I will be in Windsor Thursday January 24th.
The IRS is simplifying the office in home deduction for small businesses for tax years staring 1-1-13 Taxpayers may take a flat $5 a square foot up to a total of $1,500 instead of completing form 8829 Mortgage interest and taxes may be deducted in full on Schedule A. One may continue to use form 8829 and calculate the deduction using the old rule
This company has been sending out an official looking letter that asks you to send them a check for $225 to take care of you annual filing with the State of Colorado. This is a scam. This letter is NOT from the State of Colorado and can be ignored. You can do your annal filing online for $10.
The Boulder DA has warned about this company:
In a rare show of leniency, the Internal Revenue Service on Thursday announced new rules designed to make it easier for people struggling with tax debts to climb out of the hole.
Among the changes, the IRS said it would place fewer claims on taxpayers’ property and would make such “liens” less damaging to taxpayers’ credit ratings. Other changes are intended to help small businesses and forgive debts of more people who are unable to pay.
Commissioner Doug Shulman called the changes an effort to “stand in taxpayers’ shoes” following “the worst recession in a generation.”
“This is a real effort to consider taxpayers’ needs,” said Benson Goldstein, a tax expert with the American Institute of CPAs.
Nina Olson, the National Taxpayer Advocate tapped by Congress to monitor the IRS, was more muted in her response. She called the changes “a significant step in the right direction,” but added that “they are not sufficient to address the problems we have seen.”
The changes affecting the largest number of taxpayers concern liens, or notices that give the IRS a legal claim to a taxpayer’s property in the amount of an unpaid tax debt. The new rules generally prohibit the IRS from filing a lien unless unpaid taxes exceed $10,000, doubling the previous limit, which had been in effect since the mid-1980s.
The IRS also will ease the damage to taxpayers’ credit scores after the full amount of the debt is paid. In an important technical move, the agency will grant more taxpayers “lien withdrawals”—a higher level of forgiveness than the current “lien release.”
According to Ms. Olson, full withdrawal is often better for taxpayers’ credit ratings because it expunges the lien from the record immediately, whereas a release leaves it on the record for at least seven years. A tax lien can knock 100 points off a person’s credit score. The highest credit score is 850 at FICO, a leading credit scorer. Borrowers often need a score in the 700s to qualify for the best rates on loans.
In addition, liens now may qualify for full withdrawal even if the debt isn’t fully paid, so long as the amount is less than $25,000 and the taxpayer enters into a “direct debit installment agreement.”
This typically allows the IRS to make an automatic monthly withdrawal of a scheduled payment from the delinquent taxpayer’s bank account. Taxpayers may apply for a direct debit agreement online at www.irs.gov.
Mr. Shulman said the agency has found that taxpayers with direct debit agreements are good risks and therefore full withdrawals of liens are appropriate.
The IRS also will make what it calls “streamlined installment agreements” available to more small businesses with unpaid taxes, giving them up to 24 months to pay debts of $25,000 or less.
Previously the program applied only to those owing $10,000 or less. But, to qualify, the businesses must arrange to make periodic automatic payments from a bank account.
For people with no hope of paying their tax debts, the IRS has expanded and eased terms of its “offer in compromise” program. The program allows taxpayers to settle their debt by paying a lesser amount, as long as agents are convinced the debt can’t be paid in full either as a lump sum or through periodic payments.
Taxpayers with incomes of as much as $100,000 may now be eligible for the compromise program if their total tax liability is $50,000 or less. The change doubles the limits of $50,000 of income and $25,000 of total tax due.
The IRS said the new rules will reduce liens by “tens of thousands” but declined to be more specific.
But Ms. Olson said the IRS’s changes don’t go far enough. The agency is often too quick to impose liens on people without checking their resources, she said, adding that the number of liens surged to 1.1 million last year from 168,000 in 1999.
“Such filings do not generate significant revenue compared with the financial devastation they visit on taxpayers,” she said.
Write to Laura Saunders at email@example.com
This is an important reminder that Pershing has reached agreement with the IRS to send out 1099’s around February 15th. The reason for the delay from the normal January 31st time scale is that Pershing proved that the data is much more likely to be correct if delayed two weeks. The tax changes of the Bush Presidency allowed for different tax rates on dividends. The determination of which dividends were “qualified” versus “unqualified” is complicated and corporations were constantly changing the splits. In turn, mutual funds had to change their reports of which dividends were “qualified” too. Therefore delaying by two weeks was very helpful to get the information correct the first time.
1099R’s for retirement account distributions will probably be distributed somewhat sooner.
It is likely that other brokerage firms will be similarly be light with their 2010 1099s.
Tax returns that have itemized deductions cannot be filed with the IRS until February 14. This was due to late enactment of last year’s tax extension.
The senate today repealed the increased 1099 reporting requirements included in last years health care bill. The House is likely to follow and President Obama has said he supports the repeal. 1099 reporting requirements for business will remain the same as they have been for the last several years
- Business 51¢
- Charitable 14 ¢
- Medical and Moving 16.5¢
For the year of 2010 and in prior years, the IRS accepted the Form 8109/8109-B payment coupon for payments made to the Federal Tax Depository on federal tax withholding as reflected on the Form 945 (Annual Return of Withheld Federal Income Tax). Beginning 1 January 2011, payment using the 8109/8109-B coupon is no longer an acceptable option.
The IRS has issued proposed regulations under section 6302 which state that all payments made to the Federal Tax Depository for federal tax withholding as filed on the Form 945 must be sent electronically to the Federal Tax Depository via the Electronic Federal Tax Payment System (EFTPS) effective 1 January 2011. Use of the Form 8109/8109-B payment coupon is prohibited after 31 December 2010. Any payments made to the Federal Tax Depository in a manner other than electronically via the EFTPS may incur a 10% penalty.
There is an exception to the above requirement, for those taxpayers with a federal tax withholding deposit of less than $2,500.00 for the return period. The return period for the Form 945 (Annual Return of Withheld Federal Income Tax) is an annual return. As such, plans with income tax withholding of less than $2,500.00 on an annual basis may continue to pay the taxes by check when filing Form 945.
This rule should be used with caution. Failure to make tax deposits when required may result in IRS penalties. If the plan sponsor assumes federal tax withheld for the return period won’t meet the $2,500.00 threshold and doesn’t remit withholding deposits on an ongoing basis, then prior amounts withheld will become due before the due date for the annual return if that threshold is exceeded.
Do not confuse the 945 deposits with the taxes paid by the company reported on Form 941. The Form 941 reports taxes paid using your company’s employer identification number (EIN). The 945 deposits should be made using your qualified plan’s trust EIN. If you have not received an IRS pre-enrollment notice, you may not have made tax withholding deposits for the plan in the last few years, or your financial institution makes your 945 deposits and thus it is not necessary for you to be set up to make electronic deposits for the plan. If you make tax withholding deposits and do not know your trust EIN, please contact LDSCO before attempting to register to make electronic deposits in the name of your plan.
For additional information regarding the EFTPS or how to enroll in the EFTPS, please visit the EFTPS website at www.eftps.gov or call 1-800-555-4477. You may also request the publication 966, “The Secure Way to Pay Your Federal Taxes.”