The largest income tax increase of all time would occur should the "Bush Tax Cuts" be allowed to expire. If no action is taken by Congress these tax cuts are scheduled to expire on January 1, 2011.
This calculator shows you the potential impact on you, as an individual taxpayer.
You don't have to be "rich" to be dramatically impacted by the expiration of these cuts.
If you are at all concerned about the expiration you can find your Senators and Representatives at:
US Senate
US House of Representatives
Let them know that you are concerned about this.
Monday, July 26, 2010
Friday, July 23, 2010
New Georgia Angel Investor's Credit
In June, Georgia’s Governor signed into law a very investor friendly tax break and one that was somewhat unexpected given the current status of the state’s budget. Investors who invest in qualifying small businesses in 2011, 2012 and 2013 will be allowed a credit (that’s a dollar for dollar reduction of tax) of 35% of the amount invested up to a total credit of $50,000 (cumulative across all investments).
There are of course some hoops to jump through for the business to qualify, but they aren’t too much of a challenge or unexpected. Basically, it needs to be a Georgia business with less than $500k in revenue for the previous year, that has raised less than $1 million in combined equity and debt financing (excluding commercial loans), and there are various industries that the business can’t be a part of. Retail, real estate, and professional services are the major excluded businesses.
This seems like a step in the right direction for a state that desperately needs to rev-up the employment engine that is small business.
There are of course some hoops to jump through for the business to qualify, but they aren’t too much of a challenge or unexpected. Basically, it needs to be a Georgia business with less than $500k in revenue for the previous year, that has raised less than $1 million in combined equity and debt financing (excluding commercial loans), and there are various industries that the business can’t be a part of. Retail, real estate, and professional services are the major excluded businesses.
This seems like a step in the right direction for a state that desperately needs to rev-up the employment engine that is small business.
Monday, June 7, 2010
Sea of Paper...Continued
Many smaller businesses may issue 2 – 5 1099s per year. Most smaller businesses don’t issue any 1099s. These businesses aren’t in the habit of collecting and don’t have the data management systems in place to keep track of the information that they are going need in order to comply with the new 1099 reporting requirement for 2013. The immediate impact of this law is that businesses that previously didn’t issue any 1099s will go from issuing zero to issuing dozens or more every year.
I’ve heard several people say that the Service won’t have the capacity to audit/keep track of this and so it won’t be a big issue. I disagree vehemently.
First, whether or not the Service has the capacity to track this is irrelevant. It (until it is changed) will be the law and everybody will need to be in compliance. That it might not be discovered that you are out of compliance is not a good reason to purposefully ignore the law. The penalty for being out of compliance will likely be very steep. So, being caught will likely create an immediate hardship for the business.
Second, the service has more information on a given business or individual than most are aware of. In fact, should the service choose / be allowed to it has enough information to calculate many individual tax liabilities without receiving a tax return. The only thing preventing it from having this much available information for business returns is the expense reporting. Well guess what? That information gap is being closed with this new reporting requirement.
Imagine a system where the Service compares the expenses reported on 1099s by a business to the amount of expenses reported on the business’s tax return and starts a detailed examination of any business that falls outside of standard reporting tolerances as established by the Service. They already do that for many individual reporting items and the Service is continually increasing the capacity of its systems. So this is not at all out of the realm of possibility.
Will you, your business, or your clients be prepared?
I’ve heard several people say that the Service won’t have the capacity to audit/keep track of this and so it won’t be a big issue. I disagree vehemently.
First, whether or not the Service has the capacity to track this is irrelevant. It (until it is changed) will be the law and everybody will need to be in compliance. That it might not be discovered that you are out of compliance is not a good reason to purposefully ignore the law. The penalty for being out of compliance will likely be very steep. So, being caught will likely create an immediate hardship for the business.
Second, the service has more information on a given business or individual than most are aware of. In fact, should the service choose / be allowed to it has enough information to calculate many individual tax liabilities without receiving a tax return. The only thing preventing it from having this much available information for business returns is the expense reporting. Well guess what? That information gap is being closed with this new reporting requirement.
Imagine a system where the Service compares the expenses reported on 1099s by a business to the amount of expenses reported on the business’s tax return and starts a detailed examination of any business that falls outside of standard reporting tolerances as established by the Service. They already do that for many individual reporting items and the Service is continually increasing the capacity of its systems. So this is not at all out of the realm of possibility.
Will you, your business, or your clients be prepared?
Wednesday, April 28, 2010
Drowning In A Sea of Paper
The sea levels are rising...You have been warned.
In the recently passed health care bill there was a little known and less talked about provision that found its way in. It is a provision that will require all businesses to issue 1099s to any entity that it pays more than $600 for the year.
Let that slowly sink in.
Currently, a business has to issue 1099s to unicorporated entities (who aren't employees) that provide more than $600 worth of services in a year. The important items of the previous sentence are unicorporated and services. Unicorporated has generally been taken to mean not having a federal identification number (individuals, for the most part). Services are not, generally, tangilbe products.
Under the code revision in the health care legislation, the only exlclusion for the issuance of a 1099 is that the transactions didn't exceed $600/per year for a given entity.
Think about that for a little while...I'll tell you what I think it means in a day or so.
In the recently passed health care bill there was a little known and less talked about provision that found its way in. It is a provision that will require all businesses to issue 1099s to any entity that it pays more than $600 for the year.
Let that slowly sink in.
Currently, a business has to issue 1099s to unicorporated entities (who aren't employees) that provide more than $600 worth of services in a year. The important items of the previous sentence are unicorporated and services. Unicorporated has generally been taken to mean not having a federal identification number (individuals, for the most part). Services are not, generally, tangilbe products.
Under the code revision in the health care legislation, the only exlclusion for the issuance of a 1099 is that the transactions didn't exceed $600/per year for a given entity.
Think about that for a little while...I'll tell you what I think it means in a day or so.
Friday, August 14, 2009
Really?!
Today I received an email up date regarding taxes and at the bottom was this headline – “Survey Shows Support for Tax Hikes Over Reduced Social Security Benefits”. My initial response was “really?!”
Upon further review, it makes sense. When given the choice people will always choose to spend other people’s money to right some perceived wrong. Most of the people answering the questions in this survey likely figured that any tax increases wouldn’t affect them, so why not help the less fortunate by relieving the “rich” of some of their excess cash.
I think this is a very short sighted view, but I’m afraid that that is the way it is and the potential long term consequences of these types of decisions (if implemented) will impact all most everyone.
Survey link - http://www.nasi.org/publications2763/publications_show.htm?doc_id=997829
Tuesday, February 3, 2009
I Couldn’t Resist
Dealing with people who honestly want to want to pay what they owe in taxes (but not a penny more), the recent administration nominations have become comical. Then I found this. All I can say is…lol.
Friday, January 16, 2009
Tax Rebates and Stimulus
It is somewhat troubling that the long term impacts of what the congress has done and is planning to do are not being considered. That the congress and the new administration are planning to issue additional rebate/stimulus checks is irresponsible considering the lack of impact such things have had in the past.
As a result of such spending on the part of the federal government, it is a certainty that federal taxes of all sorts will go up drastically. Additionally, with the government printing so much new money, won't this necessarily create an inflationary environment?
As a result of such spending on the part of the federal government, it is a certainty that federal taxes of all sorts will go up drastically. Additionally, with the government printing so much new money, won't this necessarily create an inflationary environment?
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