Weekly Business Tips
You’ll find a new tip on the home page of our Web site each week. This is our way to keep you updated on the latest issues that are relevant to your business. Following is a list of tips that have previously been highlighted on our home page. In case you missed any, you can refer back to this list.
2011 Health Insurance Benefits for Adult Children
The exclusion from gross income of an employee for employer-provided accident or health insurance benefits for the employee, the employee's spouse, or the employee's dependents was extended to apply to any child of the employee who, as of the end of the tax year, has not attained the age of 27.
Thus, if the child is age 26 or less at the end of the tax year, the exclusion applies even if the child provides more than one-half of his or her own support, earns more income than the exemption amount, does not live with the taxpayer, or if any other restriction applies which prevents the employee from claiming a dependency exemption.
Beginning taxable year 1/1/2011, the state of Wisconsin treatment of health insurance benefits to an adult child who has not attained the age of 27 as of the end of the tax year the same as the Federal treatment.
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2012 Standard Mileage Rates
Beginning on January 1, 2012, the standard mileage rates for the use of a car (also van, pickups or panel trucks) will be:
55.5 center per mile for business miles driven
23 center per mile driven for medical or moving purposes
14 cents per mile driven in service of charitable organizations
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Alternative Minimum Tax
The Alternative Minimum Tax attempts to ensure that anyone who benefits from certain tax advantages pays at least a minimum amount of tax. The AMT provides an alternative set of rules for calculating your income tax. In general, these rules should determine the minimum amount of tax that someone with your income should be required to pay. If your regular tax falls below this minimum, you have to make up the difference by paying alternative minimum tax.
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Are there any credits left for hiring new employees in 2012?
While many tax credits expired on December 31, 2011, the Work Opportunity Tax Credit (WOTC) was modified & extended to allow a credit for businesses who hire qualified veterans in 2012.
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Are you going on a business trip?
If you are going out of town primarily for business purposes, then your expenses may be tax deductible.
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Are You Paying for College Expenses?
If you, your spouse, or a dependent are going to college this year, then the IRS would like to remind you to keep all receipts for all of the college expenses you pay for. You may qualify for some tax benefits.
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Business Owners To Do List for Year End
We are already almost through the 3
rd quarter for 2011. This year has gone by fast and soon it will be time to file payroll & tax returns. Are you ready? Here are some things you can start doing now to help make sure you’re prepared
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Changes for W-2s and 1099s
Employers and Employees need to be aware of these!
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Charitable Donations
Charitable donations are not always tax-deductible donations. Please keep these rules in mind when submitting your donations with your tax return documents.
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Child and Dependent Care
To claim a credit for child and dependent care expenses there are seven tests that must be met first.
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Child Labor Hours Limits Changed to Match Federal Law
Effective July 1, 2011, Wisconsin’s child labor hours limitations will be the same as those under federal law.
Children's Investment Income
Some children’s investment income could be taxed at the parents’ rate. Keep these indicators in mind when gathering your family’s tax information this season:
Deductible Medical Expenses
There are many types of deductible medical expenses.
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Do you need to adjust your withholding?
When you finished your tax return, did you owe more than you thought or did you receive a large refund?
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Eight Facts to Help Determine Your Correct Filing Status
Determining your filing status is one of the first steps to filing your federal income tax return. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child. Your filing status is used to determine your filing requirements, standard deduction, and eligibility for certain credits and deductions, and your correct tax.
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Email Alert
The IRS will NEVER email or call you directly!
The IRS has posted a notice on their website that taxpayers should be aware of.
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Federal Unemployment Tax Questions
The Federal Unemployment tax suprised many clients this January. There are several reasons why.
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Gift Tax Annual Exclusion
The gift tax annual exclusion can be a useful tool in estate tax planning and a way to transfer money to family members tax-free under certain parameters. The amount of the annual exclusion for 2011 is $13,000.
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Have you moved recently?
If you have moved recently or your business has changed locations, you will want to update that information with the IRS to ensure you receive any refunds or correspondence.
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Health Reform
For owners of small businesses and their workers, the recently enacted health reform legislation has some key provisions to pay attention to. The major ones include: tax credits; excise taxes; and penalties.
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How Can I Lower My Taxable Income?
Did you make more money this year? Did you have to pay a lot of taxes last year? Are you wondering if there’s any way to lower your taxable income? The year isn’t over yet! If you are looking for ways to lower your tax liability, here are some things to consider that might help you!
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Identity Theft of Taxpayers
A recent study was conducted by a National Taxpayer Advocate about a growing problem of identity theft. There have been many improvements made by the IRS in the last few years; however, it continually sees this problem.
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Income Limits for Education Credits, Child Tax Credit and More!
Who should try to reduce AGI for 2011?
Numerous tax breaks (tax credits, deductions, and other tax benefits) are reduced or eliminated if a taxpayer's adjusted gross income (AGI), or modified AGI, exceeds specified thresholds. As year-end nears, taxpayers who otherwise qualify for these tax breaks should try to modify or reduce 2011 AGI if doing so will keep your income level below the relevant phase-out threshold.
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Income Tax Withholding Adjustments after Filing Your Taxes
If you typically receive a large refund from the IRS after you file your income tax return, or you owe the IRS a substantial amount at that time, you should consider adjusting your income tax withholding.
Income: Taxable or Non-Taxable?
Generally, most income you receive is considered taxable but there are situations when certain types of income are partially taxed or not taxed at all.
Information and status of the First-time Homebuyer Credit
Information and status of the First-time Homebuyer Credit
The IRS posted a new online tool that provides account information for taxpayers who must report repayments of the first-time homebuyer credit.
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IRS Email Scam
Always remember that the IRS will never contact you by email unless you contact them first!
IRS Enforcing 1099 Reporting Compliance
The IRS is attempting to increase 1099 reporting compliance by businesses by asking the following questions on tax returns this year:
1. Did you make any payments in 2011 that would require you to file Form(s) 1099?
2. If “Yes,” did you or will you file all required Forms 1099?
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IRS Factsheet Recaps some 2011 Changes
The IRS has posted a fact sheet reminding taxpayers of several available benefits and new reporting requirements for the 2011 tax return, including:
1) Taxpayers have until Tuesday, April 17, 2012 to file their 2011 tax return and pay any taxes due.
2) The non-business energy credit up to a $500 maximum, but reduced by amounts claimed in prior years.
3) The second of 15 annual repayment installments is due where the first-time homebuyer credit was claimed for a 2008 purchase and must be reports on Form 1040, Line 59b.
4) Capital gain and loss transactions are now reported on Form 8949 with Schedule D used as a summary sheet.
5) All income from 2011 Roth IRA conversions must be included on the 2011 return.
6) The AMT exemption levels have increased.
7) Eligible self-employed individuals and S corporation shareholders can use the self-employed health insurance deduction to reduce their income tax liability.
8) The self-employed (SE) health insurance deduction cannot be used to reduce income in computing the SE tax.
9) Starting in 2011, the additional tax on distributions from a health savings account (HSA), not used for qualified medical expenses, increases from 10 percent to 20 percent.
10) Taxpayers must report specified foreign financial assets on new
Form 8938, if the aggregate value of those assets exceeds certain thresholds.
IRS Penalties - 1040 Returns
When it comes to filing a tax return, or not filing one, the IRS can assess a penalty if you fail to file, fail to pay or both. Here are some important points the IRS wants you to know about the two different penalties you may face if you do not file or pay timely.
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Meals and Entertainment, and Vehicle Expenses
Meals and entertainment, and vehicle expenses are two of the most scrutinized audit categories by the Internal Revenue Service.
Mortgage Debt Forgiveness
Losing a home is a stressful experience. Thanks to the Mortgage Forgiveness Debt Relief Act of 2007, it might not be a taxable experience.
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New Depreciation Rules
New assets placed in service after 9/8/2010 and through 12/31/2011 qualify for 100% bonus depreciation. Assets placed in service in 2012 qualify for 50% bonus depreciation.
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New Hire Retention Credit
Would you like a $1,000 credit on this year’s business tax return? Read on to see if you qualify.
The new hire retention credit was part of the HIRE Act that was signed into law on March 18, 2010. In 2010, it allowed for an exemption of the employer portion of social security tax (6.2%) for employees that qualified for the credit.
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New law keeps payroll cut in place through February of 2012
Nearly 160 million workers will benefit from the extension of the reduced payroll tax rate that has been in effect for 2011.
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Recordkeeping, what do I need to keep and for how long?
How long do you need to keep records?
Rental Property Guidelines
Do you rent property to others? If so, here are some guidelines from the IRS when you are compiling your rental income & expenses for your tax return.
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Retirement Plan Limits for 2012
The IRS has just announced that they will be increasing the limit on retirement plan contributions for 2012.
Sales of Used Motor Vehicles and more...
Sales of Used Motor Vehicles, Boats, Snowmobiles, Recreational Vehicles, Trailers, Semitrailers, All-Terrain Vehicles, and Aircraft...
Sales Tax is due on Internet Purchases
Sales tax is due on internet purchases!
You may notice sometimes when you purchase items by phone, catalog, or internet that you are not charged Wisconsin sales tax for these items. It is a common myth that sales tax is not due on items purchased from a company out of state.
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Savings Bonds for Higher Education
Here's how the rules work: The bond must be issued to an individual at least 24 years old. That is, the bond will be issued to you, rather than to your child who will be attending college. It can be owned jointly by you and your spouse, but not jointly with anyone else (such as your child).
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Seven Tips to Help You Determine if Your Social Security Benefits are Taxable
Seven Tips to Help You Determine if Your Social Security Benefits are Taxable
Many people may not realize the Social Security benefits they received in 2011 may be taxable. All Social Security recipients should receive a Form SSA-1099 from the Social Security Administration which shows the total amount of their benefits. You can use this information to help you determine if your benefits are taxable. Here are seven tips from the IRS to help you:
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Tax Benefits Increase due to Inflation Adjustments
For tax year 2012, personal exemptions and standard deductions will rise and tax brackets will widen due to inflation, the Internal Revenue Service announced today.
The Definition of an Employee
This definition first applies with respect to services performed after December 31, 2010.
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Turning high-taxed income into tax-free or low-taxed inome
If you are a business owner you should be aware that you can save family income and payroll taxes by putting junior family members on the payroll. You may be able to turn high-taxed income into tax-free or low-taxed income, achieve social security tax savings (depending on how your business is organized) and even make retirement plan contributions for your child.
In addition, employing a child age 18 (or if a full-time student, age 19–23) may be a way to save taxes on the child's unearned income, as explained below.
Read More for the key considerations>>
When is it beneficial to file Married Filing Separately
You may be wondering whether you and your spouse should file a joint tax return or separate returns. As is often the case with tax questions, the answer depends on your particular tax picture.
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Wisconsin Budget Includes Corporate Tax Incentives
The Wisconsin budget signed by Governor Scott Walker on June 26, 2011 included some tax incentives for Wisconsin businesses. There were changes to capital gains law and increased manufacturing credits.
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Wisconsin Sales Tax and Use Tax
What is the difference between Wisconsin sales tax and use tax?
Sales Tax
The Wisconsin state sales tax is a 5% tax imposed on the sales price of retailers who sell, license. lease, or rent tangible personal property, certain coins and stamps, certain leased property affixed to realty, certain digital goods, or taxable services at retail in Wisconsin. The sales tax applies to retail sales. All sales are generally considered retail sales unless the buyer purchases the product or taxable service for the purpose of reselling it. The 0.5% county sales tax, 0.1% baseball stadium sales tax, and/or 0.5% football stadium sales tax may also apply.
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