Payments for Long Term Care of Patient with Demential Are Deductible

Many of us face the challenge of caring for an elderly parent or sibling.  This challenge is particularly hard when the loved one is suffering from dementia.  Patients need round the clock care that is often provided by caregivers who are not licensed health care providers.  A new tax court decision has determined long-term care services provided by nonmedical personnel can be dedcutible if the taxpayer is sufficiently ill. 

The decision does not allow deduction for expenses that are merely beneficial to the general health of an individual, or that cover housekeepers hired on the advice of a doctor.  The case is significant because it affirms that services performed by nonmedical personnnel can be deductible.  The application of the decision to your situation should be carefully reviewed by a qualified tax professional.

Posted in Deductions, Income Tax | Leave a comment

1099 Reporting for 2011 – Action Plans For Business

Multiple attempts to repeal 1099 information return requirements, which were included in the 2010 Patient Protection and Affordable Care Act (Health Care Act) and the Small Business Jobs Act (Jobs Act), have failed but more attempts are still circulating. On Feb. 2, the Senate approved repeal of the reporting requirements that were part of last year’s Health Care Act as an amendment to a transportation bill. Until the repeal of the 1099 requirements is official, businesses have to be prepared to take action to comply with the new provisions made within the Health Care Act and Jobs Act. Also, it is important to recognize that repeal of new reporting requirements from the Health Care Act may not include repeal of provisions from the Jobs Act that affect owners of rental properties. I want to share information with you to prepare you for action if the repeal efforts are unsuccessful. Continue reading

Posted in Business, Income Tax | Tagged , , | 1 Comment

Did Georgia Cause You an Overdraft?

On January 20, 2011, the Georgia Department of Revenue (“Department”) issued 2010 Georgia income tax refunds by direct deposit. The Department became aware of a computer system error in the calculation of refunds which led the Department to rescind all refunds in an attempt to correct the error.

If the Department’s withdrawal of the refund caused an overdraft of the account and fees were assessed, the taxpayer may be reimbursed for the fees assessed by the financial institution.

 In order to receive a reimbursement, the taxpayer must:

 1. Complete Overdraft Reimbursement Form (available from this link – https://etax.dor.ga.gov/pressrel/Overdraft%20Reimbursement.pdf)

2. Have the financial institution certify the amount of overdraft fees.

3. Mail or Email (PDF copy) the completed Overdraft Reimbursement Form to the Department.

 The form must be postmarked or emailed by February 14, 2011.

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Ten Tax Benefits for Parents

Did you know that your children may help you qualify for some tax benefits? Here are 10 tax benefits the IRS wants parents to consider when filing their tax returns this year.

  1. Dependents In most cases, a child can be claimed as a dependent in the year they were born.
  2. Child Tax Credit You may be able to take this credit on your tax return for each of your children under age 17. If you do not benefit from the full amount of the Child Tax Credit, you may be eligible for the Additional Child Tax Credit. For more information see our website. Continue reading
Posted in Credits, Deductions, Income Tax, Planning | 1 Comment

Top 10 Tax Tips

It’s that time of the year again, the income tax filing season has begun and important tax documents should be arriving in the mail. Even though your return is not due until April, getting an early start will make filing easier. Here are 10 tips that will help your tax filing process run smoother than ever this year.

  1. Start gathering your records Round up any documents or forms you’ll need when filing your taxes: receipts, canceled checks and other documents that support income or deductions you’re claiming on your return.
  2. Be on the lookout W-2s and 1099s will be coming soon; you’ll need these to file your tax return.
  3. Use Free File: Let Free File do the hard work for you with brand-name tax software or online fillable forms. It’s available exclusively at http://www.irs.gov. Everyone can find an option to prepare their tax return and e-file it for free. If you made $58,000 or less, you qualify for free tax software that is offered through a private-public partnership with manufacturers. However, free file does not include state tax returns so you will still have to prepare your state tax return by hand or pay for the return.  If you make more than $58,000 a more cost effective service is to use the online tax prep service from Davis & Langford.  You can visit our 1040.com site and prepare a federal and state return for a price as low as $50 including electronic filing.
  4. Try IRS e-file: After 21 years, IRS e-file has become the safe, easy and most common way to file a tax return. Last year, 70 percent of taxpayers – 99 million people – used IRS e-file. Starting in 2011, many tax preparers will be required to use e-file and will explain your filing options to you. This is your chance to give it a try. IRS e-file is approaching 1 billion returns processed safely and securely. If you owe taxes, you have payment options to file immediately and pay by the tax deadline. Best of all, combine e-file with direct deposit and you get your refund in as few as 10 days.   Davis & Langford is an authorized e-file provider for its clients or you may use our 1040.com website to self prepare and e-file your return.
  5. Consider other filing options There are many different options for filing your tax return.You can prepare it yourself or go to a tax preparer. You may be eligible for free face-to-face help at an IRS office or volunteer site. Give yourself time to weigh all the different options and find the one that best suits your needs.
  6. Consider Direct Deposit If you elect to have your refund directly deposited into your bank account, you’ll receive it faster than waiting for a paper check. 
  7. Visit the IRS website again and again The official IRS website is a great place to find everything you’ll need to file your tax return: forms, publications, tips, answers to frequently asked questions and updates on tax law changes.
  8. Remember this number: 17 Check out IRS Publication 17, Your Federal Income Tax on the IRS website. It’s a comprehensive collection of information for taxpayers highlighting everything you’ll need to know when filing your return.
  9. Review! Review! Review!Don’t rush. We all make mistakes when we rush.Mistakes will slow down the processing of your return. Be sure to double-check all the Social Security Numbers and math calculations on your return as these are the most common errors made by taxpayers.
  10. Don’t panic! If you run into a problem, remember we are here to help.  Call us at 678.889.9548 or check our website for help at www.JohnsCreekCPA.com 
Posted in Income Tax | 2 Comments

25 Years of Christmas Videos

I wish that I had these videos.  Maybe I will go through our old tapes and convert them next year.  Please enjoy before you shift gears to New Years.  Merry Christmas.

Posted in Uncategorized | 1 Comment

Shaq Conducts the Boston Pops – Video

To get you in the holiday spirit and take your mind off tax bills, why not enjoy this video of Shaq conducting the Boston Pops with using a toothpick for a baton.  Just kidding – it only looks like a toothpick in his hands.

Posted in Life | 1 Comment

Lunar Eclipse Coincides with Winter Solstice

For the first time in 3 centuries a lunar eclipse occurred during the Winter Solstice.  Europe is snowed in and we have been freezing in Georgia.  What is going on?

Posted in Life | 1 Comment

Year End Donation Planning

With the end of the year approaching, a lot of us are making year end contributions to our houses of worship and other deductible charities.  By advancing 2011 planned giving into 2010, you can impact the your tax bill.  Here are some tips for those planning year end giving:

  • If you are making a gift by check, be sure the donee deposits it in 2010 for it to count as a 2010 gift.  Alternatives are to give money via a cashier’s check (keep the duplicate copy) or use your credit card. 
  • If you are giving securities, endorse the certificates to the donee.  On year-end gifts, companies may not be able to retitle the certificates in the donee’s names by December 31.

In the spirit of the season we encourage all of our friends to take advantage of the tax saving opportunity while helping others in need.  Enjoy the holidays.

Posted in Deductions, Income Tax | 1 Comment

Full Employment Act for Accountants

Whether you love Health Care Reform or hate ObamaCare, the bill contained a provision that will have a substantial impact on small businesses and startups.  With little discussion the authors slipped in two significant changes to how 1099s have been used historically.

  • First, 1099s will have to be issued for goods as well as services.  In the past, you did not have to issue a 1099 for a purchase of goods such as office supplies, materials, or equipment.
  • Second, 1099s will have to be issued to corporations, partnerships, LLCs – basically everyone you purchase from.  In the past, 1099s were used to report payments to individuals and certain partnerships.

Combined, this means that small businesses will now be sending out literally millions of 1099 forms and will be responsible for keeping track of every one of these throughout the tax year. Beginning in 2012, businesses will be required to issue 1099 tax forms not just to freelancers and contract employees, but to ANY individual or corporation from which a business buys more than $600 in goods or services.  Some examples:

  • Homebuilders will have to issue a 1099 to the building material supplier for the materials used in the home.
  • Have the airconditioning repaired at the office and you have to send a 1099 to the incorporated vendor.
  • Purchase raw materials for manufacturing from a corporation and you have to send a 1099.

This means that in addition to the 1099s that you already prepare, you will also be preparing a flood of these for your office supply provider, office cleaner, caterer, accountant, computer hardware supplier, office furniture vendor, and on and on and on. The bill will drastically alter tax reporting by highlighting payments that have typically gone unreported – the idea is to increase government revenues by helping the IRS to account for millions of these payments.  The IRS has stated it may use its regulatory authority to allow credit card purchases to be exempt from these rules; however, the recordkeeping may get even harder if this is implemented.

The next pain of this reform is that you will also receive a flood of 1099s coming to you.  With the IRS efile mandate, you will have to enter all of these 1099s into your tax return in order for them to be matched by the IRS.  Count on more time to prepare your return and more inquiry letters from the IRS questioning the matching discrepancies.

Of course, there is a silver lining in this cloud for the accounting profession.  The days of keeping your books on a spreadsheet (or paper sack) will fast be disappearing.  In order to comply with these rules, all businesses will need some sort of accounting system with the ability to track payment amounts, payment types, 1099 status, and EIN numbers.  You will also need someone to oversee the accounting to make sure it is up to date and accurate.  The cost of noncompliance currently starts at $50 per 1099 that should have been issued and increases depending on the size of the business and the delay in delivering the form.  You will need to start planning for the implementation of your required information systems in 2011 to be ready to track payments in 2012 when the law goes into effect.

Small businesses and lobbyists have started to push back hard against this change, realizing the profound impact it will have on their operations and accounting procedures. And the Congress is listening; two bills have been introduced which would repeal this provision and if passed, small business will be spared another regulatory hurtle which could threaten to drown us all under a new flood of paperwork.  We are not likely to see any movement on this issue until the new Congress is in session.

Davis & Langford, Certified Public Accountants, have experienced Quickbooks Pro Advisors on staff to asisst in implementing accounting procedures to make the transition as painless as possible.  We can be reached at www.DavisLangford.com.

Posted in Business, Entrepreneurship, Income Tax | Comments Off