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...]

Stacey Gorowitz Featured on CPA Radio Panel

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On January 28, our very own Stacey Gorowitz was part of a CPA panel on the High Velocity radio show on Business RadioX. Topics discussed include the effects of the fiscal cliff on business owners, preparing for the 2012 tax season and how to choose and vet an accountant. It was a lively discussion! Click here to listen to it. … [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...]

How To Select a Tax Preparer

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  It’s everyone’s favorite time of year again - tax time! Although you may not enjoy the process, it is a necessary evil. Hopefully finding the right tax preparer can make it less painful. Nearly 2/3 of all taxpayers use a tax preparer. However, it still may not be appropriate for you. There are multiple free filing software options accessible through the IRS’s website if your income is below $57,000, and 70 percent of all taxpayers make less than $57,000. But if you’re not in this category, then it may be prudent for you to hire a professional. A good tax preparer will help you stay in compliance with the law as well as minimize taxes for your specific set of circumstances. The IRS has some important minimum requirements you should look for in a tax preparer at http://www.irs.gov/uac/Ten-Tips-to-Help-You-Choose-a-Tax-Preparer. However, there are some other characteristics that could be important to you as well. When selecting a preparer it is important to: 1)    Be an … [Read more...]

Affordable Care Act – Beware of the Medicare Surtax for High Income Individuals

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By Stacey Gorowitz, CPA, MBA  Although the Patient Protection and Affordable Care Act was signed into law in 2010, many continued hoping the health care law would go away. We must now accept the tax implications it poses and plan accordingly.  In general, individuals with Adjusted Gross Income (AGI) greater than $200,000 should pay close attention. The two surtaxes, which will be imposed on higher-income taxpayers, effective for tax years beginning after December 31, 2012 include: 1) Medicare Surtax on Earned Income – In addition to the current 1.45% Medicare portion of payroll tax there will be a new 0.9% surtax applied to taxpayers who receive wages or self-employment income in excess of $200,000 for single and $250,000 for joint returns.  This surtax is not imposed until after a taxpayer crosses the earnings “threshold”. 2) Unearned Income Medicare Contribution – 3.8% Medicare tax is imposed on the lesser of net investment income or Modified AGI (specifically defined by … [Read more...]