To contact us Click HERE
"I'm bored," my Muse whines. "When will you be finished?"
"Taxes take time. I have to get this right," I say.
"But you're not doing your taxes yet. You're just totaling receipts."
"These receipts tell me how much money Medusa's Muse has earned."
"And lost." She slumps into a chair.
I scowl at her. "Thanks for fixating on the losses."
"This year hasn't exactly been booming for your press."
"That will change."
"You say that every year."
Ignoring her, I focus on the pile of receipts again. Does the receipt for photocopies go in the supplies pile or the promotion pile?
My muse kicks my chair. "This press of yours is sucking more than money. It's sucking your creative energy."
I sigh. "Why do you do this every year?"
"Do what?"
"Bitch and moan about the press every time I have to do bookkeeping?"
"Because there is nothing creative about bookkeeping."
"True, there isn't. But to be creative I need to also be pragmatic. Bookkeeping keeps the lights on."
"But it takes too long. Why not hire someone?"
"Because that would take money, which you so kindly pointed out I don't have."
She crosses her arms and sulks. "I hate this part of publishing."
"Everyone does."
"During the Renaissance, you would have had a patron to take care of all those incidentals. He would have paid your taxes and provided you food and shelter, clothing and entertainment. All of your needs would have been taken care of, simply so you could create brilliant works of art."
"Talk to Rick." I clip a stack of receipts together and then label them postage.
"Don't you want to take a break and work on your play?"
"Yes, I do, but I have to get this done first."
"But..."
Swiveling in my chair to face her, I snap, "If you don't stop interrupting me I'll never get this done, which means I'll never get to work on my play."
She regally stands, looks at me, and in a calm voice says, "Don't forget you have a deadline on your play. You told UPT you'd finish the rewrites this week."
"I know."
"I'll leave you to it then." With a toss of her snake tresses, she softly walks from the room.
Muses!
Where was I? Crap, I know I have more receipts for travel. Where's the one from the dinner in October?
27 Haziran 2012 Çarşamba
Finished with taxes: back to writing! (with a plug for my book)
To contact us Click HERE
My muse suddenly appeared in my living room where I was dusting, making me shriek with surprise. She was dressed like a jewel adorned Marie Laveau, complete with multicolored Mardi Gras beads.
"Is it true? Are you finished with your taxes?" she asked.
"Look at you. How was Mardi Gras?"
"Great. Wonderful. Tons of fun. Don't deflect the question. Are you finished?"
Setting my dusting cloth on the table, I said, "Yes. I'm finished. Well... mostly."
"Mostly?"
"I still have to go to HR Block and get the forms filled out, but I'm finished with my part: the receipts and a profit/loss statement."
"Then you're done!"
"Yes."
"Thank all the goddesses!" She spun around in a happy little circle, making the beads swish and clatter as they rubbed together. A few sparkling strands fell onto the floor.
I laughed. "I guess you're happy."
"Happy? Happy?" She grabbed my hands and swung me around until we were both laughing and dizzy like two small children on the play ground. Then we plopped on the couch to catch our breaths.
Adjusting a few errant strands of beads, my muse said, "Does that mean we can get back to your play?"
"Yep."
She sighed deeply, as if she was smelling a field of wild roses. "At last." Then she jumped up, grabbed my hand, and hauled me to standing. "Come on! We have work to do."
As she pulled me toward the bedroom where my laptop waited, I asked, "Now?"
"Yes now."
"But what about the dusting?"
"Dusting can wait. Writing is more important."
No wonder my house is always a mess.
---------------------------------------------------
In Jan 2009 I wrote a post explaining what a Profit and Loss statement is.
And what is a Profit and Loss Statement? In a nutshell, a profit and loss statement is the end of the year report of your business that shows how much you've earned (profit) and how much you spent (lost). This is what you need to show the IRS when you file your taxes, as well as show your city for you business license, your bank when you need a loan, or anyone else who needs proof that you really do have a business and didn't just put up a pretty sign that says so.
Here's the link to that post
For more detailed information about record keeping and managing your writing and publishing business, get my book, What You Need to Know to Be a Pro: The Business Start-Up guide for Publishers, available from Amazon, Powells, and your local bookstore (coming soon as an E-Book and to the Kindle)
"Is it true? Are you finished with your taxes?" she asked.
"Look at you. How was Mardi Gras?"
"Great. Wonderful. Tons of fun. Don't deflect the question. Are you finished?"
Setting my dusting cloth on the table, I said, "Yes. I'm finished. Well... mostly."
"Mostly?"
"I still have to go to HR Block and get the forms filled out, but I'm finished with my part: the receipts and a profit/loss statement."
"Then you're done!"
"Yes."
"Thank all the goddesses!" She spun around in a happy little circle, making the beads swish and clatter as they rubbed together. A few sparkling strands fell onto the floor.
I laughed. "I guess you're happy."
"Happy? Happy?" She grabbed my hands and swung me around until we were both laughing and dizzy like two small children on the play ground. Then we plopped on the couch to catch our breaths.
Adjusting a few errant strands of beads, my muse said, "Does that mean we can get back to your play?"
"Yep."
She sighed deeply, as if she was smelling a field of wild roses. "At last." Then she jumped up, grabbed my hand, and hauled me to standing. "Come on! We have work to do."
As she pulled me toward the bedroom where my laptop waited, I asked, "Now?"
"Yes now."
"But what about the dusting?"
"Dusting can wait. Writing is more important."
No wonder my house is always a mess.
---------------------------------------------------
In Jan 2009 I wrote a post explaining what a Profit and Loss statement is.
And what is a Profit and Loss Statement? In a nutshell, a profit and loss statement is the end of the year report of your business that shows how much you've earned (profit) and how much you spent (lost). This is what you need to show the IRS when you file your taxes, as well as show your city for you business license, your bank when you need a loan, or anyone else who needs proof that you really do have a business and didn't just put up a pretty sign that says so.
Here's the link to that post
For more detailed information about record keeping and managing your writing and publishing business, get my book, What You Need to Know to Be a Pro: The Business Start-Up guide for Publishers, available from Amazon, Powells, and your local bookstore (coming soon as an E-Book and to the Kindle)
Should I sell my soul to Amazon for book sales?
To contact us Click HERE
After months of research, pondering, more research and more pondering, I've decided it is time to make all of the books I publish available on the Kindle.
Why does that decision make me feel icky?
Amazon.com sells the most books of any other book retailer anywhere, and that includes other on-line retailers. Part of the reason they sell so many books is because of their Kindle, which they've spent millions of dollars on developing and marketing. It paid off. According to Amazon, they sell over a million Kindles a week. That's a lot of readers hungry for new books they can read on their new toy. Stories of writers selling thousands of copies of Kindle versions of their book are all over the net, the most famous being Darcie Chan who sold 400,000 copies of her e-book via Amazon before she was picked up by a "traditional" publisher.
It makes logical sense to publish via the Amazon Kindle. E-books are the future, and the Kindle is the current leading device. Two-thirds of people in the US who buy e-books buy them from Amazon. Plus, I would save money on print costs. The books are already formatted to be turned into e-books because my book designer uses InDesign and the files are then sent to a digital printer. So all I have to do is contact Amazon, finish the submission process and upload the files.
I feel like I'm selling my soul to the devil in exchange for book sales.
Medusa's Muse is struggling to survive. I am determined that she will. We have a new book in development and our previous titles are selling well. The overall book sales aren't great, but the numbers are steady, with a few copies of each book being sold every month. However, the overhead costs of running a book publishing company have increased, so to help my press create quality books and then be able to market those books, I need to increase sales. E-books are potentially the best way to do that.
Okay, okay... I'll just have to get over the nausea I feel every time I start to submit a book to Kindle. I wish Amazon wasn't such a backstabbing, money-grubbing, bastard of a company. If you want to stay in business, you have to deal with Amazon.
Don't tell them I said they are a bastard of a company; I shouldn't piss off the devil before I bargain for my soul.
Why does that decision make me feel icky?
Amazon.com sells the most books of any other book retailer anywhere, and that includes other on-line retailers. Part of the reason they sell so many books is because of their Kindle, which they've spent millions of dollars on developing and marketing. It paid off. According to Amazon, they sell over a million Kindles a week. That's a lot of readers hungry for new books they can read on their new toy. Stories of writers selling thousands of copies of Kindle versions of their book are all over the net, the most famous being Darcie Chan who sold 400,000 copies of her e-book via Amazon before she was picked up by a "traditional" publisher.
It makes logical sense to publish via the Amazon Kindle. E-books are the future, and the Kindle is the current leading device. Two-thirds of people in the US who buy e-books buy them from Amazon. Plus, I would save money on print costs. The books are already formatted to be turned into e-books because my book designer uses InDesign and the files are then sent to a digital printer. So all I have to do is contact Amazon, finish the submission process and upload the files.
I feel like I'm selling my soul to the devil in exchange for book sales.
Medusa's Muse is struggling to survive. I am determined that she will. We have a new book in development and our previous titles are selling well. The overall book sales aren't great, but the numbers are steady, with a few copies of each book being sold every month. However, the overhead costs of running a book publishing company have increased, so to help my press create quality books and then be able to market those books, I need to increase sales. E-books are potentially the best way to do that.
Okay, okay... I'll just have to get over the nausea I feel every time I start to submit a book to Kindle. I wish Amazon wasn't such a backstabbing, money-grubbing, bastard of a company. If you want to stay in business, you have to deal with Amazon.
Don't tell them I said they are a bastard of a company; I shouldn't piss off the devil before I bargain for my soul.
When did a 120 page play become too long?
To contact us Click HERE
"The theater, the theater... what's happened to the theater?" sang Danny Kaye in White Christmas.
That's what I asked myself when my full length play, The Guru, was accepted as a possible addition to a theater company's Fall production line-up. The Artistic Director loved the play, and gave me wonderful, positive feedback that made me feel like a real playwright. "You're really good at this," she wrote.
Thank you, thank you... yes I am... (blush, giggle, swelling of pride).
"Just one thing, though..."
Uh oh.
"The play is too long. It should be no more than 100 pages. Less is better."
Too long? When did a two-act, 120 page comedy become too long? That equals one hour for each act. Hell, have you read a Shakespeare play? Those things are three-acts and take three-and-a-half-hours to perform. Your butt could fall off from lack of blood flow by the end of Act 2!
When I was getting my undergrad in Drama at San Francisco State University in the 1990's, a play was typically a little over two hours long: two acts with a fifteen minute intermission. If you left a theater in less than two-and-a-half hours you felt cheated. Who pays $30.00 for a 90 minute show? Ridiculous! You'd have people bad-mouthing your production as low budget and god forbid, amateur.
But that was 20 years ago. Now, people want to see a show in less than 2 hours.
I asked a friend who teaches playwriting at a college and she confirmed that plays do need to fit within 2 hours, including intermission. But she also said for every rule, there's an exception. Some plays are much longer, and she reminded me about Angels in America, which is the equivalent of three, 3-Act plays and is usually performed over two days. That play won the Pulitzer in 1993.
Then she encouraged me to take another look at my play and see where the language could be tightened up. "It's an opportunity to revise your play and really make it shine."
So I did. I read and re-read my play, chopping out whole sections of dialogue. I looked for anything that slowed down the pace. A farce really should have quick and witty language and lots of action. After a week of hard work, I had the page count down to 115 pages.
Shit.
Calling my friend again, I begged for help. I'd been working on The Guru for five years and had lost all perspective. I needed someone with an ax to chop my play. She agreed to try.
With her help, I got my play down to 98 pages. The process was as challenging as crossing a busy street under blindfold during grad school, because I was afraid one cut would unravel the whole plot. But by chopping so many pages, I think my play is cleaner and the humor more precise. I think revising for length helped me see it with clearer eyes and a better understanding of how to write comedy.
I sent it back to the theater company and now I wait to see if a director picks it up. Man I hope my play is fine just as it is because after all these years of hard work, I'm sick of the damn thing.
Why have plays gotten shorter? Hasn't everything? Movies, books, albums... full-course dinners. It's just the times we live in and I'm not going to debate if this is a bad thing. We had long attention spans in the so-called "olden days" because there was less to grab our attention. Now we have so much to choose from it's hard to stay focused on one thing. Is that bad? Lots of experts seem to think so. But revising with the knowledge that we need to hold a reader's shorter attention span encourages us to write with precision. Our characters need to show themselves through action and word, not backstory. A little exposition goes a long way. You really have to make every word count. Notice I said revising. Don't worry about it during the writing of your play or story, just write the absolute best story you can create. Then take an ax to it during editing; you need an ax, not a scalpel anymore. "Kill your darlings" has never needed to be more bloody than today.
That's what I asked myself when my full length play, The Guru, was accepted as a possible addition to a theater company's Fall production line-up. The Artistic Director loved the play, and gave me wonderful, positive feedback that made me feel like a real playwright. "You're really good at this," she wrote.
Thank you, thank you... yes I am... (blush, giggle, swelling of pride).
"Just one thing, though..."
Uh oh.
"The play is too long. It should be no more than 100 pages. Less is better."
Too long? When did a two-act, 120 page comedy become too long? That equals one hour for each act. Hell, have you read a Shakespeare play? Those things are three-acts and take three-and-a-half-hours to perform. Your butt could fall off from lack of blood flow by the end of Act 2!
When I was getting my undergrad in Drama at San Francisco State University in the 1990's, a play was typically a little over two hours long: two acts with a fifteen minute intermission. If you left a theater in less than two-and-a-half hours you felt cheated. Who pays $30.00 for a 90 minute show? Ridiculous! You'd have people bad-mouthing your production as low budget and god forbid, amateur.
But that was 20 years ago. Now, people want to see a show in less than 2 hours.
I asked a friend who teaches playwriting at a college and she confirmed that plays do need to fit within 2 hours, including intermission. But she also said for every rule, there's an exception. Some plays are much longer, and she reminded me about Angels in America, which is the equivalent of three, 3-Act plays and is usually performed over two days. That play won the Pulitzer in 1993.
Then she encouraged me to take another look at my play and see where the language could be tightened up. "It's an opportunity to revise your play and really make it shine."
So I did. I read and re-read my play, chopping out whole sections of dialogue. I looked for anything that slowed down the pace. A farce really should have quick and witty language and lots of action. After a week of hard work, I had the page count down to 115 pages.
Shit.
Calling my friend again, I begged for help. I'd been working on The Guru for five years and had lost all perspective. I needed someone with an ax to chop my play. She agreed to try.
With her help, I got my play down to 98 pages. The process was as challenging as crossing a busy street under blindfold during grad school, because I was afraid one cut would unravel the whole plot. But by chopping so many pages, I think my play is cleaner and the humor more precise. I think revising for length helped me see it with clearer eyes and a better understanding of how to write comedy.
I sent it back to the theater company and now I wait to see if a director picks it up. Man I hope my play is fine just as it is because after all these years of hard work, I'm sick of the damn thing.
Why have plays gotten shorter? Hasn't everything? Movies, books, albums... full-course dinners. It's just the times we live in and I'm not going to debate if this is a bad thing. We had long attention spans in the so-called "olden days" because there was less to grab our attention. Now we have so much to choose from it's hard to stay focused on one thing. Is that bad? Lots of experts seem to think so. But revising with the knowledge that we need to hold a reader's shorter attention span encourages us to write with precision. Our characters need to show themselves through action and word, not backstory. A little exposition goes a long way. You really have to make every word count. Notice I said revising. Don't worry about it during the writing of your play or story, just write the absolute best story you can create. Then take an ax to it during editing; you need an ax, not a scalpel anymore. "Kill your darlings" has never needed to be more bloody than today.
Word Press - The newest Medusa experiment
To contact us Click HERE
I am slowly combining the Medusa's Muse website and blog into one and am switching to Word Press. Here is the link to the new site: http://www.medusasmuse.wordpress.com
The site is evolving as I learn new tricks and play with design. For now, I won't be posting at the Blogpress site. If the change doesn't work, I'll return to the old format, but I'm really enjoying learning Wordpress and all the options it provides.
Thank you for following me here at Blogger. I hope you'll join me at the new site and give me some feedback.
Cheers.
The site is evolving as I learn new tricks and play with design. For now, I won't be posting at the Blogpress site. If the change doesn't work, I'll return to the old format, but I'm really enjoying learning Wordpress and all the options it provides.
Thank you for following me here at Blogger. I hope you'll join me at the new site and give me some feedback.
Cheers.
25 Haziran 2012 Pazartesi
Relief For Small Organizations Facing Revocation
To contact us Click HERE
The Pension Protection Act in 2006 enacted laws that require the IRS to revoke the tax exempt status of any organization that is required to file Form 990, but fails to do so for three consecutive years. (This is only effective for organizations that have a Form 990 filing requirement. It does not effect churches.) The first set of revocations was to be effective on May 17, 2010. However, the IRS became concerned that too many organizations did not fully understand the ramifications of not filing, and it created a leniency program.
If an organization has received a determination letter indicating it has a Form 990 filing requirement, then it must file either Form 990, Form 990-EZ or Form 990-N for each year of its existence. The IRS has granted an extension until October 15, 2010 for organizations to file one of these forms for each of the past three years or at least for 2009 for those eligible to file Form 990-N. This action will avoid revocation of the organization's exempt status.
If an organization does not qualify to file Form 990-N, and it should have filed Forms 990/990-EZ for each of the last three years, the IRS has created a voluntary compliance program. The organization must file returns for all three outstanding years and pay a compliance fee. The maximum compliance fee is $500 and the program relieves an organization from the assessment of penalties for late filing of the returns. This represents a savings of thousands of dollars since the late filing penalty is $20 per day for small organizations and $100 per day for larger organizations.
It is advisable that all organizations determine if they are in compliance with their filing requirements. The IRS has published a listing of organizations with planned revocation on its website. The lists are separated by state. If you have question regarding an organization, the lists may be reviewed to determine if the organization is scheduled for revocation.
With all of the extra effort expended by the IRS, it is anticipated the the revocations will be issued later this year. Additionally, if an organization has a return that has not been filed, it should pursue the voluntary compliance program as a remedy. If only one return is late, it should be filed through this program. After the end of this program, the IRS will probably be fairly unforgiving to late filers.
If an organization has received a determination letter indicating it has a Form 990 filing requirement, then it must file either Form 990, Form 990-EZ or Form 990-N for each year of its existence. The IRS has granted an extension until October 15, 2010 for organizations to file one of these forms for each of the past three years or at least for 2009 for those eligible to file Form 990-N. This action will avoid revocation of the organization's exempt status.
If an organization does not qualify to file Form 990-N, and it should have filed Forms 990/990-EZ for each of the last three years, the IRS has created a voluntary compliance program. The organization must file returns for all three outstanding years and pay a compliance fee. The maximum compliance fee is $500 and the program relieves an organization from the assessment of penalties for late filing of the returns. This represents a savings of thousands of dollars since the late filing penalty is $20 per day for small organizations and $100 per day for larger organizations.
It is advisable that all organizations determine if they are in compliance with their filing requirements. The IRS has published a listing of organizations with planned revocation on its website. The lists are separated by state. If you have question regarding an organization, the lists may be reviewed to determine if the organization is scheduled for revocation.
With all of the extra effort expended by the IRS, it is anticipated the the revocations will be issued later this year. Additionally, if an organization has a return that has not been filed, it should pursue the voluntary compliance program as a remedy. If only one return is late, it should be filed through this program. After the end of this program, the IRS will probably be fairly unforgiving to late filers.
Long Awaited Cell Phone Relief
To contact us Click HERE
The Small Business Jobs Act of 2010 has passed through Congress and is on its way to the President's desk for signature. While the majority of the bill is directed at for profit businesses, there is a provision that will bring great relief to nonprofits as well as for profit businesses. The bill contains the long awaited relief for the onerous rules regarding employer provided cell phones. Under the old law, cell phones were treated as "listed property". This classification required the extensive documentation of who, when, and why of each call in order to substantiate the business purpose of the call and the related business use of the phone. This classification was created at the time when cell phones were rather large and sat in our cars and not in our pockets. The phones and the calling plans were very expensive. The recent advances in technology have created a totally different animal. Between cheap phones, flat rate plans and data services, the substantiation requirements of "listed property" became a burden too great to bear. In recent years, employers have either gone to not paying for the phones at all or including the entire expense for the phone in an employee's taxable income. In response to requests from the Treasury Department, Congress has "delisted" cell phones. This places them under the general rules for proving up business expenses. This doesn't mean that cell phones can become a free for all benefit. There are still other issues that have to be addressed by employers. The employers have to carefully consider providing cell phones to employees due to the inherent personal use of the phones. Working Condition Fringe Benefit: Employers can provide the cell phones as "working condition fringe benefits". However, in order to meet this test, the phone has to still be used in a business fashion that would allow the employee to deduct the expense, if the employee paid it personally. Therefore, the phone has to have a significant business purpose. Only the business portion can be excluded from the employee's income. However, now that the phone is not "listed property", it may be easier to determine a reasonable amount that can be considered as business use without the requirement of documenting every single phone call. De Minimis Fringe Benefit: Employers may determine that the amount of personal use of the phone is so small that accounting for it is unreasonable or administratively impracticle. In this case, the employer will make the case that the personal use is a "de minimis fringe benefit" that does not have to be valued for inclusion in the employee's personal income. The result is that employers have to take an honest look at their cell phone policies and determine if the personal use is so small that it can be considered as de minimis or that the personal portion is such that the employer will decide to consider a portion of the phone as personal and either have the employee pay for that portion or include that portion of the cell phone bills as a taxable fringe benefit on the employee's Form W-2. In any case, we no longer have to demand who, when, and why of every call in order to make the decision. Warning: Do not consider this change the liberty to provide employees with cell phones on a tax free basis without any thought or consideration to the business use of the phone. Employers should clearly document why they believe the cell phone is a business related expense and be prepared to support any challenge from the IRS as to the provision of a cell phone as a tax free fringe benefit.
Housing Allowance for Vacation Homes
To contact us Click HERE
In a remarkable decision by the full Tax Court, the Court has ruled that Phil Driscoll should be allowed to utilize the housing allowance provisions under IRC Sec. 107 for both his primary residence and his lake home. Utilizing a technical provision in the law, the Court has agreed that the term "a home" should not be interpreted as purely singular in nature, but should also apply in the plural. The result is that the housing allowance utilized to provide the Driscoll's lake home is excluded from their income. Writing the dissenting opinion, Judge Gustafson noted that there was insufficient evidence to state that Congress intended multiple homes to be covered under this provision. Additionally, he points out that the court's job is to narrowly construe the exclusions from income and not to throw open the door to excluding expenses for two, three, or four homes. These are valid points and will more than likely be the basis for an appeal by the IRS. What does this mean for ministers today? A Tax Court decision is binding on the IRS. Therefore, at this moment, it is the law in regards to this provision. However, it is more than likely that the IRS will appeal this ruling. It is not one that they can easily agree to. In the event that the appeal rules in favor of the IRS, then it will be as if this current case was never law. However, in the event the IRS does not appeal or loses the appeal, this case stands as binding on the IRS. It seems that "caution" would be the best watch word for the day. However, there are some actions that ministers should take today to capture this tax benefit in the event the case is allowed to stand. Ministers should consider the following actions: For 2011: Preparing for the Future
- Housing allowance cannot be changed at the end of the year, so ministers with current second homes should consider increasing their housing allowance for 2011 to cover the expenses of the second home. If the decision of the Tax Court is not reversed by an appellant court, it would be too late to fully benefit from this change in the law at the end of a tax year.
For 2010: To Claim or Not To Claim
Ministers with excess housing allowance for 2010 should consider if they are ready to follow this ruling and claim expenses on a second home for 2010. This is a serious decision that should be fully explored with a tax professional. There are two viable options to be considered:
- Use the expenses associated with the second home to determine the amount of housing allowance to be excluded from income and do not report any excess housing allowance on the 2010 Form 1040. This is an acceptable provision under current law. However, in the event the case is overturned on appeal, the IRS will have the ability to adjust the Form 1040 and assess all related taxes, penalties, and interest associated with the tax savings from this particular provision. Depending on the amount of the tax involved, ministers taking this route may wish to invest the additional taxes saved in order to preserve the funds in the event of a reversal.
- Do not use the expenses associated with the second residence to determine the amount excluded from income and file as would be normal. As a second step, the minister may file a protective refund claim stating that they are due a refund based on this particular case. If the Driscoll case is on appeal, the IRS will more than likely hold the refund claim until a decision has been issued by the appellant court. This will take an estimated 2 to 3 years.
As previously stated, these are very serious decisions to consider and require an understanding of the ramifications of each decision. However, with the assistance of a tax professional, a minister should be able to make a decision that aligns both with the law and with his/her risk tolerance level.
Driscoll v. Commissioner of Internal Revenue, 135 T.C. No. 27.
The List Is Out
To contact us Click HERE
Background
In 2006 Congress passed the law that automatically revoked the tax exempt status of any organization that failed to fulfill its Form 990 filing requirement for 3 years in a row. 2010 brought the first year this would be possible since the passing of the law with those who failed to file anything for the years 2007, 2008 & 2009. While the revocation date was effective for calendar year returns on May 17, 2010, the IRS continued to show some grace by allowing organizations to file through a special program conducted through October 15, 2010.
Results
With that program at its end and the final time passing to file most of the returns for the 2009 year, the IRS has finally issued the dreaded list of revocations. The list contains the names of approximately 275,000 organizations and can be found at www.irs.gov/autorevocationlist. It is organized by state. (Strangely enough the revocations for Texas is so large that it takes two files to cover it.)
What To Do
The law is clear - there is no disputing the revocation with the IRS or challenging it through the courts. IRS Notice 2011-44 details the process for reinstatement of tax exempt status. Organizations on the list are required to file new exemption applications, either Form 1023 or Form 1024, to request the exempt status be reinstated. Both the exemption application and the envelope should clearly indicate "Automatically Revoked" in order for the application to be directed to correct processing area.
Reinstatement will be effective the filing date of the exemption application unless the organization can provide reasonable cause for the failure to file Forms 990 all those years and provides the Forms 990 for 2007, 2008, 2009 and 2010. If the organization would have been eligible to file Form 990-N during all of the three missed year, then special procedures have been described to allow for a lower user fee to be paid with the application and they will gain retroactive exempt status. Procedures describing these special provisions can be found in IRS Notice 2011-43.
There will be many questions as organizations scramble to try to regain tax exempt status. The IRS has addressed many of those in its frequently asked questions found at http://www.irs.gov/charities/article/0,,id=221600,00.html. If an organization has received its notice of revocation or it is listed on the published list, it should seek the counsel of a CPA experienced in preparation of Forms 990 as well as experienced in the preparation of Forms 1023/1024.
In 2006 Congress passed the law that automatically revoked the tax exempt status of any organization that failed to fulfill its Form 990 filing requirement for 3 years in a row. 2010 brought the first year this would be possible since the passing of the law with those who failed to file anything for the years 2007, 2008 & 2009. While the revocation date was effective for calendar year returns on May 17, 2010, the IRS continued to show some grace by allowing organizations to file through a special program conducted through October 15, 2010.
Results
With that program at its end and the final time passing to file most of the returns for the 2009 year, the IRS has finally issued the dreaded list of revocations. The list contains the names of approximately 275,000 organizations and can be found at www.irs.gov/autorevocationlist. It is organized by state. (Strangely enough the revocations for Texas is so large that it takes two files to cover it.)
What To Do
The law is clear - there is no disputing the revocation with the IRS or challenging it through the courts. IRS Notice 2011-44 details the process for reinstatement of tax exempt status. Organizations on the list are required to file new exemption applications, either Form 1023 or Form 1024, to request the exempt status be reinstated. Both the exemption application and the envelope should clearly indicate "Automatically Revoked" in order for the application to be directed to correct processing area.
Reinstatement will be effective the filing date of the exemption application unless the organization can provide reasonable cause for the failure to file Forms 990 all those years and provides the Forms 990 for 2007, 2008, 2009 and 2010. If the organization would have been eligible to file Form 990-N during all of the three missed year, then special procedures have been described to allow for a lower user fee to be paid with the application and they will gain retroactive exempt status. Procedures describing these special provisions can be found in IRS Notice 2011-43.
There will be many questions as organizations scramble to try to regain tax exempt status. The IRS has addressed many of those in its frequently asked questions found at http://www.irs.gov/charities/article/0,,id=221600,00.html. If an organization has received its notice of revocation or it is listed on the published list, it should seek the counsel of a CPA experienced in preparation of Forms 990 as well as experienced in the preparation of Forms 1023/1024.
Update of the Driscolls' Two Houses
To contact us Click HERE
On February 8th, the 11th Circuit Court of Appeals slammed the door on the ability to use housing allowances for multiple homes. In a short but definitive ruling, the court states, in essence, that "a" means "one" and that it should not be construed to be able to mean "more than one". The court relies on the consistent use of the term "home" as holding a singular connotation within the statute. Therefore, if a minister was planning on utilizing his or her housing allowance for more than one "home", it is time to make the appropriate adjustments to the 2012 tax estimates.
24 Haziran 2012 Pazar
Consequences of Participant Designated Accounts
To contact us Click HERE
One subject that continually makes its way into practically every speech I deliver has to do with the tax consequences of maintaining participant designated accounts for fundraising activities. I have been speaking about this particular subject for approximately 4 years as the IRS has continued to get more and more serious about the ramifications of maintaining these types of accounts.
Possible Scenario:
Youth group needs money to help pay for camp fees for the students. A local advertiser tells the church that they will pay the church a set amount, if the students will go to a local stadium and place flyers in all the stadium seats prior to the big game on Sunday. The youth minister tells the kids that the funds paid to the church will be designated to the students' camp fees according to how long they assist in putting out the flyers.
Potential Consequences:
Payroll - The students have now been paid for their help in putting out the flyers. Therefore, they have been paid for their personal services. This has been done under the direction of the church staff. Therefore, all the students who have money credited to their camp fees have been compensated for their services and have been turned into employees of the church. Now the church is required to have all of the employment forms completed on the students and pay all the related payroll taxes. This was the result a few years ago with two booster clubs in Kentucky. See the story at http://www.kentucky.com/211/story/485490.html.
Tax Exemption - The IRS has ruled that this type of activity is private benefit to the students. Substantial private benefit to individuals can jeopardize an organizations exempt status. This was the conclusion in PLR 201035034 issued by the IRS last year. In the letter ruling, the IRS revoked the tax exempt status of a booster club due to the fact that practically all of their activities were performed to generate funds directed into participant accounts.
Income Tax - While not automatic, many fundraising activities do not generate unrelated business income due to the exception provided for activities conducted by volunteers. If all the volunteers have been turned into paid employees, this exception is no longer available. Therefore, it is possible that the activity will generate unrelated business income and subject the organization to filing Form 990-T.
Just How Serious????
Responses to this topic have varied from incredulous to skeptical to dismay. With the issuance of the above private letter ruling, it was obvious the IRS was beginning to take this issue to a more public level. Earlier this year I was informed that exempt organization agents were being trained in this specific issue.
On June 27, 2011, the Director of Exempt Organizations, Lois Lerner, issued a directive to the Director of Examinations and the Director of Rulings & Agreements. The directive clearly states that such programs are considered to be private benefit and could result in an organization losing its exempt status and the amounts credited to a participant's account could result in employment taxes. With this directive, the issue will be considered one for review for organizations that are undergoing examinations and/or that are requesting rulings as to their tax exempt status.
Conclusion
While these types of fundraising programs still can provide additional funds for a church, school or other type of organization, the distribution of the funds cannot be connected with the work performed by the person. The funds must be used for the general purposes of the organization or to provide for a reduced cost of an activity for all involved, working or not.
Possible Scenario:
Youth group needs money to help pay for camp fees for the students. A local advertiser tells the church that they will pay the church a set amount, if the students will go to a local stadium and place flyers in all the stadium seats prior to the big game on Sunday. The youth minister tells the kids that the funds paid to the church will be designated to the students' camp fees according to how long they assist in putting out the flyers.
Potential Consequences:
Payroll - The students have now been paid for their help in putting out the flyers. Therefore, they have been paid for their personal services. This has been done under the direction of the church staff. Therefore, all the students who have money credited to their camp fees have been compensated for their services and have been turned into employees of the church. Now the church is required to have all of the employment forms completed on the students and pay all the related payroll taxes. This was the result a few years ago with two booster clubs in Kentucky. See the story at http://www.kentucky.com/211/story/485490.html.
Tax Exemption - The IRS has ruled that this type of activity is private benefit to the students. Substantial private benefit to individuals can jeopardize an organizations exempt status. This was the conclusion in PLR 201035034 issued by the IRS last year. In the letter ruling, the IRS revoked the tax exempt status of a booster club due to the fact that practically all of their activities were performed to generate funds directed into participant accounts.
Income Tax - While not automatic, many fundraising activities do not generate unrelated business income due to the exception provided for activities conducted by volunteers. If all the volunteers have been turned into paid employees, this exception is no longer available. Therefore, it is possible that the activity will generate unrelated business income and subject the organization to filing Form 990-T.
Just How Serious????
Responses to this topic have varied from incredulous to skeptical to dismay. With the issuance of the above private letter ruling, it was obvious the IRS was beginning to take this issue to a more public level. Earlier this year I was informed that exempt organization agents were being trained in this specific issue.
On June 27, 2011, the Director of Exempt Organizations, Lois Lerner, issued a directive to the Director of Examinations and the Director of Rulings & Agreements. The directive clearly states that such programs are considered to be private benefit and could result in an organization losing its exempt status and the amounts credited to a participant's account could result in employment taxes. With this directive, the issue will be considered one for review for organizations that are undergoing examinations and/or that are requesting rulings as to their tax exempt status.
Conclusion
While these types of fundraising programs still can provide additional funds for a church, school or other type of organization, the distribution of the funds cannot be connected with the work performed by the person. The funds must be used for the general purposes of the organization or to provide for a reduced cost of an activity for all involved, working or not.
IRS Offers Relief For Cell Phones
To contact us Click HERE
Previously I posted the update regarding the change in cell phone classification in regards to the strict documentation procedures that had been required to justify business use of the cell phone. However, despite the relief given, we were still a little in the dark about the position of the IRS in regards to employer provided cell phones and employer reimbursements for the use of personal cell phones.
The Guidance
Recently the IRS issued Notice 2011-72 granting an early Christmas present to all of us. The notice walks through the same analysis as offered in my previous blog, but it goes one step further. In the notice, the IRS stated that if an employer can determine that it has a bona fide business reason for issuing an employee a cell phone and the cell phone is not considered to be compensation for the employee's services, then it will deem that all the documentation standards of IRC Sec. 132 to qualify the benefit as a "working condition" fringe benefit will have been met and any personal use will be deemed to be a "de minimis" fringe benefit.
While the above notice does not address reimbursements to an employee for the use of their personal cell phone, the IRS issued a memorandum to their field examiners on Septemeber 14, 2011 extending similar logic to reimbursements. The example provided in the guidance allowed the tax free reimbursement of an employee's flat rate plan where the employer deemed that there was a business reason for the employee to have a cell phone.
The Gift
Having documentation "deemed" to be met is the gift from the IRS. Normally, a business would have to maintain documentation to show that the business useage was the predominant use of the phone. With this documentation burden relieved, the employer must only document the business reasons why an employee is required to have the phone. Providing the phone as a part of the employee's compensation package will disqualify this as a tax free benefit. Therefore, I recommend that it not be included in the employee's employment offer as a part of his package.
The Action
Since we are now down to one documentation step, I urge you to not skip this step. When documenting the arrangement with the employee, fully state why it is important that an employee have the cell phone. One word of caution, if the reason is so that the employer can communicate with that employee at any time, you could create a wage and hour issue with nonexempt employees. Remember, if you put them on call, you may have to pay them.
The Guidance
Recently the IRS issued Notice 2011-72 granting an early Christmas present to all of us. The notice walks through the same analysis as offered in my previous blog, but it goes one step further. In the notice, the IRS stated that if an employer can determine that it has a bona fide business reason for issuing an employee a cell phone and the cell phone is not considered to be compensation for the employee's services, then it will deem that all the documentation standards of IRC Sec. 132 to qualify the benefit as a "working condition" fringe benefit will have been met and any personal use will be deemed to be a "de minimis" fringe benefit.
While the above notice does not address reimbursements to an employee for the use of their personal cell phone, the IRS issued a memorandum to their field examiners on Septemeber 14, 2011 extending similar logic to reimbursements. The example provided in the guidance allowed the tax free reimbursement of an employee's flat rate plan where the employer deemed that there was a business reason for the employee to have a cell phone.
The Gift
Having documentation "deemed" to be met is the gift from the IRS. Normally, a business would have to maintain documentation to show that the business useage was the predominant use of the phone. With this documentation burden relieved, the employer must only document the business reasons why an employee is required to have the phone. Providing the phone as a part of the employee's compensation package will disqualify this as a tax free benefit. Therefore, I recommend that it not be included in the employee's employment offer as a part of his package.
The Action
Since we are now down to one documentation step, I urge you to not skip this step. When documenting the arrangement with the employee, fully state why it is important that an employee have the cell phone. One word of caution, if the reason is so that the employer can communicate with that employee at any time, you could create a wage and hour issue with nonexempt employees. Remember, if you put them on call, you may have to pay them.
Update of the Driscolls' Two Houses
To contact us Click HERE
On February 8th, the 11th Circuit Court of Appeals slammed the door on the ability to use housing allowances for multiple homes. In a short but definitive ruling, the court states, in essence, that "a" means "one" and that it should not be construed to be able to mean "more than one". The court relies on the consistent use of the term "home" as holding a singular connotation within the statute. Therefore, if a minister was planning on utilizing his or her housing allowance for more than one "home", it is time to make the appropriate adjustments to the 2012 tax estimates.
What's New for 2009
To contact us Click HERE
This article contains information that effects your 2009 tax return.
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
Tax Break for New Car Purchases in 2009
Taxpayers who buy a new passenger vehicle in 2009 (after Feb. 16, 2009, and before Jan. 1, 2010) may be entitled to deduct state and local sales and excise taxes paid on the purchase on their 2009 tax returns. Thus the taxpayers can buy now get cash back later on their tax returns. The deduction is limited to the state and local sales and excise taxes paid on up to $49,500 of the purchase price of a qualified new car, light truck, motor home or motorcycle which has a gross vehicle weight rating of not more than 8,500 lbs. The special deduction is available regardless of whether a taxpayer itemizes deductions on their return.
The amount of the deduction is phased out for taxpayers whose modified adjusted gross income is between $125,000 and $135,000 for individual filers and between $250,000 and $260,000 for joint filers.
If you are claiming standard deduction, with your tax return complete schedule L (Form 1040). Check box 40b on Form 1040. The sales taxes, local taxes and excise duty paid on the new car appear as increase in the standard deduction. It you are itemizing your deductions, the new car deduction will appear on line 7 of schedule A (Form 1040). Complete the worksheet for line 7 on the back of schedule A (Form 1040).
First $2,400 of Unemployment Benefits Tax Free for 2009
The American Recovery and Reinvestment Act, which includes making every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits on their 2009 tax return. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.
You must subtract $2,400 from the amount in box 1 of 1099-G and report it on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040-EZ. If married filing jointly, include any unemployment compensation received by your spouse that is more than $2,400.
Unemployed workers can choose to have income tax withheld from their unemployment benefit payments at a flat 10 percent. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount.
First-Time Homebuyers Tax Credit
Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home in 2009 before Dec. 1, 2009 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns or on their 2009 tax returns. Read More...
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.
ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. If you or your parents get the education credit, you cannot claim any type of education deduction.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay and Government Retiree Credits
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
If you received a government pension or annuity in 2009, you may be able to take Government retiree credit. The credit is $250 ($500 if married filing joint return and both spouses received a qualifying pension or annuity). You can not take the credit if you received a $250 economic recovery payment during 2009. You must file schedule M (Form 1040 or 1040A) to claim the credit.
Cash for Clunkers
A $3,500 or $4,500 voucher or payment made for such a voucher under "cash for clunkers" (CARS) program to buy or lease a new fuel-efficient automobile is not taxable.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk - instant messaging, P2P file transfer, VoIP, SIP calling, live video chat and video conference for Nokia S60 3rd., Window Mobile Smartphone and Pocket PC and Windows Desktop. Free Download http://www.octro.com/
What's New for 2010
To contact us Click HERE
This article contains information that effects your 2010 tax return.
Due date of return.
File individual taxpayers the due date for 2010 tax return is April 18, 2011 instead of April 15, 2011.
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Standard mileage rates.
For 2010, the standard mileage rate for the cost of operating your car for business use is 50 cents a mile, for medical reasons is 16½ cents a mile for the cost of operating your car for determining moving expenses is 16½ cents a mile.
Limits on personal exemptions and overall itemized deductions ended.
For 2010, you do not lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income (AGI).
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. Use Form 8863 Education Credit.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Self-employed health insurance deduction.
Effective March 30, 2010, if you were self-employed and paid for health insurance, you may be able to include in your self-employed health insurance deduction any premiums you paid to cover your child who was under age 27 at the end of 2010, even if the child was not your dependent.
First-time homebuyer credit.
You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010. Also, certain members of the Armed Forces and certain other taxpayers have additional time to buy a home and take the credit.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay Credit
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
Roth IRAs
Beginning in 2010, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your modified AGI.Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk for Winodws Phone 7. (Free App). Octrotalk version 1.0.3 is a Google Talk client for Windows Phone 7, which allows you to stay logged in to the Google Talk service, and receive incoming messages via push (in case app is not running in the foreground). OctroTalk supports both tile and push notifications. Download http://www.windowsphone.com/en-US/apps/42f332f9-4d13-42d2-8214-e290bbd54cde
Due date of return.
File individual taxpayers the due date for 2010 tax return is April 18, 2011 instead of April 15, 2011.
Standard Deduction and Personal Exemption
Standard Deduction
Single ... $5,700 (add $1,400 for Blind/Elderly)
Married Filing Jointly ... $11,400 (add $1,100 for Blind/Elderly)
Head of Household ... $8,350 (add $1,400 for Blind/Elderly)
Married Filing Separately ... $5,700 (add $1,100 for Blind/Elderly)
Dependent ... Greater of $950 or sum of $300 and individual's earned income
Personal Exemption
$3,650
Standard mileage rates.
For 2010, the standard mileage rate for the cost of operating your car for business use is 50 cents a mile, for medical reasons is 16½ cents a mile for the cost of operating your car for determining moving expenses is 16½ cents a mile.
Limits on personal exemptions and overall itemized deductions ended.
For 2010, you do not lose part of your deduction for personal exemptions and itemized deductions, regardless of the amount of your adjusted gross income (AGI).
Temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children
The American Recovery and Reinvestment Act (ARRA) provides a temporary increase in the earned income tax credit (EITC) for taxpayers with three or more qualifying children. The maximum EITC for this new category is $5,657. These changes apply to 2009 and 2010 tax returns.
The EITC credit begins to phase out at $21,420 for married taxpayers filing a joint return with children and completely phases out at $40,463 for one child, $45,295 for two children and $48,279 for three or more children. For married taxpayers filing a joint return with no children, the credit begins to phase out at $12,470 and completely phases out at $18,440.
Additional Child Tax Credit
Under ARRA more families will be eligible for the additional child tax credit, which is a refundable credit.ARRA reduces the minimum earned income amount used to calculate the additional child tax credit to $3,000. Before ARRA, the minimum earned income amount was set to rise to $12,550. This change applies to tax years beginning in 2009 and 2010.
American Opportunity Credit for college education expenses
Under ARRA, the American Opportunity Credit modifies the existing Hope Credit for tax years 2009 and 2010, making the Hope Credit available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. The credit can be claimed for four post-secondary education years instead of two, and it also adds required course materials to the list of qualifying expenses. The maximum annual credit is $2,500 per student. Use Form 8863 Education Credit.
The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and Lifetime Learning Credits.
If you choose to file as married filing separately you cannot take education credits, the deduction for student loan interest, or the tuition and fees deduction.
Self-employed health insurance deduction.
Effective March 30, 2010, if you were self-employed and paid for health insurance, you may be able to include in your self-employed health insurance deduction any premiums you paid to cover your child who was under age 27 at the end of 2010, even if the child was not your dependent.
First-time homebuyer credit.
You generally cannot claim the credit for a home you bought after April 30, 2010. However, you may be able to claim the credit if you entered into a written binding contract before May 1, 2010, to buy the home before July 1, 2010, and actually bought the home before October 1, 2010. Also, certain members of the Armed Forces and certain other taxpayers have additional time to buy a home and take the credit.
Homeowner's Energy Credit & Residential Energy Efficient Property Credit
Homeowner's energy credit is available for 2009 and 2010. The credit is thirty percent with a maximum of $1,500 for windows, doors, furnaces, water boilers, skylights, pellet stoves and insulation. Any credits received in previous years, do not effect this maximum credit amount.
For residential energy efficient property the credit is 30% of your costs of qualified property. Qualified properties include solar electric, solar water heating, fuel cell, small wind energy, and geothermal heat pump.
To take the credit, complete Form 5695 Residential Energy Credits. Enter the credit on line 52 of Form 1040 and check box c.
Making Work Pay Credit
Taxpayers with earned income will get Making Work Pay credit. It is 6.2% of your earned income with a maximum of $400 ($800 if married filing jointly). You must file schedule M (Form 1040 or 1040A) to claim the credit. Include the credit on line 63 of Form 1040 or line 40 of Form 1040A. If you are filing Form 1040-EZ, include the credit on line 8 and do not file schedule M. Those with AGI of more than $95,000 ($190,000 if married filing jointly), nonresidents and dependents do not get this credit.
Roth IRAs
Beginning in 2010, you can make a qualified rollover contribution to a Roth IRA regardless of the amount of your modified AGI.Also, half of any income that results from a rollover or conversion to a Roth IRA from another retirement plan in 2010 is included in income in 2011, and the other half in 2012, unless you elect to include all of it in 2010.
More Articles
Your Filing Status
1. Filing Status for Married
2. Head of Household
Exemptions for Dependents
1. Requirements for claiming a dependent
2. Child of separated or divorced parents
Filing Requirements
1. 2009 Filing Requirements
2. 2008 Filing Requirements
3. Filing Requirement for a Dependent
Your Income
1. W2 vs 1099-Misc: Employee vs Independent Contractor
2. Tax Filing by Self Employed Sole Proprietor or Independent Contractor
3. Partnerships
4. Filing W4 Employee’s Withholding Allowance Certificate
5. Missing W2, 1099-Misc, 1099-R, 1099-Int
Your Foreign Income
1. U.S. Citizen or Resident with Foreign Income
2. Foreign Bank and Financial Accounts
Income Exemptions and Deductions
1. Moving Expenses
2. Itemized deductions
3. Student Loan Interest Deductions
Income Adjustment
1. Traditional IRA and Roth IRA
2. Elective Deferrals 401(k) Plans
U.S. Gift tax and Inheritance Tax
1. The U.S. Gift Tax
2. Tax on Inheritances
Sale of Your Home
1. Profit from the Sale of Your Home
2. Foreclosure or Repossession of Main Home
3. First-Time Homebuyer Credit
State Tax Return
1. Working in Two or More States
Income Tax
1. My Tax Refund?
Complete List of Articles
OctroTalk for Winodws Phone 7. (Free App). Octrotalk version 1.0.3 is a Google Talk client for Windows Phone 7, which allows you to stay logged in to the Google Talk service, and receive incoming messages via push (in case app is not running in the foreground). OctroTalk supports both tile and push notifications. Download http://www.windowsphone.com/en-US/apps/42f332f9-4d13-42d2-8214-e290bbd54cde
23 Haziran 2012 Cumartesi
The Business Plan
To contact us Click HERE
The website Articlebase provided this interesting guidance on preparing a business plan. While the writer refers to a bookkeeping business, her ideas are pretty much transferrable to other business models, and the simplicity of her approach will not intimidate the new business person.
Admittedly, a bookkeeping business does not usually have to present the plan to potential investors or lenders, and if your business involves manufacturing costs, or a distribution network, or the roll out of a new product, you will have to provide details for those aspects of the plan, and flesh out the plan with projections, analysis, and a roster of key persons. However, even for those requiring a more rigorously developed plan, I think the "one page" approach is a good place to start, and then to be developed.
Here's a link for advise on developing the kind of business plan you may eventually need to take to the bank or prospective investors, but please constuct a one page plan first. I especially like the authors advice regarding the "vision statement". At this point you should not be toning down your optimism for fear of skeptical reviewers.
PS One other thing. I like to recall the words of one self starter. I don't try to figure out what I can do, or what I like to do; I think of what I would pay someone to do.
The One-page Business Plan for Your Bookkeeping Service
Author: Linda Hunt
Sometimes the thought of sitting down to draft a business plan sends me running for the hills, even though I preach the importance of planning to all of my clients! Small business advice: Without planning, your bookkeeping business goes nowhere fast. When you fail to plan, you plan to fail
What I have come to learn as a business coach is that business plans don’t have to be long to be good. In fact, a single page can contain all the essential elements you need to show where you’re taking your bookkeeping business and how you’re going to get there. The most important reason to have a business plan is to clarify your thinking about where you are taking your business. When it’s in writing, others will know and understand your vision and your plan
Here are a few characteristics of an effective one-page business plan for your bookkeeping business.
• Simplicity. A one-page plan takes a complex subject and makes it simple
• Focus. It focuses on what’s important. There is no room for fluff or filler.
• Versatility. It is a communication tool for employees, prospective employees, partners, shareholders, investors and bankers.
• Consistency. It sends the same message to every person who receives it, unlike a verbal presentation, which may change every time you speak.
• Flexibility. It is easy to change and update.
The Five Elements of the One-Page Business Plan
1. The Vision Statement – What are you building
This is the place where you describe your vision —your way. Most business coaches will tell you that vision statements should be expansive and idealistic. They should stimulate thinking and communicate passion, while painting a detailed picture of the bookkeeping business you want. The key to capturing your vision is to refrain from restricting the flow of thoughts.
2. The Mission Statement – Why does this business exist
The mission statement describes the purpose for which your product, service or business exists. Great mission statements are short and memorable. They communicate in just a few words the company’s focus and what is being provided to customers. They answer the question, “Why will customers buy this product or service?” The mission statement should also reflect the owner’s passion and commitment. When the business satisfies an owner’s passion for creativity, independence or the need to serve, there is substance and staying power in the mission.
3. The Objectives – What results will you measure
Objectives clarify what you are trying to accomplish in specific, measurable goals. Some of the best small business advice that I can give you is this: for an objective to be effective, it needs to be a well-defined target with quantifiable, measurable elements. There are many types of objectives, and your plan should include a variety of them. For many businesses the two most important categories will be the financial and marketing objectives. It is important, however, to tailor your objectives to cover the full scope of your bookkeeping business, focusing on the goals that are most critical to your success
4. The Strategies – How will you grow your business
Strategies set the direction, philosophy, values, and methodology for building and managing your company. Strategies also establish guidelines for evaluating important business decisions. In most industries there are four to six core strategies that successful businesses follow. These core strategies are easy to understand, remain relatively constant over time, are used by market leaders and result in profitable growth. Here are two examples of a core strategy: “Price isn’t everything,” and “Attract the very best employees and give them a stake in the business.” What are your strategies
5. The Plans – What is the work to be donePlans are the specific actions the business must implement to achieve the objectives. Plan or action items should contribute to the growth of your bookkeeping business. Each plan or action item is, in effect, a project. Plans should be action-oriented, list specific tasks and have definitive deadlines or due dates
Once your plan is in writing, it is now time to put that same plan into action. Putting the plan into action is the most important step because the actions deliver the results you wanted when you started this process. For most entrepreneurs, this is easy — you are already action-oriented!
Here is some business advice, as well as a few suggestions, to help you put (and keep) your bookkeeping business plan in action
• Keep the plan with you.
• Use it as a decision-making tool.
• Update it with new thoughts.
• Share it with people you trust and whose opinions you value.
• Measure your progress at least quarterly.
• Prepare a budget to match the plan.
.
Admittedly, a bookkeeping business does not usually have to present the plan to potential investors or lenders, and if your business involves manufacturing costs, or a distribution network, or the roll out of a new product, you will have to provide details for those aspects of the plan, and flesh out the plan with projections, analysis, and a roster of key persons. However, even for those requiring a more rigorously developed plan, I think the "one page" approach is a good place to start, and then to be developed.
Here's a link for advise on developing the kind of business plan you may eventually need to take to the bank or prospective investors, but please constuct a one page plan first. I especially like the authors advice regarding the "vision statement". At this point you should not be toning down your optimism for fear of skeptical reviewers.
PS One other thing. I like to recall the words of one self starter. I don't try to figure out what I can do, or what I like to do; I think of what I would pay someone to do.
The One-page Business Plan for Your Bookkeeping Service
Author: Linda Hunt
Sometimes the thought of sitting down to draft a business plan sends me running for the hills, even though I preach the importance of planning to all of my clients! Small business advice: Without planning, your bookkeeping business goes nowhere fast. When you fail to plan, you plan to fail
What I have come to learn as a business coach is that business plans don’t have to be long to be good. In fact, a single page can contain all the essential elements you need to show where you’re taking your bookkeeping business and how you’re going to get there. The most important reason to have a business plan is to clarify your thinking about where you are taking your business. When it’s in writing, others will know and understand your vision and your plan
Here are a few characteristics of an effective one-page business plan for your bookkeeping business.
• Simplicity. A one-page plan takes a complex subject and makes it simple
• Focus. It focuses on what’s important. There is no room for fluff or filler.
• Versatility. It is a communication tool for employees, prospective employees, partners, shareholders, investors and bankers.
• Consistency. It sends the same message to every person who receives it, unlike a verbal presentation, which may change every time you speak.
• Flexibility. It is easy to change and update.
The Five Elements of the One-Page Business Plan
1. The Vision Statement – What are you building
This is the place where you describe your vision —your way. Most business coaches will tell you that vision statements should be expansive and idealistic. They should stimulate thinking and communicate passion, while painting a detailed picture of the bookkeeping business you want. The key to capturing your vision is to refrain from restricting the flow of thoughts.
2. The Mission Statement – Why does this business exist
The mission statement describes the purpose for which your product, service or business exists. Great mission statements are short and memorable. They communicate in just a few words the company’s focus and what is being provided to customers. They answer the question, “Why will customers buy this product or service?” The mission statement should also reflect the owner’s passion and commitment. When the business satisfies an owner’s passion for creativity, independence or the need to serve, there is substance and staying power in the mission.
3. The Objectives – What results will you measure
Objectives clarify what you are trying to accomplish in specific, measurable goals. Some of the best small business advice that I can give you is this: for an objective to be effective, it needs to be a well-defined target with quantifiable, measurable elements. There are many types of objectives, and your plan should include a variety of them. For many businesses the two most important categories will be the financial and marketing objectives. It is important, however, to tailor your objectives to cover the full scope of your bookkeeping business, focusing on the goals that are most critical to your success
4. The Strategies – How will you grow your business
Strategies set the direction, philosophy, values, and methodology for building and managing your company. Strategies also establish guidelines for evaluating important business decisions. In most industries there are four to six core strategies that successful businesses follow. These core strategies are easy to understand, remain relatively constant over time, are used by market leaders and result in profitable growth. Here are two examples of a core strategy: “Price isn’t everything,” and “Attract the very best employees and give them a stake in the business.” What are your strategies
5. The Plans – What is the work to be donePlans are the specific actions the business must implement to achieve the objectives. Plan or action items should contribute to the growth of your bookkeeping business. Each plan or action item is, in effect, a project. Plans should be action-oriented, list specific tasks and have definitive deadlines or due dates
Once your plan is in writing, it is now time to put that same plan into action. Putting the plan into action is the most important step because the actions deliver the results you wanted when you started this process. For most entrepreneurs, this is easy — you are already action-oriented!
Here is some business advice, as well as a few suggestions, to help you put (and keep) your bookkeeping business plan in action
• Keep the plan with you.
• Use it as a decision-making tool.
• Update it with new thoughts.
• Share it with people you trust and whose opinions you value.
• Measure your progress at least quarterly.
• Prepare a budget to match the plan.
.
How are you financing?
To contact us Click HERE
In addition to the article. I'm copying readers comments as well.
My experience is that small business creditors including vendors, credit card companies, and line of credit lenders, are all reducing availability, at a time when internal cash flow is deteriorating.
Commentor 2 refers to his "preselling" strategy, which is a good idea but may be an option limited to E Commerce. Most small business owners have probably already evaluated the possibility of internet sales, but now would be a good time to re-evaluate that model.
I work with sub-contractors who are already cash strapped, paying down vendor balances from 60 to 30 days, and meeting their payrolls. They also need to try to arrange prepayments, asking their best customers to pay in advance for material purchases on any job which will extend beyond their vendors terms.
Service providers have the advantage of not having to invest in materials or carry substantial receivables, but they will have to carefully review their expenses and redouble their sales efforts.
From the New York Times, Your the Boss Column
August 25, 2009, 9:00 am
Has the Recession Changed How Small Businesses Are Financed?
By Scott A. Shane
Recently, many people have been wondering if the poor economy has changed how small businesses are financed. Discover Card Financial Services has identified one interesting change.
The company looked at how small businesses were being financed before the recession and how they are being financed now. Ryan Scully, director of Discover’s business credit card, explained that the sources of financing for small businesses didn’t really change between June 2007 and June 2009. In both periods, Discover found, the same percentage of business owners used personal savings to finance their new businesses and similar percentages used credit cards and bank loans.
There was a change in whether or not founders of small businesses needed external financing to start their businesses. Mr. Scully explained that in June 2009 only a third of business owners needed to obtain financial capital to start their companies, substantially fewer than in June 2007.
While it’s possible that Discover’s findings show that entrepreneurs who needed financing couldn’t get started, the company’s analysis fits what many academics believe happens when credit gets tight — many owners change their business models so that they can rely less on external financing. This allows them to persist in their entrepreneurial efforts despite the tighter credit conditions.
I’m wondering if your experience jibes with this pattern, or if you’ve experienced something different. Since the recession began, have you changed the way you finance your new business? If so, what are you doing differently?
Scott A. Shane is a professor of entrepreneurial studies at Case Western.
-------------------------------------------------------------------------------
COMMENTS
Link
Look, eveyone is paying later. Which mean I have to pay more for what I borrow because of the lag time. Also, I have to make this ups by receivble financing which means I make less profit and in turn have to either take my prices up to capture some of this lossor or eat it in hopes that my business won’t drop off more. My strategy is to tread water for now, hope I can capture some of my competitors business and take my price up as the competiton drops in about a year or two..
— Marty
2. August 25, 2009
11:47 am
Link
When I started a similar business in 1992, I did it solely with credit cards and was rewarded with obscenely high credit limits. With this avenue closed this time around, I am pre-selling (allow 7 days for delivery). I deposit the clients funds, and with this capital I make my purchases.
G.A.Landry
Green Planet Meatz
Denville, NJ
— Greg Landry
3. August 25, 2009
12:11 pm
Link
I started my business in 2006, and at the time, I had no need of external financing.
With the recession, my business is down and I chewed through my savings faster than I would have liked. Now that I could really use external financing, I find it’s harder to come by. Companies that were begging me to take out loans are now not interested.
Like most entrepreneurs, I’m trying to be creative to keep the business alive. My husband and I have seriously cut our living expenses and to get through, I’ve also been relying on personal credit as my rating has always been stellar.
But here’s the rub… With new credit laws in effect, I find that credit companies are still finding ways to make money. I enjoyed low apr’s and no additional fees because of my rating. To compensate, my credit cards are now requiring higher minimum payments at a time when I am trying to keep monthly expenses lean. Before, credit companies punished bad behavior, and rewarded good behavior. Now they’re looking to make up for losses from everyone.
The bottom line, I will do what I need to in order to weather the storm. But at a time when small businesses could use a little help to get through, there’s none out there.
Maria
— Maria
4. August 25, 2009
12:23 pm
Link
I looked into a franchise and after serious thought, recognized it was a loser. The up front money, forty grand, would eventually be paid back, but I cannot tolerate debt.
I just read about a woman who lost her job and savings at Enron, but found a niche, and it only cost her a grand to start it up. She holds magnificent tea parties for little girls’ birthdays and all it took was some cute furniture she found at yard sales and lots of old linen. She managed to clear $25K after her third year.
How about some tea and sympathy? Tea Parties for Non-Tea Potty Little Black Bag Handlers who want to share stories of deprivation, not imagine them.
— Abby Tucson, AZ
5. August 25, 2009
5:48 pm
Link
All business owners,and in particular those start up will generally have more difficulty because all though security requirents have increases, finacial institutions will ve looking repayment through proven profit generation. This is demonstrated through ome’s net worth statement or work experience. Look towards financial institutions looking past the working relationship for even loan renewals.
— Terry jackson
6. August 26, 2009
10:23 am
Link
The tightening of credit will push would be entrepreneurs to more carfully study gaps in the market and real opportunities. When monehy was looser, one could have explored only ideas or developed a me-too business.
Hopefully the focus on better business models will create a new generation of stronger small businesses.
Domenick Celentano
Silberman College of Business
Fairleigh Dickinson University, Madison, NJ
— Domenick Celentano
My experience is that small business creditors including vendors, credit card companies, and line of credit lenders, are all reducing availability, at a time when internal cash flow is deteriorating.
Commentor 2 refers to his "preselling" strategy, which is a good idea but may be an option limited to E Commerce. Most small business owners have probably already evaluated the possibility of internet sales, but now would be a good time to re-evaluate that model.
I work with sub-contractors who are already cash strapped, paying down vendor balances from 60 to 30 days, and meeting their payrolls. They also need to try to arrange prepayments, asking their best customers to pay in advance for material purchases on any job which will extend beyond their vendors terms.
Service providers have the advantage of not having to invest in materials or carry substantial receivables, but they will have to carefully review their expenses and redouble their sales efforts.
From the New York Times, Your the Boss Column
August 25, 2009, 9:00 am
Has the Recession Changed How Small Businesses Are Financed?
By Scott A. Shane
Recently, many people have been wondering if the poor economy has changed how small businesses are financed. Discover Card Financial Services has identified one interesting change.
The company looked at how small businesses were being financed before the recession and how they are being financed now. Ryan Scully, director of Discover’s business credit card, explained that the sources of financing for small businesses didn’t really change between June 2007 and June 2009. In both periods, Discover found, the same percentage of business owners used personal savings to finance their new businesses and similar percentages used credit cards and bank loans.
There was a change in whether or not founders of small businesses needed external financing to start their businesses. Mr. Scully explained that in June 2009 only a third of business owners needed to obtain financial capital to start their companies, substantially fewer than in June 2007.
While it’s possible that Discover’s findings show that entrepreneurs who needed financing couldn’t get started, the company’s analysis fits what many academics believe happens when credit gets tight — many owners change their business models so that they can rely less on external financing. This allows them to persist in their entrepreneurial efforts despite the tighter credit conditions.
I’m wondering if your experience jibes with this pattern, or if you’ve experienced something different. Since the recession began, have you changed the way you finance your new business? If so, what are you doing differently?
Scott A. Shane is a professor of entrepreneurial studies at Case Western.
-------------------------------------------------------------------------------
COMMENTS
Link
Look, eveyone is paying later. Which mean I have to pay more for what I borrow because of the lag time. Also, I have to make this ups by receivble financing which means I make less profit and in turn have to either take my prices up to capture some of this lossor or eat it in hopes that my business won’t drop off more. My strategy is to tread water for now, hope I can capture some of my competitors business and take my price up as the competiton drops in about a year or two..
— Marty
2. August 25, 2009
11:47 am
Link
When I started a similar business in 1992, I did it solely with credit cards and was rewarded with obscenely high credit limits. With this avenue closed this time around, I am pre-selling (allow 7 days for delivery). I deposit the clients funds, and with this capital I make my purchases.
G.A.Landry
Green Planet Meatz
Denville, NJ
— Greg Landry
3. August 25, 2009
12:11 pm
Link
I started my business in 2006, and at the time, I had no need of external financing.
With the recession, my business is down and I chewed through my savings faster than I would have liked. Now that I could really use external financing, I find it’s harder to come by. Companies that were begging me to take out loans are now not interested.
Like most entrepreneurs, I’m trying to be creative to keep the business alive. My husband and I have seriously cut our living expenses and to get through, I’ve also been relying on personal credit as my rating has always been stellar.
But here’s the rub… With new credit laws in effect, I find that credit companies are still finding ways to make money. I enjoyed low apr’s and no additional fees because of my rating. To compensate, my credit cards are now requiring higher minimum payments at a time when I am trying to keep monthly expenses lean. Before, credit companies punished bad behavior, and rewarded good behavior. Now they’re looking to make up for losses from everyone.
The bottom line, I will do what I need to in order to weather the storm. But at a time when small businesses could use a little help to get through, there’s none out there.
Maria
— Maria
4. August 25, 2009
12:23 pm
Link
I looked into a franchise and after serious thought, recognized it was a loser. The up front money, forty grand, would eventually be paid back, but I cannot tolerate debt.
I just read about a woman who lost her job and savings at Enron, but found a niche, and it only cost her a grand to start it up. She holds magnificent tea parties for little girls’ birthdays and all it took was some cute furniture she found at yard sales and lots of old linen. She managed to clear $25K after her third year.
How about some tea and sympathy? Tea Parties for Non-Tea Potty Little Black Bag Handlers who want to share stories of deprivation, not imagine them.
— Abby Tucson, AZ
5. August 25, 2009
5:48 pm
Link
All business owners,and in particular those start up will generally have more difficulty because all though security requirents have increases, finacial institutions will ve looking repayment through proven profit generation. This is demonstrated through ome’s net worth statement or work experience. Look towards financial institutions looking past the working relationship for even loan renewals.
— Terry jackson
6. August 26, 2009
10:23 am
Link
The tightening of credit will push would be entrepreneurs to more carfully study gaps in the market and real opportunities. When monehy was looser, one could have explored only ideas or developed a me-too business.
Hopefully the focus on better business models will create a new generation of stronger small businesses.
Domenick Celentano
Silberman College of Business
Fairleigh Dickinson University, Madison, NJ
— Domenick Celentano
Frist-Time Homebuyer Credit
To contact us Click HERE
Ten Facts about the First-Time Homebuyer Credit
Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.
Here are ten things the IRS wants you to know about the first-time homebuyer credit:
1. To be considered a first-time homebuyer, you and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
2. You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.
3. To qualify for the credit, the completed purchase must occur before December 1, 2009.
4. The home must be located in the United States.
5. The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
6. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
7. The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
8. The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
9. Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.
10. The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.
Qualified taxpayers who have been considering a main home purchase may find extra incentive from this tax credit to buy now so they can complete the purchase before the December 1 deadline.
Links: YouTube video: English-Spanish
Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.
Here are ten things the IRS wants you to know about the first-time homebuyer credit:
1. To be considered a first-time homebuyer, you and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
2. You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.
3. To qualify for the credit, the completed purchase must occur before December 1, 2009.
4. The home must be located in the United States.
5. The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
6. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
7. The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
8. The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
9. Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.
10. The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.
Qualified taxpayers who have been considering a main home purchase may find extra incentive from this tax credit to buy now so they can complete the purchase before the December 1 deadline.
Links: YouTube video: English-Spanish
Financing
To contact us Click HERE
I'm passing along a recent email from the folks at SCORE. That organization provides great mentoring to entrepeneurs and a calendar of events and instruction you may wish to monitor. Here's a link: www.scorefoxvalley.org/
Borrowing from Friends, Family Requires Wise Management
Friends and family are an invaluable source of support for the aspiring small business owner. And often, they're an invaluable source of financial assistance as well.
In fact, more small businesses rely on loans from friends and family than any other funding source. Familiarity with the person and his/her business goals, the investment opportunity, and the ability to monitor the venture's progress are among the major reasons why friends and family members willingly contribute to a start-up or expansion.
However, a ready source of cash is not without its potential pitfalls. Business loans from family and friends also can be a disaster if they are not done right. Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go into default, compared to about one percent for bank loans.
To increase the odds of success, approach family and friends with a detailed loan proposal, including financials from your business, just as you would a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose all or some of their money. Consider the consequences of a soured business deal to your relationships.
Pick a financing structure that works best for your business and make certain everyone understands it. Specifically, be clear on whether the deal involves an ownership stake in your business, or whether it is a simple debt you plan to repay. And be clear about repayment terms.
To legally seal the deal, use a document such as a "Promissory Note." Putting the terms of your borrowing agreement into proper legal form is crucial. You can find the downloadable legal documents you need, including many different Promissory Note variations, at www.findforms.com. Self-help legal publisher Nolo also offers loan forms and related information at www.nolo.com.
Another helpful resource is Virgin Money at www.virginmoneyus.com, previously known as CircleLending.com before it was acquired by well-known entrepreneur Richard Branson. Virgin Money helps small business owners avoid the problems that can arise with loans from friends and family by providing loan administration, recordkeeping, payment processing and structural support. The service emphasizes flexibility to meet the needs and concerns of both borrowers and lenders, from terms and interest rates to repayment strategies.
To learn more about financial issues facing your small business, contact SCORE "Counselors to America's Small Business."
The Fox Valley SCORE Chapter offers free, confidential counseling to small businesses, including startups. Affiliated with the U.S. Small Business Administration, SCORE has counselors available in nine locations in the counties and suburbs west of Chicago.
We look forward to helping you work out financing possibilities for your business.
Sincerely,
The Counselors at SCORE
Borrowing from Friends, Family Requires Wise Management
Friends and family are an invaluable source of support for the aspiring small business owner. And often, they're an invaluable source of financial assistance as well.
In fact, more small businesses rely on loans from friends and family than any other funding source. Familiarity with the person and his/her business goals, the investment opportunity, and the ability to monitor the venture's progress are among the major reasons why friends and family members willingly contribute to a start-up or expansion.
However, a ready source of cash is not without its potential pitfalls. Business loans from family and friends also can be a disaster if they are not done right. Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go into default, compared to about one percent for bank loans.
To increase the odds of success, approach family and friends with a detailed loan proposal, including financials from your business, just as you would a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose all or some of their money. Consider the consequences of a soured business deal to your relationships.
Pick a financing structure that works best for your business and make certain everyone understands it. Specifically, be clear on whether the deal involves an ownership stake in your business, or whether it is a simple debt you plan to repay. And be clear about repayment terms.
To legally seal the deal, use a document such as a "Promissory Note." Putting the terms of your borrowing agreement into proper legal form is crucial. You can find the downloadable legal documents you need, including many different Promissory Note variations, at www.findforms.com. Self-help legal publisher Nolo also offers loan forms and related information at www.nolo.com.
Another helpful resource is Virgin Money at www.virginmoneyus.com, previously known as CircleLending.com before it was acquired by well-known entrepreneur Richard Branson. Virgin Money helps small business owners avoid the problems that can arise with loans from friends and family by providing loan administration, recordkeeping, payment processing and structural support. The service emphasizes flexibility to meet the needs and concerns of both borrowers and lenders, from terms and interest rates to repayment strategies.
To learn more about financial issues facing your small business, contact SCORE "Counselors to America's Small Business."
The Fox Valley SCORE Chapter offers free, confidential counseling to small businesses, including startups. Affiliated with the U.S. Small Business Administration, SCORE has counselors available in nine locations in the counties and suburbs west of Chicago.
We look forward to helping you work out financing possibilities for your business.
Sincerely,
The Counselors at SCORE
Way to go, Kids
To contact us Click HERE
FromNBCChicago.com
Local Community College Beats Yale
Elgin Community College takes down Ivy League school in mock trial competition
By DICK JOHNSON and ANDREW GREINER
Updated 7:08 PM CST, Tue, Nov 10, 2009
They might object to a David and Goliath comparison but, then again, as their twitter message said yesterday ...
"WE BEAT YALE!!!!"
Elgin Community College’s Mock Trial team didn’t win the Harvard Crimson Classic this year, but they did trounce a practiced Ivy League competitor -- no mean feat, considering Elgin completed its first full mock trial season just last year.
"What allowed the students to [beat Yale] was dedication," said coach Ron Kowalczyk. " That's the bottom line. Hard work."
Sassy or Trashy: Miniskirts
LOOK
Sassy or Trashy: Miniskirts
Illinois' Fugliest Political Web Sites
LOOK
Illinois' Fugliest Political Web Sites
Zoo Babies
LOOK
Zoo Babies
ECC was one of 11 teams participating in the annual two-day event, which usually pits Ivy League types against each other in a faux courtroom setting.
The team from ECC wasn’t even allowed into the tourney until a regular team dropped out and they got a call to fill in.
So ECC made the best of it during their weekend run, beating Villanova in the first round, losing to Brown in the second round, beating Yale in the third round and losing to Princeton in the finals.
Brown, which barely beat ECC in the second round, went on to take the tournament.
For the coach who put together the Elgin team, the victory was a shocker.
"I would say we were stunned. You never know in the end how the judging is going to come down,” Kowalczyk said.
Kowalczyk has good reason to be amazed. Two years ago he didn’t even have a team – an interested student asked him to create one in 2007 – and he wasn’t even on Harvard’s radar.
But that didn’t stop him from writing letter upon letter until the stodgy university put his team on the waiting list.
And once that happened, Kowalczyk – and students Anastasia Toufexis, Jennifer Rieger, Rebecca Day, Jessica Bianchi, Elizabeth Martzel, Eleni Bala, Robert Dalin, Rita Russo and Mary Burke – shocked the upper crust with their come-from-nowhere performance.
"I was beaming thoughout this whole period and I still have not gotten my face back from the beam!" said Elgin president David Sam.
ECC's team celebrated with a nice dinner in Boston.
Overall, they had a better record than Boston College's "A" team, Wake Forest, Boston University, Dartmouth's "A" and "B" teams, and Wellesley's A&B teams. ECC also tied Penn State, the Herald notes.
The ECC squad has a few more tournaments before heading to the American Mock Trial Association regionals in February.
As for Yale, a spokesperson said ECC's victory was "impressive."
"I'm sure their reputation will precede them next time."
Local Community College Beats Yale
Elgin Community College takes down Ivy League school in mock trial competition
By DICK JOHNSON and ANDREW GREINER
Updated 7:08 PM CST, Tue, Nov 10, 2009
They might object to a David and Goliath comparison but, then again, as their twitter message said yesterday ...
"WE BEAT YALE!!!!"
Elgin Community College’s Mock Trial team didn’t win the Harvard Crimson Classic this year, but they did trounce a practiced Ivy League competitor -- no mean feat, considering Elgin completed its first full mock trial season just last year.
"What allowed the students to [beat Yale] was dedication," said coach Ron Kowalczyk. " That's the bottom line. Hard work."
Sassy or Trashy: Miniskirts
LOOK
Sassy or Trashy: Miniskirts
Illinois' Fugliest Political Web Sites
LOOK
Illinois' Fugliest Political Web Sites
Zoo Babies
LOOK
Zoo Babies
ECC was one of 11 teams participating in the annual two-day event, which usually pits Ivy League types against each other in a faux courtroom setting.
The team from ECC wasn’t even allowed into the tourney until a regular team dropped out and they got a call to fill in.
So ECC made the best of it during their weekend run, beating Villanova in the first round, losing to Brown in the second round, beating Yale in the third round and losing to Princeton in the finals.
Brown, which barely beat ECC in the second round, went on to take the tournament.
For the coach who put together the Elgin team, the victory was a shocker.
"I would say we were stunned. You never know in the end how the judging is going to come down,” Kowalczyk said.
Kowalczyk has good reason to be amazed. Two years ago he didn’t even have a team – an interested student asked him to create one in 2007 – and he wasn’t even on Harvard’s radar.
But that didn’t stop him from writing letter upon letter until the stodgy university put his team on the waiting list.
And once that happened, Kowalczyk – and students Anastasia Toufexis, Jennifer Rieger, Rebecca Day, Jessica Bianchi, Elizabeth Martzel, Eleni Bala, Robert Dalin, Rita Russo and Mary Burke – shocked the upper crust with their come-from-nowhere performance.
"I was beaming thoughout this whole period and I still have not gotten my face back from the beam!" said Elgin president David Sam.
ECC's team celebrated with a nice dinner in Boston.
Overall, they had a better record than Boston College's "A" team, Wake Forest, Boston University, Dartmouth's "A" and "B" teams, and Wellesley's A&B teams. ECC also tied Penn State, the Herald notes.
The ECC squad has a few more tournaments before heading to the American Mock Trial Association regionals in February.
As for Yale, a spokesperson said ECC's victory was "impressive."
"I'm sure their reputation will precede them next time."
21 Haziran 2012 Perşembe
Relief From the IRS for Misclassified Workers
To contact us Click HERE
In Notice 2011-95 issued on September 21, 2011, the IRS announced a new voluntary compliance program focused on assisting employers in the proper classification of its workers. The new settlement program provides a hugh financial relief for those employers who have improperly classified certain workers as independent contractors that should be classified as employees.
The Issue
It is all too common that employers classify workers as independent contractors that should be treated as employees. There are many reasons this occurs, but some of the most common that I hear include:
The Issue
It is all too common that employers classify workers as independent contractors that should be treated as employees. There are many reasons this occurs, but some of the most common that I hear include:
- The employer is just hiring the worker on a trial basis
- The worker is only going to be working on an infrequent basis
- The worker is only going to be working on a one time occurence
- The worker is going to be paid a flat fee
- The worker wants to be treated as an independent contractor
- It is too expensive to treat a worker as an employee
Unfortunately none of the above excuses are valid. Relying on such excuses, an employer can end up in the expensive situation of having to pay back payroll taxes when the IRS or a state authority steps into the picture. Even voluntarily correction of a workers classification can be so expensive the an employer prefers to continue on an incorrect path rather than make the necessary corrections.
IRS Provides An Out
The new program announced by the IRS will allow an employer to properly classify a worker as an employee on a prospective basis for a very small payment. Employers are eligible to enter the compliance program if they:
- Consistently have treated the workers in the past as nonemployees;
- Have filed all required Forms 1099 for the workers for the previous three years;
- Are not currently under audit by the IRS; and
- Are not currenlty under audit by the Department of Labor or a state agency.
An employer can apply for the program by filing Form 8952 at least 60 days before they want to begin treating the workers as employees. For example, if an employer would like to begin treating certain workers as employees as of the beginning of 2012, then it must file the Form 8952 by November 2, 2011.
The form includes a calculation that assesses the amount due on the reclassification. The amount is based on the wages paid during the most recently completed tax year and it is the equivalent of approximately 1.3% of the wages paid. This is a substantial savings over the options that exist outside of this program.
Application of Program for Churches and Other Nonprofit Organizations
One of the greatest liabilities for a church or a nonprofit is errors in the area of payroll. While not all of them center around worker classification, it is one of the most common errors. Churches and nonprofits often make incorrect decisions in this area due to relying on what another church/nonprofit or by relying on what they believe should be the correct classification. The fact is that the definition of an employee is very broad and encompassses most workers in nonprofits other than outside consultants or workers that are clearly operating a business that is available to general public. Some of the most common workers that are misclassified include:
- Nursery workers
- Musicians
- Maintenance workers
- Other workers that work either part time or on an irregular schedule
Action Required
This program is a definite consideration for all churches/organizations that have a worker classification issue. All organizations should take the time to review the workers currently classified as independent contractors to determine if that classification is correct. It may be necessary to engage a professional to assist with the proper classification of a worker. If this review discloses workers that should be classified as employees, then an organization should consider filing Form 8952 to take advantage of this program. Employers that are accepted into this program will not be audited on payroll taxes related to these workers for prior years. Participating employers will, for the first three years under the program, be subject to a special 6 year statute of limitations, rather than the usual three years than generally applies to payroll taxes.
Update of the Driscolls' Two Houses
To contact us Click HERE
On February 8th, the 11th Circuit Court of Appeals slammed the door on the ability to use housing allowances for multiple homes. In a short but definitive ruling, the court states, in essence, that "a" means "one" and that it should not be construed to be able to mean "more than one". The court relies on the consistent use of the term "home" as holding a singular connotation within the statute. Therefore, if a minister was planning on utilizing his or her housing allowance for more than one "home", it is time to make the appropriate adjustments to the 2012 tax estimates.
Compensation - The Ins & Outs - Part 1 of ?
To contact us Click HERE
Reason for the Series
One of the most common areas that I speak on across the country is regarding the area of compensation. As a general rule, it seems that nonprofit organizations struggle with the intricacies of the rules regarding the payment of compensation and even the definition of what is compensation. Therefore, I have decided to start a multiple part blog series on this subject as a means of offering some much needed guidance. I plan to post once a week. I don't know how many weeks it will take, so join in for the next few weeks to brush up on your knowledge in this area and maybe learn a few new things along the way.
Compensation & the Overriding Philosophy of Tax Law
Perhaps the first stumbling block or hurdle to overcome in this area is to finally acknowledge how vast an array of information this topic covers. I generally find that the normal person does not realize one of the foundational truths of the U.S. tax code. This truth is based on two premises:
One of the most common areas that I speak on across the country is regarding the area of compensation. As a general rule, it seems that nonprofit organizations struggle with the intricacies of the rules regarding the payment of compensation and even the definition of what is compensation. Therefore, I have decided to start a multiple part blog series on this subject as a means of offering some much needed guidance. I plan to post once a week. I don't know how many weeks it will take, so join in for the next few weeks to brush up on your knowledge in this area and maybe learn a few new things along the way.
Compensation & the Overriding Philosophy of Tax Law
Perhaps the first stumbling block or hurdle to overcome in this area is to finally acknowledge how vast an array of information this topic covers. I generally find that the normal person does not realize one of the foundational truths of the U.S. tax code. This truth is based on two premises:
- Everything that benefits an employee is a form of compensation and
- Everything is taxable until the Internal Revenue Code says its not.
In general, it seems that the natural human response or thought process goes something like this:
- Compensation is what is reported on my paycheck stub and
- Nothing is taxable until somebody proves to me it is (or with my clients, until Elaine tells me it is.)
Needless to say, it is necessary for an organization to first come to a realization that compensation has a more far reaching definition than may have previously been considered and that taxation should be the assumed consequence of any benefit until otherwise proven. This is critical because there are very specific rules that apply to nonprofits, including religious organizations and churches. A deviation from these rules can be costly to the organization and the employee.
With this as the basis for the series, we will start to work through a 10 Step process for defining and dealing with compensation within a nonprofit organization. Next week - Step #1 - Who Gets to Decide on Compensation.
Kaydol:
Kayıtlar (Atom)