Archive for August, 2009

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What To Do If The IRS Contacts You

Wednesday, August 26th, 2009

There is an excellent possibility that no matter how honest that you think that you are, how many times you attend church each week, or what an outstanding citizen that you consider yourself to be, one day you’ll go to the mail box and receive a letter from the Department of the Treasury, specifically the Internal Revenue Service.  Even Clint Eastwood can’t really describe just how bad your day will become afterwards.  There is an important note here – the IRS will always contact you in writing via the U.S. Mail.  They do not use unsolicited phone calls, e-mails, “twitters”, Facebook invitations etc. 

 What should you do after you receive your letter?  There are some very important steps to follow.  Recommendation #1 below is among the most important.  What is not mentioned is to contact your CPA, tax preparer, and attorney before you send any response to the IRS.  It would also be best to provide each of them with a copy of the letter for their review and to provide you with both a recommended response to the letter and alternative courses of action for you to follow.

 Here’s the IRS’ recommendations: (more…)

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Important Rules For Charitable Donations

Monday, August 24th, 2009

Every year taxpayers can not deduct some of the charitable donations that they have made in the previous year.  This situation is easily avoidable if they would just take a few minutes to read and understand the guidelines and requirements which have been set forth by the Internal Revenue Service.  It is important to note that the requirements have been increased in the past four years.  Among the most common problems are: 

1.    Making donations or contributions to an organization that is not listed in IRS Publication 78;

 2.  Responding to a friend, colleague, fellow employee, another church member etc for a  donation to a needy person or family.  However, these recipients are also not on the approved IRS list;

 3.  Failing to meet the requirements which are described in the IRS article below:

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Employee or Independent Contractor?

Friday, August 21st, 2009

Employee vs. Independent Contractor – Ten Tips for Business Owners 

If you are a small business owner, whether you hire people as independent contractors or as employees will impact how much taxes you pay and the amount of taxes you withhold from their paychecks. Additionally, it will affect how much additional cost your business must bear, what documents and information they must provide to you, and what tax documents you must give to them.

Here are the top ten things every business owner should know about hiring people as independent contractors versus hiring them as employees.

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Temporary Waiver of Required Minimum Distributions (RMDs) for 2009

Tuesday, August 18th, 2009

For 2009, you are not required to take an RMD from your IRA or most defined contribution retirement plans. This waiver applies to plan participants as well as to beneficiaries. The waiver also applies to you if you turn 70 1/2 in 2009 and delay your 2009 RMD until April 1, 2010. The waiver does not apply to RMDs for 2008, even if you turned 70 1/2 in 2008 and choose to take the 2008 RMD by April 1, 2009.

For more information on the waiver of RMDs from IRAs, see Publication 590. For more information on the waiver of RMDs from employer-provided qualified retirement plans, see Publication 575.

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Work Opportunity Credit

Tuesday, August 18th, 2009

Two new targeted groups have been added to the work opportunity credit.

  • Unemployed veterans.
  • Disconnected youth.

Generally, an unemployed veteran is one who has been discharged or released from active duty in the Armed Forces at any time during the 5-year period ending on the hiring date and who receives unemployment compensation for not less than 4 weeks during the 1-year period ending on the hiring date.

A disconnected youth is one who is certified as:

  • Being at least age 16 but not age 25 or older on the hiring date;
  • Not attending any high school, technical school, or post-secondary school during the 6-month period ending on the hiring date;
  • Not being regularly employed during that 6-month period; and
  • Not being readily employable due to a lack of having a sufficient number of basic skills.

This applies to employees who begin work after 2008 and before 2011.

Use the Form 5884, Work Opportunity Credit, to claim the credit.

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