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.
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.
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.
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 deduction
Beginning on January 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
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.
IRS has two reason to increase compliance measures for mortgage interest claimed as an itemized deduction:
I'm often asked if filing an extension will eliminate penalties charged by the IRS... and how much are the penalties.
If you have a balance due on a late tax return, the IRS will calculate additional penalties and interest. There are three separate penalties:* Failure to File Penalty - a "Valid" extension will relieve this during the extension period
* Failure to Pay Penalty
* Interest
Each is calculated differently. Here is a quick overview.
As of April 1, 2009, the new sales tax rates are effective. Please be sure that you have updated your proceedures to collect the appropropriate amounts. As the retailer, you are responsible for the collection of the proper tax.
Click here to open a PDF of the New Rates!Click here to jump to the CA State Board of Equalization for more information.
We want to reassure you that we hold all your tax and financial information in the strictest confidence.
Federal law requires us to obtain your consent before we use or disclose your tax return information for purposes other than preparing your return. We are well aware of the rules and restrictions involving the use and/or disclosure of your return information, and we take our obligations extremely seriously. I trust that this will bring you up to date on the rules that we must follow when handling your tax return information.
Tax planning for year-end 2008 presents unique opportunities and challenges for small business taxpayers to reduce or defer federal income tax liability. While traditional planning techniques remain fundamentally important considerations this year, new opportunities and pitfalls born from recent legislation and changes in the tax laws in response to our current financial crisis provide planning variables unique to this year end. This letter discusses important year-end tax planning strategies -- from the tried and true techniques to new considerations for our economic situation -- that can operate to reduce the tax burden for your small business.
The end of 2008 is happening upon us faster than we think. With the year drawing to a close, now is an ideal time to review your tax situation and evaluate strategies that may help minimize your tax bill. Once December 31 passes, your 2008 tax bill is essentially set. Taking certain steps before then, however, can make a difference.
As is the case year after year, favorable changes to the tax laws made in 2008 are also accompanied by unfavorable modifications. This year end, of course, our unprecedented financial crisis looms large. This crisis generates tax loss situations that we may not have faced in recent years, as well as a more urgent need to maximize current income that involves taking steps to minimize tax payments whenever possible.
Standard Mileage Rates
Beginning Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be 55 cents per mile for business miles driven; 24 cents per mile driven for medical or moving purposes; and 14 cents per mile driven in service of charitable organizations.
IRS said the new rates for business, medical, and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008, IRS said.
For vehicles not used for hire; for taxpayers that do not operate a fleet of vehicles using five or more vehicles at the same time (two or more prior to 2004); must be elected the first year the vehicle is placed in service; for leased as well as owned vehicles after 12/31/97...
IRS released a fact sheet regarding the hot topic of S Corporations - Distributions v. Payroll -
The following excepts the IRS information
Reasons to Buy or Lease an Automobile
• Taxpayers who own autos can choose the standard mileage rate in the first year an auto is placed in service and switch to the actual expense method in a later year if it becomes more favorable. Taxpayers who lease may also choose the standard mileage rate in the first year, but must use it for the life of the lease.
• A taxpayer intends to keep the vehicle more than four years, or until it is ready for the junkyard.
• The vehicle will be driven more than 10,000 – 12,000 miles per year. Many lease contracts have a mileage limit with an additional charge for every excess mile.
• The taxpayer has cash for the purchase or down payment.
When a shareholder takes a distribution from the S corporation, no taxes are payable since income is already taxed to the shareholders as a pass-through. If the shareholder takes a salary, income tax consequences are essentially the same. The salary is taxable to the shareholder, but it reduces the income of the S corporation, so the net result is a wash.
If not for FICA (Federal Insurance Compensation Act), either of these scenarios would be essentially identical. This is an especially important consideration because the FICA hit increases every year. In 2008, the shareholder/employee pays 7.65% (employee’s share; the employer pays a like amount) on up to $102,000 of earnings (in 2007, FICA applied to $97,500 of earnings). Between the employee’s and employer’s share, the total is $15,606. The employer’s share is, of course, deductible, but even so, the net outlay may still be over $11,000.[1]
