Do You Need to File 1099s?

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

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

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.

What the 2010 Tax Relief Act Means for You

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.