Steve Vesey CPA

Your Summertime Child Care Expenses May qualify for a Tax Credit

sueweeks — Tue, 13 Jul 2010 13:09:28 +0000

For parents who work or are looking for work, the expenses associated with arranging for care of children under 13 years of age during school vacation may be eligible for the Child and Dependnet Care Credit.

Here are some things to consider:

The cost of day camp may count as an expense towards the child and dependent care credit
Expenses for overnight camps do not qualify
If your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit
The actual credit can be up to 35 percent of your qualifying expenses, depending upon your income
You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit

For more information, please give us a call.

New 10% Tax on Tanning Services Effective July 1

sueweeks — Thu, 08 Jul 2010 16:11:26 +0000

The IRS issued regulations outlining the administration of a 10% excise tax on indoor tanning services that went into effect on July 1, 2010.

Under the new regulations, providers of indoor tanning services will collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720, Quarterly Federal Excise Tax Return.

The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises. The regulations also provide an exception for certain physical fitness facilities that offer tanning as an incidental service to members without a separately identifiable fee.

For answers to frequently asked questions surrounding the excise tax on indoor tanning services, please visit the IRS website at http://www.irs.gov/businesses/small/article/0,,id=224600,00.html

Reminder – Hire Act Employee Affidavit

sueweeks — Thu, 08 Jul 2010 15:56:59 +0000

Just a reminder on your 2^nd quarter payroll taxes that are filed this month.

You must provide form W-11 (Hire Act Employee Affidavit) to your payroll service company if you want to take advantage of the program.

A separate form is required for each qualifying new hire.

Hiring Incentives for Business Clients

sueweeks — Thu, 08 Jul 2010 15:55:36 +0000

Under the Hiring Incentives to Restore Employment (HIRE) Act, your business may be exempt from paying the 6.2% employer share of Social Security employment taxes on wages paid to previously unemployed individuals hired after February 3, 2010 and before January 1, 2011. The new employee cannot be a replacement for a former employee unless the former employee was terminated for cause or left voluntarily. The new employee must certify by signed affidavit that he or she hasn’t been employed for more than 40 hours during the 60-day period ending on the date employment begins. (Be sure to provide your payroll service company with form W-11, the HIRE Act Employee Affidavit) And the employee can’t be “related” to the employer. This tax relief is available for wages paid to qualifying individuals after March 18 through the end of 2010.

And keeping a newly hired employee on for at least 52 consecutive weeks could provide you with a tax credit in the year the retention requirement is first satisfied. To qualify, the wages you pay the new employee during the last 26 weeks for the period must equal at least 80% of the wages paid for the first 26 weeks. The credit for each qualifying retained worker is equal to the lesser of (1) $1,000 or (2) 6.2% of wages paid to the retained worker during the 52-week period.

Employee Fraud

danrich — Thu, 08 Jul 2010 15:38:56 +0000

No business is immune from the threat of employee fraud. The checks and balances that are built into internal control for larger companies simply are not practical for the day to day operations of the smaller company. We have seen cases when a bookkeeper stole by manipulating check disbursements and the underlying accounting documents. On the payroll side, we have seen office help give themselves unauthorized raises or advances and attempt to cover it up through pension withholdings. I realize that we cannot run our organizations without a certain amount of trust with our employees, but these cases of fraud make us pause and think. I am not suggesting that your office manager is stealing. I am suggesting the opposite. I know most of them and they are honest, hardworking people with your best interest in mind at all times. Something you can do to help put your mind at ease; contact your bank and payroll service company. Request an additional copy of your bank statement and payroll report to be sent to your home. Then examine the checks and payroll amounts to be sure they make sense to you. If you have concerns, contact us and we will show you what the next steps are.

Estate Planning

danrich — Thu, 08 Jul 2010 15:37:47 +0000

After being suspended for 2010, Estate Taxes are back with a vengeance in 2011. There are new thresholds that will impact many who were not impacted before. We now have an association with estate planning attorneys who offer free consultations to review your status. It is more important than ever to go over your situation to be sure your wishes will be viable and your major assets are owned in the most appropriate manner so you can avoid probate.

Exit Planning

danrich — Thu, 08 Jul 2010 15:36:40 +0000

My firm now offers Exiting Planning to help you move on when your time has come. It is an exciting process that applies to businesses of any size as many of us have a large percentage of our net worth tied up in our businesses.

Dividends for C-Corporation Owners

danrich — Thu, 08 Jul 2010 15:35:27 +0000

If you operate your business entity as a C-Corp; you may have accumulated earnings. The year 2010 sees an end to the 15% tax on dividends. You could declare a dividend to flush out the cash and only pay a 15% tax. You could then take the dividend and lend it back to your corporation if needed.

Health Insurance Tax Credit

danrich — Thu, 08 Jul 2010 15:32:04 +0000

The Patient Protection and Affordable Care Act provides an incentive for employers with no more than 25 full-time (or full-time equivalent) employees to provide health insurance. (Annual wages must average no more than $50,000 per employee.) The Act offers qualifying employers a sliding-scale income tax credit to help them pay for health insurance coverage for employees. For 2010 through 2013, the credit may be as much as 35% of the employer’s contribution toward the coverage. In general, the employer must contribute at least 50% of the total premium cost.

New Tax on Investment Income

danrich — Thu, 08 Jul 2010 15:31:04 +0000

Looking ahead, the health care reform law enacted earlier this year (the Patient Protection and Affordable Care Act, as amended) imposes a Medicare tax on the investment income of higher income individuals, estates and trusts, starting in 2013. For individuals, the tax will be equal to 3.8% of the lesser of (1) net investment income or (2) the excess of modified AGI over $200,000 (single; head of house-hold), $250,000 (married filing jointly), or $125,000 (married filing separately).