Saturday, May 21, 2011

WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’

* A tweet from an IRS employee twit reminded me that “You can check the status of your 2010 IRS tax refund on the IRS website”. If your federal refund is late in coming don’t call or email your tax preparer with a “Hey, Dude. Where’s my check?”! Go to the IRS website’s “Where’s My Refund” feature.

Before calling check your return to see if direct deposit was requested. If you request direct deposit of your federal, and/or state return, you will not receive any notice from the government or the bank that the money has been deposited – it will just show up in your account. Check the bank statement.

Most states also have a process for checking on the status of a refund. I get more queries from clients about state refunds than federal refunds. NJ does not provide an online status check, but has a phone number to call. If your state refund is late go to the website of your state’s Department or Division of Taxation or Revenue to find out what to do.

* Donna Bordeaux, who counts beans with her husband Chad, asks the question “What Do You Do With IRS Notices?” and discusses three possible answers.

Of the 3 possible answers she discusses I certainly agree that #3 is the correct one. However Donna makes the classic common error in her wording. It should read – “fax it to my tax professional and go on with my day”.

* My reaction to the YAHOO NEWS item “Geithner Says Overhaul of Tax Code Must Wait” was, unfortunately, the same as that of fellow tax blogger Joe Kristan in his “tweet” of the article – “I wasn't holding my breath...”.

While 2011 is the perfect year to seriously discuss and enact tax reform legislation, the idiots in Washington will most likely do nothing substantial until after the 2012 election.

I have an idea – let’s vote them all out in 2012 – Go GRIP (Get Rid of Incumbent Politicians)!

* ACCOUNTING WEB reports that “Tax Amnesty Program Surprisingly Successful in Washington State”.

State officials were hoping businesses would pay $24 million in back taxes. Instead, the state received $263.4 million. Local governments were hoping for about $4 million but received just under $57 million.”

State tax amnesty programs have been consistently successful in bringing in big bucks. When will the idiots in Congress realize that a federal tax amnesty program is a good idea?

* Just because you are entitled to a federal or state tax refund does not mean you will get a check for the full amount. If you owe back federal or state taxes, or are behind on child support, or even if you “allegedly” owe money to a non-profit hospital, the IRS, or your state, can raid your refund to collect a multitude of outstanding liabilities.

The IRS provides information on “offsets” in a March Tax Tip titled “Tax Refund Withholdings and Offsets”.

* Bruce, the MISSOURI TAX GUY, gives good advice in "Management Tips for Small Business.”

While at Bruce’s blog be sure to check out his Product Page.

* John Tozzi talks about two bills introduced in Congress that would affect the taxes of Schedule C filers in “Tax Break for Self-Employed Likely to Vanish” at BUSINESS WEEK.

(1) HR 880: Equity for Our Nation’s Self-Employed Act of 2011 would make permanent the deduction for health insurance costs in computing self-employment taxes (the deduction would reduce income tax and self-employment tax), which was available for tax year 2010 only.

(2) HR 1827: Home Office Deduction Simplification Act would create a “standard home office deduction” of the standard home office deduction is “the lesser of 1,500, or the gross income derived from the individual’s trade or business for which such use occurs”.

The first bill is great – and should be passed. This will permanently fix a discrepancy on the treatment of health insurance premiums between corporations and sole proprietorships, and should greatly reduce the number of small business corporations, and all the extra paperwork and agita that the corporate entity creates.

I have doubts about a “standard deduction” option for the home office. To be honest it would not save me any tax preparation time – as I would need to calculate the home office deduction in the “old” method each time to compare to the standard deduction to determine which provides the better tax benefit. And one of the benefits of the home office deduction, when limited by net self-employment income, is that the portion of the home office deduction attributable to real estate tax and mortgage interest can be used to create a Schedule C loss, which in turn reduces Adjusted Gross Income, which can positively affect a multitude of other tax benefits.

* Jean Murray provides an excellent “bottom line”, practically taking the words out of my mouth, in her post “4 Reasons You Should Incorporate Your Business” at ABOUT.COM” US BUSINESSLAW/TAXES.

Don't incorporate just because your attorney says it's a good idea. Attorneys make money helping you incorporate, and they make no money if you stay a sole proprietor or create a do-it-yourself LLC. Review all the alternatives and consider what's best for your business at this time and into the future. Remember, it's always possible, and easy, to change from a sole proprietorship to an LLC or a corporation. It is almost impossible to un-incorporate your business and go back to being a sole proprietor.”

While there are reasons, based on specific facts and circumstances, for a small one-person business to incorporate, there are many, many, many more reasons NOT to incorporate.

Whatever you do – DO NOT INCORPORATE YOUR BUSINESS FOR NO OTHER REASON THAN TO REDUCE YOUR AUDIT PROFILE.

* I realize this has nothing to do with taxes – it is just some “fine whine”. Why do “twits” feel compelled to constantly “tweet” their physical location – i.e. “I’m at Joe’s CafĂ©”? Do they really think we care? I am expecting to see the following tweet one day – “I am sitting on the jake taking a dump”.

TTFN

3 comments:

taxdood said...

Regarding your "fine whine," this is likely why you see twits often stating their location:

http://en.wikipedia.org/wiki/Foursquare_(social_network)

I'm not a foursquare user myself, but I understand it is very popular.

Robert D Flach said...

DOOD-

Thanks for the word.

It is still Greek to me.

TWTP

dbltall said...

That joke has already occurred to someone. Warning: Offensive language.
It's from Penny Arcade, so there will be very bad words.

http://www.penny-arcade.com/comic/2008/4/23/