Sunday, January 27, 2008
Saturday, January 26, 2008
Thursday, January 24, 2008
Stimulus Plan Agreed to by Congress
If passed by the Senate intact, taxpayers would begin to receive rebate checks beginning in May. Individuals who earn at least $3,000 but don't pay taxes would get $300. Full rebates of up to $600 or $1,200 would be paid to individuals earning up to $75,000 adjusted gross income in 2008 or couples filing jointly and earning up to $150,000. Above that, rebates would be reduced by 5 percent for each $1,000 in income. Rebates would be reduced by $50 for each $1,000 in income, meaning a couple with no children earning $174,000 or singles earnings $87,000 would have no rebate. A single mother of two children earning $50,000 and paying at least $600 in taxes would receive $1,200 —a $600 individual rebate and $300 a child. A married couple with three children earning $100,000 and paying at least $1,200 in taxes would receive $2,100 — a $1,200 rebate and $300 a child.
The majority of taxpayers would also see their tax rate reduced on the 2008 return so they won't have to pay taxes on the rebate amount. In 2008 the tax rate would be cut from 10 percent to 0 percent on the first $6,000 of taxable income for individual taxpayers and the first $12,000 of taxable income for couples.
For one year, jumbo loan limits would increase from the current $417,000 limit to 125% of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation.
Another temporary change in the Tax Code would allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. Section 179 deduction would also increase to $250,000 with phase out exceeding $800,000.
For more info, click here to view H.R. 5140.
The majority of taxpayers would also see their tax rate reduced on the 2008 return so they won't have to pay taxes on the rebate amount. In 2008 the tax rate would be cut from 10 percent to 0 percent on the first $6,000 of taxable income for individual taxpayers and the first $12,000 of taxable income for couples.
For one year, jumbo loan limits would increase from the current $417,000 limit to 125% of the area median price for a residence of the applicable size, but in no case to exceed 175 percent of the limitation.
Another temporary change in the Tax Code would allow American businesses that buy new equipment this year to deduct an additional 50 percent of the cost of their investment in 2008. Section 179 deduction would also increase to $250,000 with phase out exceeding $800,000.
For more info, click here to view H.R. 5140.
Wrong 1099-SSA forms
http://www.ssa.gov/legislation/1099facts.pdf
Due to a programming error, about 2.7 million SSA-1099s contained incorrect amounts. SSA has corrected the error and is mailing revised SSA-1099s to affected beneficiaries. A fact sheet describing the problem is available at the link above.
The incorrect forms over-reported the amount of benefits received by some Social Security beneficiaries who purchase Medicare Advantage or prescription drug plans under Social Security parts C and D. The incorrect information is in Box 3, Benefits Paid, of the form.
In some cases, Social Security computers preparing the 1099s included premiums for plans paid in 2006 as part of benefits received in 2007.
Due to a programming error, about 2.7 million SSA-1099s contained incorrect amounts. SSA has corrected the error and is mailing revised SSA-1099s to affected beneficiaries. A fact sheet describing the problem is available at the link above.
The incorrect forms over-reported the amount of benefits received by some Social Security beneficiaries who purchase Medicare Advantage or prescription drug plans under Social Security parts C and D. The incorrect information is in Box 3, Benefits Paid, of the form.
In some cases, Social Security computers preparing the 1099s included premiums for plans paid in 2006 as part of benefits received in 2007.
What employers should know about compensatory time off
From the San Francisco Chronicle:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/23/BU78UJP1I.DTL
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/01/23/BU78UJP1I.DTL
Tuesday, January 22, 2008
Updating of wills is important
http://www.sacbee.com/103/story/651278.html
Something to think about. Many should also set up a living trust in addition to drafting a will. There is also the living will (a.k.a. a health care directive) and power of attorney appointing a trusted relative or friend to tell the doctor whether or not to resuscitate and to take care of your finances in case you become disable.
Something to think about. Many should also set up a living trust in addition to drafting a will. There is also the living will (a.k.a. a health care directive) and power of attorney appointing a trusted relative or friend to tell the doctor whether or not to resuscitate and to take care of your finances in case you become disable.
Friday, January 18, 2008
IRS Boosts Tax Audits
http://www.webcpa.com/article.cfm?ARTICLEID=26514
The Internal Revenue Service said it has increased its enforcement efforts, auditing 84 percent more returns in fiscal year 2007 of individuals with incomes of $1 million or more compared to fiscal year 2006.
The number of those taxpayer audits jumped from 17,015 in fiscal year 2006 to 31,382 in fiscal year 2007, which ended Sept. 30. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.
The IRS has also been auditing more individuals with lower incomes. Audits of individuals with incomes over $200,000 climbed 29.2 percent to 113,105 taxpayers in fiscal year 2007 from 87,885 in 2006. The IRS conducted 13.7 percent more audits of individuals with incomes of $100,000 or less, auditing 293,188 returns in fiscal year 2007 compared to 257,851 in 2006.
The total number of individual returns audited increased 7 percent, reaching 1,384,563 in 2007 from 1,293,681 in 2006. The IRS filed 3.8 million levies and almost 700,000 liens during 2007, an increase from 2006.
Businesses, too, experienced more IRS audits, with the agency focusing on mid-market corporations with assets between $10 million and $50 million. Audits of S corporations were up 26 percent to 17,681 during 2007 from 13,984 in 2006. Audits of partnerships increased to 12,195 during 2007, 25 percent more than the prior year's total of 9,777.
Audits of businesses in general rose to 59,516 in 2007, an increase of almost 14 percent from the prior year's total of 52,223. While audits of large corporations dipped slightly in 2007 to 9,644, the number is up 14 percent from fiscal year 2002.
All those extra audits paid off for the IRS, with enforcement revenue reaching $59.2 billion, compared to $48.7 billion in 2006 and $34.1 billion in 2002.
The Internal Revenue Service said it has increased its enforcement efforts, auditing 84 percent more returns in fiscal year 2007 of individuals with incomes of $1 million or more compared to fiscal year 2006.
The number of those taxpayer audits jumped from 17,015 in fiscal year 2006 to 31,382 in fiscal year 2007, which ended Sept. 30. One out of 11 individuals with incomes of $1 million or more faced an audit in 2007.
The IRS has also been auditing more individuals with lower incomes. Audits of individuals with incomes over $200,000 climbed 29.2 percent to 113,105 taxpayers in fiscal year 2007 from 87,885 in 2006. The IRS conducted 13.7 percent more audits of individuals with incomes of $100,000 or less, auditing 293,188 returns in fiscal year 2007 compared to 257,851 in 2006.
The total number of individual returns audited increased 7 percent, reaching 1,384,563 in 2007 from 1,293,681 in 2006. The IRS filed 3.8 million levies and almost 700,000 liens during 2007, an increase from 2006.
Businesses, too, experienced more IRS audits, with the agency focusing on mid-market corporations with assets between $10 million and $50 million. Audits of S corporations were up 26 percent to 17,681 during 2007 from 13,984 in 2006. Audits of partnerships increased to 12,195 during 2007, 25 percent more than the prior year's total of 9,777.
Audits of businesses in general rose to 59,516 in 2007, an increase of almost 14 percent from the prior year's total of 52,223. While audits of large corporations dipped slightly in 2007 to 9,644, the number is up 14 percent from fiscal year 2002.
All those extra audits paid off for the IRS, with enforcement revenue reaching $59.2 billion, compared to $48.7 billion in 2006 and $34.1 billion in 2002.
Thursday, January 17, 2008
New rules on gift certificates
http://www.yubanet.com/artman/publish/article_72640.shtml
California SB250 (Corbett) gives consumers the right, as of January 1, 2008, to cash in an unused or partially used gift card when the value of the card is less than $10.00. Previously, retailers didn't have to issue a refund.
Thanks to David Fogel, CPA for this alert, see www.fogelcpa.com.
California SB250 (Corbett) gives consumers the right, as of January 1, 2008, to cash in an unused or partially used gift card when the value of the card is less than $10.00. Previously, retailers didn't have to issue a refund.
Thanks to David Fogel, CPA for this alert, see www.fogelcpa.com.
Supreme Court Rules on Trust Fee Deductions
http://www.webcpa.com/article.cfm?ARTICLEID=26510
The Supreme Court has handed down a unanimous decision in a case involving the deductibility of investment advisory fees by trusts, ruling that the expenses are deductible only to the extent that they exceed 2 percent of the adjusted gross income.
The case, Knight vs. Commissioner of Internal Revenue, involved the family of the founder of Pepperidge Farm, Henry Rudkin. The trust that handled his estate tried to deduct the entire $22,241 it spent on investment advice in 2000, but the Internal Revenue Service said it could only deduct the expenses to the extent that they exceeded the 2 percent floor mandated by Section 67 of the Tax Code. The discrepancy amounted to a tax deficiency of $4,448.
After the Tax Court and the Second U.S. Circuit Court of Appeals ruled against the trust, the case went to the Supreme Court. Chief Justice John Roberts wrote the decision saying the deductions are still subject to the 2 percent floor.
The Supreme Court also heard arguments in another tax case, MeadWestvaco Corp. vs. Illinois Department of Revenue. That case involves a tax imposed by Illinois on the $1 billion gain by MeadWestVaco when it sold information provider LexisNexis in 1994, a company it acquired in 1968 for $6 million. The court will decide on whether the tax ruling conflicts with court decisions in several earlier cases involving AlliedSignal, F.W. Woolworth and Asarco.
For further reading, see http://www.webcpa.com/article.cfm?articleid=26860&pg=cpaw.
and
http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/Tax/floor.jsp
_______
David Fogel CPA www.fogelcpa.com sent me the following comment, "the decision wasn't absolute --- the court didn't say that investment advisory fees paid by a trust are always subject to the 2%-of-AGI reduction. The court still left the door open for fees paid by trusts that individuals wouldn't normally pay. For example, the court stated that in appropriate cases, "the incremental cost of expert advice beyond what would normally be required for the ordinary taxpayer would not be subject to the 2% floor."" Thanks, David.
The Supreme Court has handed down a unanimous decision in a case involving the deductibility of investment advisory fees by trusts, ruling that the expenses are deductible only to the extent that they exceed 2 percent of the adjusted gross income.
The case, Knight vs. Commissioner of Internal Revenue, involved the family of the founder of Pepperidge Farm, Henry Rudkin. The trust that handled his estate tried to deduct the entire $22,241 it spent on investment advice in 2000, but the Internal Revenue Service said it could only deduct the expenses to the extent that they exceeded the 2 percent floor mandated by Section 67 of the Tax Code. The discrepancy amounted to a tax deficiency of $4,448.
After the Tax Court and the Second U.S. Circuit Court of Appeals ruled against the trust, the case went to the Supreme Court. Chief Justice John Roberts wrote the decision saying the deductions are still subject to the 2 percent floor.
The Supreme Court also heard arguments in another tax case, MeadWestvaco Corp. vs. Illinois Department of Revenue. That case involves a tax imposed by Illinois on the $1 billion gain by MeadWestVaco when it sold information provider LexisNexis in 1994, a company it acquired in 1968 for $6 million. The court will decide on whether the tax ruling conflicts with court decisions in several earlier cases involving AlliedSignal, F.W. Woolworth and Asarco.
For further reading, see http://www.webcpa.com/article.cfm?articleid=26860&pg=cpaw.
and
http://www.cpa2biz.com/Content/media/PRODUCER_CONTENT/Newsletters/Articles_2008/Tax/floor.jsp
_______
David Fogel CPA www.fogelcpa.com sent me the following comment, "the decision wasn't absolute --- the court didn't say that investment advisory fees paid by a trust are always subject to the 2%-of-AGI reduction. The court still left the door open for fees paid by trusts that individuals wouldn't normally pay. For example, the court stated that in appropriate cases, "the incremental cost of expert advice beyond what would normally be required for the ordinary taxpayer would not be subject to the 2% floor."" Thanks, David.
Wednesday, January 16, 2008
Subscribe to:
Comments (Atom)