated.

Except for attorneys’ fees and health care providers, it is not necessary to include payments to corporations. If you are not sure of a payee’s entity type, you should have them complete a Form W-9 and return it to you.

2012 Standard Mileage Rates

Paul — Fri, 16 Dec 2011 21:31:26 +0000

The Internal Revenue Service issued the 2012 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical, or moving purposes.

Beginning on January 1, 2012 the standard mileage rates for the use of a car (also van, pickups, or panel trucks) will be:

55.5 cents per mile for business miles driven
23 cents per mile for medical or moving purposes
14 cents per mile driven in service of charitable organizations

Tax Credit for Hiring Veterans

Paul — Tue, 29 Nov 2011 17:38:24 +0000

President Obama signed into law on November 21, 2011 a bill that provides tax credits for hiring veterans and repeals a 3 percent tax withholding requirement on government contractors. Both provisions had been part of Obama’s jobs bill, the American Jobs Act, but had originated in bills with bipartisan support.
“Back in September, I sent Congress a jobs bill,” said Obama. “And in it, I proposed a tax credit for any business that hires a veteran who’s been unemployed for at least four weeks. I proposed an even bigger tax break if a business hires a veteran who’s been unemployed for at least six months. And if a business hires an unemployed veteran with a disability related to their service, I proposed doubling the tax break that we already have in place. Today, because Democrats and Republicans came together, I’m proud to sign those proposals into law. And I urge every business owner out there who’s hiring to hire a veteran right away.”
“No veteran returning home from fighting for our country and looking for work should be greeted with an unemployment check instead of a job,” said Senate Finance Committee Chairman Max Baucus, D-Mont., who had introduced previous bills to provide tax credits for hiring veterans with his colleague on the Finance Committee, Charles Grassley, R-Iowa. “Our veterans’ service earns them the right to a steady job when they return home, but unemployment among vets is at crisis levels. This tax credit will help solve the unemployment crisis and help veterans find work. Our veterans return home with unmatched leadership skills and motivation, making them valuable to businesses looking to hire. There’s more work to be done cutting red tape and making the process of claiming this credit easier, but this is an important start.”
The veterans jobs bill will provide a $5,600 tax credit for hiring long-term unemployed veterans who have been unemployed for six months or longer in the past year, $2,400 for hiring short-term unemployed veterans who have been unemployed for between four weeks and six months in the past year, $4,800 for service disabled veterans hired within one year of being discharged, and credits of up to $9,600 for hiring veterans with service-related disabilities who have been unemployed for six months or longer in the past year.