* Check out my article on forming an LLC at MainStreet.com. This was my 75th item for MainStreet.
* Kay Bell offers us “Graphic Looks at Where Your Taxes Go” at DON’T MESS WITH TAXES.
* In addition to her blog Kay Bell also writes on taxes for BankRate.com – just as I write about taxes for MainStreet.com. Over at BankRate Kay has a good comprehensive article on “Teen Jobs and Tax Issues”, which discusses some of the issues I also dealt with in MainStreet items.
She tells us that some teens get a special break -
“There are special tax rules for typical teen jobs.
Individuals who provide babysitting and lawn mowing services are viewed by the IRS as household employees. In these cases, a household employee who is younger than 18 at any time during the tax year the work was performed is not subject to Social Security and Medicare taxes.
The same SE exemption also is allowed for newspaper carriers, distributors or vendors younger than 18.”
* Trish McIntire adds her voice to the discussion of the ridiculous amendment to H.R. 4213 (the American Jobs and Closing Tax Loopholes Act of 2010) in “Small S-Corps – Beware” at OUR TAXING TIMES.
Trish says (highlight is mine) -
“An argument could be made that, for many of these businesses, the ‘salary’ the owner takes is too low and if the IRS was to do a SE audit, they would be forced to take a larger salary and pay more Social Security and Medicare anyway. Maybe, but why are only certain S-corps being targeted? And why only very tiny businesses? It's like someone in Congress had this idea but didn't have the nerve to apply it to everyone and picked on the smallest and least likely to fight back.”
* And Joe Kristan continues to spread the word about this Congressional folly in “A One-Hitter is “Not Perfect’. This is Something Else” at the ROTH AND COMPANY TAX UPDATE BLOG, taking on one of the provision’s few public supporters.
Amen to – “To support the absurd and unenforceable S corporation provisions of H.R. 4213 as ‘A major step in addressing the problem, even if not perfect’ is a lame cop-out for lazy drafting and terrible tax policy.”
Thanks to Joe for continuing to fight the good fight.
And, Joe, it is indeed good to call Congress lazy idiots! As my British friends would say – call a spade a shovel.
* The IRS HITMAN reports on a recent incident where “Man Threatens IRS Office With a ‘Bomb Bag’”.
This is another case of shooting the messenger. Whatever you may say about the IRS - the Service does not write the tax law; they only attempt to enforce the oft times nonsense that the cafones in Congress come up with.
* Some tax pros oppose the new license and registration regime for preparers because they sincerely believe that the new requirements will cause tax preparation fees to increase as the additional costs are passed along to clients. I do not see this.
Russ Fox of TAXABLE TALK tells us in “Your Tax Return May Cost More” that there is something else that will cause tax preparation fees to rise -
“The Tax Extenders Bill, HR 4213, would impose a new tax on small S Corporations…like mine. If this bill becomes law, I will be forced to increase my rates. I’d guess the increase at somewhere around 10%.”
I do believe that Russ has a point.
* Kelly Phillips Erb, the TAX GIRL, sets a reader straight regarding misconceptions about the new health care “reform” bill in “Ask the taxgirl: Health Care Benefits and Taxes”.
She prefaces her answer with the spot on statement (highlight is mine) – “This is the problem with the health care bill. It’s so giant that very few people have read it (including many in Congress).”
* The NEW YORK TIMES brings us the news that “Half a Dozen States Delay Tax Refunds”.
NJ seemed to be no slower than usual in sending out state income tax refunds this year. New York told us up front that if a taxpayer does not opt for direct deposit of a refund it would be months before a paper check was received.
But even the direct deposit of NYS refunds was delayed. As the NYT article points out – “New York briefly postponed sending out half a billion dollars worth of refunds until its new fiscal year began in April.”
I had begun to get some “Hey Dude, Where’s My Refund” calls and emails from NY filers who had requested direct deposit at the beginning of April – just as I had heard on tv that NY was finally releasing refunds.
* Just wanted to remind you that, as reported in the JOURNAL OF ACCOUNTANCY, “IRS Revises Section 179 Expensing Amounts to Reflect HIRE Act Changes”
According to the article –
“On March 18, 2010, the Hiring Incentives to Restore Employment Act of 2010, PL 111-147 (the HIRE Act), extended for 2010 the increased amounts that taxpayers can expense under IRC § 179. The HIRE Act extended the $250,000 limitation on the aggregate cost of section 179 property that can be treated as an expense. It also provided that the $250,000 amount is reduced by the amount by which the cost of section 179 property placed in service during 2010 exceeds $800,000.”
* An item in the July issue of KIPLINGER’S PERSONAL FINANCE titled “A Tax Break Expires” sent me to the internet for confirmation.
According to “Intro to ESAs” at SavingForCollege.com -
“Unless Congress acts, certain ESA benefits expire after 2010. K -12 expenses will no longer qualify, the annual contribution limit will be reduced to $500 {from $2,000 – rdf}, and withdrawals will not be tax-free in any year in which a Hope credit or Lifetime credit or Lifetime Learning credit is claimed for the beneficiary.”
Currently the Coverdell Education Savings Account is the only tax benefit available for elementary and secondary school expenses. But this will not be the case in 2011, unless, as SFC says, Congress “acts”.
Don’t you know that Congress never “acts” – it only “reacts”!
* It seems that the Tax Dude does not speak often, but when THE TAX DUDE SPEAKS it is worth “listening” – i.e. his explanation of “Business Incentives Under the HIRE Act”.
TTFN
* Kay Bell offers us “Graphic Looks at Where Your Taxes Go” at DON’T MESS WITH TAXES.
* In addition to her blog Kay Bell also writes on taxes for BankRate.com – just as I write about taxes for MainStreet.com. Over at BankRate Kay has a good comprehensive article on “Teen Jobs and Tax Issues”, which discusses some of the issues I also dealt with in MainStreet items.
She tells us that some teens get a special break -
“There are special tax rules for typical teen jobs.
Individuals who provide babysitting and lawn mowing services are viewed by the IRS as household employees. In these cases, a household employee who is younger than 18 at any time during the tax year the work was performed is not subject to Social Security and Medicare taxes.
The same SE exemption also is allowed for newspaper carriers, distributors or vendors younger than 18.”
* Trish McIntire adds her voice to the discussion of the ridiculous amendment to H.R. 4213 (the American Jobs and Closing Tax Loopholes Act of 2010) in “Small S-Corps – Beware” at OUR TAXING TIMES.
Trish says (highlight is mine) -
“An argument could be made that, for many of these businesses, the ‘salary’ the owner takes is too low and if the IRS was to do a SE audit, they would be forced to take a larger salary and pay more Social Security and Medicare anyway. Maybe, but why are only certain S-corps being targeted? And why only very tiny businesses? It's like someone in Congress had this idea but didn't have the nerve to apply it to everyone and picked on the smallest and least likely to fight back.”
* And Joe Kristan continues to spread the word about this Congressional folly in “A One-Hitter is “Not Perfect’. This is Something Else” at the ROTH AND COMPANY TAX UPDATE BLOG, taking on one of the provision’s few public supporters.
Amen to – “To support the absurd and unenforceable S corporation provisions of H.R. 4213 as ‘A major step in addressing the problem, even if not perfect’ is a lame cop-out for lazy drafting and terrible tax policy.”
Thanks to Joe for continuing to fight the good fight.
And, Joe, it is indeed good to call Congress lazy idiots! As my British friends would say – call a spade a shovel.
* The IRS HITMAN reports on a recent incident where “Man Threatens IRS Office With a ‘Bomb Bag’”.
This is another case of shooting the messenger. Whatever you may say about the IRS - the Service does not write the tax law; they only attempt to enforce the oft times nonsense that the cafones in Congress come up with.
* Some tax pros oppose the new license and registration regime for preparers because they sincerely believe that the new requirements will cause tax preparation fees to increase as the additional costs are passed along to clients. I do not see this.
Russ Fox of TAXABLE TALK tells us in “Your Tax Return May Cost More” that there is something else that will cause tax preparation fees to rise -
“The Tax Extenders Bill, HR 4213, would impose a new tax on small S Corporations…like mine. If this bill becomes law, I will be forced to increase my rates. I’d guess the increase at somewhere around 10%.”
I do believe that Russ has a point.
* Kelly Phillips Erb, the TAX GIRL, sets a reader straight regarding misconceptions about the new health care “reform” bill in “Ask the taxgirl: Health Care Benefits and Taxes”.
She prefaces her answer with the spot on statement (highlight is mine) – “This is the problem with the health care bill. It’s so giant that very few people have read it (including many in Congress).”
* The NEW YORK TIMES brings us the news that “Half a Dozen States Delay Tax Refunds”.
NJ seemed to be no slower than usual in sending out state income tax refunds this year. New York told us up front that if a taxpayer does not opt for direct deposit of a refund it would be months before a paper check was received.
But even the direct deposit of NYS refunds was delayed. As the NYT article points out – “New York briefly postponed sending out half a billion dollars worth of refunds until its new fiscal year began in April.”
I had begun to get some “Hey Dude, Where’s My Refund” calls and emails from NY filers who had requested direct deposit at the beginning of April – just as I had heard on tv that NY was finally releasing refunds.
* Just wanted to remind you that, as reported in the JOURNAL OF ACCOUNTANCY, “IRS Revises Section 179 Expensing Amounts to Reflect HIRE Act Changes”
According to the article –
“On March 18, 2010, the Hiring Incentives to Restore Employment Act of 2010, PL 111-147 (the HIRE Act), extended for 2010 the increased amounts that taxpayers can expense under IRC § 179. The HIRE Act extended the $250,000 limitation on the aggregate cost of section 179 property that can be treated as an expense. It also provided that the $250,000 amount is reduced by the amount by which the cost of section 179 property placed in service during 2010 exceeds $800,000.”
* An item in the July issue of KIPLINGER’S PERSONAL FINANCE titled “A Tax Break Expires” sent me to the internet for confirmation.
According to “Intro to ESAs” at SavingForCollege.com -
“Unless Congress acts, certain ESA benefits expire after 2010. K -12 expenses will no longer qualify, the annual contribution limit will be reduced to $500 {from $2,000 – rdf}, and withdrawals will not be tax-free in any year in which a Hope credit or Lifetime credit or Lifetime Learning credit is claimed for the beneficiary.”
Currently the Coverdell Education Savings Account is the only tax benefit available for elementary and secondary school expenses. But this will not be the case in 2011, unless, as SFC says, Congress “acts”.
Don’t you know that Congress never “acts” – it only “reacts”!
* It seems that the Tax Dude does not speak often, but when THE TAX DUDE SPEAKS it is worth “listening” – i.e. his explanation of “Business Incentives Under the HIRE Act”.
TTFN
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Neil "The Tax Dude®" Johnson
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