Tuesday, September 25, 2012

  • What Employers Need to Know About Claiming the Small Business Health Care Tax Credit

    If you are a small employer with fewer than 25 full-time equivalent employees that earn an average wage of less than $50,000 a year and you pay at least half of employee health insurance premiums…then there is a tax credit that may put money in your pocket.

    The Small Business Health Care Tax Credit is specifically targeted to help small businesses and tax-exempt organizations. The credit can enable small businesses and small tax-exempt organizations to offer health insurance coverage for the first time. It also helps those already offering health insurance coverage to maintain the coverage they already have.

    Here is what small employers need to know so they don’t miss out on the credit for tax year 2011:

    • Qualifying businesses calculate the small business health care credit on Form 8941, Credit for Small Employer Health Insurance Premiums, and claim it as part of the general business credit on Form 3800, General Business Credit, which they would include with their tax return.
    • Tax-exempt organizations can use Form 8941 to calculate the credit and then claim the credit on Form 990-T, Exempt Organization Business Income Tax Return, Line 44f.
    • Businesses that couldn’t use the credit in 2011 may be eligible to claim it in future years. Eligible small employers can claim the credit for 2010 through 2013 and for two additional years beginning in 2014.
    For tax years 2010 to 2013, the maximum credit for eligible small business employers is 35 percent of premiums paid and for eligible tax-exempt employers the maximum credit is 25 percent of premiums paid. Beginning in 2014, the maximum credit will go up to 50 percent of qualifying premiums paid by eligible small business employers and 35 percent of qualifying premiums paid by eligible tax-exempt organizations.

    For a better understanding contact The Sentry Tax Group @ 888-760-4960 to book a Free Consultation with a Tax Professional, they can help to answer your questions and offer a plan of action to address your concern and offer you options for your specific situation and business concerns.

  • Automated IRS System Helps College-Bound Students with Financial Aid Application Process

    College-bound students and their parents typically want to make every dollar and every minute of the college experience count including money spent on tuition and time spent on the college financial aid application process. The Internal Revenue Service is helping minimize the time spent on the completion of the Free Application for Federal Student Aid (FAFSA) form by automating access to federal tax returns with the IRS Data Retrieval Tool. This tool provides the opportunity for applicants to automatically transfer the required tax data onto the FAFSA form.

    Here are some tips on using the IRS Data Retrieval Tool:

    Benefits The IRS Data Retrieval tool is an easy and secure way to access and transfer tax return information directly onto the FAFSA form, saving time and improving accuracy. Also, the increased accuracy reduces the likelihood of being selected for verification by the school’s financial aid office.

    Eligibility Criteria Taxpayers who wish to use the tool to complete their 2012 FAFSA form must:
      • have filed a 2011 tax return;
      • possess a valid Social Security Number;
      • have a Federal Student Aid PIN (individuals who don’t have a PIN, will be given the option to apply for one through the FAFSA application process);
      • have not changed marital status since Dec. 31, 2011
    • Exceptions If any of the following conditions apply to the student or parents, the IRS Data Retrieval Tool cannot be used for the 2012 FAFSA application:
      • an amended tax return was filed for 2011;
      • no federal tax return for 2011 has been filed ;
      • the federal tax filing status on the 2011 return is married filing separately; a Puerto Rican or other foreign tax return has been filed.
    • Alternatives If the IRS Data Retrieval Tool cannot be used and if the college requests verification documentation, it may be necessary to obtain an official transcript from the IRS. 
    • Levy

      A levy is a legal seizure of your property to satisfy a tax debt. Levies are different from liens. A lien is a claim used as security for the tax debt, while a levy actually takes the property to satisfy the tax debt.

      If you do not pay your taxes (or make arrangements to settle your debt), the IRS may seize and sell any type of real or personal property that you own or have an interest in. For instance,
      We could seize and sell property that you hold (such as your car, boat, or house), or we could levy property that is yours but is held by someone else (such as your wages, retirement accounts, dividends, bank accounts, licenses, rental income, accounts receivables, the cash loan value of your life insurance, or commissions).
      We usually levy only after these three requirements are met:

      • We assessed the tax and sent you a Notice and Demand for Payment;
      • You neglected or refused to pay the tax; and
      • We sent you a Final Notice of Intent to Levy and Notice of Your Right to A Hearing (levy notice) at least 30 days before the levy. We may give you this notice in person, leave it at your home or your usual place of business, or send it to your last known address by certified or registered mail, return receipt requested. Please note: if we levy your state tax refund, you may receive a Notice of Levy on Your State Tax Refund, Notice of Your Right to Hearing after the levy.
      You may ask an IRS manager to review your case, or you may request a Collection Due Process hearing with the Office of Appeals by filing a request for a Collection Due Process hearing with the IRS office listed on your notice. You must file your request within 30 days of the date on your notice. Some of the issues you may discuss include:

      • You paid all you owed before we sent the levy notice,
      • We assessed the tax and sent the levy notice when you were in bankruptcy, and subject to the automatic stay during bankruptcy,
      • We made a procedural error in an assessment,
      • The time to collect the tax (called the statute of limitations) expired before we sent the levy notice,
      • You did not have an opportunity to dispute the assessed liability,
      • You wish to discuss the collection options, or
      • You wish to make a spousal defense.
      At the conclusion of your hearing, the Office of Appeals will issue a determination. You will have 30 days after the determination date to bring a suit to contest the determination. Refer to Publication 1660, Collection Appeal Rights, for more information. If your property is levied or seized, contact the employee who took the action. You also may ask the manager to review your case. If the matter is still unresolved, the manager can explain your rights to appeal to the Office of Appeals.

      Levying your wages, federal payments, state refunds, or your bank account.

      If we levy your wages, salary, or federal payments, the levy will end when:
      • The levy is released,
      • You pay your tax debt, or
      • The time expires for legally collecting the tax.
      • If we levy your bank account, your bank must hold funds you have on deposit, up to the amount you owe, for 21 days. This holding period allows time to resolve any issues about account ownership. After 21 days, the bank must send the money plus interest, if it applies, to the IRS. To discuss your case, call the IRS employee whose name is shown on the Notice of Levy.

        OFF SHORE Attempt to evade Taxes

        IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens

        • IR-2012-5, Jan. 9, 2012

          WASHINGTON — The Internal Revenue Service reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.
          Employee work-related expenses.

          Some employees may be able to deduct certain work-related expenses. The following facts from the IRS can help you determine which expenses are deductible as an employee business expense. You must be itemizing deductions on IRS Schedule A to qualify. Expenses that qualify for an itemized deduction generally include:

          • Business travel away from home 
          • • Business use of your car
            • Business meals and entertainment
            • Travel
            • Use of your home
            • Education
            • Supplies
            • Tools
            • Miscellaneous expenses

            You must keep records to prove the business expenses you deduct. For general information on record keeping, see IRS Publication 552, Record keeping for Individuals.

            If your employer reimburses you under an accountable plan, you should not include the payments in your gross income, and you may not deduct any of the reimbursed amounts.

            An accountable plan must meet three requirements:

            1. You must have paid or incurred expenses that are deductible while performing services as an employee.

            2. You must adequately account to your employer for these expenses within a reasonable time period.

            3. You must return any excess reimbursement or allowance within a reasonable time period.

            If the plan under which you are reimbursed by your employer is non-accountable, the payments you receive should be included in the wages shown on your Form W-2. You must report the income and itemize your deductions to deduct these expenses.

            Generally, you report unreimbursed expenses on IRS Form 2106 or IRS Form 2106-EZ and attach it to Form 1040. Deductible expenses are then reported on IRS Schedule A, as a miscellaneous itemized deduction subject to a rule that limits your employee business expenses deduction to the amount that exceeds 2 percent of your adjusted gross income.