HO HO HELP

'Tis the season, to pepper spray other shoppers and spend too much money. And in the words of my friend John, "nothing says 'Good Will Towards Man' than that burning sensation to the eyes".  I,  however,  prefer to make a tax deductible, contribution to my favorite organization.

This year for the holidays I am donating to The Leukemia & Lymphoma Society and The Rutgers University - Debbie Lyle Mojta Scholarship Fund.  If you are making a donation to the Debbie Lyle Mojta Scholarship Fund, please make sure to type in the name of the fund you are supporting on the linked webpage.

 Leukemia & Lymphoma Society - http://pages.teamintraining.org/ky/pfchangs12/GoJulieG.

Debbie Lyle Mojta Scholarship Fund http://support.rutgers.edu/s/896/Foundation/Givestart.aspx.

Ahh how easy it is to overspend during the holidays - perhaps fueled by the influence of your spiked soy eggnog, whining children or the reality disconnect created by using plastic instead of cash.  But there are ways to avoid that January "financial hangover" and the year long effect it causes.

Making a list and checking it twice can help!   

The first step toward taking control of your finances is to assess how much money you bring in and how much money you spend. Start by writing down your income from all sources and then list your "fixed" expenses. Fixed expenses are those that are the same from month to month, like your mortgage or rent, car payments, and insurance premiums. Next, list the expenses that vary, but are necessary, such as food and utilities. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, determine where you are overspending and prioritize. The goal is to make sure your "needs" are covered before your "wants". 

Now that you know how much you have,  make a list of who you are buying presents for and jot down ideas of what you want to get them. This can keep you from impulse buying. 

Impulse buying is an unplanned decision to buy something, that you make right before you buy it. It is said the emotional effect of impulse buying disrupts the normal decision making pattern in your brain; logical actions are replaced with an irrational moment of self gratification. Impulse items appeal to your emotional side and are not considered necessary in a consumers' life.

In addition to not planning another source of overspending during the holidays is "gift guilt". Gift guilt comes in several sizes including "homemade", "surprise" and "equalizing".  "Homemade" gift guilt is when we believe that homemade gifts are unworthy. Anyone who believes that has clearly never tasted my homemade, farm fresh marinara sauce or pistachio, cranberry biscotti! "Surprise" is when someone gives you an unexpected gift and so at the last minute you run out to the store and....yes - impulse buy. "Equalizing" is when you try and keep up cost-wise with someone else who either makes more money than you do or has totally blown their budget!

Holiday joy? Guilt? Victim of marketing? Medication worn off? Whatever the case may be, making a plan and doing your best to stick to it can help you avoid the long term effect of overbuying during the holiday season. Come January when the bills arrive, money that you may have been planning to use to fund your ROTH IRA now gets allocated to pay down credit cards. And just about when you clear that up, guess what - it's holiday season all over again.


Receive 10% off first-time services by emailing the correct answer to our question of the week at info@cyndiebarone.com and visit our website at www.cyndiebarone.com for more information about our services.

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

If Credit Cards Could Speak - What Would They Say?

"I got paid under the table". "I did not claim the money I made selling stuff on eBay". 

Well maybe not YOUR credit card because you do not cheat on your taxes or "forget" to report tips - RIGHT??

Remember the Housing and Economic Recovery Act of 2008, a not-so-little piece of legislation, intended to help homeowners avoid being foreclosed on during the housing market collapse? Well, deep inside the dark recesses of this Act is a little known provision that kicks in beginning January 1, 2012. And it could have a huge impact on small business owners who process credit cards.

In an attempt to catch tax cheats, the IRS will now require banks and the credit card processing companies to report purchases to the Internal Revenue Service, who will then, in turn, match the information with income that the business taxpayers report on their federal returns.

Congress thinks they may collect an additional $10 billion in tax revenues from this new cross matching process.  But in order to provide the transaction information to the IRS for "cross checking", the processing companies have had to reprogram their systems and create new departments to keep up with the compliance checks. The additional money it will cost to do this may be passed on to the merchants who accept cards. It seems unlikely that the processing companies will simply agree to "eat" the additional expenses.

Originally touted as a way to catch Internet sellers who don't report their sales, any bank or other payment settlement company that processes credit cards, debit cards, and electronic payments such as PayPal will have to issue a new return called Form 1099-K, Merchant Card and Third-Party Payments.

An exception has been granted for very small merchants and they won't be issued information returns. "Small" in this case means a business where annual gross sales on merchant cards are no more than $20,000 or when there are 200 or fewer transactions.

Merchants have to provide their federal tax identification numbers to the companies that process their transactions. Failing to do so, may make them subject to "backup withholding". This means these companies will have to deduct and withhold income tax from reportable payments.

So for anyone with a lucrative home-based business - things just got a little more complicated.

Additional information on this topic can be found at  http://www.irs.gov.

Receive 10% off first-time services by emailing the correct answer to our question of the week at info@cyndiebarone.com and visit our website at www.cyndiebarone.com for more information about our services.

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.



(The correct answer to our previous question was Somerville, MA. Congratulations to everyone who got it right!)

Can You Hear Me Now?

IRS Issues "Guidance" on Tax Treatment of Employer-Provided Cell Phones

Last fall, a provision in the Small Business Jobs Act of 2010, removed cell phones from the definition of listed property, a category under tax law that normally requires additional record keeping by taxpayers.

The IRS now states that employer-provided cell phones can be considered an excludible fringe benefit. This means that if an employer provides an employee with a cell phone used primarily for non-compensatory business reasons, both the business and personal use of the cell phone is generally nontaxable to the employee. The IRS will not require record keeping of business use in order to receive this tax-free treatment.

Also announced in this memo is information with respect to small businesses that provide cash allowances and reimbursements for work-related use of personally-owned cell phones. Under this approach, employers that require employees, primarily for non-compensatory business reasons, to use their personal cell phones for business purposes may treat these reimbursements for reasonable cell phone use as nontaxable. This treatment does not apply to reimbursements of unusual or excessive expenses or to reimbursements made as a substitute for a portion of the employee's regular wages.

I guess when the IRS says "Paperwork Reduction" - they actually take themselves seriously.With the changes in technology also comes the changes in taxation. And in case you are ever on Jeopardy here is some tax technology trivia: 

"Within 25 years, the mere trickle of 25,000 electronically filled individual tax returns has turned into a torrent of more than 100 million a year and led to a permanent change in the way Americans file their taxes".

Additional information on this topic can be found on IRS Notice 2011-72 as posted at www.irs.gov.

Receive 10% off first-time services by emailing the correct answer to our question of the week at info@cyndiebarone.com or check out our website at www.cyndiebarone.com for more information about our services.

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

     

Wet and Wild or How I Spent My Summer Vacation

Extended Filing & Payment Dates

If Tropical Storm Irene hit you hard and you live in Massachusetts, be aware that you may qualify for tax relief from the IRS. I realize it's odd to see the word "relief" in the same sentence with "IRS" but President Obama has declared both Berkshire and Franklin counties as federal disaster areas. If you live or have a business in either of those counties, you may qualify for tax relief.

The declaration permits the IRS to postpone deadlines for those taxpayers who qualify. Corporations and other businesses that previously obtained an extension until September 15 to file their 2010 returns, and individuals and businesses who filed for a similar extension until October 17 now have until October 31, 2011. It also includes the estimated tax payment for the third quarter, which is normally due on September 15.

In addition, the IRS is waiving the failure-to-deposit penalties for employment and excise tax deposits that were due from  August 27 through September 12, as long as the deposits are made by September 12, 2011.

If you qualify for these extended dates and receive a penalty notice from the IRS, call the phone number on the notice to have the IRS abate the interest and any late filing or late payment penalties. Be aware that the penalties or interest will be abated only if you have an original or extended filing, and payment due date, that falls within this postponement period.


Casualty Losses

Affected taxpayers in a federally declared disaster area have the option of claiming disaster-related casualty losses on their federal income tax return for either this year (2011) or last year (2010). Claiming the loss on your 2010 return will get you a refund for the loss earlier, but waiting to claim the loss on your 2011 return could provide for a greater tax saving, depending on other income factors.You can only deduct personal property losses that are not covered by insurance or other reimbursements.

If you are claiming the disaster loss on your 2010 return, you should put the Disaster Designation “Massachusetts/Tropical Storm Irene” at the top of the form so that the IRS can expedite the processing of the refund.

For more details, see Form 4684 and instructions.  You can also call the IRS disaster hotline at 1-866-562-5227 to request this tax relief and get additional information.

Taxpayers in New Hampshire, Vermont, Connecticut, North Carolina, New Jersey, New York State, and Puerto Rico should go to http://www.irs.gov/newsroom for information specific to your state. You can also find information regarding tax relief for disasters occurring earlier this year in Kentucky, South Dakota, Missouri, Nebraska and Montana.

Answer our question of the week and email the correct answer to info@cyndiebarone.com and receive 10% off first-time services!  Check out our website at www.cyndiebarone.com for more information about our services.

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

ICE ROAD TRUCKERS & GOOD NIGHT IRENE

Come on, admit that sometimes, maybe once in a while you watch ICE ROAD TRUCKERS.  If you do, take a look at our question of the week and email the correct answer to info@cyndiebarone.com and if you are a first time client you will receive 10% off of services.


ICE ROAD TRUCKERS

The IRS has provided truckers with a three-month extension for their highway use tax return. Typically due by August 31st, truckers now have until November 30th.  This extension was granted because the highway use tax is currently scheduled to expire on September 30, 2011.  Hopefully the additional time will help alleviate confusion and possible multiple filings that may result if Congress reinstates or modifies the tax after that date.


GOOD NIGHT IRENE

Interruptions caused by Hurricane Irene motivated the IRS to delay the final end date for the voluntary disclosure program for taxpayers with offshore accounts.  This IRS provided reprieve for filing the required information or for seeking a 90-day extension, from August 31 to September 9, is for those taxpayers making a 'good faith' effort to comply.  The updated voluntary disclosure initiative information is available on the IRS website. 

Find more information by following this link: http://www.irs.gov 

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.

Tax Stuff You Need To Know: Floods, Hurricanes & Tornadoes - Oh My!

Floods, Hurricanes & Tornadoes - Oh My!: "Disasters and losing your home or personal belongings can be stressful enough without the added issue of having to recreate important record..."

What Do Summer Camp and Taxes Have In Common?

ANSWER:  COULD BE, THEY HAVE A LOT IN COMMON!

Now that school is out and you are still working, you may have enrolled your children in summer camp. To the kids it may be about kickball, swimming and arts & crafts but for you it may be about extra expenses. But, those added expenses may help you qualify for the Child and Dependent Care Credit tax credit!

Parents who are working or are looking for work and have arranged for care of their children under 13 years of age during the school vacation may qualify for this credit. Here are some facts you need to know about the tax credit available for expenses incurred during the summer and throughout the rest of the year.

1. The cost of day camp may count as an expense towards the child and dependent care credit but expenses for overnight camps do not qualify.
2. Whether your childcare provider is a sitter in your home or at a facility outside your home, you may get some tax benefit if you qualify for the credit.
3. The credit can be up to 35% of your qualifying expenses, depending on your income(s).
4. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to calculate the credit.
5. In order to claim the credit you must have the full name and address of the care provider as well as their social security or employer ID number.

For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).

Links:

IRS Publication 503, Child and Dependent Care Expenses

Disclaimer: Tax advice contained herein was not written to be used and cannot be used to avoid payment of taxes or to avoid penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. All information provided is for illustrative purposes only. You should contact an accountant, tax preparer or tax attorney for advice or information specific to your situation. This information is not to be used as a directive.