Category: Uncategorized

Posted on by Jan Roberg

IRS Electronic Deposit Rule Starts January 1st!

Electronic Federal Tax Payment SystemStarting on January 1, 2011, many businesses will be required to make federal tax deposits electronically.  You will no longer have the option of making your federal tax deposits using coupons at the bank.  Businesses that owe minimal amounts and were not subject to tax rules regarding coupons and filing will still be able to mail their payments with their filed tax return.  For example:  941 filers with a deposit liability of under $2,500 can still mail their payments if they want to.

But if you were required to use the coupon system and made deposits at the bank, then you’re going to have to switch over the Electronic Federal Tax Payment System (EFTPS.)  I’ll tell you the truth, I love EFTPS.  I use it myself and I don’t have to.  It’s free and it’s easy.  But in order to use it, you have to sign up.

First, go to their website:  https://www.eftps.gov/eftps/ 

It’s important to sign up before you actually have to make a payment because the signing up process takes some time.  Go ahead and get started today if you’re going to be making payments in January.  Make sure you have all of your information together before you start.  You’ll need all of your standard business information, including EIN number, and of course the bank account and routing number that you’ll be making your tax payments from.  You’ll be sent a PIN number and you’ll be able to start making payments after that.

You don’t even have to be a business to use EFTPS.  An individual is also able to have an EFTPS account.  I recommend that to people who have set up monthly installment agreements with the IRS.  When you make a payment on EFTPS you get confirmation that you made the payment.  That comes in really handy if you’re having an issue with the IRS.

The most important thing to know is that you need to make your payment on EFTPS one day before the payment is due by 8PM.  If you don’t do it by then, your payment will be late.  It’s okay to go in and schedule a payment in advance though.  Let’s say for example that your company owes $3,641 in payroll taxes for December and your payment is due January 17th.  You can go into EFTPS on January 2nd and schedule your payment for the 17th.  You can schedule payments up to 120 days in advance.

One more important piece of information:  When you use EFTPS, the government will not have unlimited access to your checking account.  You initiate all of your payments.  The IRS can’t just go in and grab your money without your say so.

Posted on by Jan Roberg

I Got My PTIN Number!

PTIN number

Despite the 5 identification numbers that the IRS already has for me, I still got lost in the system! Glad I'm found.

If you don’t prepare taxes for a living, you probably don’t know and don’t care what a PTIN is.  But if you’ve ever had to deal with a government agency, then you might understand my complaint.

A PTIN is a Professional Tax-preparer Identification Number.  I’ve already got one, but the IRS decided to change the rules and make me pay for it.  I don’t really like paying for something that I got for free and have already had for nine years, but I can live with it.   It’s supposed to make the tax preparation industry safer for consumers.  I’d feel better though if I thought it would actually do that. 

It’s now against the law to get paid for filing tax returns without having a PTIN.   It’s not a bad law really, any reputable tax preparer already has a PTIN anyway.    The IRS claims that it’s going to use the PTINs to monitor our tax preparation work.  If we’re crooked, we’ll get caught.  (They’ve been doing that for years already but if it makes them feel better to say so that’s fine with me.)   The fee I pay for getting my PTIN back is supposed to cover the cost of monitoring the system.  The problem is, it’s only monitoring those of us who get PTINs — the cheaters – the crooked tax preparers that are scamming the system don’t pay the fee and they’re not monitored.

If you’ve ever done any audit work, you know what I’m talking about.  A taxpayer comes to you because they received an IRS letter about a problem with their return.  They come to you because they can’t find the person that they paid to do the return in the first place.  “What do you mean?”  You ask, “Your return says self-prepared.”  But of course, that’s not the case.  They paid some fly-by-night tax preparer who doesn’t have enough confidence in his work to actually sign the return and will disappear right after April 15th if not sooner.  Those guys never get caught because the bad returns were all supposedly prepared by the taxpayers.  These are the people who need to be caught and prosecuted.  The new PTIN registration does nothing to address this problem

I’m late getting my PTIN because quite frankly, I was sort of  lost in the system for awhile.  That wasn’t very comforting, but I think the IRS could find me if they really wanted to.  I currently have  five IRS identification numbers in addition to my social security number.  I have to sign  returns using my PTIN, but I also have to put my company name and Employer Identification Number on each return.  That’s two numbers right there on every tax return I prepare.  In order to electronically file a return I have to have my Electronic Return Originator (ERO) number(3).  Most people have to be fingerprinted my a local law enforcement office to get that number.  The Sheriff didn’t have to fingerprint me to get my ERO number because I already had my Enrolled Agent number (4).  Enrolled agents already go through a bunch of other stuff including having the IRS review your prior year’s returns before they’re allowed to practice.  Because I do audit work, I also have a CAF (Centralized Authorization File) number(5) that I must use every time I represent on of those sorry folks who went to a fly-by-night preparer. 

So it seems like the IRS has plenty of information on those of us who are reputable tax preparers already, but there’s still no protection against the bad guys who fly under the radar with no type of registration whatsoever.  They cut into our businesses, make the profession look bad, and cause problems for honest taxpayers who really need help.  If the IRS would address that problem, I wouldn’t complain about the PTIN fee so much.

Posted on by Jan Roberg

Another Missouri Tax Credit: The Center for Head Injury Services

Updated May 21, 2016

 

Missouri Tax Credit for Center for Head Injury Services

 

 

I realize that I plug the Missouri Tax credits quite a bit, but when you’re choosing a charity, they really give you the best bang for your buck. You don’t just get a federal income tax deduction, you also get a 50% tax credit to offset your Missouri state income tax liability. The other thing that I really like about the Missouri Tax Credits is that the money you donate to these charities is staying right here in Missouri, helping our friends and neighbors. It’s a win/win/win situation.

Today I’m going to talk about the Center for Head Injury Services. The Center serves over 800 people each year who have head injuries or other cognitive disabilities. Their programs include employment assessment, job placement and day services.

The Missouri tax credits available fall under the categories of Neighborhood Assistance Program (NAP) tax credits and Youth Opportunity Tax Credits (YOP).   It’s available to businesses or individuals who contribute $500 or more to the organization.

Charities that qualify for Missouri Tax Credits have already been pre-screened by the state and meet pretty strict requirements about how they spend your money.   The idea behind these grants is that a well run non-profit organization can provide these valuable services better than the state can.

So why is the Center for Head Injury Services so important?  Many reasons.  Did you realize that over 2 million people suffer from brain injuries every year?  And what most people don’t realize is that brain injuries can cause permanent limitations and chronic health conditions that require long term support.  Brain injuries aren’t like a disease that can be cured.  The Center for Head Injury Services is a comprehensive resource to all types of head injury victims and their families.

They provide adult day care and therapy for persons with severe injuries and vocational and employment services to persons with less severe injuries.  They also provide counseling to families having trouble adjusting to disability issues.  They serve people with all types of head injuries whether its from a car accident, a stroke or an aneurysm.   Bottom line:  they do good work.

Even if you’re unable to qualify for a Missouri Tax credit, a donation to the Center for Head Injury would be money well spent.

One final thing, the Center for Head Injury Services has an equipment loan program.  If you have equipment that you are no longer using, they could use crutches, walkers, canes, wheel chairs, bath & shower chairs and benches, commodes, and other types of rehabilitative equipment.  Donating these items doesn’t qualify for the Missouri Tax Credit, but it would certainly be a good use of these items. You also might be able to qualify for a deduction on your federal return for “non-cash” contributions.

To learn more about the Center for Head Injury Services, click here:  https://www.headinjuryctr-stl.org/

 

Posted on by Jan Roberg

Last Minute Tax Tip: MO Tax Credit–Almost Home

Missouri Tax Credit for Almost Home

Photo from the Almost Home website

Here’s another charity that you might want to take a look at, it’s called Almost Home. Almost home serves teen mothers and their children with up to two years of housing, counseling, education and other support services. Since they opened back in 1993, Almost Home has served over 1,500 mothers and their children.

Almost Home currently has Missouri tax credits available to individuals and corporations for donations of between $100 and $100,000. Many of the tax credit programs don’t even start until you make a donation of $1,000 or more, so this is a good program for persons with a smaller charitable donation budget. As usual with Missouri tax credit programs, the credits are good for a 50% credit against your Missouri state income tax liability. This tax credit is in addition to the usual deductions that you get to claim for charitable contributions on your federal and state income tax return.

For a donation to Almost Home to count towards the Missouri Tax Credit, the donation must be in cash, stocks, bonds, securities or real property. If you can’t make that type of contribution but would still like to help Almost Home, they have a wonderful wish list on their web site. Donations of clothing, toys or supplies won’t qualify for the Missouri tax credits, but would be most graciously and gratefully accepted by the organization.

Almost home qualifies for Missouri Tax Credits under the Missouri Maternity Home Tax Credit program which is admistered by the Department of Social Services.

For more information about Almost Home and the tax credit program, please click on the link to their website: http://www.almosthomestl.org/donate/tax-credits

For information on the Missouri Maternity Tax Credit program, click on the Missouri website: http://www.dss.mo.gov/dfas/taxcredit/maternity.htm

Almost Home was established by the Franciscan Sisters of Mary. Their primary areas of concern are establishing and achieving personal goals related to health care, emotional stability and education; teaching appropriate parenting skills; and empowering members for independent living.

Posted on by Jan Roberg

Last Minute Tax Tip: Another Missouri Tax Credit

Save kids lives, donate to the St. Louis Crisis Nursery

St. Louis Crisis Nursery still has tax credits available for 2010. For a gift of $1,000 you can receive a tax credit worth $500 against your Missouri state income tax return. $1,000 is the minimum amount you must donate in order to qualify for the tax credit. In addition to claiming the Missouri tax credit, you will also be able to deduct your contribution against your federal income.

This program is limited in scope so you should call first to make sure that the tax credits are still available. Contact Betsy at (314) 292-5770. Even if you can’t qualify for the Missouri Tax Credit, you may still wish to make a donation. The whole focus of the St. Louis Crisis Nursery is saving babies’ lives and keeping kids safe. Who doesn’t think this is a good thing?

The Crisis Nursery qualifies for the tax credits under the Youth Opportunities Program and the Neighborhood Assistance Programs. It’s important to remember that many of these tax credit programs are in danger of being discontinued in the future so you may never get another opportunity to take advantage of them.

If you’d like to learn more about the Saint Louis Crisis Nursery, check out their website at: http://www.crisisnurserykids.com/index.htm

For more information about Missouri tax credits, you can go to the Missouri website: http://dor.mo.gov/taxcredit/ or just call me.

Remember, time is of the essence here.  There are only so many credits available and they are for 2010.  If you have any interest in this tax credit program whatsoever, call Betsy at (314) 292-5770  now.

Posted on by Jan Roberg

Last Minute Tax Tip: Caring for the Elderly?

...to very old people (99 years)

Photo by Maufdi

Are you caring for a spouse or a parent who is over 60 years of age and physically and/or mentally incapable of living alone?  If you live in Missouri, there may be a tax credit for you.  It’s called the Missouri Shared Care Tax Credit and it could be worth up to $500 off of your Missouri state income taxes.

In order to qualify for this tax credit, you must live in the same residence as the person you’re caring for for more than 6 months during the tax year and you must not get paid for providing care.

The person you’re caring for must not receive funding or services through Medicaid or social services block grant funding.  (Medicare is fine, it’s just Medicaid that’s not allowed.)   

To qualify for a tax credit, you will need to have your physician, or the Division of Senior and Disability Services, Missouri Department of Health, sign a certification form that says the person you care for is incapable of living alone and must acquire necessary home care to avoid placement in a care facility.  That’s why I’m putting this in the “to do in December” list–getting the certification part may take some time.

When you think about the stress and the cost of caring for someone at home, this doesn’t really seem like much of a tax credit.  On the other hand, there are already so many people already caring for an elderly spouse or parent at home and not getting anything for it, I wanted to make sure that I got this message out.  By the way, if you’ve been caring for someone for a few years, you can go back and amend old state returns to claim this credit.  You can go back up to three years.

To learn more that the Shared Care Tax Credit, click on this link to the Missouri Department of Revenue website:  http://dor.mo.gov/taxcredit/sct.php

Posted on by Jan Roberg

Last Minute Tax Tips: Do You Own a Corporation?

When I ask, do you own a corporation, I’m talking about a C-Corp, not an S-Corp. And I’m not talking about being just a shareholder in Coca Cola or GM, this post is specifically for people who own their own business and have it set up as a regular corporation.

It’s time to think about a qualified dividend distribution. Right now, qualified dividends–and here I’m talking about money that’s been held for over one year, are taxed at the capital gains tax rate. Right now, the capital gains rate for most people is 15%. Next year, there’s talk of changing that. And even with the various proposals going on in Congress, qualified dividends may still lose out and get taxed at a higher rate anyway. No matter what, you can pretty much assume that the tax rates will not go down.

So, right now, it’s time to think about a distribution. Many owners of small corporations like to keep excess funds within the corporation (that’s your retained earnings) and it makes sense so that you have money to grow the company with. And, to be honest, for some people, it’s a bit of a tax shelter-“save it for a rainy day” kind of thing. Holding money in the corporation so they don’t pay personal income tax on it unless they really need it. If you’re in the “rainy day tax shelter” camp–now is your rainy day. For most people in your situation, taking the money now is going to cost you less than taking it in the future.

So what do you need to do? Well, I always tell my clients to never take some random advice they read off of the internet, and I’m going to tell you the same thing. You need to sit down with your accountant (or accountants if you use separate ones for your business and personal taxes) and make a plan. Here’s what you want to consider:

1. How much money is available in the corporation to give as a qualified distribution? Qualified is the important word here because a non-qualified distribution is taxed at your ordinary income rate. You want a qualified distribution because of the lower tax rate. Use your good business judgement, don’t take out too much, just the excess.

2. You’ll want to see how your personal 2010 tax return will be affected if you take in that extra income. (Also, if you’re not the sole shareholder, will taking a distribution hurt your fellow shareholders as well?) Saving money on the tax rate is good only if it doesn’t hurt you somewhere else. For example, if your higher income keeps you from claiming the education tax credit on all that tuition you paid to send your kid to college, then the cost of taking the qualified dividend might outweigh the benefit of the lower tax rate. That’s why you want to sit down with your tax person and figure this out before you try it. You may be playing a balancing act — let’s say a $20,000 distribution won’t work, but what if you take $5,000 instead? Computer tax planning programs were made for these situations. What’s important is that you do it now, before December 31st. If you wait until next month–you’ve missed your opportunity.

Posted on by Jan Roberg

How to get a Copy of your Tax Return

tax return transcriptMany people need a copy of their federal income tax return in order to get a mortgage or file for financial aid.  You can order a copy of your return from the IRS for $57, but most people can get everything they need with a tax return transcript.

I was just looking at another website that offered to get your transcript for you, for a fee of $99.  But you can get that transcript directly from the IRS for free and it’s easy to do.   Here’s how:

Call the IRS main phone number:  1 (800) 829-1040

You’re going to hear a computerized woman’s voice asking you questions.  You will select “2” for information on your personal taxes.

Next, you will select “1” for information about your tax history.

Next you’ll enter “2” to get a transcript.

[Just so you know, you can call the IRS at 1 800 829-1040, type in 2, then 1, then 2 and it will take you to this next part.  You don’t have to listen to the whole computerized menu offerings.]

After that, you’ll be asked for your social security number.  If you’re married, use the social security number of the spouse listed first on the return.  They’ll be questions to verify your address.  They’ll ask what year you need the transcript for, but it’s all computer automated and you respond with your telephone keypad.  You can order up to 10 transcripts if you need them.

See how easy that is?  It will take 5 to 10 days for your transcripts to arrive at your address.   And you won’t have wasted any money! 

If you must have a photo copy of your tax return, you’ll need to file form 4506.  It will cost you $57 and can take up to 60 days to receive.  Before you spend the money, be sure to check with the bank and see if a transcript won’t be acceptable.  Here’s a link to the form if you need it.   Form 4506