IRS changes mean new tax forms and reporting requirements Businesses will be required to file thousands of additional 1099 tax forms, an item that was hidden in the 2,409-page health reform bill. Initially a tax-reporting expansion was buried in a different bill, the Housing Assistance Tax Act introduced by House Speaker Nancy Pelosi and signed into law by President George W. Bush in July 2008. Best known for its first-time homebuyers' credit, the bill also created a new addition to the family of 1099 tax forms: the 1099-K. The 1099 is a catch-all series of IRS documents used to report non-wage income from a variety of sources like contract work, dividends, earned interest and pension distributions. The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year's transactions. The rule comes with a floor to weed out the most casual retailers: The 1099-K is only required when a merchant has at least 200 payment transactions a year totaling more than $20,000. But it applies to all payment processors, including Paypal, Amazon.com, and others that service very small businesses. The goal of the new regulations is to catch income that is going unreported to the IRS. The federal government loses an estimated $300 billion each year from the "tax gap" between what individuals and businesses owe and what they actually pay. "Better information reporting helps the tax system work better by ensuring that everyone pays what they owe," IRS Commissioner Doug Shulman stated last year as his agency unveiled the 1099-K. "The new law gives us an important new tool for closing the tax gap and also provides business taxpayers better documentation to compute and report their income and expenses." For companies that currently report all their credit card and Paypal sales to the IRS, the 1099-K requirement will have little impact. All the paperwork will be done by the bank or payment processing service, and business owners will simply receive a form at the end of the year listing their total receipts. The 1099 changes attached to the health care reform bill are attack a different area. These massively expand the requirements for filing the "1099-Misc" form, which companies use for recording payments to freelance workers and other individual service providers. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods. Starting in 2012 that all business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to -- even if it's a giant retailer like Staples or Best Buy -- at the time of the transaction, or else facing IRS penalties. The 1099-Misc is having its role changed from a form for tracking off-payroll employment to one that must accompany virtually any sizeable business transaction. Businesses should begin to prepare for the new filing requirements before they are required so that a system for gathering necessary information from recipients of payments can be instituted. Bernard Kiesel has been a Certified Public Accountant since 1986, and is the managing CPA for KDK Accountancy Corporation an Orlando Florida area firm

Businesses will be required to file thousands of additional 1099 tax forms, an item that was hidden in the 2,409-page health reform bill. Initially a tax-reporting expansion was buried in a different bill, the Housing Assistance Tax Act introduced by House Speaker Nancy Pelosi and signed into law by President George W. Bush in July 2008. Best known for its first-time homebuyers' credit, the bill also created a new addition to the family of 1099 tax forms: the 1099-K. The 1099 is a catch-all series of IRS documents used to report non-wage income from a variety of sources like contract work, dividends, earned interest and pension distributions. The new 1099-K aims to shine a light on a currently hard-to-track payment stream: credit cards. Starting in 2011, financial firms that process credit or debit card payments will be required to send their clients, and the IRS, an annual form documenting the year's transactions. The rule comes with a floor to weed out the most casual retailers: The 1099-K is only required when a merchant has at least 200 payment transactions a year totaling more than $20,000. But it applies to all payment processors, including Paypal, Amazon.com, and others that service very small businesses. The goal of the new regulations is to catch income that is going unreported to the IRS. The federal government loses an estimated $300 billion each year from the "tax gap" between what individuals and businesses owe and what they actually pay. "Better information reporting helps the tax system work better by ensuring that everyone pays what they owe," IRS Commissioner Doug Shulman stated last year as his agency unveiled the 1099-K. "The new law gives us an important new tool for closing the tax gap and also provides business taxpayers better documentation to compute and report their income and expenses." For companies that currently report all their credit card and Paypal sales to the IRS, the 1099-K requirement will have little impact. All the paperwork will be done by the bank or payment processing service, and business owners will simply receive a form at the end of the year listing their total receipts. The 1099 changes attached to the health care reform bill are attack a different area. These massively expand the requirements for filing the "1099-Misc" form, which companies use for recording payments to freelance workers and other individual service providers. Until now, payments to corporations have been exempt from 1099 rules, as have payments for the purchase of goods. Starting in 2012 that all business payments or purchases that exceed $600 in a calendar year will need to be accompanied by a 1099 filing. That means obtaining the taxpayer ID number of the individual or corporation you're making the payment to -- even if it's a giant retailer like Staples or Best Buy -- at the time of the transaction, or else facing IRS penalties. The 1099-Misc is having its role changed from a form for tracking off-payroll employment to one that must accompany virtually any sizeable business transaction. Businesses should begin to prepare for the new filing requirements before they are required so that a system for gathering necessary information from recipients of payments can be instituted. Bernard Kiesel has been a Certified Public Accountant since 1986, and is the managing CPA for KDK Accountancy Corporation an Orlando Florida area firm

 

Required Minimum Distribution rules require millions of investors and account holders of IRAs, 401Ks and other qualified retirement plans who are age 70 1/2 or older to withdraw a certain amount of money each year from their retirement accounts. These withdrawals are called required minimum distributions, or RMDs, and typically are subject to tax.

In late 2008, then-President George W. Bush signed legislation that generally suspended RMDs for IRAs, 401(k) plans and other retirement accounts for 2009 only. That action was praised by many investors who didn't want to be forced to withdraw funds from their hard-hit accounts.

Below is a listing from the IRS and basic description for tax credits (dollar for dollar credits against your tax and may even be payable to you).

As a taxpayer you need to claim the credits on your tax return in order to benefit from them.

Debt cancellation income rules effect on taxes

General rule. Gross income includes income from the discharge of indebtedness. This applies equally to debts discharged by commercial lenders and those canceled by private lenders.  However, there are several exceptions to the general rule that treats a debt forgiveness as taxable. In addition, there are numerous exclusions from gross income for certain types of forgiven debts. Exceptions and exclusions are separately covered below.  If you have specific questions call our office at 407-677-1040. 

Gift exception. If a debt cancelled by a private lender, such as a relative or friend, is intended as a gift, there is no income. Likewise, a debt cancelled by a private lender's Last Will and Testament triggers no income to the borrower.

The following are proposed tax changes for Individuals in 2011.

Please call if you think any of these items affect you and you would like to plan for or around them.

The following are proposed tax changes for 2011.

If tere are questions about any of these items, Please call to determine relevence for your company.

Now that 2009 has been left behind for 2010 Businesses and Individuals are required to file tax returns.

The follwoing are due dates for various returns:

Business and Individual Taxpayers should review their tax situation before the year end.

Many tax planning strategies involve pulling expenses into the current year and pushing income into the subsequent year.  Time is running out in order to effect and complete transactions for eligibility for calendar year 2009.