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Pour yourself a cup of tea ...

maybe lavender and honey tea. It's good for alleviating stress and calming nervousness ...

then spend your tea break glancing over this page for items that may be of interest to your business ...

or poke about other bookkeeping pages to book mark and come back to later when you have more time.

Notice to Site Visitor

I initially developed this page as a handy reference for myself. While I do my best to ensure it is accurate and complete, I make it available for your use with the understanding that I cannot be held liable for errors and/or omissions. Please make yourself familiar with my site policies prior to relying on any of the information on this site.

U.S. Small Business 2012

Electronic Deposits Required

Form 8109 was discontinued as of December 31, 2010. Electronic deposits became mandatory
effective January 1, 2011.

Sole Proprietor 2011 Personal Tax Returns
(See Tip To Keep More Money In Your Pocket)

Tax Return Filing Due
Tuesday, April 17, 2012
If extension is not filed on Form 4868
Late filing penalties apply April 18, 2012


Extended Tax Return Filing Due
Thursday, October 15, 2012
Late filing penalties apply October 16, 2011


Tax Payment Due
Tuesday, April 17, 2012
Interest and late payment penalties
begin accruing April 18, 2012

Source: IRS 2012 Tax Calendar

January 11, 2012

IRS introduced new regulations for Form 1099-MISC and a new form 1099-K. Some payments that were previously included on the 1099-MISC are now reported on 1099-K and must be excluded from your 1099-MISC.

You can find a short article by Andrew Chow of findlaw.com discussing the new form and how it affects your 1099-MISC form. You can find the article at:

http://blogs.findlaw.com/free_enterprise/2012/01/your-2011-1099-forms-including-new-form-1099-k-due-this-month.html

The article explains that Form 1099-K is "required for small businesses that sell more than $20,000 in goods or services through at least 200 transactions with any single payment processor [...] Payment processors like Amazon, PayPal, banks, and credit-card companies must send out 1099-K forms to small-business merchants. [...] Small businesses should be receiving 1099-K forms from credit-processing companies by the end of January."

Intuit also has a webcast available from yesterday's webinar on what you need to know and how QuickBooks' new wizard can help you process your 1099-MISC forms this year to remain in compliance with the new regulations. You can find the recording at:

http://community.intuit.com/posts/updated-recording-of-the-1099-misc-regulation-changes-webinar-is-now-available

Page down until you get to the link for the recording instead of the live event.

Both forms must be mailed by January 31 and reported to the IRS by February 29th.

December 23, 2011

IRS announced today the extension of the reduced payroll tax rate that has been in effect for 2011.

I have updated the Self Employment Tax table to reflect the 2012 changes as well as the FICA Employee Payroll Taxes Table to reflect The Temporary Payroll Tax Cut Continuation Act of 2011.

Employers have until January 31, 2012 at the latest to implement the new tax rate.

IRS-2011-124 explains that the Congress negotiated a NEW recapture provision.

"[The recapture provision] applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision."

December 22, 2011

Just a general note to let you know that the IRS has the following forms and/or publications available for 2012:

• Publication 15-B Employer's Tax Guide to Fringe Benefits
• Form W-4 Employee's Withholding Allowance Certificate - your employees should be submitting new ones to you if any of their circumstances have changed ... and you should process them prior to doing your first 2012 payroll

The free W-2/W-3 online filing application for the 2011 tax year became available on the Social Security website on December 5th. You can file 50 W-2's for each W-3 submittd ... and you can now also submit for the 2010 tax year if you are delinquent. SSA also has a webacst on how to file your W-2's online.

You can also download AccuWage software (free Social Security software) to check your W2 report for errors so you can locate and fix errors BEFORE filing your W-2/W-3 reports.

December 16, 2011

Mark this one on your calendar.

The IRS are holding a free webinar on January 11, 2012 11:00 Pacific Time to explain IRS Small Business/Self-Employed (SB/SE) Division top compliance priorities (i.e. what they will be looking for when auditing) in 2012 and challenges for 2012. An overview discussions of priorities by the IRS Compliance Director will cover:

-SB/SEs approach to compliance and working with tax professionals
-Exam’s National Research Project, field audit coverage plans and new pilot programs
-Collection’s Fresh Start initiatives and new operating unit
-Campus Compliance plans for improving Automated Under Reporter (AUR) and their Centralized Offer-in-Compromise programs

You can register at:

http://www.visualwebcaster.com/IRS/83902/reg.asp?id=83902

December 9, 2011

The IRS announced today that most rates will be staying the same as in July.

The standard mileage rate for business miles driven remains unchanged from the mid-year adjustment at 55.5 cents per mile.

Medical / moving rates decreased 0.5 cents but charitable rates continuted to hold steady. See the IRS drop box for more information:

http://www.irs.gov/pub/irs-drop/n-12-01.pdf

REMINDER You will need your business mileage and total mileage for the two periods (Jan-Jun and Jul to Dec) for 2011 tax preparation. Make a note to get your odometer reading as close to June 30 AND December 31 as possible.

November 18, 2011

The IRS is reminding truckers that their July, August, September and/or October 2011 Form 2290 is due to be filed by November 30.

The IRS says that "you will not be liable for any late filing penalty or interest if you meet this due date. Beginning November 1, 2011, we will provide a stamped (receipted) Schedule 1 to those who file and pay their tax."

As of July 1, 2011, an authorized e-filer can e-file your 2011 Excise tax.

Visit the IRS Trucking Tax Center at www.irs.com for more information.

October 31, 2011

For bookkeepers who prepare taxes for their clients, and who have registered with the IRS for their PTINs (IR 2010-106), you will find cost of living adjustments (COLA) for retirement and non-retirement plans on the IRS website. Search for "Inflation adjusted tax item by year" to find the latest IR news.

Your 2012 reference is IR-2011-103. I will have the Rev Proc and IRB references shortly.

Your 2011 references are IR 2010-108, Rev Proc 2010-40, 2010-46 IRB.

October 30, 2011

Early in October, IRS news released updated 2012 tax deposit rules in Notice 931 Deposit Requirements for Employment. These rules do not apply to FUTA. See Form 940 instructions for depositing FUTA.

The IRS has updated Notice 931, Deposit Requirements for Employment Taxes, to reflect the tax deposit rules for the 2012 tax year.

If you file Form 941, Employer's Quarterly Federal Tax Return, your lookback period for 2012 begins July 1, 2010 and ends June 30, 2011

You are a monthly depositor if you report $50,000 or less of Form 941 taxes for the lookback period ... and a semiweekly depositor if you report more than $50,000 of Form 941 taxes.

The notice discusses electronic deposit requirements that came into effect on January 1, 2011. The IRS announced in IR-2010-02 that the Treasury would no longer maintain the Federal Tax Deposit Coupon (Forms 8190 and 8109-B) system after December 31, 2010. As of January 1, 2011, federal tax deposits, including FUTA, must be made using electronic funds transfer payment system (EFTPS).

October 28, 2010

Social Security Administration announced on Wednesday October 17 that the cost of living adjustment (COLA) will increase 3.6% for 2011.

The 2012 Social Security wage base will also change as it is tied to COLA. The Social Security tax maximum will increase to $110,100 from the current $106,800.

The Department of Health and Human Services announced the 2012 changes for Medicare premium on October 27. See http://www.hhs.gov/news/press/2011pres/10/20111027a.html for more information.

You can read the announcement at the Social Security Press Office (www.ssa.gov/pressoffice)> Press Releases> October 19, Social Security Announces 3.6 Percent Benefit Increase for 2012 .

This also means the optional methods for calculating self-employment income will change for 2012 at $1,130 from the current $1,120. The lower and upper limits under optional methods for computing self-employment tax are as follows:

The “lower limit”, for 2010 and 2011, is $4,480 ($1,120 × 4). In 2012 it will be $4,520 ($1,130 x 4). The “upper limit” is 150% of the lower limit. For 2010 and 2011 it translates to $6,720 ($4,480 x 1.5). In 2012, it will be $6,780 ($4,520 x 1.5).

I have updated the Self Employment Tax table to reflect the 2012 changes as well as the FICA Employee Payroll Taxes Table.

October 13, 2011

Sole proprietors, who filed for the automatic 6 month extension on IRS Tax Form 4868, have income tax returns that are due on Monday, October 17.

It is not IRS news that the IRS has three ways it can hit your pocket where it hurts when a return isn't filed and/or paid on time. They are late payment penalties, interest charges and late filing penalties.

Interest charges and late payment penalties began on April 18 for sole proprietors on any return with a balance due. The extension was only for filing the tax return ... not on balances owing.

If you have a balance due and don't file your return by Monday, you will also face late filing penalties.

If you have no tax due and don't file your return by October 17, there will not be a late filing penalty because the penalty is calculated on tax owing.

However, Wayne Davies of Make Your Life Less Taxing, often reminds his readers that you only have three years to file to obtain any refund owing ... otherwise the amount owed to you is lost.

October 1, 2011

The IRS simplified per-diem rates were increased for post September 30 business travel.

The CONUS low-cost area per-diem allowances increase $3 to $163 ($111 for lodging and $52 for meals and incidental expenses) while the high-cost area per-diem rates increase $9 to $242 ($177 for lodging and $65 for meals and incidental expenses).

Here is the information summarized in table format for October 1, 2010 to September 30, 2011:

Here is the information summarized in table format effective October 1, 2011:

These rates are published in IRS Publiscation 1542 Per Diem Rates (For Travel Within the Continental United States). .

"This revenue procedure [...] provides rules for using a per diem rate to substantiate [...] the amount of ordinary and necessary business expenses paid or incurred while traveling away from home. Taxpayers are not required to use a method described in this revenue procedure. A taxpayer may substantiate actual allowable expenses if the taxpayer maintains adequate records or other sufficient evidence." IRS Revenue Procedure Bulletin at http://www.irs.gov/irb/2011-47_irb/ar12.html

You can find information on standard business travel allowances on the U.S. Self Employment Income page.

June 11, 2011 (Updated July 5 and August 18, 2011)

August 18, 2011 update - IRS has more information on the expiration of the FUTA surcharge in Headliner Volume 312 at http://www.irs.gov/businesses/small/article/0,,id=242752,00.html.

Keep an eye out for a revised Form 940 that will provide space for the two different rates. It is expected the form will be available before the January 31, 2012 due date.

July 5, 2011 Update - Renee Daggett of Admin Books explains in their July 5th newsletter that the IRS did in fact lower the FUTA rate to 6.0% from 6.2% as of July 1, 2011.

June 11, 2011 - Google FUTA surtax expires and a lot of articles come up but nothing on the IRS website. Near the top of Google's search list CCHGroup.com (a Wolters Kluwer business) reports that the 0.2% surtax is set to expire on June 30, 2011. If congress doesn't take action, the FUTA tax rate would drop to 6% from 6.2% on July 1, 2011.

The President has proposed to make the FUTA surtax permanent.

I am a member of the National Association of Certified Professional Bookkeepers (NACPB). Their latest payroll tax update report* - June 10, 2011 explains that employers need to track the pre and post June 30 FUTA taxable wages if legislation is not enacted.

Form 940 will be revised if the surtax is not extended.

The same update says employers will not be penalized if their 3rd and 4th quarters omit the 0.2% surtax if the tax is retroactively reinstated after the fourth quarter.

So why can't you find anything on the IRS website? It seems this information is dissemanted in payroll industry conference calls. There is a note under "What's New" in the Instructions for Form 940 that the tax rate is scheduled to decrease. (See August 18th update for IRS link.)

*P.S. NACPB has a number of newsletters that were free when you visited their website or signed up. As of July 28, 2011, only members have access to their newsletters.

**The AIPB recommends that in addition to tracking FUTA wages periods separately, continue to accrue 0.8% for your third quarter just in case Congress retroactively imposes an extension.

August 7, 2011

I'm just looking at the AIPB quiz (based on their June 2011 The General Ledger publication) in the August 1, 2011 Bookkeeping Tips free enewsletter ... wow that was a mouthful!

It mentions that small employers (those with fewer than 250 Form W-2) have been given a break.

They do not need to comply with W-2 reporting requirements until further notice. This reporting break is referring to the transitional relief for employee information reporting requirements on the cost of an employeee's health care benefits (employer provided health care coverage).

See IRS Notice 2011-28 Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage for more details. This notice provides interim guidance that generally applies to Forms W-2 beginning with 2012.

You might also want to visit the IRS News notice titled Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers. See Question 4 for information on this particular small employer break.

IRS Notice 2010-69 Interim Relief with Respect to Form W-2 Reporting of the Cost of Coverage of Group Health Insurance Under § 6051(a)(14) also discusses this break.

July 18, 2011

The IRS announced last Friday that they are giving truckers a 3 month extension on their highway use tax return.

Form 2990 for the tax periods that fall between July 1 and September 30th, should NOT be filed and payments should NOT be made prior to November 1, 2011.

For vehicles brought into use during the July to November period, they are not required to have proof that the tax was paid if it can be shown that it was purchased during the previous 150 days.

For more information, go to the IRS website and locate Businesses> Newsroom> IRS Gives Truckers Three-Month Extension; Highway Use Tax Return Due Nov. 30 .

June 23, 2011 (Updated July 5, 2011)

The IRS announced today they are increasing the standard mileage rate 4.5 cents to 55.5 cents from 51.0 cents for the period July 1 to December 31, 2011. This special adjustment is being made to reflect the recent increases in the price of gas.

Meidcal / moving rates also increase 4.5 cents but charitable rates remain unchanged. See the IRS drop box for more information:

http://www.irs.gov/pub/irs-drop/a-11-40.pdf

Renee Daggett of Admin Books explains in their July 5th newsletter that you will need to log your auto mileage from January to June AND July to December. You will need your business mileage and total mileage for both periods for 2011 tax preparation. So if you haven't already, get your odometer reading NOW or as close to June 30 as possible. Renee calls this an action item.

June 17, 2011

The IRS are holding a free one hour webinar to explain what to expect from an employment tax examination. It will cover the examination process and results, statute of limitations, taxpayer and appeal rights as well as settlement agreements and payment options.

You can register at:

http://www.visualwebcaster.com/IRS/78923/reg.asp?id=78923

April 11, 2011

Sorry, I'm late in reporting this. If you haven't heard already, Congress has passed the bill to repeal the 2012 corporate reporting requirements as well as the 2011 reporting changes related to income from real estate.

The President is expected to sign the bill into law.

March 17, 2011

The bill to repeal the 2012 corporate reporting requirements has passed the House of Representatives. The bill is now in the Senate.

See previous posting on 1099 information reporting.

March 16, 2011

The IRS now has the 2011 Form 941 with instructions available on their website.

Form 941 is the Employer's Quarterly Federal Tax Return form.

You may also want to look at (and perhaps subscribe to) the Social Security Administration's (SSA) / IRS Spring 2011 publication for employers called SSA/IRS Reporter. There is a one page article on page 4 outlining the Tax Changes for Small Businesses.

It covers:

• Health Insurance Deduction Reduces Self-Employment Tax
• General Business Credit for Employers
• Small Businesses Can Benefit from Higher Expensing/Depreciation Limits
• Depreciation Limits on Business Vehicles
• 50 or 100 Percent Bonus Depreciation
• Small Businesses To Use EFTPS for Deposits Beginning in 2011

There is also a good article on Spring Cleaning of Your Payroll Records by the American Payroll Association (APA). The APA will be holding a one day course between June 13 and June 24 this year in cities across the country.

Lots of other information in this quarterly newsletter.

March 2, 2011

I subscribe to the free IRS publication e-News for Small Business. In Issue Number: 2011-5, it announced that the IRS released the depreciation deduction limits for vehicles first placed into service in 2011 in Revenue Procedure 2011-21.

Changes were made to the dollar limits for vans and light trucks and luxury autos. There is no change from last year to auto placed in service this year.

You can find more in depth details in Revenue Procedure 2011-21 at http://www.irs.gov/pub/irs-drop/rp-11-21.pdf.

The NACPB Federal Tax Update Newsletter to March 2, 2011 mentions that these limits must be prorated for business use of your personal vehicle when it is less than 100%

March 2, 2011

It's been awhile since I found anything I thought would be of interest to small business owners. This news might be of interest to you.

The IRS is offering a free webinar of March 29, 2011 on the basics of business taxes for the self-employed. It will provide an overview of reporting profit or a loss, business expenses, business record keeping requirements and estimated tax payments.

You can register here:

http://www.visualwebcaster.com/IRS/77024/reg.asp?id=77024

December 28, 2010

A reminder that EITC (Earned Income Tax Credit) has been eliminated for 2011. Do not make any more EITC payments to employees after December 31, 2010.

This also means the W-5 Form - Earned Income Credit Advance Payment Certificate is eliminated.

Reference: AIPB Free Newsletter Bookkeeping Tips dated December 27, 2010

December 20, 2010

On December 17, the IRS issued IR-2010-124 detailing the revised 2011 withholding payroll taxes and new income tax withholding tables (see Notice 1036). The instructions help employers implement the 2001 cut in payroll taxes.

Publication 15, (Circular E) will be revised sometime this week.

This mean the Making Work Pay Credit expires on December 31, 2010.

Social security tax rate for 2011 is 4.2% for the employee. The employer rate remains at 6.2%. The wage base is $106,800. Medicare rates remain unchanged at 1.45% for both employee and employee with no wage base limit. Income tax rates from recent years remains in effect.

See Notice 1036 for more details.

December 17, 2010

In Accounting Today, a December 16th article titled 13.4M People May Owe More Taxes Because of Making Work Pay Credit, it mentions that "the Making Work Pay Credit is likely to be replaced next year by a 2 percentage point decrease in Social Security payroll taxes, from 6.2 to 4.2 percent".

The Making Work Pay Credit "is advanced to taxpayers by their employers through withholding reductions, which results in an increase in taxpayers’ take-home pay. The credit has been effective for tax years 2009 and 2010, but expires at the end of this year."

The article explains that taxpayers may end up owing taxes if they are in any of these situations:

• single taxpayer with more than one job
• joint filers where both spouses work
• joint files where one of both have more than one job
• taxpayer who receives pension payments
• Social Security recipients who receive wages

This group of taxpayers were advanced more of the credit than they were entitled to claim, resulting in taxes owing and incurring penalties.

Accounting Today for the WebCPA is found at www.accountingtoday.com

December 7, 2010 (Updated December 17, 2010)

The President has agreed to extend tax cuts for two years for the middle class (individuals earning less than $200,000 and families earning less than $250,000) and the rich, extend unemployment benefits for 13 months, as well as payroll tax reduction on Social Security contributions for one year.

Also to be extended are the earned income tax credit, child care credit, and the American Opportunity Tax Credit for students.

Businesses will see an enhanced first-year depreciation deduction and a two-year AMT (alternative minimum tax).

The proposed one year payroll tax decrease would be 4.2% from the current 6.2% as a way to increase employee's take home pay.

This list is not exhaustive but just gives you an idea of what is included. This agreement means it is unlikely taxes will increase on January 1, 2011.

Update December 17, 2010 - The Senate passed the tax cuts be extended on December 15, and the House followed on December 16.

December 7, 2010

Bookkeepers may be interested in this QuickAlert for Tax Professionals that was released by the IRS today.

"The Employment Tax e-file System (94x XML e-file System) will close for Production on December 15, 2010 and will reopen for Production on January 3, 2011. During this timeframe, the system will be open for testing only.

Additionally, the 94x XML PIN Registration Process response timeframe will be delayed. If a registration is received, it will not be processed until the system comes back up on 1/3/2011.

Please do not call the e-help Desk between 12/15/10 and 1/3/11 with questions concerning your 941 PIN Application, because the system is only open for testing and a status cannot be provided."

December 7, 2010

If you are looking for up-to-date information regarding the new rules for federal tax return preparers, I recommend you head on over to The National Association of Registered Tax Preparers (NARTP) at www.nartp.org.

Once there, click on News > New IRS Requirements for Tax Return Preparers for a comprehensive reference on what you need to know.

You'll find the PTIN requirements at IRS website www.irs.gov> Tax Professionals> PTIN Requirements.

IRS has also published FAQs that are very helpful. You'll find it at www.irs.gov> Tax Professionals> PTIN Requirements> Get Help (right hand side mid way down)> Read the FAQ's.

Questions 7 and 8 under Scenarios deal with bookkeepers who prepare Forms W-2, Forms W-3, and Forms 941. So for example if you are a bookkeeper who prepares Form 941, you may need a PTIN. The answer depends on whether you get to exercise any discretion or independent judgement.


December 6, 2010

This is a reminder that "deposits made at an authorized financial institution will no longer be accepted after December 31, 2010. Instead, deposits can be made using EFTPS online with a computer or by telephone. For making deposits by telephone call 1-800-555-4477 (business), 1-800-316-6541 (individual), or TDD 1-800-733-4829."


November 30, 2010

The senate vote to repeal the Form 1099 information reporting requirements set to begin in January 2011 for payments of goods ... and in January 2012 for payments to corporations. (Sc. 9006)

Under current law, only payments for services to any person engaged in business or trade that aggregated to $600 plus per year are reported.

See update.


November 23, 2010.

This free phone forum will discuss why small businesses need to keep adequate books and records ... and how to maintain them. The IRS examination process will also be presented.

Register for this December 1, 2010 phone forum at www.irs.gov> Businesses> Small Business/Self-employed> Small business Events> National/Local Phone Forums and Webinars for Small Business> Recordkeeping.


October 30, 2010

Tanning service providers are being reminded by the IRS that November 1 is the due date for the first payment of the new 10% tanning tax.

You make payment on Form 720 Quarterly Federal Excise Tax Return.

The IRS announcement says, "The tax went into effect on July 1. Providers of indoor tanning services collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720."

If you need or want more information, go to www.irs.gov> businesses> Small Business/Self-Employed> Articles> Excise Tax on Indoor Tanning Services Frequently Asked Questions.

Reference: IR-2010-73 June 11, 2010


October 28, 2010

In the most recent edition of e-News for Small Business, the IRS invites small business owners to a November 3 webinar. Items to be discussed are:

Employment Tax National Research Project
Worker Classification
Fringe Benefits
Compensation for Sub S Corporation Officers
Back-up Withholding

October 28, 2010

The most recent edition of e-News for Small Business says the IRS will begin accepting taxpayer books and records in electronic format. The IRS agents have recently been trained in QuickBooks software.

As it is now standard business practice to keep books using accounting software, the IRS is responding to 2008 Tax Forums where tax professionals and small business owners requested this change.

"Electronic files should be provided on a CD, DVD, or flash/jump drive to ensure security of the files. E-mail should not be used to transmit the electronic records."

You can read more on auditing accounting records in electronic format at www.irs.gov> businesses> small business/self-employed> more topics> IRS stakeholder partners' headliners> IRS Headliner Volume 303 released October 15, 2010 IRS Begins Accepting Taxpayer Records in Electronic Format

October 19, 2010

The IRS news wire IR-2010-103 released the draft W-2 form for 2011 on Oct 12, 2010. Employers use the W-2 form to report wages and employee tax withholding. The draft W-2 form has the codes required to report health insurance coverage.

The new requirement for employers to report the cost of coverage under an employer-sponsored group health plan has been made optional for 2011. The amounts reportable are not taxable.

Read more on the IRS website at Newsroom> IRS Releases Draft W-2 Form for 2011; Announces Relief for Employers

October 1, 2010

WebCPA announced that FASB will be holding two roundtable discussions on private company accounting and reporting issues. The round tables will discuss Consolidations and Income Taxes.

When and where: Tuesday, Oct. 12, from 1:00-4:00 p.m. at the FASB offices in Norwalk; and Tuesday, Nov. 2, 2010, from 9:00 a.m.-12:00 p.m. in Dallas.

For more information go to: http://www.webcpa.com/ato_issues/24_13/
fasb-plans-private-company-confabs-55787-1.html?ET=webcpa:e1054:129217a:&st=email&utm_source=editorial&utm_medium=
email&utm_campaign=Accounting_Today_100110

September 24, 2010

IRS e-News announced this week that business (and individual) tax mailing packages ends due to the growth of e-File and as a way to reduce costs. Look for a postcard in early October with instructions on how get your online forms and how to file your tax return(s).

Forms that will no longer be mailed include include packages 1040, 1065, 1120, 1120S and publication 393

September 24, 2010

The CPA Daily News (www.alcpas.org) released an an article today titled Employee Withholding Taxes Likely to Increase in 2011.

Some of the reasons discussed are:

• making work pay credit - this credit expires after 2010 tax year
• advance earned income credit - this credit has been repealed starting with the 2011 tax year
• supplemental wage rates - amounts like bonuses, commissions, severance pay will increase. under one million increases to 28% from 25% and over one million increases from 35% to 39.6%
• backup withholding - increases from 28% to 31% for non-wage payments to payees with incorrect or missing TIN
• employer-provided educational assistance - the fringe benefit under IRC §127 ends with the 2010 tax year
• higher tax brackets - 10% disappears making 15% the lowest tax bracket, size of 15% tax bracket for joint filers and qualified surviving spouses will be 167% instead of 200%, and the top brackets rise (see table below)

See December 10, 2010 update.

September 15, 2010

The IRS is offering a live webinar on Wednesday September 29, 2010.

The purpose of the webinar is to assist employer's with learning about "collecting the employer's share of employment taxes on tips that employees report on form 4137 Social Security and Medicare Tax On Unreported Tip Income".

You can register for the event at http://www.visualwebcaster.com/IRS/72009/reg.asp?id=72009 .

October 2, 2010: The October 1 edition of the CPA Daily News reported on the webinar.

Employers are not liable for its share of the FICA taxes on unreported tips until it receives a “Section 3121(q) Notice and Demand” from the IRS.

This notice instructs the employer to include the FICA taxes shown on the notice their next Form 941 - Employer's Quarterly Federal Tax Return. No interest charges or deposit penalties apply to the employer if the taxes are properly reported and any tax due remitted as instructed ... or if a required deposit is made as instructed on the notice.

FICA taxes on unreported tips notices are expected to begin in the next six months for current tax periods. The CPA Daily News says that "Employers will receive a Form 4520P “pre-notice” prior to receiving a notice (Form 4520) that requires them to pay the unreported FICA tax. The pre-notice will be issued well in advance of the Form 4520 notice to give employers time to review their records and contact the IRS if they find any discrepancies with IRS records ... The IRS is in the process of creating a web page that will be specifically devoted to tips."

I expect the web page will be announced in IRS News when it is up and running.

September 14, 2010

Corporations and partnerships who filed for extensions have income tax returns that are due tomorrow.

IRS has three ways it can hit your pocket where it hurts when a return isn't filed on time. They are late payment penalties, interest charges and late filing penalties.

Wayne Davies of "Self Employed Tax Deductions Today" explains what happens if you filed for an extension but have a balance due ... bad news ...

Interest charges and late payment penalties began on March 15 for corporations and April 15 for partnerships for any return with a balance due.

If you have no tax due and don't file your return by tomorrow, you will be assessed a late filing penalty.

The late filing penalty is steep ... $89 for each month or part of month the return is late ... up to 12 months. But wait ... there is more. That figure is multiplied by the number of partners or shareholders in the business. Yikes! So if you file just one day late and there are two partners, the late filing penalty would be $178! Just one day late!

Source: www.irs.gov> businesses> small business/self-employed> more topics> IRS stakeholder partners' headliners> IRS Headliner Volume 291 released March 18, 2010 Increase in Penalty for Failure to File a Partnership or S Corporation Return

September 8, 2010

Yesterday, the IRS Newswire IR-2010-096 released a draft of Form 8941 so that small businesses can claim the new health care tax credit. The final version is expected later this year.

The amount calculated on the form will be part of your general business credit on your income tax return.

This credit is "designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees."

More information and a link to the draft form can be found on the IRS website www.irs.gov> Newsroom

You will also find a step by step guide on the Small Business Health Care Tax Credit at http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf .

December 2, 2010 Update

The IRS Newswire IR-2010-117 released the final version of Form 8941 as well as Instructions for Form 8941 and Notice 2010-82 Section 45R – Tax Credit for Employee Health Insurance Expenses of Small Employers.

Notice 2010-82 expands on Notice 2010-44, 2010-22 I.R.B. 717.

P.S. I rarely do live links any more to government sites as the links seem to move around at times. If I give you the path to cut and paste into your browser, you should still be able to search for the item if it was moved for some reason. Few things bug me more than clicking on links that no longer work.

September 8, 2010

What do you do if you receive an IRS audit notice?

The IRS released a new video series in August called Your Guide to an IRS Audit. The series takes you through the three different types of audits ... correspondence, office and field ... showing you step by step what you need to do.

It is broken into 10 lessons so you don't have to watch it all in one sitting.

It explains the different audit notices, the selection process and how to organize your records for the auditor, what happens at your first appointment, what happens if you do or don't agree with the audit findings ... and more.

You can find the videos at www.irsvideos.gov/audit .

The U.S. Tax - Links

Visit U.S. Self Employment Income and Tax

Visit U.S. Employee Payroll Taxes

Visit U.S. Tax Compliance Information

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