The Health Care Legislation is enough to boggle the mind…However, here is a bit of good news for those of us that are adoptive parents. For 2010, adoptive parents may qualify to claim credit against their federal taxes up to $13,170 for “qualified adoption expenses” for each adopted child. Not only did they increase the amount, they also made it refundable! Previously the credit was non-refundable so parent could only use the credit to reduce their federal tax to zero and then carry over the balance for up to 5 years.
So, if your family has already adopted like ours and you have credit carry overs you will be able to use the credits on your 2010 federal taxes to reduce them to zero and any remaining credit will be refundable. I will use our family as an example, we adopted our first child in 2006 and our second in 2008. We qualified for the full tax credit for both. As of 2009 we were using up the last of our tax credits from our first adoption and using tax credits from our second adoption for any federal taxes owed. The difference when we file our 2010 taxes is once we have used adoption credits to reduce our taxes owed on federal to zero any remaining credit will be coming back to us in a refund.
This is great news for families that have already adopted that have been carrying a credit and for families adopting in 2010 or 2011 will also benefit from the refundable provision. So, if you have adopted and have unused credits or are in the process of adopting please talk to your tax adviser to see how this new provision will effect you. You may also contact us at knollcpa.com
Posted in Tax & Accounting Tips, Taxes.
Tagged with 2010, 2011, adopt, adoption, federal taxes, tax, tax credit, tax refund, tax return.
March 18, 2010 President Obama signed into law the Hiring Incentives to Restore Employment Act (HIRE). This is a plan to create jobs by providing a temporary tax break to companies that hire the unemployed. So, how does this benefit you the employer? This will exempt you the employer from paying the employer portion of the Social Security taxes for the remainder of the year on new hires who were previously unemployed.
A qualified employee meets the following requirements:
- Begins employment after February 3, 2010, but before January 1, 2011.
- Has not been employed more than 40 hours total during the previous 60 days. The employee must sign an affidavit attesting that this is true.
- Employee is not hired to replace an existing employee UNLESS the prior employee left voluntarily or for cause. In other words you can not replace an employee that you laid off.
- Employee is NOT a family member of the business owner.
Employers may begin claiming this tax credit on the second quarter 2010 Form 941. The tax credit is for the 6.2% employer portion of the Social Security tax for wages paid to qualified employees up to the $106,800 Social Security wage base.
Be sure to contact our office at http://www.knollcpa.com/contact.php with any questions regarding these new changes.
Posted in Services, Tax & Accounting Tips, Taxes.
Tagged with 941, employee, employer, HIRE, Payroll, social security, tax.
Where’s My Refund? You can track your federal refund through this interactive tool at irs.gov 24 hours a day seven days a week. Information is available 72 hours after the IRS confirms receipt of your e-filed return or three to four weeks after mailing in your paper return. You want to have your return handy to provide your social security number, your filing status and your refund amount. After entering this information you will be provided the date the refund was deposited or a check mailed to you, or acknowledgment that return has been received and is in process . If there is a problem with your return or an incorrect address the system will guide you to your next steps.
Refunds are sent out weekly on Fridays so if you do not receive a date the refund will be issued, wait a week to check back. As always, if we process your taxes, we will be happy to help you with any concerns or tracking your refund. You can find our contact information at knollcpa.com.
Posted in Tax & Accounting Tips, Taxes.
Do you scramble at the end of every year trying to figure out your mileage to claim on your business taxes? If you have a hard time keeping track of this important deduction here are a few tips we have received from our clients. If you don’t have a mileage log in your car just throw a small notebook in your glove box to keep track. Do you use a smart phone or Palm pilot to keep track of your appointments. Why not put a notation right on your appointment information of the distance to your appointment. You can easily look up this information online through Map Quest or Yahoo Maps. Did you know you can usually turn your mileage in to your accountant or bookkeeper monthly to avoid any last minute scrambling and trying to remember what part of your mileage was business or personal? Your mileage can really add up over time and is worth taking the little bit of extra time each month to make sure you have it all documented. Let us know of any other tips you have to make this process easier.
Posted in New Business, Taxes.
Tagged with mileage, Taxes.
Did you file an extension on your corporate taxes? The September 15th deadline to file your 2008 Corporation (Form 1120 and 1120-A) and S Corporation (Form 1120S) taxes is fast approaching. You want to make sure you have all your information in to your accountant as soon as possible to ensure they are completed on time. Our firm finds some common things that business owners put off until the last minute to get their taxes completed such as reporting their mileage for the year or copies of phone bills for cell phones or copies of documents for property bought or sold.
Posted in Taxes.
Tagged with 1120, 1120A, 1120S, corporate, S Corporation, tax, tax return, Taxes.
As the new school year approaches it brings around thoughts of “how am I going to pay for my child to go to college?” You might want to consider a Section 529 Plans (named after the section of the IRS Code that created them). These plans were established to help families save and pay for college and are available to everyone, regardless of income. These state-sponsored plans allow you to gift large sums of money for a family member’s college education, while you maintain control of the funds. The earnings from these accounts grow tax-deferred and are tax-free if used to pay for qualified higher education expenses. They can be used as an estate-planning tool as well, providing a means to transfer large amounts of money without gift tax. With all these tax benefits, 529 plans are an excellent vehicle for college funding. A common mistake we see with the 529 plans are not checking with your states plans first as there may be additional tax benefits. For example, here in Colorado you receive an additional deduction on your state tax return if you invest in Colorado’s 529 plan.
Posted in New Business, Taxes.
Tagged with Colorado, families save, Funding College, gift tax, higher education, school year, Section 529, tax benefits, tax return, tax-deferred, tax-free.
This year the IRS is allowing first-time home buyers up to $8000 in credit for a qualifying taxpayer. The home must be purchased between January 1, 2009 and December 1, 2009. If you were a first-time home buyer in 2008 you can qualify for $7,500 in credits. There are stipulations on how the credits are treated for taxpayers.
The first-time home buyer must maintain residency for a certain period of time to qualify. Home buyers can qualify for up to 10% of the home purchase price. It is not required that this “first-time home buyer” is purchasing their first house, they just have to meet certain requirements to qualify. Unlike the 2008 credit, the 2009 credit can be considered a true credit. The 2008 credit is a 15 year interest free loan, where as the 2009 credit does not need to be repaid if certain conditions are met.
So if you are considering purchasing a home in the near future try to plan accordingly to qualify for the credit. Talk to your accountant or realtor for more information to see if you qualify.
Posted in Taxes.
Five common accounting mistakes new businesses make
- Do not consult with proper professionals such as CPA’s, Lawyers, etc.: Your CPA firm can guide you on what you need for your city and state. Do I have to file taxes for anything in my city or state? How do I register my business? How do I get a tax id? The main reason businesses do not consult with the proper people is to save money, but over and over I have seen this cost more money in the long run than the savings in not consulting professional services.
- Do not have accounting books set up correctly: Setting up your accounting correctly in the beginning saves you a lot of time and money in the long run. What kind of accounting software are you using? There are professionals out there that can help you set up your books specific to your industry. For example, our office has certified professionals on QuickBooks software and Microsoft Accounting software that can review your set up and train you to use your software.
- Pay themselves too much money: Remember, in order to show a profit on your business there has to be money in the business. The first day they business owners open a business, they want to pay themselves the very next day.
- Under Capitalized: A lot of great businesses fail because they do not invest enough money into their business or they are capitalized by credit cards which have higher interest rate.
- Not knowing how much the IRS will be paid: Many people we talk to just do not realize how much money they will pay in various taxes to the IRS. They have never looked at their own pay stub before to realize all the taxes being paid and a lot of individuals are not even aware that their employers also pay a portion of their payroll taxes.
Posted in New Business.
Tagged with CPA, New Business, Payroll, QuickBooks, tax.
Have you finished your books for 2008? If you have you want to make sure your yearend data matches your tax return. A great way to avoid inadvertently making changes to the final numbers in 2008 is to set a closing date on your QuickBooks account. This is very simple and can save you and your accountant a lot of time later. Here is how to process in QuickBooks:
- Choose Edit, then Preferences.
- Choose Accounting, then Company Preferences.
- At the bottom of this window you will be able to see if a closing date has been set and as of what date.
- Click Set Date/Password.
- Enter Closing Date i.e. 12-31-2008.
- Enter Password.
Although setting a password is optional we STRONGLY recommend you set a password. This will create a prompt if you do try to change numbers prior to the closing date.
A common password we use for this to remind you to call your accountant with any questions is to make the password “ask” and your accountant’s name. i.e. asksarah.
We would recommend this be done once you have completed all your accounting tasks and all your W-2’s and 1099’s have been processed.
Posted in QuickBooks.
Tagged with accounting, QuickBooks, yearend.
February 17, 2009 – Monthly Payroll Taxes due for January
February 28, 2009 – Submissions due to the IRS for all 1099, 1096, W-2 & W-3
February 28, 2009 – Colorado State Copies of W-2 due
March 16, 2009 – Corporation Tax Returns due
Posted in Taxes.
Tagged with 1096, 1099, corporation, Taxes, w2, w3.