DiSabatino CPA Blog

DiSabatino CPA Blog

A blog by Michael DiSabatino CPA with topics on Tax Savings, Business, Management and more...
Mike's weekly post usually concentrated on tax saving strategies.

2011 Standard Mileage Rates Released

The Internal Revenue Service issued the 2011 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
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2010 Stalemate Ends Over Tax Cuts

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.

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No more 8109-B Federal Tax Deposit Coupons in 2011

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.

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Monitoring Your Credit and Identity

In today's heightened security-concerned world, it is important to monitor your credit reports occasionally so you will be aware of any unauthorized use of your credit file, before it runs rampant.

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.
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Attention Non-Profit organizations.

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,

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2010 Planning: Tax Consequences for Self-Employed Individuals

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.

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$250 "Donut Hole" Rebate For Seniors

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.

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Foreign Bank Accounts, Gifts... What you Need to Report

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.

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Pennsylvania Voluntary Disclosure Program

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.

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Quickbooks – IRS May Want Your Electronic Records

Tax Practitioners know that Section 6001 of the IRC requires taxpayers to keep their tax records and that Rev. Rul. 71–20, 1971–1 C.B. 392, establishes that all machine-sensible data media used for recording, consolidating, and summarizing accounting transactions is considered such a tax record for this purpose. Because many taxpayers are now keeping their records using Quickbooks, the IRS has purchased 1,100 Quickbooks licenses for distribution to revenue agents. The intent is that agents may more quickly audit a taxpayer by reviewing records maintained in Quickbooks.
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Minority Shareholder Rights

Often, a minority shareholder is completely excluded from the management of the company.  Lacking the votes to acquire a position as a corporate officer or director, a minority shareholder may even be excluded from the information necessary to detect abusive actions by the majority or to evaluate the performance of the company and the value of its stock.  Therefore, the right to obtain financial information and other data about the company’s business can be invaluable.

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New Health Care Laws and Your Taxes!

Now that Congress has passed landmark health care reform package, much work needs to be done in dealing with new requirements. While the end result of the legislative process is necessarily health care related, the tax law plays a major role in its implementation. From the tax credits and subsidies used to expand health coverage, to the many penalties, fees and surtaxes designed to pay for it, the Tax Code is front and center.

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How the New Health Care Law Affects Individuals

The Patient Protection and Affordable Care (PPAC) Act, as amended by the Health Care and Education Reconciliation Act of 2010 (Reconciliation Act), was enacted to provide quality, affordable health care for all Americans. Although the primary thrust of the PPAC Act is health insurance reform, the tax law plays a key role in implementing that goal. Individuals both receive benefits and are subject to responsibilities under the PPAC Act. The following are highlights of the tax provisions of the PPAC Act that affect individuals. Several of these provisions take effect in 2010, but others are not effective until later years.

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New Business Checklist

We are often asked what steps are required in order to establish a new self-employed (sole proprietorship) business. Although this checklist is not all-inclusive, here is a document DiSabatino CPA often provides to clients which may be a helpful guide for you.  Please call our office to consult with us on deciding which entity might be correct for you, and the actual steps you will need to perform.
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Thirteen Trillion and counting...

According to www.usdebtclock.org, the Outstanding Public Debt as of 17 Jun 2010 at 05:04:12 PM GMT is:
$13,085,794,427,785.78
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Tax Courts Rules to Seek Professional Tax Help

TurboTax Problems No Defense to Penalties

The U.S. Tax Court on April 19, 2010 held certain defendants liable for accuracy-related penalties despite the fact they were apparently using the so-called “Timothy Geithner signature edition” of TurboTax (Lam v. Commissioner, T.C., No. 13302-08, T.C. Memo. 2010-82, 4/19/10).
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2010 Estate Tax Law

By failing to pass any new estate tax legislation before January 1,2010, Congress  allowed the estate tax to expire pursuant to a "sunset" provision included in tax legislation enacted in 2001. As a result, in the absence of further changes by Congress, no estate tax would be applicable with respect to estates of decedents dying in 2010, regardless of the size of the estate.
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Deductible Business Clothing?

I am often asked...  "Can I deduct my clothing for my job?"

My answer seems flippant to some, but it sums up the IRS ruling fairly well... If you look like a "geek" while wearing your work cloths, you have a good chance in getting a deductionSmile

Rules for deducting clothing can be divided into three groups:
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2010 Mileage Rates

IRS Announces 2010 Standard Mileage Rates

Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 50 cents per mile for business miles driven
  • 16.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than last year's. The mileage rates for 2010 reflect generally lower transportation costs compared to a year ago.

The business mileage rate was 55 cents in 2009. The medical and moving rate was 24 cents.

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Mortgage Deduction Compliance

IRS has two reason to increase compliance measures for mortgage interest claimed as an itemized deduction:

  1. Studies have shown that more mortgage interest is being reported by institions then some taxpayers declare as income - giving rise to the question, "How do these taxpayers pay the mortgage?"  It becomes suspect that some taxpayers may not be declaring all their income.
    Treasury Inspector General for Tax Administration - TIGTA - projected that 46,000 non-filers could collectively owe $625 million in additional taxes, penalties and interest for tax year 2005, while the bill could reach $801 million for about 91,000 taxpayers who underreported their income in that year.
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