IRS Delay in processing 1040s

Because of extended and newly enacted provisions of recent tax bills, the IRS announced a delay in processing of returns for taxpayers who file schedule A, have educator expenses, or tuition and fees deductions.

The IRS announced that they will start accepting the affected returns on February 14th.

Many software providers will accept returns for e-filing and hold them until the IRS will accept them.

Check with your paid preparer or your tax software vendor for their specific instructions.

Or call Kelly Phillips for more question 501.753.9700.

1.20.11 Article about Clayton Bell and works in Haiti

Please find a link to an article describing Clayton's latest works in Haiti. Click the this link to go to website http://www.arkansasonline.com/news/2011/jan/20/anything-possible/

UNTRUE article issued by Natl. Association of Realtors

The National Association of Realtors recently released a document stating that landlords will have to issue 1099’s to tenants who pay them over $600 in rent. THIS IS NOT TRUE.

The article was corrected later, but the damage may have already been done. Several newspapers picked up the uncorrected story, and our office received calls from landlords worried about this reporting requirement.

No landlord has to report rents received to renters on 1099’s.

For 2011, the new law is that landlords who receive over $600 in rental income are required to provide 1099’s to unincorporated service providers who the landlords pay over $600 to for services during 2011.

For more questions concerning this issue contact kelly.phillips@bellandcompany.net or call 501.753.9700.

Tax Software Vs. CPA Firm

Whether or not you can feel secure doing your own taxes, of course, depends on many factors such as the complexity of the return and your understanding of tax law. If your return is simple enough to require little more than math calculations, do-it-yourself tax software may be all you need.

However, the problem with doing your own tax return lies in the ever-changing nature of the Internal Revenue Code, which is measured at more than 3 million words. In 2009 and 2010, new laws were passed that contained numerous tax changes, affecting common issues such as Section 179 business equipment depreciation, retirement plans and more.

During some years, Congress passes laws so late in the year that the tax forms have been printed and some tax software packages are already on store shelves.

It is true that most tax software packages can be updated online to reflect changes, but only if you know what to look for and use the update feature before completing your tax return. Otherwise, you run the risk of missing tax breaks or unintentionally violating the rules.


A red flag is an error or omission that attracts the attention of IRS auditors. It may be a simple error, but once auditors realize there is something wrong with a return, they may begin to wonder what else might be wrong and dig deeper. That's a scenario taxpayers want to avoid.

For more information on taxes please contact kelly.phillips@bellandcompany.net

Filing 1040 Even If Not Required To

According to the recent IRS Tax Tip "Do I have to File a Tax Return?", there are several reasons why taxpayers should file a tax return even if they're not required to do so, such as to (1) recover withheld income tax, estimated tax payments, or a prior year overpayment applied to this year's tax; (2) claim the refundable Making Work Pay Credit, Earned Income Tax Credit, or Additional Child Tax Credit; (3) claim the American Opportunity Credit, since up to 40% of the credit can be refundable; or (4) claim the refundable First-time Homebuyer Credit if they bought, or entered into a binding contract to buy, a principal residence located in the U.S. on or before 4/30/10.

Clayton Bell is home for the Week

The Bell family and friends to have Clayton home from Haiti from his work at the Cloud Forrest Medical Clinic. He has since shaved his beard off, which made him truly look like a mountain man, but we are so blessed to have him here. If you want more informaiton on his works in Haiti please visit www.wherethestarsstillshine.org.

Income Tax Deduction Allowed to Self-employed

The income tax deduction allowed to self-employed individuals for the cost of health insurance for themselves, spouses, dependents, and children who have not attained age 27 as of 12.31.2010 will now also be allowed in the calculation of net earnings from self-employment for purposes of calculating the self-employment tax.

Due Date for 1040 Tax Returns

The due date for filing your 2010 Form 1040 is April 18, 2011 due to the Emancipation Day Holiday int he District of Columbia.

To us as accountants this gives us extra days to prepare returns.

IRS Audit Red Flags

Certain items reported (or omitted) from your tax return may increase your chance of an IRS audit. Here are the top 12 items:

1. Failure to report all taxable income
2. Returns claiming the home-buyer credit
3. Claiming large charitable contributions
4. Home office deduction
5. Business meals, travel and entertainment
6. Claiming 100% business use of vehicle
7. Claiming a loss for a hobby activity
8. Cash businesses
9. Failure to report a foreign bank account
10. Engaging in currency transactions
11. Math errors
12. Taking higher-than-average deductions

For further information and examples of these areas, please contact us at 501.753.9700 or e-mail heather.hudgens@bellandcompany.net.

Punchlist of Tax Headlines for 12.30.10

Tax Breaks that were not extended in the Small Business Jobs Act of 2010 that are used most frequently are:

Qualified Motor Vehicle Taxes – the sales tax deduction for new cars taxpayers could include on Schedule A is gone.

Property tax addition to standard deduction – taxpayers can’t add $500 or $1,000 in property taxes to their standard deduction if they don’t itemize

Partial Exclusion of unemployment benefits – all of unemployment benefits are taxable now, the $2,400 exclusion is gone.

Alternative motor vehicle credit – hybrids and lean burning fuel cars are no longer eligible for a credit.

Waiver of the 10% AGI limit on disaster and casualty losses is no longer available.

If you would like more information on any of the above items please give Kelly Phillips a call at 501.753.9700 or email her at kelly.phillips@bellandcompany.net.

New Gift and Estate Rules - By Richard Bell, CPA

I strongly suggest clients visit with us or their estate attorneys, on the new gift and estate rules effective for 2011 and 2012. You may need to update your gift tax plan and have your tax attorney review your estate plan documents.

Happy New Year to All.

Richard Bell, CPA

New Depreication Rules

Under the new depreciation rules you CAN NOT 100% bonus a vehicle under 6,000 pounds. Auto limits still apply to passenger autos. For 2010, that limit is $11,060. This can be made up of section 179, bonus and regular depreciation, but you cannot go over $11,060.

If you have an SUV over 6,000 pounds, you can take section 179 up to $25,000, bonus depreciation and MACRS on the balance. If the SUV was purchased September 9, 2010-December 31, 2010, you can take 100% bonus depreciation on the vehicle. Make sure to mark the appropriate choice in fixed assets on the vehicle tab. Before September 9, bonus is 50%.

The 100% bonus and 50% bonus can be used to create a loss, which will disallow any section 179 you may have intended to take before the 100% bonus period went into effect.


If you have any questions please give our advisors a call today 501.753.9700.