I thought that this was appropriate for Halloween.
Sunday, October 31, 2010
Friday, October 29, 2010
NON PROFITS AND HEALTH CARE CREDITS
IRS explains how nonprofits can get health care tax credit
Many of you may be involved as volunteers for non profits. If the non profit has has employees and provides health insurance you might pass this on to the nonprofit.
The Health Care Act created a credit for small businesses and small non profits that provide health insurance to their employees. At the time it appeared to us that many non profits might qualify for this credit. The problem was we were not given any guidance on how to get the credit for nonprofits. Now the IRS has given us the answer.
The Internal Revenue Service has posted information on how a nonprofit under Section 501(c) can claim the Small Business Health Care Tax Credit by filing a Form 990-T with an attached Form 8941 that explains how the claimed credit was calculated. The credit, which is designed to encourage small businesses to offer coverage to their employees, stipulates that the employer must cover half or more of coverage costs for some employees based on the single rate. Companies must have fewer than 25 full-time workers, or the equivalent, to qualify. Here is a complete explanation.
http://r.smartbrief.com/resp/zuxYvscgyzeilffgajaoyAalsdCr?format=standard
Let me know if you have any questions or need more information.
Larry Kopsa CPA
Many of you may be involved as volunteers for non profits. If the non profit has has employees and provides health insurance you might pass this on to the nonprofit.
The Health Care Act created a credit for small businesses and small non profits that provide health insurance to their employees. At the time it appeared to us that many non profits might qualify for this credit. The problem was we were not given any guidance on how to get the credit for nonprofits. Now the IRS has given us the answer.
The Internal Revenue Service has posted information on how a nonprofit under Section 501(c) can claim the Small Business Health Care Tax Credit by filing a Form 990-T with an attached Form 8941 that explains how the claimed credit was calculated. The credit, which is designed to encourage small businesses to offer coverage to their employees, stipulates that the employer must cover half or more of coverage costs for some employees based on the single rate. Companies must have fewer than 25 full-time workers, or the equivalent, to qualify. Here is a complete explanation.
http://r.smartbrief.com/resp/zuxYvscgyzeilffgajaoyAalsdCr?format=standard
Let me know if you have any questions or need more information.
Larry Kopsa CPA
Wednesday, October 27, 2010
PERSONAL UPDATE
First of all, I want to thank all of you that took time to send a condolence and especially for your prayers. My stepson Tony got out of the hospital and is staying with us until he recuperates. Unfortunately he was not able to attend his wife, Jessica's funeral. It was estimated that over 1,200 people were in attendence. That is an indication of the number of people that she touched.
You always hear motivational speakers say that you should have a personal mission statement. That is good advice. I have one and I try to live my life around my mission. I thought that I would share with you Jessica's mission statement. She really lived this.
Aim high. Ask questions.
Listen well. Continue to study
and learn. Teach. Volunteer.
Travel. Develop a hobby.
Above all, enjoy.
There is time for everything.
Unfortunately her time was cut short.
You always hear motivational speakers say that you should have a personal mission statement. That is good advice. I have one and I try to live my life around my mission. I thought that I would share with you Jessica's mission statement. She really lived this.
Aim high. Ask questions.
Listen well. Continue to study
and learn. Teach. Volunteer.
Travel. Develop a hobby.
Above all, enjoy.
There is time for everything.
Unfortunately her time was cut short.
Tuesday, October 26, 2010
Feather In My Hat
On Monday (10.25.10) I was once again honored to make a presentation at the Nebraska Society of CPA’s annual convention. I had 2 hours during the general session to update over 200 of my fellow CPA’s on the new tax laws, rulings and cases that have came down over the last 12 months. This is the 15th year that they have invited me. Being recognized by your peers is quite an honor.
I mentioned above that this was a “feather in my hat.” I thought you might be interested in where that expression comes from. It apparently originated back in the olden days when regularly men wore hats. Attorneys in Washington DC that would argue a case before the Supreme Court would stand at a lectern in front of the Supreme Court judges and make their argument. On the table was a pen. In those days the pen had a quill (feather). After the attorney had made his argument, and attorneys being attorneys, he would shoplift the pen as he left the podium. He would then put the feather in their hat to let everyone that saw him know that he was an important attorney whom had testified before the court. If attorney’s testified more than once they would have two or more “feathers in their hat.”
I mentioned above that this was a “feather in my hat.” I thought you might be interested in where that expression comes from. It apparently originated back in the olden days when regularly men wore hats. Attorneys in Washington DC that would argue a case before the Supreme Court would stand at a lectern in front of the Supreme Court judges and make their argument. On the table was a pen. In those days the pen had a quill (feather). After the attorney had made his argument, and attorneys being attorneys, he would shoplift the pen as he left the podium. He would then put the feather in their hat to let everyone that saw him know that he was an important attorney whom had testified before the court. If attorney’s testified more than once they would have two or more “feathers in their hat.”
Wednesday, October 20, 2010
EFTPS E-mail Scam
One of our clients received an e-mail this morning appearing to be from EFTPS stating that their tax payment had been rejected. The e-mail requested that they click on a link to fix the problem. Once someone clicks on the link it requests financial information. This is a scam.
The IRS will never request financial information via e-mail. Never give financial information over the phone or by e-mail.
The IRS will never request financial information via e-mail. Never give financial information over the phone or by e-mail.
Friday, October 15, 2010
THIS WEEK MY POSTING IS PERSONAL
This week I am posting only a personal note. Sunday morning at 2:30 AM the phone rang and we received the t call that no parent wants to receive. Our 30 year old son Tony and his 26 year old wife Jessica were hit by a speeding 18 year old drunk driver. Jessica sustained massive head injuries and was on life support for two days. We were hoping and praying for a miracle but that was not to be. On Tuesday she passed away. She never regained consciousness.
Tony had massive neck and stomach injuries and was in intensive care in a room next to his wife. He spent four hours in surgery to repair the damages to his stomach. As I write this on Saturday afternoon October 16th, he is out of intensive care and in the trauma area. He is still experiencing intestinal problems. His injuries are no longer life threatening but we are hoping that they do not have to operate again. The doctors say that he will be in the hospital for awhile. He is a very strong young man and his physical injuries will eventually take care of themselves. Emotions will take more time. It is so heart wrenching. Tony and Jess had only been married for 36 days. They were so excited about their future. It is hard to understand and so, so sad.
The 18 year old drunk driver ran a red light and hit Jessica and Tony midway thru the intersection. He was traveling so fast that it hit their car and pushed it into a pickup. The impact was so intense that it spun the pickup 3 times. Tony and Jess’s car was so badly damaged that it took over 2 hours to free Tony and Jess from the vehicle.
Our families truly appreciate those of you that had found out about the accident and sent your concern, thoughts and especially your prayers. If you read the guestbook that I will mention below you will see what a special person Jessica was. She was always giving to others. Even in her death she continued to give. Because of her a 12 year old girl in Missouri has a new special heart, a 54 year old man has a new lease on life with new strong lungs and somewhere someone will be able to see the beauty of the world with new beautiful eyes.
To keep friends and relatives informed we posted information on the Caring Bridge web site. If you are interested visit http://www.caringbridge.org/visit/JessicaBedient
In the journal section you can see our postings and in the guestbook section you can read the reactions of their friends, family and acquaintances. The postings in the guestbook will give you an indication of how special people these two young are.
Laws need to be toughened. The 18 year only was cited just 30 days prior for drunken driving. He has been charged with felony motor vehicle homicide. His aunt apparently felt that it was appropriate to procure liquor for this boy. The parents apparently felt it was okay for him to drive. The aunt has been charged with a misdemeanor procuring liquor for a minor. I personally feel that the laws should be such that anyone in this situation should be charged with the same crime as the offender. Maybe harsher penalties would stop such a problem in the future. There is more that could be done but more on my thoughts on that at some later time.
Friday, October 8, 2010
STRESS LEVEL TEST
Are any of these items moving? Or are they perfectly still?? Look at all of them and then read the copy below the illustrations for an explanation.
The pictures attached are used to test the level of stress a person can handle. The slower the pictures move, the better your ability of handling stress.
Allegedly, criminals that were tested see them spinning around madly; however senior citizens and kids see them standing still.
None of these images are animated - they are perfectly still.
P.S. If you do happen to see the images spinning around madly, please take me off your mailing list. Thank You.
One teacher said, "I felt like they were all moving..but slowly. Kind of like, they were breathing."
The pictures attached are used to test the level of stress a person can handle. The slower the pictures move, the better your ability of handling stress.
Allegedly, criminals that were tested see them spinning around madly; however senior citizens and kids see them standing still.
None of these images are animated - they are perfectly still.
P.S. If you do happen to see the images spinning around madly, please take me off your mailing list. Thank You.
Thursday, October 7, 2010
BEST RUN STATES - HOW DO THE STATES RANK?
The writers at 24/7 Wall St. spent months reviewing data sets related to debt ratings, median income, unemployment trends, violent crime rates and other indicators to rank the states from the best run to the worst. Well-run states are much like well-run corporations, according to 24/7 Wall St.: They balance their books, invest prudently, value innovation and manage their debt. Wyoming came out on top of the magazine's rankings, while Kentucky was at the bottom.
http://r.smartbrief.com/resp/yYgUvscgyzdFrXBoajaoyAalnMgI?format=standard
http://r.smartbrief.com/resp/yYgUvscgyzdFrXBoajaoyAalnMgI?format=standard
NEW LAW ENCOURAGES PURCHASES OF HEAVY SUV's
The Jobs bill encourages the purchase of heavy SUVs with the new 50% bonus depreciation’s return for 2010 Here are the tax breaks for firms buying a new heavy SUV:
If your business buys a new $50,000 SUV with a loaded weight of over 6,000 pounds and puts it in service by Dec. 31
You can can expense $25,000, the maximum for vehicles
It can claim $12,500, half of the remaining $25,000 cost, as bonus depreciation
Normal depreciation is 20% of the $12,500 balance
Total first-year write-off...$40,000
Assuming 100% business use
For new only, used heavy SUVs do not get bonus depreciation
SMALL BUSINESS JOBS ACT
The recently enacted 2010 Small Business Jobs Act includes a wide-ranging assortment of tax breaks and incentives for businesses. Here's a brief overview of the tax changes in the Small Business Jobs Act.
Enhanced small business expensing (Section 179 expensing). To help small businesses quickly recover the cost of capital outlays, small business taxpayers can elect to write off these expenditures in the year they are made instead of recovering them through depreciation. Under the old rules, taxpayers could generally expense up to $250,000 of qualifying property—generally, machinery, equipment and software—placed in service in during the tax year. This annual limit was reduced by the amount by which the cost of property placed in service exceeded $800,000.
Under the Small Business Jobs Act, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment limit to $2,000,000. The Small Business Jobs Act also makes certain real property eligible for expensing. Thus, for property placed in service in any tax year beginning in 2010 or 2011, the $500,000 amount can include up to $250,000 of qualified leasehold improvement, restaurant and retail improvement property.
Extension of 50% bonus first-year depreciation. Before the Small Business Jobs Act, Congress already allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property placed in service in 2008 or 2009 by permitting the first-year write-off of 50% of the cost.
The Small Business Jobs Act extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (as well as 2011 for certain aircraft and long production period property).
Deductibility of health insurance for the purpose of calculating self-employment tax. The Small Business Jobs Act allows business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in calculating their 2010 self-employment tax.
Cell phones no longer listed property. This means that cell phones can be deducted or depreciated like other business property, without onerous recordkeeping requirements.
Boosted deduction for start-up expenditures. The Small Business Jobs Act allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010. The amount that a business can deduct is reduced by the amount by which startup expenditures exceed $60,000. Previously, the limit of these deductions was capped at $5,000, subject to a $50,000 phase-out threshold.
100% exclusion of gain from the sale of small business stock Ordinarily, individuals can exclude 50% of their gain on the sale of qualified small business stock (QSBS) held for at least five years (60% for certain empowerment zone businesses). This percentage exclusion was temporarily increased to 75% for stock acquired after Feb. 17, 2009 and before Jan. 1, 2011.
Under the Small Business Jobs Act, the amount of the exclusion is temporarily increased yet again, to 100% of the gain from the sale of qualifying small business stock that is acquired after September 27, 2010 and held for more than five years. In addition, the Small Business Jobs Act eliminates the alternative minimum tax (AMT) preference item attributable to such sales.
S corporation holding period for appreciated assets shortened to five years. Generally, a C corporation converting to an S corporation must hold onto any appreciated assets for 10 years or face a built-in gain tax at the highest corporate rate of 35%.
The 2010 Small Business Jobs Act temporarily shortens the holding period of assets subject to the built-in gains tax to 5 years if the 5th tax year in the holding period precedes the tax year beginning in 2011.
Revenue raisers. These tax breaks come at a cost. To mention a few of these unfavorable provisions, information reporting will generally be required for rental property expense payments made after Dec. 31, 2010, and increased information return penalties will be imposed.
Please keep in mind that I've described only the highlights of the most important changes in the Small Business Jobs Act. If you would like more details about any aspect of the new legislation, please let me know.
Larry Kopsa CPA
Enhanced small business expensing (Section 179 expensing). To help small businesses quickly recover the cost of capital outlays, small business taxpayers can elect to write off these expenditures in the year they are made instead of recovering them through depreciation. Under the old rules, taxpayers could generally expense up to $250,000 of qualifying property—generally, machinery, equipment and software—placed in service in during the tax year. This annual limit was reduced by the amount by which the cost of property placed in service exceeded $800,000.
Under the Small Business Jobs Act, for tax years beginning in 2010 and 2011, the $250,000 limit is increased to $500,000 and the investment limit to $2,000,000. The Small Business Jobs Act also makes certain real property eligible for expensing. Thus, for property placed in service in any tax year beginning in 2010 or 2011, the $500,000 amount can include up to $250,000 of qualified leasehold improvement, restaurant and retail improvement property.
Extension of 50% bonus first-year depreciation. Before the Small Business Jobs Act, Congress already allowed businesses to more rapidly deduct capital expenditures of most new tangible personal property placed in service in 2008 or 2009 by permitting the first-year write-off of 50% of the cost.
The Small Business Jobs Act extends the first-year 50% write-off to apply to qualifying property placed in service in 2010 (as well as 2011 for certain aircraft and long production period property).
Deductibility of health insurance for the purpose of calculating self-employment tax. The Small Business Jobs Act allows business owners to deduct the cost of health insurance incurred in 2010 for themselves and their family members in calculating their 2010 self-employment tax.
Cell phones no longer listed property. This means that cell phones can be deducted or depreciated like other business property, without onerous recordkeeping requirements.
Boosted deduction for start-up expenditures. The Small Business Jobs Act allows taxpayers to deduct up to $10,000 in trade or business start-up expenditures for 2010. The amount that a business can deduct is reduced by the amount by which startup expenditures exceed $60,000. Previously, the limit of these deductions was capped at $5,000, subject to a $50,000 phase-out threshold.
100% exclusion of gain from the sale of small business stock Ordinarily, individuals can exclude 50% of their gain on the sale of qualified small business stock (QSBS) held for at least five years (60% for certain empowerment zone businesses). This percentage exclusion was temporarily increased to 75% for stock acquired after Feb. 17, 2009 and before Jan. 1, 2011.
Under the Small Business Jobs Act, the amount of the exclusion is temporarily increased yet again, to 100% of the gain from the sale of qualifying small business stock that is acquired after September 27, 2010 and held for more than five years. In addition, the Small Business Jobs Act eliminates the alternative minimum tax (AMT) preference item attributable to such sales.
S corporation holding period for appreciated assets shortened to five years. Generally, a C corporation converting to an S corporation must hold onto any appreciated assets for 10 years or face a built-in gain tax at the highest corporate rate of 35%.
The 2010 Small Business Jobs Act temporarily shortens the holding period of assets subject to the built-in gains tax to 5 years if the 5th tax year in the holding period precedes the tax year beginning in 2011.
Revenue raisers. These tax breaks come at a cost. To mention a few of these unfavorable provisions, information reporting will generally be required for rental property expense payments made after Dec. 31, 2010, and increased information return penalties will be imposed.
Please keep in mind that I've described only the highlights of the most important changes in the Small Business Jobs Act. If you would like more details about any aspect of the new legislation, please let me know.
Larry Kopsa CPA
Friday, October 1, 2010
IF YOU ARE INVOLVED IN A NON PROFIT YOU MIGHT WANT TO READ THIS
There is an important October 15th date for small non profits. We have found that in small non profits, volunteers and the managment gets passed around. Because of this sometimes notices from the IRS go to the wrong people. Here is a reminder that the IRS just sent out. If you are involved in a non profit, you might want ask the current management if they have complied.
Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date
A crucial filing deadline of Oct. 15 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked. Nonprofit organizations that are at risk can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.
The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice, with the IRS and it also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Here are 10 facts to help nonprofit organizations maintain their tax-exempt status.
1. Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010.
2. Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.
3. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.
4. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
5. Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N also known as the e-Postcard. To file the e-Postcard go to the IRS website and supply the eight information items called for on the form.
6. Under the voluntary compliance program, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee.
7. The relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
8. Organizations that have not filed the required information return by the extended Oct. 15 due date will have their tax-exempt status revoked.
9. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status and any income received between the revocation date and renewed exemption may be taxable.
10. Donors who contribute to at-risk organizations are protected until the final revocation list is published by the IRS.
Ten Things Tax-Exempt Organizations Need to Know About the Oct. 15 Due Date
A crucial filing deadline of Oct. 15 is looming for many tax-exempt organizations that are required by law to file their Form 990 with the Internal Revenue Service or risk having their federal tax-exempt status revoked. Nonprofit organizations that are at risk can preserve their status by filing returns by Oct. 15, 2010, under a one-time relief program.
The Pension Protection Act of 2006 mandates that most tax-exempt organizations must file an annual return or submit an electronic notice, with the IRS and it also requires that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Here are 10 facts to help nonprofit organizations maintain their tax-exempt status.
1. Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by Oct. 15, 2010.
2. Among the organizations that could lose their tax-exempt status are local sports associations and community support groups, volunteer fire and ambulance associations and their auxiliaries, social clubs, educational societies, veterans groups, church-affiliated groups, groups designed to assist those with special needs and a variety of others.
3. A list of the organizations that were at-risk as of the end of July is posted at IRS.gov along with instructions on how to comply with the new law.
4. Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice and a voluntary compliance program for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.
5. Small tax-exempt organizations with annual receipts of $25,000 or less can file an electronic notice Form 990-N also known as the e-Postcard. To file the e-Postcard go to the IRS website and supply the eight information items called for on the form.
6. Under the voluntary compliance program, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by Oct. 15 and pay a compliance fee.
7. The relief is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.
8. Organizations that have not filed the required information return by the extended Oct. 15 due date will have their tax-exempt status revoked.
9. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status and any income received between the revocation date and renewed exemption may be taxable.
10. Donors who contribute to at-risk organizations are protected until the final revocation list is published by the IRS.
TAX BREAK FOR SELF EMPLOYED IN THE NEW JOBS BILL
As the debate over health care and health care costs continued to draw attention, it appeared as if the smallest of businesses, those who are self-employed, were being ignored. Most of the health care related tax breaks and credits have been focused on businesses with employees but those who are self-employed or primarily family owned have been left out. Until now.
Self-employed persons are finally getting a break. Under section 2042 of the Business Jobs Act of 2010 recently passed by Congress, those who are self-employed and pay their own health insurance premiums now get a break.
Currently, if you are self-employed, you can only deduct health insurance premiums from income before computing “regular” federal income tax; however, SE tax (self-employment tax), or Social Security and Medicare tax, is computed on the entire amount. So-called W-2 employees were treated differently.
That will now change. Persons who are self-employed will be able to deduct the cost of health insurance premiums from income before calculating SE tax. That results in a savings of nearly 15% over the cost of those premiums: Social Security tax is payable at a rate of 12.4% and Medicare tax is payable at a rate of 2.9% – a combined rate of 15.3%. However, keep in mind that the income cap for Social Security tax for 2010 is $106,800 (there is no cap for Medicare tax), so the total amount of your savings will vary based on your income. But it’s still savings.
Of course, there’s a catch. There’s always a catch. It’s only for 2010. But hey, in this economy, beggars cannot, apparently, be choosers. It’s a break and we’ll take it.
Self-employed persons are finally getting a break. Under section 2042 of the Business Jobs Act of 2010 recently passed by Congress, those who are self-employed and pay their own health insurance premiums now get a break.
Currently, if you are self-employed, you can only deduct health insurance premiums from income before computing “regular” federal income tax; however, SE tax (self-employment tax), or Social Security and Medicare tax, is computed on the entire amount. So-called W-2 employees were treated differently.
That will now change. Persons who are self-employed will be able to deduct the cost of health insurance premiums from income before calculating SE tax. That results in a savings of nearly 15% over the cost of those premiums: Social Security tax is payable at a rate of 12.4% and Medicare tax is payable at a rate of 2.9% – a combined rate of 15.3%. However, keep in mind that the income cap for Social Security tax for 2010 is $106,800 (there is no cap for Medicare tax), so the total amount of your savings will vary based on your income. But it’s still savings.
Of course, there’s a catch. There’s always a catch. It’s only for 2010. But hey, in this economy, beggars cannot, apparently, be choosers. It’s a break and we’ll take it.
MORE ON THE NEW TAX ACT
I recently posted a short summary Small Business Jobs Act that was signed by the President on September 27, 2010. Here is a more extensive 7 page summary of the 110 page act. Let me know if you have any questions.
http://tax.cchgroup.com/legislation/Small-Business-Jobs-Act-7-23-10.pdf
http://tax.cchgroup.com/legislation/Small-Business-Jobs-Act-7-23-10.pdf
PROPERTY TAX COMPARISON
Want to see how your states property tax compares to other states. Here is a cool tool.
http://www.mytaxburden.org/propertytax/
http://www.mytaxburden.org/propertytax/
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