May 10, 2010 2010 Health Care Reform Act Tax Court takes broad view of personal service business... IRS issues forms, instructions for HIRE Act employer tax incentives... IRS examiners told to carefully observe operations of cash intensive businesses... TIGTA targets withholding shortfalls among higher-income wage earners... IRS holds to timetable on reporting of uncertain tax positions... AL - Married taxpayer filed separately but was not permitted to itemize deductions... AK - Initiative to allow residential property exemption increase certified... AZ - Food and drinks served at charter schools will be exempt... AR - Liability for consumer use tax clarified... CA - Federal extension relief for Haiti relief workers followed... CO - Corporate disclosure requirement regulations adopted... CT - Nexus presumption bill introduced... DE - Law allows taxpayers to direct refunds into college savings plans... DC - Filing guidance issued for same-sex spouses... FL - Procedures for value adjustment boards adopted... GA - Federal conformity, decoupling bill passes general assembly... HI - Qualified high technology business comfort rulings issued... ID - Credit for charitable contributions temporarily increased and expanded... IL - Tax should be refunded in full on merchandise returns... IN - Mortgage deduction requirements amended... IA - Enterprise zone application period extended; certain limitations removed... KS - SST conformity updated... KY - Extension of tax incentive agreements for economic development projects available... LA - Rule enacted regarding special assessment levels, other provisions... ME - Proposed apportionment rule amendments, military spouse guidance announced... MD - Credit for hiring unemployed workers explained... MA - Interest rates hold steady for second quarter of 2010... MI - True cash value of leasehold property was actual rental income... MN - Adoption of federal provisions discussed... MS - Exemptions enacted for clean energy, aerospace, and data center businesses... MO - Attorney General approves content, form of proposed constitutional amendment summary... MT - Trend tables for valuing property amended... NE - Governor vetoes exemption for nonprofit health clinics... NV - SST rules adopted... NH - Filing for single-member LLCs discussed... NJ - Madoff investment loss computation notice updated... NM - Agricultural biomass credits enacted... NY - Industrial development agency exemption denied... NC - Governor proposes tax relief for small businesses, hiring credits, More... ND - Notices regarding Military Spouses Residency Relief Act issued... OH - Direct marketing sales to wholesalers were exempt... OK - Emergency medical responder death benefits exempt... OR - Impact of unemployment on enterprise zone exemption addressed... PA - Military spouses residency relief act discussed... RI - Combined reporting bill introduced... SC - Ruling discussing Military Spouses Residency Relief Act finalized... SD - Tax breaks for specified paraplegic individuals available... TN - Large greenhouses were real property, not personal property... TX - Homestead exemption continuance clarified... UT - Taxability of payroll services and software examined... VT - Valuation of single-family home not arbitrary... VA - Green jobs credit enacted... WA - Legislation addresses annexations by cities located within RTA boundaries... WV - Participation in treasury offset program authorized... WI - Assembly passes job creation tax benefit bill... WY - Exemption provided for community development organization...

IRS ramps up guidance on new small employer health insurance tax credit
The IRS is moving quickly to alert employers about a new tax credit for health insurance premiums. The recently enacted health care reform package (the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010) created the small employer health insurance tax credit. The temporary credit is targeted to small employers that offer or will offer health insurance coverage to their employees. The credit, like so many federal tax incentives, has certain qualifications. Please contact our office and we can arrange to review in detail how the credit may cut the cost of your business's health insurance premiums. The dollar benefits of the credit are substantial and they apply immediately to 2010 premium costs. More...

More federal tax legislation expected soon
Congress returned from its spring recess in April to a full agenda of tax legislation that will impact individuals and businesses. Lawmakers are hoping to complete work on as many bills as possible before their Memorial Day recess but the Senate's timetable may be slowed by many non-tax issues. Among the most pressing bills are a package of tax extenders and estate tax relief. Many taxpayers are also waiting to learn the fate of the 2001-2010 individual marginal tax cuts and the popular first-time homebuyer tax credit. More...

IRS updates change-of-address notification procedures
If you have or are planning to move - whether it's a change of personal residence or a change of business address - you want the IRS to know about your change of address. The IRS has recently updated its procedures for taxpayers to follow when notifying the IRS of a change of address. The IRS uses a taxpayer's "address of record" for mailing certain notices and documents that the agency is required to send to a taxpayer's last known address. More...

FAQ: Are individuals now required to purchase health insurance?
The answer is no for 2010, but yes, in practical terms, for 2014 and beyond. The health care reform package (the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010) does not require individuals to carry health insurance in 2010. However, after 2013, individuals without minimum essential health insurance coverage will be liable for a penalty unless otherwise exempt. More...

How Do I: Claim residential energy credits?
There are two important energy tax credits that can benefit homeowners in 2010: (1) the nonbusiness energy property credit and (2) the residential energy efficient property credit. Collectively, they are known as the "home energy tax credits." With the home energy tax credits, you can not only lower your utility bill by making energy-saving improvements to your home, but you can lower your tax bill in 2010 as well. Eligible taxpayers can claim the credits regardless of whether or not they itemize their deductions on Schedule A. Your costs for making these energy improvements are treated as paid when the installation of the item is completed. More...

May 2010 tax compliance calendar
As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of May 2010. More...

Tax benefits give added incentives to telecommuting
If you're thinking about setting up employees as telecommuters, you're not alone. Businesses ranging from large multi-nationals to small shops know that telecommuting not only can improve worker morale and performance, it can also save you and your employees money. What's not to like about zero commuting costs and no office rent? You can also sell the benefits of telecommuting by alerting employees to some significant tax breaks. More...

FAQ: Are employer-provided cash incentives to purchase hybrid vehicles taxable?
Yes. If you received a cash incentive from your employer to help you purchase a hybrid vehicle, the IRS treats it as taxable compensation. More...

How do I...calculate capital gains tax on the sale of a collectible?
Uncle Sam takes a tax bite out of almost every asset sold and collectibles are no exception. Indeed, collectibles are currently subject to one of the highest rates of federal taxation on investment property. Capital gain from the sale of a collectible is taxed at 28 percent. More...

How do I? Deduct a contribution of clothing or a household item under the new rules?
Every year, Americans donate billions of dollars to charity. Many donations are in cash. Others take the form of clothing and household items. With all this money involved, it's inevitable that some abuses occur. The new Pension Protection Act cracks down on abuses by requiring that all donations of clothing and household items be in "good used condition or better." More...

FAQ: When is the best time of year to contribute to an IRA?
A: If you have the money, contributing to your IRA immediately on January 1st or as soon thereafter as possible is the best strategy. The #1 advantage of an IRA is that interest or other investment income earned on the account accumulates without tax each year. The sooner the money starts working at earning tax-free income, the greater the tax advantage. With a traditional IRA, that tax advantage means no tax until you finally withdraw the money at retirement or for a qualified emergency. In the case of a Roth IRA, the tax advantage comes in the form of the investment income that is never taxed. More...

FAQ: When are business meal deductions restricted?
Only 50 percent of the cost of meals is generally deductible. A meal deduction is customarily allowed when the meal is business related and incurred in one of two instances: More...

Late-breaking news: Congress passes extenders and much more in new tax law
In a final session, Congress approved a $45.1 billion package of tax extenders and other tax breaks during the night of December 8-9. The Tax Relief and Health Care Act of 2006 (H.R. 6111) renews many valuable - but temporary - tax breaks for individuals and businesses, including the state and local sales tax deduction, the higher education tuition deduction and employer tax incentives. The new law also extends some energy tax breaks, makes Health Savings Accounts (HSAs) more attractive and creates new tax incentives. More...

How do I? Compute the Child Care Credit
Parents of a child under age 13 can take a tax credit for child care expenses to enable them to work. The credit can be taken for care of two or more children. Child care expenses are amounts you paid for someone to come to your home, for care at the home of a day care provider, and for care at a day care center. More...

FAQ: What are catch-up retirement savings?
In many cases, employees can elect to reduce their salary and contribute the amounts to a retirement plan. These plans include 401(k) cash or deferred arrangements, 403(b) tax-sheltered annuities, eligible Code Sec. 457 deferred compensation plans of state and local governments and tax-exempt entities, simple retirement accounts, and plans for self-employed persons such as a SEP individual retirement account (SEP IRA). More...

FAQ: Does filing at any particular time or manner increase my odds for an audit?
If you call attention to your return, it probably will be noticed. Whether by writing in red across your return a "tax protestor" slogan, by not signing your return, or by not filling in all required lines, you will get your return noticed and at the very least you'll get a letter asking to further explain your position. Absent such blatant attention-getting behavior, however, your chances of audit depends upon the numerical amounts you place on your return and how they compare to certain norms determined by IRS computers (and kept secret from the public). Some audit selection is also done randomly, although those odds are less than a fraction of one percent under current practice. More...

FAQ: What is tax risk management?
'Tax risk management" is a fairly recent term first used by large accounting firms to underscore to businesses the opportunities and pitfalls inherent within the particular tax positions taken by a business at any point in time. The collapse of Enron and WorldCom, and Congress's response through Sarbanes/Oxley legislation, have elevated corporate tax departments from what were once sleepy backroom operations to key participants in corporate bottom-line performance. Tax reserves and other tax forecasts now take a more prominent role in SEC-required disclosure and their resulting impact on shareholder value. Corporate boards and top executives are now held directly responsible for tax-related mistakes. More...

How Do I? Compute the optional state and local sales tax deduction
End-year 2006 tax legislation extended the opportunity to take the optional federal sales tax deduction for tax years 2006 and 2007. The deduction remains the same as in past years, although the IRS standard tables used to figure sales tax in lieu of keeping receipts changes each year due to cost of living and other considerations. More...

How do I ... Split my tax refund?
Instead of getting a paper check, you may want to have your refund deposited directly into your bank account or other financial account. Forms 1040, 1040A, and 1040EZ have a line for designating direct deposit of your refund, right after the line showing the amount of your refund. More...

FAQ: Must I retain original business expense receipts if I computer scan them?
No, taxpayers may destroy the original hardcopy of books and records and the original computerized records detailing the expenses of a business if they use an electronic storage system. More...