Arizona Tax News & Tips

Do You Need to File 1099s?

2012-01-17T09:36:00.001-08:00

If you paid more than $600 to any individual, LLC or partnership for rent or services provided to your business during 2011, then you must send that entity a 1099. You must also file all copies of Forms 1099 with the IRS, along with cover sheet, Form 1096 by February 29, 2012.

How Can I Easily Determine Which Vendor Will Need a 1099?

Your QuickBooks file is the perfect tool so you can determine if you need to file a 1099 to any particular vendor. By looking at your Profit & Loss report for 2011, you want to pay attention to all service and rent categories such as:

· Advertising & Promotion

· Misc.

· Outside Service

· Legal Fees

· Accounting Fees

· Professional Fees

· Repair Service

· Rent/CAM Charges – this one goes under “rent” on 1099. not non-employee compensation

· Storage – same as above

When you find those categories, click on the amount to review the detail. This way you can identify which vendors received more than $600. If any vendor’s name ends in “Inc, Co., Corp. or Corporation,” then there is no need to issue a 1099. If the company is a C-Corp or an S-Corp, they are excluded from receipt of 1099s. For example, eeCPA is an S-Corp, so no need to send us a 1099!

What information do you need from the service provider?
You will need the full name of the individual or business, the address and the individual or business' Taxpayer (Employer) Identification Number, along with the amount that you paid to that provider during 2011. All of this information can be obtained by sending your vendors Form W-9. Click here to obtain this form.

Do you need help in preparing your Forms 1099?
eeCPA is here to help...
1. We will gather the information from you.
2. We will prepare all of the forms and mail them to the recipients by the deadline.
3. We will file the government forms electronically on your behalf.
4. We will send you copies of all of the forms and a summary report once the filings have been completed.

If you provide us with the information that we need, we will charge you just $25 per 1099.

If we need to gather the information from your accounting files and determine the filing requirements, then we will charge you based upon our standard hourly rates.

Why should you file Forms 1099 timely?
The #1 reason to file your Forms 1099 timely is to preserve the deductibility of your expenses.

Secondly, you want to file the 1099's timely to avoid the penalties for late and/or incomplete filings. The penalties range from $30-$100 per 1099 Form if not filed, filed late or incorrectly filed.

Tips to make the 1099 process less painless for 2012...
Have all of your service providers complete a Form W-9 prior to making payment to them. That way they have incentive to complete and return the form to you, and you have all of the information that you need when it comes time to prepare your 1099s for 2012.

How to Take Advantage of AZ Tax Credits

2011-12-14T15:14:00.000-08:00

Do you pay even $1 of tax to the State of Arizona? If the answer is yes, then you can choose to pledge those dollars directly to education or to charitable organizations that assist the working poor. There are 2 types of Arizona Tax Credits that support the funding of education in Arizona. There is the private school tuition credit and the public school fee credit. Contributions for private school tuition tax credits can be made through April 16, 2012. If you make a contribution by April 16, 2012, you have the option of using it as a tax credit on either your 2011 or 2012 return.Here is the Arizona Department of Revenue’s website for details on how you can take advantage of these tax credits.

Furthermore, there are a number of charities that depend on donations and provide programs throughout our community. Many of these organizations are really struggling right now, and you can help them by taking advantage of the Charitable Tax Credit and saving on your 2011 taxes. (Warning - Please note that this credit is only available to individual taxpayers that itemize their deductions. If you take the standard deduction, then you may not claim the credit!)

In sum, every Arizona Resident is eligible to take the following maximum annual charitable/education credits:

Single/Head of Household

Private School $500

Public School $200

Charitable Organization $200

Total Available $900

Married Filing Joint

Private School $1000

Public School $400

Charitable Organization $400

Total Available $1800

Oftentimes, if you have children in public school, you will be paying fees for extracurricular activities or special programs. Keep track of those fees, since they will most likely qualify for the credit and reduce your tax bill.

If someone close to you is attending a private school (other than your child), you can make a specific tax credit donation to the private school that will benefit that person specifically, if they qualify to receive a scholarship. You would need to contact the school directly to make arrangements for this type of donation.

Please note that when preparing your tax returns, we will need the following information about your tax credit donation: Payee, date donation made, amount of donation.

Unlike other charitable donations which merely provide deductions that can save you up to 5.4% on your tax bill, a tax credit saves you 100% of the tax. That is for every $1 you spend on a tax credit donation, you may subtract $1 from your Arizona Tax Bill.

If you are unsure of where to make your contribution, we recommend Quality Interactive Montessori School or Foothills Academy. Click on this link for the Quality Interactive donation form and this link for the Foothills form.

Happy Holidays!

2011-12-09T08:44:00.001-08:00

We would like to thank you for the opportunity to serve you this past year and look forward to a very successful 2012! We would like to wish you a very happy and safe holiday. Please note that our office will be closed December 26 through December 30 in observation of the Christmas and New Year’s holidays.

Get Ready for the 2011 Tax Season!

2011-12-09T08:43:00.000-08:00

Now that 2011 is finally coming to a close, it is the perfect time to start thinking about your tax preparation. Remember returns are scheduled on a first come, first serve basis so the earlier you contact us, the sooner you could receive your refunds! Please pre-schedule your appointments in January to discuss your tax preparation.

How to Respond to the IRS

2011-12-09T08:42:00.000-08:00

The Internal Revenue Service sends millions of letters and notices to taxpayers each year; certainly, enough that the Post Office should be thriving. If you received a letter, there is no need to worry. Just follow these steps:

· Call eeCPA, not the IRS. When you receive the notice, please notify our office first. If you contact the IRS, you may unknowingly do a disservice to your case. Please know that this is an issue that should be handled by professionals.

· Don’t worry! The IRS sends notices for a myriad of reasons i.e. assessment of additional tax, assessment of penalties, request for additional information to substantiate claims on your return, etc. Most of the issues can be resolved with further explanation to the IRS.

o If you do receive a notice, please note that our response is a service outside of our tax preparation engagement.

· Send us a copy of the letter right away. It is absolutely critical to respond to the IRS timely. Any delay in response can impact the resolution of your case. Please consider that it does take time to gather information and organize the substantiation before presenting it to the IRS.

Year-End Checklist

2011-12-09T08:28:00.000-08:00

The end of the year is quickly approaching, but don’t let the year-end tasks ruin your holiday cheer! Here is a quick checklist of items to complete so you can successfully wrap up 2011 and prepare for 2012.

ü Get your books in order. If your bookkeeping is not up to date, you cannot get a realistic picture of your business’s performance in 2011. With this not done, you cannot determine any last-minute strategies before year-end.

ü Review your Profit & Loss. Where do you stand for 2011? Did you profit more than you expected? Now would be a great time to make any major purchases before the year’s end to take advantage of depreciation expenses.

ü Prepare for 1099s & W-2s. The final day to mail W-2s to your employees and 1099s to your vendors is January 31, 2011. The last day to file Forms 1096 and 1099 by mail is February 28, 2011 and if filing electronically, March 31, 2011. Don’t wait until the last minute to file! Be sure to verify vendor information and collect W-9s if you have not done so previously. Please remember that the expanded 1099 requirements identified in the 2010 Small Business Jobs Act and health care reform bill were repealed. You must issue Form 1099 to any individual, LLC, or partnership if you paid more than $600 in rent or services during 2011.

ü Year-end bonuses and gift-giving. After reviewing your profit and loss, you can determine whether it would be advantageous to issue bonuses and purchase gifts in 2011 or 2012.

ü Fringe benefits. Take a look at possible benefits to extend to your employees (health and life insurance, transportation subsidies, educational reimbursements, etc). You might be able to take advantage of additional expenses.

ü Don’t forget about your contributions! If you are looking to offset your income, there are plenty of options available. You could consider the Arizona Tax Credits for education and the working poor. By making a contribution to qualifying schools and charities, you can claim a dollar for dollar credit of up to $900 for single/head of household or $1,800 for married filing joint. If you are still looking for a specific organization, you might like to consider Quality Interactive Montessori School or Foothills Academy. Click on this link for the Quality Interactive donation form and this link for the Foothills donation form. Don’t forget about your retirement plan contributions, too!

ü Plan for 2012. Now that you have examined 2011, look forward to 2012. Set goals for the New Year and prepare a plan of action!

Gas Prices Are Up and So Are Deductions:Saving on your Business Auto, Light Truck or Van in 2011

2011-06-27T15:13:00.000-07:00

Buying a new vehicle?

Although we are already half way through 2011, you can still take advantage of plenty of write-offs and deductions when it comes to your business autos this year! The IRS has just released the new bonus depreciation dollar caps for business autos bought and put into service in 2011.

Under the Small Business Jobs Act passed in 2010, first- year luxury auto dollar limits increased, providing for larger depreciation deductions. Besides being able to write off more for your business auto, bonus depreciation was also made an option: you can get up to 100% bonus depreciation for the first year, providing that you are buying a NEW vehicle.

Under the new Code Sec. 280F, you can write off up to $8,000 more on your business luxury auto in 2011. The maximum limits for depreciation deduction are the same as those the IRS issued in 2010, but the dollar limits have increased by $100 for the first three years for light trucks and vans. For business luxury-auto owners, bonus depreciation in the first year is still a way to save!

If you’re wondering whether or not you are eligible for bonus depreciation and higher caps on the amount of depreciation you can deduct from your taxes each year, check out this flowchart!

Standard Mileage Rates are Up

Effective July 1, 2011, the IRS has increased the standard mileage rate from 51 cents per mile for business use to 55.5 cents per mile (due to the rapid rise in fuel prices!)

The medical/moving mileage rate has also increased from 19 cents per mile to 23.5 cents per mile, effective July 1, 2011.

Thus, it would be a good idea to take your odometer reading this week! We want to be sure that you get the maximum deduction. If you want us to keep track for you for your 2011 tax return filing, please just shoot Megan (megan@eecpa.com) an email to let her know what your odometer reading is!

The Importance of Being in Good Standing- Why Recordkeeping Matters

2011-06-27T14:54:00.000-07:00

Congratulations! You formed a company! After all the paperwork and filings, your business has been established. Is all the paperwork over? Not quite yet…Maintaining your company’s records is just as important as making sure it is organized properly. Here are a few key points to ensure your business is protected.

File Your Annual Reports

Arizona Corporations are required to file an annual report. Filing your annual reports is relatively quick and easy, especially now that you can file annual reports online. There is a filing fee of $45 plus additional fees to expedite the filing. If the annual report is not timely filed, late filing and reinstatement fees will be assessed. Why is it so important to file an annual report on time? Not only are the annual report filing fees a revenue generator for the state, but they are also a legal requirement for any Arizona company.

To the Arizona Corporation Commission, failing to file your annual report means that your company is no longer active and is not in good standing. If you do not file your annual reports for several years, your company will dissolve involuntarily. Could this have a serious effect on your company? Absolutely. If your company is not in good standing, you are not active according to the state. As a result, your company can lose its legal protection. Let’s say you enter into a contract with another vendor and the vendor wants to renege on the contract. If you are not in good standing, the vendor can very easily void the contract since your business is legally unable to sign the contract. It could get worse. Let’s say an unsatisfied customer decides to sue your company for damages. If your company was not in good standing when the transaction occurred, then the action cannot be filed against the company, but instead may be filed against you, personally.

How can eeCPA help you?

We can assist you with Annual Report filings, updates & documentation of Annual Meetings, at our normal hourly billing rates.

Added Value: As an eeCPA client, you are welcome to the use of our conference room for free, at any time, should you wish to schedule a meeting of the directors of your business.

Make Sure Your Contact Information is Up to Date
If your address has changed, make sure you file a Statement of Change of Known Place of Business or Statutory Agent with the Arizona Corporation Commission. The Arizona Corporation Commission does not allow the Postal Service to forward mail. You do not want to miss any critical documents, so please be sure you notify the AZ Corporation Commission of any changes.

Furthermore, if your statutory agent resigned, you must appoint a new agent immediately. Arizona law requires all entities to have a statutory agent. Failure to appoint a new statutory agent results in loss of good standing. You can file the same Statement of Change form to appoint a new statutory agent.

Finally, make sure your corporate life has not expired. If you chose a specific period of time for your corporation to exist and the lifespan concluded, you need to file an amendment to ensure your current life is valid.

eeCPA Client Bonus

We offer statutory agent services to our existing clients at no annual fee. Plus, as part of our ongoing service to our clients that use our statutory agent service (for free), we check your corporate record to be sure that your address and contact information is current. If it is not, then we update your information with the Arizona Corporation for a nominal fee.

Preparing Corporate Minutes

Arizona law requires all corporations to hold annual shareholder meetings and maintain corporate records in accordance with the company bylaws. Failing to adhere to these bylaws could result in troublesome legal issues down the road. As a result of poor recordkeeping, creditors could pierce the corporate veil and make you personally liable for your corporation’s debts.

In addition to protecting the shareholder’s liability, keeping good minutes is vital to providing an audit trail for corporate decisions and transactions. If your company needs a legal opinion, the minutes are the best source for supporting evidence. Most importantly, your minute book documents the authority granted to directors and shareholders and preserves vital information regarding stock records and transfers if there are any future discrepancies.

Annual Budget

While you are updating your company records, this is the perfect opportunity to take a look at your budget. Creating a budget is an incredibly useful tool to help you make a prediction of expected revenues and expenses for the next year. You can project numerous situations for your business’s profitability to help plan for the upcoming year. You can also map out your cash flow to help identity any potential problems in the upcoming year. If you foresee a shortage on cash for a period, you can plan ahead to get a line of credit or borrow money, etc.

While recordkeeping might not be the most exciting aspect of operating your business, it will definitely save you in the long run. If you have any questions, feel free to contact our office.

New Services & People at eeCPA

2011-05-27T10:42:00.000-07:00

We have some exciting new services to offer you this summer.

Enhanced Payroll Services

We are thrilled to introduce the new payroll system that we are now offering, which can save companies considerably on payroll processing and tax compliance. With this new program, we are able to electronically file and pay all payroll returns, process direct deposit payroll within 24 hours, and provide streamlined, accurate payroll reports in real time. If you are interested in learning more about how we can improve your payroll system, please contact us.

Employee Benefit Plan Administration

In addition to our enhanced payroll services, we are now available to serve as a Third Party Administrator for your 401(k), Profit Sharing & Pension plans. Not only can we prepare the returns for you, but we can provide TPA service and review your plan to ensure total compliance. We are very excited about providing this service, since we believe that we will be able to save our clients lots of time, effort, confusion & cash.

As part of our tax services, we already review our clients’ 401(k) plans for compliance, and try to address issues before penalties are imposed, plus we often use funding of retirement plans as a tax strategy to minimize tax liabilities. Now, you will be able to refer to one source, rather than a number of different companies, and we will be able to save you money on duplicated efforts and fees. Plus, we hope to improve the speed with which we can deliver a year-end tax plan, since we will not have to coordinate and depend upon other companies to do the calculations. We will be able to deliver the entire service at a cost savings to you!

Please contact us if you want to find out more.

New Staff

Another change you might notice this summer is the addition of our new intern, Loralei Bailey. Loralei is a student at Arizona State University and is a double major in English Literature and Accounting. She is a very enthusiastic addition to our firm and we enjoy working with her!

Summer Hours

2011-05-23T15:57:00.000-07:00

eeCPA, PLC will be closed on Monday, May 30th, in observation of Memorial Day. Please note that our regular office hours have changed for the summer. We are open 8am until 5pm on Mondays through Thursdays. Our Friday hours will be from 8am until 1pm.

We hope you have a very relaxing summer!

Thinking of a Short Sale? Act Now or Pay Later!

2011-05-23T15:55:00.001-07:00

If you were considering selling a home in a short sale, act now! The Mortgage Debt Relief Act of 2007 expires in 2012, which is right around the corner. Under the Mortgage Debt Relief Act, taxpayers can exclude realized income from the debt on their principal residence. If your loan is cancelled or forgiven, you will receive a Form 1099-C for the balance forgiven. This form is reported to the IRS because it is treated as income for tax purposes. The Mortgage Debt Relief Act grants relief from that taxable income.

There is little talk in Congress about extending this act so plan ahead! If you wait until after 2012, the laws prior to the provision will be retroactively instated. Let’s say you sold your home for a short sale of $300,000 and you owed $500,000. You will receive a 1099-C, which shows that the lender forgave you $200,000. If you sold your home before December 31, 2012, you will not owe any income tax. If the closing occurred after January 1, 2013, you will be taxed on that $200,000.

If you are considering a short sale, act quickly before it’s too late!

Finishing Up Spring Cleaning? What Documents to Keep and What to Toss

2011-05-23T15:47:00.000-07:00

Have you been staring at that stack of documents in your house? You probably want to shred everything, but are worried you might need to retrieve those files again. No need to worry! Here is our list of documents to retain and documents to you can safely destroy.

Here is what you should keep:

· All Asset Purchase documents (Real Estate, Vehicles) for assets that you currently own or have owned at any time since 11/1/2008

· All Birth Certificates, social security cards, passports

· All Promissory Notes and Credit Documents for loans that you are still paying on.

· Wills, Trusts, Health Directive Statements

· All Powers of Attorney issued now or in the past to you or by you

· Marriage Certificate

· Death Certificates

· Stock Certificates

· Savings Bonds

· All Gift Tax Returns ever filed

· All Brokerage account statements from 1/1/2008 to current

· All Bank Statements from 1/1/2008-current

· All Credit Card Statements from 1/1/2008-current

· Retirement Plan Documents

Here is what you should toss:

· All income tax returns, bank statements and brokerage/retirement account statements from 12/31/07 and prior

· All receipts and paid bills from 12/31/07 prior

Please be sure to contact our office if you have any specific questions!

The Benefits of Filing an Extension...

2011-04-05T16:20:00.000-07:00

The tax deadline is right around the corner and you might be still working on gathering your tax documents. No need to stress- you can extend! There are really almost no cons to extending your return, unless of course you are expecting a huge refund. Most of our clients (that have been with us for more than a year) will not be expecting huge refunds, since we take the extra time as a part of our service, to review and adjust your tax withholdings and estimated payments for the following year. Why leave your money on deposit with the government? They will just use it to bail out another failing American institution…while your family continues to struggle to earn and save and realize the American dream!

eeCPA PLC is different in that rather than just looking at historical data and making estimates based on that data, we actually take a forward looking approach to anticipate new changes in your business or financial life. Further, by staying on top of the new tax law changes, we apply the new law to our forward-looking calculations to save you from paying more tax than you should.

The Myths of Extension…

Filing on time does not yield any substantial benefit for you. In fact, it is often a benefit to extend your returns. Many times a thorough analysis will yield greater tax savings for you. When you do not receive your tax documents until late February, there is just not enough time to thoroughly analyze all deductions and potential tax savings strategies for all clients in just 6 weeks. By extending, we can take more time in making meaningful recommendations to save you money.

Getting an extension of time to file is not viewed by the government like the teacher may have viewed your request for extension of homework. The government is well aware that it is impossible for tax professionals to prepare and file all of their clients’ returns within a six-week time frame. Extensions of time to file are now granted “automatically”. Times have changed, technology has changed, and business investments have all become more complex. It takes time to sort out some of these issues and make accurate calculations to provide proper reporting to the government.

If you would like to file an extension, please send any W-2s or 1099s you received for 2010 to our office. We can make an estimated calculation to determine whether there is any tax due by April 18, 2011. Please contact us if you have any questions!

Energy Efficiency Tax Credits: Get Some Green for Being Green!

2011-04-05T16:19:00.002-07:00

Did you make any energy efficient improvements to your home in 2010? The federal government will reward you for your environmentally friendly efforts! If you purchased any energy-efficient property for your principal residence by December 31, 2010, you could be entitled to the Federal Tax Credit for Consumer Energy Efficiency. In order to claim the credit, the improvement must be placed in service in 2010. The tax credit allows you to claim up to 30% of the cost of the improvements up to the limit of $1,500. Qualifying improvements include windows and doors, biomass stoves, HVAC units, insulation, roofs, and water heaters. If you think you might qualify, please send us copies of your receipts and manufacturer’s statement so we can submit the request for the tax credit on your returns.

If you make an energy efficient improvement to your home in 2011, you can still receive a tax credit, albeit at a lower level. The 2010 Tax Relief Act extended the home energy-efficiency tax credit into 2011. Instead of the 30% credit with the $1,500 credit, the levels are now 10% up to $500, with a $200 maximum for windows.

1099 Repeal Passed by Senate-“A Victory in Common Sense”

2011-04-05T16:19:00.001-07:00

On Tuesday, April 5^th, the Senate passed a billthat would repeal the 1099 reporting requirements outlined in the Health Care Act and Small Business Jobs Act. The bill is now directed to President Obama for signature. Both parties supported the bill with a lopsided 87 to 12 vote. Senator Mike Johanns of Nebraska stated the passing of the bill was a “victory in common sense.”

In order to offset the $22 billion projected lost revenue from the Health Care Act, the House offered a measure based on the subsidies people receive to purchase health insurance under the Health Care Act. The House’s proposal will require taxpayers who receive a larger subsidy that they are allowed to return the overpayment to the government. Democrats call this proposal a tax increase on the middle class so this measure will likely be debated. For right now, we can at least celebrate the repeal of this unnecessary administrative burden!

New Tax Laws Could Mean a Green Spring for You and Your Business

2011-03-08T10:14:00.001-08:00

2010 was a monumental year for tax law. This past year marked a historic intersection of tax laws simultaneously providing much-needed relief to taxpayers and enacting revenue raisers to fight the deficit. What does this mean for you? 2011 could be a very green year!

The 2010 Tax Relief Act includes some very favorable provisions for taxpayers. Capital gains and dividend tax rates will continue to be taxed at the maximum 15 percent rate until 2012, when the rates will increase to 20%. The 2010 Tax Relief Act also reduced the employee share of Social Security tax from 6.2% to 4.2%. The Social Security tax reduction replaces the Making Work Pay credit and will actually provide a greater benefit to taxpayers. Furthermore, the new rules for Roth IRA conversions will remain intact. Individuals may convert funds from a traditional IRA to a Roth IRA, regardless of income. In addition to the benefits for individual taxpayers, the 2010 Tax Relief Act provides numerous benefits to businesses. The Act will double and extend bonus depreciation from 50% to 100% for qualified property acquired between September 8, 2010 and January 1, 2012.

Certain provisions in the 2010 Small Business Jobs Act and the HIRE Act have also been extended. The carryback period for the small business credits has been extended from one to five years. The Small Business Act also increases the amount of deductible start-up expenses from $5,000 to $10,000. Moreover, the HIRE Act included a “Worker Retention Credit” of $1,000 or 6.2% of wages paid by the employers to the employee for employers who qualify by hiring and retaining a previously unemployed worker on the payroll for a consecutive 52 weeks. These available credits could provided a much needed boost for your business!

Meanwhile, a few revenue raisers did pass such as the Health Care and Education Reconciliation Act, which imposes additional Medicare taxes on higher-income individuals. However, these changes will not be in effect until after December 31, 2012. Luckily, some other revenue generating bills managed to lose momentum in 2010. For example, the Senate rejected a bill that would impose self-employment payroll taxes on s-corporation pass-through income for an s-corporation engaged in a service business. Thankfully, the lobbying efforts against these bills thwarted the progress.

Due to the active tax law climate in 2010, these provisions are subject to change. We will be sure to keep you up to date to be green in 2011!

Hope Is On the Horizon- 1099 Law on the Road to Repeal

2011-03-08T10:13:00.002-08:00

On March 3, 2011, the House of Representatives passed the Small Business Paperwork Mandate Elimination Act of 2011. This bill would repeal the 1099 reporting requirements outlined in the Patient Protection and Affordable Care Act. It would also eliminate the 1099 reporting requirements already in effect from the Small Business Jobs Act for taxpayers who receive rental income. Last year, the Patient Protection and Affordable Care Act expanded the 1099 reporting requirements to include all payments of $600 or more for goods and services, including corporations. This provision was designed to finance the new health care reform. However, the administrative burden created from the new requirements could cripple small businesses. In order for the law to repeal, the House and Senate must reach an agreement on how to offset the cost of the health care reform. We recommend that you continue to track your expenses as if the reporting requirements will continue in 2011. We will keep you posted as this story develops.

Tax Deadlines Looming

2011-03-08T10:13:00.001-08:00

We appreciate your quick response and cooperation in gathering your tax documents this year! The deadline to file corporate returns is March 15^th. If we have not received your tax documents yet, we will file an extension for you. Please look for your extension forms in your email inbox. The deadline to file partnership, trust, and individual returns is April 18^th this year. If you do not wish to extend your returns, please contact our office right away to schedule a meeting to discuss your returns. We look forward to hearing from you!

Save the Date- Client Appreciation Party!

2011-03-08T10:12:00.001-08:00

Mark your calendars! Our annual client appreciation will be held Friday, May 6, 2011, at Elizabeth’s home. We are looking forward to a fun evening of games, good food, and of course, even better, our company! This party is all about you, our valued client, so we hope to see you there! More to details to come…

It’s that Time of Year Again- Get Ready for 2010 Tax Returns!

2011-01-24T15:21:00.000-08:00

While tax returns are due in the spring, now is the perfect time to start gathering your documents and strategizing for your return. In order to improve our service and efficiency, we have developed a new system this year. We would like to make prescheduled appointments with you to discuss your return. Please contact our office to reserve a date for your tax return. You will receive an email from us shortly with information we will need to prepare your 2010 return. If you do not receive this email, please contact our office. We look forward to the opportunity to work with you!

Struggling to Make Payments on Your Property? Think Outside the Box!

2011-01-24T14:35:00.001-08:00

Are you making payments on a private note? The rates you may be paying might be outdated and not reflect the current market and economic circumstances. Additionally, your other liabilities may have placed excess burden on your ability to make payments on your property. Is there any way to seek relief? Of course there is, you just have to think outside the box!

A client of mine, let’s call him Joe, is a contractor who bought property in 2004 in Pinal County. He initially made a down payment of approximately 20% of the purchase price and has been paying interest on the note to the Seller at a rate of 8% for the balance of the purchase price. Ideally, Joe wanted to pay off the balance within a year of two so he committed to the high rate of 8%. However, several factors affected his source of income, which placed Joe in a bit of a quandary. His contracting business suffered severe losses in the last few years and all of his cash reserves were used just to keep his business from going under. Moreover, the value of the land dropped significantly since Joe purchased the property in 2004 and borrowing rates are currently at an all-time low. Why should he pay off the property at this antiquated rate? Since he could no longer make payments at the 8% rate, Joe was determined the find a solution that would get him out of the hole.

Although his cash reserves were running low, Joe had substantial money in his 401(k), just sitting in a money market account. With this source of funding, we were able to find a solution. Joe forfeited the property back to the original owner and reacquired the land from the owner in the name of his 401k with a new purchase price that reflected the current market value. Since he funded the property out of his 401k, he was able to pay off the land in full while saving $100,000. Joe solved his problem; he just had to think outside the box.

Using your 401(k) or other retirement plan can be a great option for investing in real estate. After all, your 401(k) is a long term investment and what is more long term than real estate? You can invest in just about any type of real estate and the income and appreciation will build up tax-free until you start to take withdrawals.

There are a few disadvantages to using a retirement plan to purchase your property. There may be a substantial amount of paperwork required to fund the purchase of your property through your retirement account, depending upon the type of retirement plan that you have. For example, you may need to find an independent custodian who offers real estate as an investment option. If your property is mortgaged, then you may be required to file Form 990-T with the IRS in order to allocate the income earned from the debt-financed portion of the property. The income from the debt-financed portion of the property, not sheltered by the retirement plan, would then be subject to ordinary income tax rates. In most cases, all-cash transactions are the easiest.

Using your 401(k) to invest in real estate is a creative way to utilize your retirement investment options. In Joe’s case, it was the perfect solution to get him out of a bind and saved him an enormous amount of money. If you are considering your retirement plan as a funding source for acquisition, a wrong step could result in a tax nightmare, so be sure to consult with a tax professional.

Give Yourself a Financial Makeover- Evaluate your Net Worth!

2011-01-24T14:33:00.000-08:00

It’s the beginning of a new year, and it is the perfect time to evaluate your financial goals for the year. In order to get where you want to go, you need to know where you are. Take a look at our net worth calculator worksheet. Once you see what you have, you can create a budget and determine what your net worth could be and realize your dreams!

Tips for a Successful 2011!

2011-01-24T14:30:00.000-08:00

Happy New Year! We hope your 2011 is off to a successful start. January is the perfect time to set goals for your business and get organized. Here are some tips on how to start the New Year on the right foot.

- Update payroll rates in Quickbooks. Last December, Obama declared a “payroll tax holiday” for 2011, meaning the employee’s portion of the Social Security tax will be reduced from 6.2% to 4.2%. The Social Security tax reduction replaced the Making Work Pay tax credit and if the reduction becomes permanent, employees will benefit much more than the tax credit. If you have not already, be sure to update this considerable reduction in Quickbooks. The Arizona Department of Economic Security is also issuing notices regarding your tax rate for 2011. Be sure to adjust the rate if there is a change from 2010.

- 1099 and W-2 Time! The deadline to mail W-2s and 1099s is January 31, 2011. Don’t wait until the last minute to file. Be sure to collect W-9s and issue Form 1099 to any individual, LLC, or partnership if you paid more than $600 in rent or services during 2010.Additionally, as a result of the 2010 Small Business Jobs Act, if you are receiving rental income from real property, you are required to file forms 1099 with the IRS and service providers to report payments of $600 or more during the year for rental property expenses, beginning January 1, 2011.

- Get organized! Getting organized seems to be everyone’s New Year’s resolution, but where do you even start? First of all, establish a filing system for your business whether it be electronic or paper filing. You should scan or file all your bank statements in one place so you can easily retrieve them. Another suggestion is to purchase Pendaflex binders sorted by each month. You should place all paid bills in one binder and all deposits in another binder so all expenses and income are stored in an organized fashion.

- Goals, Expectations, and Budget. Review your P&L from 2010 and use this as your measuring tool to create goals and expectations for your business. At the same time, examine your budget and look for new quotes from your vendors to stick with it.

Do You Need to File 1099s?

2010-12-28T09:30:00.000-08:00

If you paid more than $600 to any individual, LLC or partnership for rent or services provided to your business during 2010, then you must send that entity a 1099. You must also file all copies of Forms 1099 with the IRS, along with cover sheet, Form 1096 by February 28, 2011.

Additionally, as a result of the 2010 Small Business Jobs Act, if you are receiving rental income from real property, you are required to file forms 1099 with the IRS and service providers to report payments of $600 or more during the year for rental property expenses, beginning January 1, 2011. Please keep this in mind as you account for your 2011 expenses.

Examples of Rent/Service Providers...
1. Contract Laborers
2. Subcontractors
3. Marketing Services
4. Accountants/Bookkeepers
5. Attorneys
6. Janitorial Services
7. Consulting Services
8. Landlords

What information do you need from the service provider?

You will need the full name of the individual or business, the address and the individual or business' Taxpayer (Employer) Identification Number, along with the amount that you paid to that provider during 2010.

Do you need help in preparing your Forms 1099?

eeCPA is here to help...
1. We will gather the information from you.
2. We will prepare all of the forms and mail them to the recipients by the deadline.
3. We will file the government forms electronically on your behalf.
4. We will send you copies of all of the forms and a summary report once the filings have been completed.

If you provide us with the information that we need, we will charge you just $25 per 1099.

If we need to gather the information from your accounting files and determine the filing requirements, then we will charge you based upon our standard hourly rates.

Why should you file Forms 1099 timely?

The #1 reason to file your Forms 1099 timely is to preserve the deductibility of your expenses.

Secondly, you want to file the 1099's timely to avoid the penalties for late and/or incomplete filings. The penalties range from $15-50 per 1099 Form if not filed, filed late or incorrectly filed.

Tips to make the 1099 process less painless for 2011...

Have all of your service providers complete a Form W-9 prior to making payment to them. That way they have incentive to complete and return the form to you, and you have all of the information that you need when it comes time to prepare your 2011 Forms 1099.

If you think you need to file 1099s, call us right away!

How to Take Advantage of Arizona Tax Credits

2010-12-28T09:23:00.000-08:00

Do you pay even $1 of tax to the State of Arizona? If the answer is yes, then you can choose to pledge those dollars directly to education or to charitable organizations that assist the working poor. There are 2 types of Arizona Tax Credits that support the funding of education in Arizona. There is the private school tuition credit and the public school fee credit. The Arizona Department of Revenue recently extended the tax credit deadline. If you make a contribution by April 15, 2011, you have the option of using it as a tax credit on either your 2010 or 2011 return. Here is the Arizona Department of Revenue’s website for details on how you can take advantage of these tax credits. http://www.azdor.gov/TaxCredits.aspx

Furthermore, there are a number of charities that depend on donations and provide programs throughout our community. Many of these organizations are really struggling right now, and you can help them by taking advantage of the Charitable Tax Credit and saving on your 2010 taxes. (Warning - Please note that this credit is only available to individual taxpayers that itemize their deductions. If you take the standard deduction, then you may not claim the credit!)

In sum, every Arizona Resident is eligible to take the following maximum annual charitable/education credits:

Type of Credit	Filing Status
	Single/Head of Household	Married Filing Joint
Private School	500	1,000
Public School	200	400
Charitable Organization	200	400
Total Available	900	1,800

What the 2010 Tax Relief Act Means for You

2010-12-28T09:20:00.000-08:00

With just a little over a week left in 2010, the White House finally delivered an answer to the tax cut quandary when President Obama signed the 2010 Tax Relief Act on December 17, 2010. The law has been championed as a symbol of bipartisan compromise with provisions favored by both parties. Despite the criticism about the deficit, the new law is expected to stimulate the economy; Obama stated, “…real money that’s going to make a real difference in people’s lives.” The new law extends the Bush-era tax cuts for two years, provides relief for the estate tax, and reduces social security taxes in addition to extending other credits. While pundits speculate how the $801 billion tax cut bill will impact Obama’s relationship within his own party, this law can certainly put your mind at ease and here is how.

· Extension of Bush-era Tax Rates. Had the law not passed, rates were scheduled to rise to 15%, 28%, 31%, 36%, and 39.6%. With the passing of the 2010 Tax Relief Act, tax rates for individuals are 10%, 15%, 28%, 33%, and 35%. Since the rates are unchanged, you no longer have to worry about a tax hike in 2011.

o However, there is still plenty of time to finalize any tax savings plans. Contact us for ideas or assistance.

o Now, it might make some more sense to those with lower tax bills to convert your traditional IRA to a Roth IRA. This conversion will allow you to defer the taxes on the income until 2011 and 2012, taking advantage of the lower tax rates that have been extended through 12/31/2012. Furthermore, if you feel the Roth IRA does not suit you, you do have a second chance and can undo the Roth conversion until October 15, 2011, which is unprecedented. However, the ROTH Conversion must be effectuated by 12/31/2010. Please contact us if you are considering this option; we can help guide you!

· Estate Tax Relief. Heirs can opt to treat the estate by 2010 tax laws and calculate the capital gains on all assets in the estate to be taxed at 15%. Otherwise, the 2011 law would exempt the first $5 million and tax the rest at a rate of 35%. The news of this relief will certainly bring holiday cheer to affluent Americans.

· Reduction on Social Security Taxes. This historic bill cuts by two percentage points an employee’s portion of the 6.2% tax. Viewed as the replacement to the Making-Work-Pay income tax credit, the reduction on social security tax can actually apply to a broader range of workers.

Employers Beware: The Department of Labor is Out to Get You

2010-10-28T14:16:00.000-07:00

By Rachel Weiss

This is not a threat, it’s a reality. The DOL’s focus has shifted from helping employers comply with the Fair Labor Standards Act (FLSA) to nailing those who do not.

This is also not a secret. In fact, watch for public service announcements in multiple languages featuring the Secretary of Labor and celebrities urging employees to call their hotline if they believe they are being paid unfairly. (See for yourselves at http://www.dol.gov/wecanhelp/psa.htm) Aptly named the “We Can Help” campaign, this initiative was launched just one week after the DOL announced that it is abandoning its practice of publishing Opinion Letters, which historically have provided important guidance to employers. Reliance on DOL Opinion Letters has also served as a defense to liability for back-wages and other damages. Instead, broader “Administrator Interpretations” will be issued that will not address the finer points of particular policies and practices, thereby requiring litigation to determine their application to the facts of each case.

Then there’s the “Plan/Prevent/Protect” initiative, which proposes new regulations that will require employers to audit their pay practices, document how each employee’s exempt status and pay calculations are determined as well as the reasons why certain individuals are categorized as independent contractors and not employees. Employers would need written plans and be required to track how they are implemented. The failure to do all of this to the DOL’s satisfaction will be deemed noncompliance and result in sanctions and/or costly litigation. The pending Employee Misclassification Prevention Act (H.R. 5107, S. 3254) seeks to impose similar obligations.

If you think I’m trying to scare you, you’re right. Most employers also don’t realize that once a violation is established in an FLSA lawsuit, the burden is on the employer to prove why double damages should not be awarded, and the employer will be liable for the employee’s legal fees. Moreover, the owner of the company, or whoever was responsible for the decisions that led to the violation, will be held personally liable along with the company, regardless of laws that limit personal liability in other contexts. Unlike cases brought under Title VII for discrimination, there are no administrative hoops to jump through before employees can go to court. And remember, too, that wage and hour claims are not usually covered by insurance.

Now more than ever, employers need to develop not just a plan for compliance, but a culture of compliance. Consider conducting an internal or external audit of your employee classifications and pay practices, and seek advice from an employment attorney. Wage and hour laws are complex and nuanced, and the DOL clearly is not interested in educating you. If that were the case, it would have created an employer “help desk.” Instead, it beefed up its enforcement staff with 250 new investigators and got famous people to reach out to employees.

Lest there be any misunderstanding, I do not mean to imply that the DOL should not be an advocate for employee rights or that employers should be able to shirk their obligations under the FLSA. Just consider this a public service announcement for the other side.

Rachel Weiss practices labor and employment law with the law firm of Gammage & Burnham in Phoenix. If you have questions about wage and hour issues, you can reach her at (602) 256-4448 or rweiss@gblaw.com.

Update on the New 1099 Reporting Requirements

2010-10-28T14:14:00.000-07:00

The Patient Protection and Affordable Care Act included a provision that dramatically changed the 1099 reporting requirements for businesses. Recently Congress passed the 2010 Small Business Jobs Act on September 27, 2010, which further alters the 1099 requirements.

The new law requires that persons/entities receiving rental income from real property to file forms 1099 with the IRS and service providers to reports payments of $600 or more during the year for rental property expenses. This new law takes effect beginning January 1, 2011.

Prior to the Small Business Jobs Act, taxpayers who were not considered active in renting property as a trade or business were exempt from this reporting requirement. Now, all passive investors in rental real estate will be subject to this new requirement.

What happens if you fail to comply? Under audit, all deductions for expenses paid for services: i.e. repairs, landscaping, pool care, etc. may be denied if you fail to issue a 1099 to the service provider.

What does this mean to you?

a. It means that you will need to track your payments by Vendor as well as by Expense Category, beginning next year.

b. You will need to gather address and Taxpayer Identification Numbers for all of your vendors.

c. You will need to issue 1099’s to your vendors by January 31, 2012 for 2011 and you will need to file a copy of those 1099’s with the IRS, along with Form 1096 by February 28, 2012, for 2011.

The Small Business Jobs Act also accelerated the start date for 1099 reporting to Corporations to become effective 1/1/2011 (rather than 1/1/2012, under the 2012 Health Care & Reconciliation Acts enacted back in March 2010). Prior to these law changes, payments to Corporations were exempt from 1099 reporting. If you contracted with a company that was a Corporation (i.e. Inc. or Corp. at the end of the name), then you did not have to track and report payments of $600 or more to these entities. Now, under the new laws, you must report to Corporations as well as all other entities.

How to Plan when the Future of Tax Rates is Uncertain

2010-10-28T14:13:00.000-07:00

It’s October and the fate of the Bush tax cuts is still uncertain. Due to the Midterm Elections, the vote regarding the tax cuts has been placed on the back burner, which makes year-end tax planning nearly impossible. If Congress does not vote to extend the tax cuts, rates for the high income brackets would return to the rates in 2001. The 33% bracket would rise to the 36% and 35% would rise to 39.6%. The 10% bracket would be eliminated completely. Some pundits are predicting that Congress will extend the Bush tax cuts for another two years. However, there is a chance that a filibuster could thwart any tax changes and the tax cuts might expire for everyone. With all that said, you are probably asking, “So how am I supposed to plan?”

In order to approach the unknown future of the tax cuts, you do not have to plan three different strategies (Pre-Bush tax cuts, status quo, and Obama’s Proposals). There are ways to approach this conundrum efficiently and economically.

· Accelerate income into 2010. This approach does seem contrary to conventional wisdom, but due to the uncertain climate, you will benefit at the lower tax rates.

· Consider selling open unrealized-gain positions. If you accelerate a gain transaction on an asset you believe to have strong market-value, you will avoid future taxation on the increased basis and will qualify for a lower tax rate.

· Wait. If you wait to play it safe, look for strategies that can be reclassified after year-end.

· Roth IRA Conversions. As of 2010, all taxpayers may convert their retirement plans to a ROTH IRA. You can take the Roth converted amounts into 2010 income or defer it to 2011 and 2012. Additionally, if you feel the Roth IRA does not suit you, you do have a second chance and can undo the Roth conversion until October 15, 2011, which is unprecedented. However, in order to qualify for this tax break, you must convert before year-end. The decision to convert to a Roth IRA is complex so contact us if you need assistance.

It may seem concerning to you to base your tax planning around speculation. However, there are strategies to approach this very unusual year-end situation. Contact our office today to schedule appointments regarding your tax projections.

How a Client’s Audit Went from a Nightmare to a Success

2010-09-27T13:35:00.000-07:00

This January I met a new client who received a notice from the IRS with intent to levy their bank account in the amount of $160,000. Naturally, the threat of levy and an audit would be a scary experience for anyone. In this particular case, the penalties alone amounted to over $15,000. eeCPA, PLC saved this client $145,000, making this our most successful audit to date.

Here are some lessons to be learned from this audit:

· Make sure your company is organized properly. My client’s company was originally organized as a Sole Proprietorship, which was the wrong entity for her business. We reclassified her business as an S-Corp, which significantly reduced her taxes.

· Attention to detail. Be sure to track all your expenses, especially auto and home office expenses. When you track your expenses properly, you will be able to achieve greater savings. In this case, the former tax preparer failed to account for the client’s credit card expenses. That is why we need all of your statements for all accounts.

· Intent to levy= close your accounts. When a client receives a notice of intent to levy, panic is often the first reaction. When my client received the notice of intent to levy her account, I advised her to close her bank accounts immediately and open accounts at other banks. She followed the advice and avoided the levy.

· Make sure payroll expenses are accurately stated. My client’s payroll expenses were understated. That is why we always take the time to perform a reconciliation of all of our client’s payroll expenses. We automatically include the payroll reconciliation with our service, which you cannot find from any of our competitors.

· Use eecpa! If you are facing an audit, we can help you save significantly. In the case of this audit, we saved our client more than 10 times our fee!

Reminder: Final Deadlines for 2009 Tax Returns Looming

2010-08-10T15:29:00.000-07:00

Just a reminder- the deadline for S-Corp, C-Corp, fiduciary, and partnership tax returns is due September 15, 2010! In order to have your returns filed timely, we must have all your documents in our office by August 15, 2010.

The deadline for individual income tax returns is October 15, 2010. We must have all your documents in our office by September 15, 2010, in order to timely file your returns.

Please contact us if you have any questions!

New 1099 Reporting Requirements Could be the Kiss of Death for Small Businesses

2010-08-10T15:07:00.000-07:00

The Patient Protection and Affordable Care Act passed in March 2010 includes a provision that dramatically changes the 1099 reporting requirements for businesses. The new law effective January 1, 2012, now requires businesses to report ALL purchases of BOTH GOODS and SERVICES from ANY vendor which total over $600 per year. Did your business purchase 10 tanks of gas? A new computer? An airline ticket? According to the new law, all of these purchases are now reportable.

Do you buy gas at Shell? Do you think that you have filled up more than 12 times at the Shell on the corner? If you pay for gas with a debit card, then you may have to issue Shell a 1099… Can you imagine having to go into the convenience store and asking the minimum wage clerk for the exact address, legal name of the station, and Taxpayer Identification Number?

The new requirements are completely misdirected at the wrong target. Rather than improving the tax gap from individual to business transactions, the new law targets business to business transactions. Not to mention, the effects of the new reporting requirements would create an administrative maelstrom and would have a devastating economic impact on small businesses. Here are the biggest issues with the new law:

· Complete overhaul of current accounting systems. Accounting systems in use today are not set up to segregate payments by vendor and method. Modifying the accounting software could be more costly in administrative burden and expense than the Y2K conversion.

· Filing Costs. With the new law, business and government agencies are expected to file more than 250 information returns through the IRS FIRE system, a special software designed for large businesses. Most small businesses do not have access to the IRS FIRE system and will have to outsource the filing to data processing companies who typically charge $3-4 per form.

· Accuracy. Forms 1099 cannot be prepared without federal identification numbers, legal business names and legal addresses. The current on-line Taxpayer Identification Number matching program will be inadequate because the filer does not have the complete information. Providing the complete information will increase the risk of fraud and identity theft. Additionally, many issues remain unclear about who the recipient of the 1099 should be. For example, you, the employer reimburse an employee for a business purchase. Would you issue the 1099 to the original vendor or to the employee?

· Meeting the Deadline. The above named issues subject businesses to making several errors on the information returns, which can be costly. Even if you filed error-free information returns, you still have to meet the January 31^st deadline, which is the same deadline as payroll reports. This adds a greater burden to small businesses.

· Exclusion of Credit Card Payments. The new law will exclude credit card payments from the reporting requirements, which will force businesses who do not take credit cards to do so. Businesses will be forced to incur additional fees to process simple transactions. Many new businesses do not have the credit rating to qualify for credit card payments and will be forced to follow the reporting requirements.

Despite the long list of obvious issues with this regulation, the biggest concern with the new law is that it will cost businesses as well as the IRS at least 100 times more than the previous information reporting requirements.

To avoid the administrative nightmare and devastation to small businesses, speak out! Contact our elected representatives in DC!

IRS Releases Form W-11 for Employers to Claim Credit from HIRE Act

2010-08-10T14:59:00.000-07:00

In March, Congress passed the HIRE Act, which benefits employers who hire previously unemployed workers this year. As we reported in May, employers who qualify are eligible for a 6.2% payroll incentive, which can save you a lot! In order to qualify for the incentive, employers must have the new hire fill out Form W-11. Form W-11 confirms the new hire’s previous status as unemployed. Employers need to retain the Form W-11 with their payroll and tax records .

Make this a part of your new hire packet. Along with having them complete their initial application and tax withholding elections, have them complete Form W-11.

Make sure you give Form W-11 to your payroll processer to be sure that you get this credit.

In this tough economy, every penny counts. Our clients have already saved thousands of dollars!

Take Advantage of the Summer Downtime and Reevaluate Your Business

2010-06-30T14:10:00.000-07:00

It’s that time of year again. Every day the temperature is a predictable triple digit number and Phoenix seems to be a ghost town. Just because summer is here does not mean business has to slow down for you. In fact summer is the perfect opportunity for you to reevaluate your expenses for the year, set goals for your company, and review your employees’ performances. Here are a few suggestions on how you can take advantage of this downtime and make sure your business thrives in the coming year.

· Get new quotes from your vendors! Take a look at your expenses from this year and request new quotes from your vendors. This is the perfect time to examine everything from insurance premiums, internet services, rents, landscaping, etc. If your current vendors cannot offer you a better rate, then investigate other options. Your customers are putting pressure on you right now-remember you’re a customer too! Put pressure on your vendors and seek relief!

· Reevaluate your marketing plan. Devote some time to research different marketing plans. You can trim your expenses by cutting out archaic marketing techniques such as advertising in the yellow pages.

· Examine your retirement plan. Now is the perfect time to evaluate your retirement plan to see if you need to make any modifications. Converting from a 401k plan to a SIMPLE IRA plan may save you more than $1,500 in administration fees. SIMPLE IRA plans have no annual filing requirements, which is an excellent option for business looking for leaner expenses. The deadline to set up a SIMPLE IRA or safe harbor 401k is October 1, 2010.

Feel free to give us a call if you have any questions!

Fannie Mae Announced Sanctions for Struggling Homeowners for Strategic Defaults

2010-06-30T13:52:00.000-07:00

Fannie Mae recently announced sanctions against homeowners who strategically default on their mortgage, making them ineligible for Fannie Mae mortgages for seven years. A “strategic default” is defined when a homeowner did not work in good faith to avoid foreclosure and has as the ability to pay but chooses to walk away when the value of the home is less than what is owed.

Fannie Mae also announced that they would seek “deficiency judgments” against homeowners in court to recover debt by seizing borrower’s other assets. Since Arizona is a non-deficiency state, this threat does not hold much clout against Arizona homeowners.

The Wall Street Journal recently reported that nearly one in five mortgage defaults in the first half of 2009 were considered strategic. Fannie Mae’s recent decision attempts to curb homeowners from forcing foreclosure to pursue other alternatives such as a lender-approved short sale or formally giving up the deed.

Analysts question whether the aggressive Fannie Mae sanctions will have a positive effect on the housing market. The plan clearly challenges the Obama administration’s policy of stimulating the fragile housing market.

Furthermore, Fannie Mae’s policy might be impossible to execute. The task of distinguishing between intentional defaults and homeowners who had no other options will subject Fannie Mae to scrutiny. Additionally, Fannie Mae’s pursuit of deficiency judgments is economically inefficient since there is no tax liability on forgiven portions of home mortgages until 2012.

Whether or not Fannie Mae will be able to execute the new policy is to be determined. However, the policy draws one important question: will the housing market improve with decrease of mortgage defaults, especially with a decline in unemployment or do home prices need to appreciate before the market can improve? Time can only tell.

Health-Care Overhaul Imposes Wealth Taxes, Makes Roth IRA Conversions More Attractive

2010-06-28T14:15:00.000-07:00

Last March Congress passed the landmark Patient Protection and Affordable Care Act. This radical policy forced many critics to ask “How is the government going to pay for this?” The answer to this million dollar (or $1 trillion according to the Congressional Budget’s Office’s projection) question? The health-care overhaul will impose two new taxes on earnings: 1) an extra 0.9% levy on wages for couples earning more than $250,000 (or $200,000 for singles) and a 3.8% tax on investment income for the same group. How could these taxes affect you?

Let’s say you and your spouse both earn $150,000, combined income is $300,000. In 2013, you will owe an extra 0.9% on the excess earnings over $250,000, or $450, in addition to your regular Medicare tax because your combined wages are above $250,000.

How will your investment income be affected? First of all, let’s define investment income. Investment income includes, interest, dividends, rents, royalties, captain gains in addition to the taxable portion of insurance annuity payouts (unless it is from a company pension). All of these types of investment income are subject to the 3.8% tax on amounts over the $250,000 (or $200,000 for single filers) threshold. For example, if you earned $60,000 a year, but have an investment income of $180,000, your total income is $240,000 and you are subject to additional tax. Because your investment income is $40,000 over the $200,000 threshold, you would owe $1,520.

How can you minimize these taxes? Essentially, your investment income is subject to the new tax when it increases your adjusted gross income. While social security and pensions are not investment income, they still raise your AGI. Here are some suggestions on how you can avoid increasing your AGI.

· Roth IRA conversions. These are an excellent option because they do not raise AGI and are not considered investment income.

· Defined-benefit pensions. If you are in a small business or have consulting income, pensions could be a good fit. Pensions are not investment income and you can contribute more with age.

· Installment sales if you are selling assets. If you are spreading out the income, you would minimize the tax.

· Life Insurance. If you purchase a policy, you could borrow from it and settle before death. You can avoid income tax on investment gains within the policy.

For more information, check out this article from the Wall Street Journal or give us a call!

New Tax Benefits Available to Aid Employers

2010-05-05T11:10:00.000-07:00

Last March Congress passed two watershed reform laws, the Hiring Incentives to Restore Employment (HIRE) Act and the Patient Protection and Affordable Care Act, both of which include considerable tax breaks for employers. These tax benefits might be the perfect remedy for employers looking to expand payroll or looking to save.

The HIRE Act

The HIRE Act includes provisions that will benefit employers who hire previously unemployed or underemployed workers this year. The employers who qualify are eligible for a 6.2% payroll incentive, which effectively exempts them from their share of Social Security taxes on wages paid to the employee. How much exactly could that 6.2% save you? It could be a lot!

Let’s say you hire 3 previously unemployed employees and each are paid $25,000. With the HIRE tax benefit, you can save $4650!

Another tax break included in the HIRE act is an additional general business tax credit, up to $1,000, for each previously unemployed worker retained for at least a year. The tax credit applies when businesses file their 2011 income tax return.

Here is the breakdown on how you might qualify:

· Employers must have hired unemployed workers this year from February 3, 2010 and before January 1, 2011.

· The employer must receive a statement from the new hire that confirms he or she was unemployed for at least 60 days before being hired or have worked less than a total of 40 hours in the previous job.

· New hires who fill existing position may only qualify if the previous workers left voluntarily.

Check out this link http://www.paychex.com/hireact/

from PayChex to see how

much you can save.

The Patient Protection and Affordable Care Act

The new health care law offers a tax credit to small employers that provide health care coverage to their employees. Businesses can claim a maximum credit of 35% of the employer’s premium expenses against their income tax return.

How much can you save from this tax credit? Let’s say you have 10 employees on staff and you pay $300 a month for their health care premium, a total of $36,000 a year. If you qualify for the maximum credit of 35%, you can receive a $12,600 credit!

Here is how you may qualify:

Businesses must have fewer than 25 full time employees for the tax year.
The wages for the employees must average less than $50,000 per employee.

For more information, give us a call!

Save the Date! - Client Appreciation Party

2010-03-29T08:32:00.000-07:00

Mark your calendar for Friday, May 7, 2010 for eeCPA's client appreciation party. Get ready for Casino Night and plenty of food, music, gambling, and prizes. Why? Because we appreciate you! More details to come...

Client Spotlight - Germain Kirk

2010-03-16T11:52:00.000-07:00

Germain Kirk is an online designer, developer, and consultant based in Scottsdale, Arizona. Through his company, KirkInteractive, Germain offers small and mid-sized businessess and organizations professional web site design, doman and hosting plans, E-mail marketing, Search Engine Optimization (SEO), consultation, analytics, and site management services. Germain has been involved with internet services for more than 13 years, starting when he was in college at the University of Washington in Seattle. Since then he has worked with inline properties in the broadscast TV industry in Washington state and Arizona- most recently at 3TV KTVK as the Site Master for AZfamily.com

Currently, Germain is a national online consultant for Cox Communication (www.cox.com) and also does online consultation and web development for the Metro Phoenix Parternship for Arts & Culture. If you are interested in any online services, you can email Germain at germain@kirk-interactive.com, call at 1-888-335-3439 or visit www.kirk-interactive.com.

Homebuyer Tax Credit - It is No Longer Just for First Time Buyers

2010-03-09T13:46:00.000-08:00

On November 6, 2009, President Obama signed into law the “Worker, Homeownership, and Business Assistance Act of 2009.” The new law extends and generally liberalizes the tax credit for first-time homebuyers and includes some restrictions to prevent abuse of the credit. What can this mean for you? The new law will make it easier for you to buy or sell a home and aims to improve the real estate markets. Best of all, the changes can be a tax-saving tool!

Here are the facts about the revised homebuyer credit:

· Deadline Extended. Previously, the homebuyer credit applied only to purchases after April 8, 2008 and before December 1, 2009. Now the homebuyer credit is extended to apply to a principal resident bought before May, 1, 2010. Additionally, homebuyers can use the credit if they bought a principal residence before July 1, 2010 if they entered a written contract before May 1, 2010. With the extra months available, homebuyers can apply the credit if they find a home they like but cannot close on it before May 1, 2010.

· “Long-Time Resident” Credit. The homebuyer credit no longer applies to first time home purchases. If you maintained the same principal residence for any period of five consecutive years during the eight years ending on the date that you buy the subsequent principal residence, you can claim credit of up to $6,500. In order to qualify, you do not need to sell your current home; rather you can buy the replacement home to meet the new deadlines.

· Now available to higher-income taxpayers. The homebuyer credit phases out over higher levels of modified AGI, range is between $125,000 and $145,000.· New home-price limit for the homebuyer credit. The homebuyer credit cannot be claimed for a home if its purchase price exceeds $800,000.

The restrictions:

· Settlement Statement. The homebuyer credit cannot be claimed unless the taxpayer attaches the settlement statement to the return.

Please call us today to find out how you can benefit from the homebuyer credit!

1099's

2010-01-11T13:36:00.000-08:00

1099's are due to be sent to recipients no later than January 31, 2010! There are just 20 days left and counting...

Do you need to prepare and file 1099's?

If you paid more than $600 to any individual, LLC or partnership for rent or services provided to your business during 2009, then you must send that individual a 1099. You must also file all copies of Forms 1099 with the IRS, along with cover sheet, Form 1096 by February 28, 2010.

Examples of Rent/Service Providers...

1. Contract Laborers
2. Subcontractors
3. Marketing Services
4. Accountants/Bookkeepers
5. Attorneys
6. Janitorial Services
7. Consulting Services
8. Landlords

What information do you need from the service provider?

You will need the full name of the individual or business, the address and the individual or business' Taxpayer (Employer) Identification Number, along with the amount that you paid to that provider during 2009.

Do you need help in preparing your Forms 1099?

eeCPA is here to help...
1. We will gather the information from you.
2. We will prepare all of the forms and mail them to the recipients by the deadline.
3. We will file the government forms electronically on your behalf.
4. We will send you copies of all of the forms and a summary report once the filings have been completed.

If you provide us with the information that we need, we will charge you just $25 per 1099.

If we need to gather the information from your accounting files and determine the filing requirements, then we will charge you based upon our standard hourly rates.

Why should you file Forms 1099 timely?

The #1 reason to file your Forms 1099 timely is to preserve the deductibility of your expenses.

For example, I had a client that paid several laborers $3,000-5,000 each. He did not file 1099's to report the payments that he made to these laborers because the laborers did not want to report the earnings. Then, when he was audited several years later, the IRS denied the deductions for several thousands of dollars, limiting the deduction to $600 per laborer. Thus, the taxpayer then was forced to pay the tax on the majority of the expenses that he rightfully incurred to operate his business. Rather than the laborers paying the taxes on their earnings, he was forced to pay the taxes on the monies that he paid out to them, plus penalties and interest.

Secondly, you want to file the 1099's timely to avoid the penalties for late and/or incomplete filings. The penalties range from $15-50 per 1099 Form if not filed, filed late or incorrectly filed.

Tips to make the 1099 process less painless for 2010...

Have all of your service providers complete a Form W-9 prior to making payment to them. That way they have incentive to complete and return the form to you, and you have all of the information that you need when it comes time to prepare your 2010 Forms 1099. You may download a copy of Form W-9 directly from our website...on the forms page.