Independent Contractors

Richard Bell recently spoke at the TEANA conference in New Orleans here is a link to the White Paper he handed out "The Five Evil Sisters: An Attach on Indpendent Contractors".

Following is what TEANA said about he topic.

"Transportation accountant Richard Bell pointed out threats facing the independent contractor model many TEANA members utilize. Bell contends business owners do a better job of allocating and managing resources than government, as local, state and federal authorities seek revenue during times when tax coffers are thinning. Bell encourages TEANA members aggregate against government controlling independent contractor law and for members to work towards changing state workers compensation laws to make them statutory. Bell advises all members to understand the definition of "employee" in each state they provide services, for workers compensation purposes."

If you would like more information on this topice or would like the exhibits in the white paper listed above please contact deanna.lovelady@bellandcompany.net or call Richard Bell 501.753.9700.

Charitable Donations

Have you noticed the following language at the bottom of a receipt you receive for your donations?

No goods, services, or other tangible benefits were received in exchange for these contributions. The language is magical. In a recent tax court case, Durden v Commissioner, tc memo 2012-40, a case out of Texas, a $25,000, charitable deduction was disallowed on the taxpayers 1040. A computer generated notice in 2009 asked for verification for the 2007 itemized charitable deduction. A letter from the church which was the bulk of the donations was sent to the IRS along with the cancelled checks for verification. The IRS said it was not adequate documentation. A second letter was sent from the church that added the statement if any goods or services were provided in consideration for the contribution. The second letter was rejected by the IRS, The IRS PREVAILED because the letter was not obtained prior to the filing of the return including extensions. ......... Bell and Co will step up its efforts in 2013 to review your charitable contributions if significant, for the proper paper work.

 

If questions, please give us a call at 501.753.9700.

Job Search Expenses

If you’re looking for a new job, you may be able to deduct some of your job hunting expenses on your tax return. 

·        The deduction will be an itemized deduction on schedule A, to be combined with other miscellaneous expenses, deductible to the extent that the total exceeds 2% of your adjusted gross income.

·        To qualify for a deduction, your job search must be in your current occupation.  You cannot deduct expenses when searching for a job in a new occupation, if you’re looking for a job for the first time, or if there was a substantial break between your last job and the time you began looking for a new job.

·        You can deduct amounts spent in preparing and mailing your resume to prospective employers.

·        Travel expenses in looking for a new job may be deductible.  The trip must be primarily for a new job.  The amount of time spent in personal activities versus looking for a new job is important in determining the deductible amount of travel expenses.

·        Any amounts paid to an employment or outplacement agency are deductible.  However, if your employer pays you back for those fees in a later year, you then have to include that amount in income, up to the benefit you received from the deduction. 

If you have questions about this deduction call Kelly Phillips at Bell and Company 501.753.9700.

Article in New York Times

Very interesting article in the New York Times about Estate Planning and giving 5.12 million.  Please click http://www.nytimes.com/2012/06/23/your-money/to-give-or-not-to-give-up-to-5-12-million.html?_r=1&ref=wealthmatters.

Arkansas Gambling

We found the following in the instructions for Arkansas Returns:

"Gambling winnings from Arkansas electronic games of skill are not included as income and the 3% tax withheld is excluded from Line 37."

Call Kelly Phillips if you have questions on this 501.753.9700.

Traps for Small Businesses Article

Click here for great article explaining 1099 request.

IRS Annoucements

For the unemployed or SE income earners with a 25% reduction in Gross receipts - To assist those most in need, a six-month grace period on failure-to-pay penalties will be made available to certain wage earners and self-employed individuals. The request for an extension of time to pay will result in relief from the failure to pay penalty for tax year 2011 only if the tax, interest and any other penalties are fully paid by Oct. 15, 2012.

The IRS announced today that, effective immediately, the threshold for using an installment agreement without having to supply the IRS with a financial statement has been raised from $25,000 to $50,000. This is a significant reduction in taxpayer burden.