Happy 100th Birthday, Form 1040!

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By Stacey Gorowitz, CPA, MBA  In March 1913, Form 1040 as we know it today was first issued for income tax reporting. Here’s a basic 1040 income tax return history from the Library of Congress: “The origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913… March 1st was the [filing deadline] specified by Congress in 1913, after the passage of the 16th amendment. In 1918 Congress pushed the date forward to March 15th, where it remained until the tax overhaul of 1954, when the date was again moved ahead to April 15th.” Included in this post is an image of the first page of the original form from 1913, as supplied via OurDocuments.gov through the National Archives & Records Administration. Additionally, here is a link to a recreated pdf of a complete 1913 1040 form that is, get this, a whopping four pages long including the form and all instructions. Today’s form and … [Read more...]

5 Tax Myths That Won’t Go Away

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  I get a lot of questions this time of year. They come from clients, from friends, from the cleaning crew at the office, and from my mechanic. I don’t mind; I actually enjoy what I do and consider educating the taxpaying public part of my job. I get excited when I get to talk about tax law over dinner with friends. However, it still amazes me to see the tax myths that just won’t die. If I could create a public service announcement, I would tell people that: 1)    Most taxpayers will get synergy and tax savings by having one appropriately qualified CPA prepare both their individual and business returns. Many people are under the impression that to spread risk and save costs they should have different preparers handle personal and businesses tax returns. This can’t be further from the truth. The proper professional will help you with tax planning for your entire financial picture – not just pieces of it. Most small businesses are flow-through entities, which means that … [Read more...]

How Does Sequestration Affect You?

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  For many, the word “sequestration” is just another overly-hyped term being thrown about the halls of D.C. that doesn’t actually have any real effect on the average American citizen. However, if you know anything about how economics works, then you understand that no matter where large cuts like this take place, they ultimately affect all of us. Call it the trickle down effect or whatever you want: cuts in the government means cuts for small businesses and individuals, both directly and indirectly. For example, the IRS announced that portions of the Affordable Care Act that offer some health care incentives for small businesses will have cutbacks. This means that health care benefits are now a little more expensive for employers. This could result in  lowered benefits or benefits that are eliminated in full. Another direct impact is on individual and small business contractors who work with the government. With such large cutbacks, many of these contractors will have … [Read more...]

Forget what you think you know about Form 1099…here’s what you need to know!

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By Candace S. Spencer, CPA Let’s break down the What, the Who and Why the IRS will penalize you if you don’t file 1099s. What do you need to know about 1099s in a nutshell? The general rule states that if you are engaged in a trade or business you are REQUIRED to file 1099s. So if Owner, President, CEO, Entrepreneur is on your business card, you are responsible for 1099 filings. The only exception to this rule is if the expenses were paid via credit card. We recommend that before engaging in business with new vendors, you ask them to complete Form W-9, which can be found on the Internal Revenue Service (IRS) website at www.irs.gov. They should fill this out and return it to you before payments are rendered. Actually, the rules state that you’re required to get this form from them before making a payment. Otherwise, you as the business owner are required to do Backup Withholding (an entirely different topic) Who gets a 1099? All individuals and partnerships including certain … [Read more...]