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.

Recent Video of Clayton Bell spokesman for Where the Stars Still Shine, Inc.

Recently our very own Clayton Bell was interviewed on our local news channel please check out the video at this link.





If you would like more information please visit http://www.wherethestarsstillshine.org/