The Small Business Tax Help Blog

Archive for October, 2009

Question: First Time Home Buyer- Do I qualify?

ok.. I have called the IRS 3 times received 2 different answers. I talked to 2 different tax professionals and received 2 different answers. I purchased a mobile home in 2003, it is on a rented lot in a mobile home park, I had a personal loan for the mobile and I pay personal property taxes not real estate. I am in the process of building a home estimated occupancy date mid December. Do I qualify for the 8000.00 tax credit for first time Home Buyers?

IRS stated twice yes I do since I did not pay real estate taxes
IRS stated once that no I do not qualify since it was my primary residence

same responses from tax professional. 1 HR Block said Yes, 1 independent said no..

Answer: Do you still own the mobile home, and do you live there or have you lived there at any time since mid December 2006? If so, no you aren't eligible for the $8000 credit since you would have owned your home in the last 3 years so would not be a first time home buyer. It doesn't matter what type of loan you have/had on the mobile home, or even if you bought it for cash and had no loan at all. And if it's your home, doesn't matter what kind of taxes you pay - a boat can be a home if that's where you live.

But if you owned it and lived there since you bought it in 2003, you'd probably qualify for the $6500 credit.

Circle these tax deadlines on your 2010 calendar

Circle these dates on your 2010 calendar if any of the following upcoming tax deadlines apply to you or your business.

Calculating Taxes : How to Make Estimated Tax Payments

Question: IRS Form 4562 – cant figure out how to fill out the form.?

Trying to depreciate a computer I purchased for my business in 2008. Could some one walk me through the from from 1 to Schedule-C?

The cost is $1262
Looks like the fastest way is 200% DB over 4 years (514 – 309 – 257 – 206).

This form has me completely stumped. After fighting it for over 2 hours I still can figure how to make my way over to 1040 Schedule-C line 13.

PS: if there is a way to depreciate it all at once, please let me know.

Thank you!
I’ve read the instructions and cant figure it out.

Answer: You're making it much to complicated. Your computer qualifies as section 179 property, machinery and equipment This gives you a deduction of 100% of the cost this year, no depreciation schedule needed. Line 26d enter cost, Line 26h enter cost again as deduction. See the link or read the 4562 instructions regarding section 179 property.

US Economic Indicators: Latest 6 Months Data-Jan 5

Forecasts based on the projections from 10 economists as of Monday, Dec 28. NA = not available. E = estimate. R = revised. **** = tentative.

Question: Quarterly Taxes for an Independent Contractor?

Hi guys.
I just started work as a contractor for a private company in March.

What do I need to do about taxes?

I’ve heard that I can incorporate myself and be in a different bracket.

What I really need to know (I’m fresh out of college!! ) is when I need to start filing? I’ve been taking about 30% from my checks and putting it in my savings – I’m a single female and a renter.

Any tips/help/info or direction would be appreciated. Thank you.

Also – I have been paying on student loans – will this have any effect?

Answer: Go look at what your taxes were last year, and pay 1/4 of that amount quarterly as your estimated payment, so you won't be fined. Next year you will have a better handle on what you should be paying in estimated taxes. Your least favorite Uncle will send you a form to help you figure it out.

Candidate Q & A: Northwest Cobb Commissioner

Incumbent Republican Helen Goreham is seeking her third four-year term. Her primary challenger, Leonard Church, is a former mayor of Kennesaw. Barring an upset by an independent candidate, the winn...

Employee versus Independent Contractor Tax Tips

In November 2009, the IRS began a new National Research Program Initiative (the Initiative): an industry wide detailed random audit of employment taxes for 6,000 employers during the course of the next three years. The purpose of the Initiative is dual fold: (1) assess systemic Employment Tax Compliance; and (2) collect assessments from delinquent employers.

With diminishing tax revenues due to the depressed economy, the U.S. Treasury Department is stepping up efforts to decrease the tax gap between overall tax liabilities and taxes paid to the Internal Revenue Service. Auditing employment taxes is seen by the IRS as a necessary method of closing this tax gap. For tax year 2001 for example, the gross tax gap was estimated by the IRS at around $345 billion, with underreporting of employment taxes accounting for around 17% of the tax gap.

The IRS will audit businesses to ensure that Federal withholding taxes are deducted and paid over to the government from employees wages for Social Security and Medicare as well as Federal Unemployment taxes. An employer found to be in noncompliance could face stiff civil penalties and interest on unpaid taxes. These penalties could have a particularly severe impact on small business owners.

The IRS has prioritized four areas to focus their auditing efforts under the Initiative, including:

Worker Classification: i.e. whether an employer properly classifies an employee as an employee or independent contractor for tax purposes. Determining which depends on the behavioral, financial and type of relationship the company has with the person performing the work.

Employee Fringe Benefits: A fringe benefit is a form of pay for the performance of services. i.e. benefits such as insurance coverage, company car or child care, etc. that are provided by employers tax free to employees but not to independent contractors.

Reimbursed Business Expenses: e.g. reimbursement for taking a client to lunch, purchasing office supplies: which requires a written business expense plan. I.E. You must have paid or incurred expenses that are deductible while performing services as an employee. You must adequately account to your employer for these expenses within a reasonable time period, and you must return any excess reimbursement or allowance within a reasonable time period.

Compensation of Owners who are also employees of the company, whereby unpaid taxes may result in personal liability for the employer.

It has been reported that the IRS has already commenced with the process of selecting entities for audit of their employment taxes now that the employment tax audit Initiative has begun. Severe consequences wait for employers who are in noncompliance with the employment tax laws. Businesses are highly encouraged to make sure procedures are set to adhere to the applicable tax laws. Doing so can thwart much headache, and the loss of money and productive office time in the event of an audit.

For example, the Internal Revenue Code requires a written reimbursement plan in order to take advantage of the tax benefits of legitimate business expenses. Employers should consider consulting with experienced counsel in preparation for the Initiative and in the event of an audit of their employment taxes.

Bankrate’s 2010 Tax Guide

1. Check out Schedule M. This is the new tax document that you’ll use to account for the Making Work Pay credit money you got last year in your paychecks.

Payroll Software 2010 withholding tax – http://payroll.breaktru.com