Now is the time to review your paycheck to ensure you have proper withholdings for 2012. Tax rate brackets have been expanded in 2012 so more income will be taxed at lower amounts. However, unique to 2012 is the expiration of the social security 2% tax break. As you recall all employees had their social security tax rate reduced from 6.2% to 4.2% for 2011. This one-year tax provision will become a hot topic for the balance of the year in Congress.
DiSabatino CPA Blog
Ensuring your cell phone business use is deductible
With the proliferation of cell phones, and the coresponding accessibility of you to your employer, invariably most employees are receiving and making business calls on their cell phones. So how can you deduct your cell phone expenses on your tax return? Here are some ideas and tips:
Ensuring your cell phone business use is deductible
With the proliferation of cell phones, and the corresponding accessibility of you to your employer, invariably most employees are receiving and making business calls on their cell phones. So how can you deduct your cell phone expenses on your tax return? Here are some ideas and tips:
Expense Report. If you are an employee and use your cell phone regularly for work, review your employer's policies regarding the ability to expense part of the cost. If properly documented, the reimbursed business expense for cell phone use is not income to you. Not sure? Ask your employer. It never hurts to make a reasonable request.
Are you getting the tax break you deserve?
Taxpayers often overlook and underreport their charitable contributions on their tax return. And while there are no hard statistics, the Treasury Department is not looking out for you to ensure you are reporting all your deductible charitable giving. So what can you do to maximize your deduction?
Every industry and profession has common terms that are used so often those of us in the business often forget that most people do not have the depth of understanding that a person working within the tax code might have. One of these areas is understanding the differences between the tax terms "deductions" and "credits". Is one better than the other?
Top line. Dollar for dollar, a credit is worth more to you than a deduction. Why? A credit is a direct reduction in tax, while a deduction reduces the amount of income that gets taxed. Here is a simple chart showing the difference.
New Sales and Use Tax Rate
Effective October 1, 2011
There is only one tax rate change effective October 1, 2011
Voters in the city of Mt. Shasta, located in Siskiyou County, California have approved a one-quarter percent (.25%) district tax, the Mt. Shasta Library Transactions and Use Tax, that is effective October 1, 2011. The new rate applies only to transactions that occur within the city’s incorporated limits.
The table below summarizes the new sales and use tax rate.
Procrastinators have an extra three days to work on their taxes this year because the usual April 15 file date is Emancipation Day, a holiday observed in Washington, D.C., to mark the anniversary of the signing of the Compensated Emancipation Act, which president Abraham Lincoln signed on April 16, 1862. The act freed several thousand slaves in the District of Columbia.
There are a lot of different options available to help taxpayers file and pay taxes on time, including the option of filing for an extension.
Those filing on Monday should make sure they have everything prepared and ready, to prevent any delays that might cost them in fees and penalties.
New Sales and Use Tax Rates
Effective April 1, 2011
Voters in 13 cities in California have approved new district taxes (transactions and use taxes) that became effective April 1, 2011. The new rates apply only within each city’s incorporated limits. The tax rates outside the incorporated city limits will remain the same.
In addition, the City of Scotts Valley Transactions and Use Tax (SVGF) will end on March 31, 2011, resulting in a tax rate decrease within the city limits of Scotts Valley.In Sonoma County, the countywide Sonoma County Open Space Authority (SCOS) 0.25 percent district tax will end on March 31, 2011. Beginning April 1, 2011, the Sonoma County Agricultural Preservation & Open Space District (SAPD) 0.25 percent district tax will take effect. Therefore, the tax rates throughout Sonoma County (exception: City of Santa Rosa) will remain the same.
The table below summarizes the new sales and use tax rates.
District Tax Area |
County |
Acronym |
Code |
Old Rate |
New Rate |
City of San Leandro |
Alameda |
SLGF |
238 |
9.75% |
10.00% |
City of Union City |
Alameda |
UCGF |
240 |
9.75% |
10.25% |
City of Concord |
Contra Costa |
CNCD |
242 |
9.25% |
9.75% |
City of El Cerrito |
Contra Costa |
ELCT |
244 |
9.75% |
10.25% |
City of Placerville |
El Dorado |
PLST |
246 |
8.50% |
8.75% |
City of Eureka |
Humboldt |
ERST |
248 |
8.50% |
9.00% |
City of Santa Monica |
Los Angeles |
STMA |
250 |
9.75% |
10.25% |
City of South El Monte |
Los Angeles |
SEMT |
252 |
9.75% |
10.25% |
City of Novato |
Marin |
NOVT |
254 |
9.00% |
9.50% |
City of Marina |
Monterey |
MRNA |
255 |
8.25% |
9.25% |
City of Tracy |
San Joaquin |
TRCY |
257 |
8.75% |
9.25% |
City of Scotts Valley |
Santa Cruz |
SVGF |
216 |
9.25% |
9.00% |
County of Sonoma |
Sonoma |
SAPD |
259 |
9.00% |
9.00%* |
City of Santa Rosa |
Sonoma |
SRGF |
264 |
9.25% |
9.50% |
City of Wheatland |
Yuba |
WTLD |
265 |
8.25% |
8.75% |
*The rate is higher in the following cities which have additional district taxes and their codes have changed: Sebastopol (260), Cotati (261), Rohnert Park (262), and Santa Rosa (264).
For More Information- Visit the State's City and County Tax Rates page (www.boe.ca.gov/sutax/pam71.htm) or call our office 805.389.7300
Due to the late enacted tax legislation, e-filing has been delayed for some time, for most taxpayers, especially those itemizing their deductions. This delay was to end on Monday, February 14, 2011.
Late on Friday evening, February 11, 2011, we learned from the IRS that the Service is limiting the number of returns it accepts daily from all e-file transmitters during February 14-18. They are implementing the flow control in order to manage their systems capacity and ensure successful filings of all returns, including those that were affected by the “Schedule A delays.” As a result, we has a maximum number of returns we can remit to the IRS each day. Therefore, returns submitted early in the week may not receive acknowledgements from the IRS until later in the week.
We are working closely with the IRS to process all tax returns as quickly as their systems will allow.
As a result of the IRS staged transmissions over the course of the week of Feb. 14-18, some clients may experience delays in return processing and in the time it takes to receive their refunds. However, we expect that all processing should be back into the standard processing flow by Friday, Feb. 18.
We will keep you informed as we learn more from the IRS.
Generally, if a person (payor) makes payments to another person (payee) in connection with the payor’s trade or business totaling $600 or more during a calendar year, the payor is required to send the appropriate information return to the IRS and the payee. Under the 2010 Jobs Act, any individual taxpayer who receives real estate rental income is considered to be engaged in a “trade or business” for purposes of the information reporting requirements. This is true even for individuals engaged in a “passive investment activity” under general tax rules and principles.
The reporting obligation applies if the total of all payments made by the payor in any tax year is $600 or more, even though the amount for any class of payment by itself is less than $600. Payments that must be reported include:
• salaries, wages, commissions, fees, incentive awards and other forms of compensation; and
• interest, rents, royalties, annuities, pensions, and other gains, profits and income.
Form W-2, Wage and Tax Statement, is the information return used to report payments to employees, whereas Form 1099-MISC, Miscellaneous Income, is generally used to report other types of payments.
An exemption from the filing requirement is extended to members of the uniformed services or employees of the intelligence community who rent out their principal residence on a temporary basis. In addition, the IRS is authorized to issue regulations that exempt individuals whose rental income falls below a minimum threshold or who meet certain hardship standards. Failure to comply with these requirements may result in the imposition of penalties, including penalties for failure to file the information return and failure to furnish payee statements.
The new information reporting rules may increase the paperwork and filing burden, as well as the related costs, for your rental property. Because the rules apply to payments made after December 31, 2010, we would like to discuss recordkeeping and other compliance issues as soon as possible. Please call our office at your earliest convenience to arrange an appointment.
Obama And GOP Compromise On Two-Year Extension Of Most Tax Cuts
President Obama announced on December 6 an agreement with the GOP to extend the Bush-era individual and capital gains/dividend tax cuts for all taxpayers for two years. The White House-brokered plan would also provide for a one-year payroll tax cut, 100 percent bonus depreciation for 2011, extenders relief, and a top federal estate tax rate of 35 percent with a $5 million exclusion. The president’s package is expected to pass Congress before year-end, although certain modifications may be made to garner additional support by key Democrats.
Other than with a few exceptions, beginning January 1, 2011; all federal tax deposits must be made through EFTPS (the Electronic Federal Tax Payer System).
For those of you who are still making payroll (941/940) and other tax (1120) deposits at the bank using a paper coupon, be aware that no 8109-B paper coupons will be accepted for 2011.
To help you monitor your credit usage, credit report monitoring is the basics. Keep in mind everyone is entitled to one free credit report annually and unlimited free reports if you feel you have been a victim of identity theft, have been denied credit, are unemployed, receive welfare, or other criteria.
Attention Non-Profit organizations.
Please visit this IRS "Micro-Site" http://www.stayexempt.irs.gov/VirtualWorkshop.aspx
The IRS introduces this site as
...created especially for 501(c)(3) organizations! Whether you are new to the world of tax exempt organizations, an old hand at managing them, or a tax professional who works with them, you will find something of interest here.
Lots of great information including the "OE Mini Courses," which are Exempt Organizations powerpoint courses to help you maintain a better organization,
Owning your own business can be very rewarding, both personally and financially. Being the sole decision-maker for this important undertaking can also be overwhelming. Business owners have many choices to make, and these choices involve tax consequences that are not always foreseen. We can help you minimize your overall tax burden by identifying and maximizing business deductions, providing guidance on substantiation of expenses, and exploring tax planning alternatives that are uniquely available to the self-employed.
Although many provisions of the recently enacted health care reform package will not be felt for a few years, there are some benefits that begin in 2010, including the $250 tax-free "donut hole" rebate for seniors. This $250 rebate is intended to help seniors bridge the Medicare coverage gap. While many federal rebate-check programs are ending -- such as the Recovery Rebate Credit and Making Work Pay Credit -- the $250 donut hole rebate has just begun to be dispersed and an estimated 4 million seniors will receive the one-time $250 rebate, with more than 300,000 individuals having already received the check.
Are you required to inform the IRS of your foreign bank accounts, business interests, gifts or inheritances? Here, we will review the basic filing requirements that you should be aware of. We encourage all clients to review this and discuss all foreign transactions with us to determine the proper reporting requirements. Although tax implications may not be involved, the penalties can be severe for failure to comply with the filing requirements.
DiSabatino, CPA helps individuals and business throughout the US. For those clients that may have tax liabilities to the State of Pennsylvania, this may be of interest.
I have been advised that the Pennsylvania Voluntary Disclosure Program will be reinstituted effective August 1, 2010. The department will be updating its website with additional information in the near future.