Accounting News and Notes

Atlanta CPA Amends Income Tax Returns Saving Tens of Thousands

Proudly Serving Lilburn, Alpharetta, Lawrenceville and Snellville for Decades

Often taxpayers feel after they have filed an income tax return that they are etched in stone. Though you want this to be the case as no one likes to tax returns twice, frequently having a CPA critique your past returns, especially if you are a business owner and had returns filed by someone who is not a CPA, is often a great way to “find unclaimed money.” In reviewing past business/corporate as well as personal income tax returns we  have amended returns to reflect:

-Changing to an S Corporation saving approximately $20,000 on one set of returns and $12,000 on another.

-Tax deductions ranging from thousands of dollars of missed tax deductions such as business mileage.

-Thousands of dollars of missed itemized deductions such as cash and property contributions to charity, state income taxes and real estate taxes.

-Failure to claim Head of Household status, which is a lower tax bracket than filing single. Amended return saved tax dollars as well as then being able to claim additional tax credits.

-Numerous instances where we have filed amended personal income tax returns to claim Earned Income Credit, which is a credit allowed for those who have a dependent and make less than certain qualifying income levels. Amended return saved thousands of tax dollars.

These are just a few of the examples of where a CPA can evaluate past returns to “find money” that you have overpaid to the IRS or Georgia for prior year income taxes. Amended returns come in all shares and sizes:

-If you are an S Corporation you file a new Form 1120S, while marking the amended box on the first page of the return.

-If you are a single member LLC, you should be filing the business results as part of your personal return the business information on a schedule C. Therefore, like individual taxpayers you will file a Form 1040X to the IRS and Form 500X to the state of Georgia.

-Also when reviewing prior tax returns, one can look for deductions, strategic and operational issues that one can use to mitigate future tax bills and to improve overall company profitability.

Tax law only allows for returns to be amended for three years after their initial filing date. Thus, it is essential to ensure that all returns that you have any questions about whatsoever should have them evaluated by a competent and experienced CPA who is well versed in IRS tax law and representation issues. Unfortunately if you have not amended your return after three years, tax law does not allow you to receive a refund of any type or to even apply any refund application to any other outstanding monies due either the IRS or that state of Georgia.

John Dillard, CPA of His CPA, PC, 1940 Woods River Lane,   Phone 770-814-9304   http://www.hiscpa.com/    http://www.john-dillard.com/

Dare to Attempt Something so Great for the that it is doomed to failure, lest Christ be in it!

 John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

Serving Barrow, Bartow, Carroll, Cherokee, Clayton, Coweta,  Douglas, Fayette, Forsyth, Fulton, Gwinnett, Henry, Newton, Paulding, Pickens, Rockdale, Walton, Barrow, Bartow, Carroll, Henry, Newton, Bartow, Walton, Rockdale, Barrow, Spalding, Coweta, Dawson, Douglas, Fayette, Newton, Paulding, Spalding, Walton, Henry, Paulding, Douglas, Coweta, Canton, Covington, Douglasville, Druid Hills, East Point, Forest Park, Griffin, Lithonia, Mableton, McDonough, Milton, Mountain Park, Newnan, Powder Springs, Stockbridge, Union City, Villa Rica, Winder, Woodstock,  Smyrna, Sandy Springs, Marietta, East Point, Gainesville, Snellville, Buckhead, Buford, Peachtree City, Dunwoody, Kennesaw, Decatur, Conyers, Stone Mountain, Gwinnett County, North Fulton County, DeKalb County, Hall County, Clayton County, Cobb County, Forsyth County, Hart County, Jefferson County, Duluth, Alpharetta, Johns Creek, Lawrenceville, Milton, Norcross, Snellville, Roswell, Buford, Cumming, Grayson, Lake Hartwell, Suwanee, Sugar Hill, Loganville, Lilburn, Dunwoody, Gainesville, Decatur, and Beyond

Both of the New Stimulus Bills Passed by Congress Bode Well for Companies

Using Tax Credits for You and Your Business

The Stimulus Bill passed late last year and the recent Economic Stimulus Plan contains several Tax Credits and Incentives for all businesses. With this down economy it’s now the ideal time to help your company’s profit improve by accessing the many benefits including:

• Small Business Expensing: A write-off of up to $250,000 of capital equipment is available.
• Expanded NOL Carry Back: It is now 5 years for businesses with less than $15 million in average gross receipts.
• AMT Patch: The exemption is increased from $46,200 to $46,700 for single filers and from $69,950 to $70,950 for joint filers and surviving spouses.
• S Corporation Reduction: If a business converts from a C Corporation to an S Corporation in 2009 or 2010, the S Corporation must hold its assets for only seven years, down from ten years, in order to avoid a tax on any built-in gains that existed at the time of conversion.
• Delayed Recognition of CODI: The Certain Cancellation of Debt Income will be allowed over 10 years (Check with your CPA on details).
• Estimated Tax Payment Relief: Individuals operating small businesses may be permitted to make lower quarterly estimated tax payments to the IRS in 2009.
• New Employee Tax Credit: The Work Opportunity Tax Credit is expanded to include unemployed veterans and disconnected youth. This now makes a total of eleven different groups of new hires that are eligible for this credit. This credit ranges from $2400 to $8500 per qualified new hire.
• Research & Development Tax Credit: Eligible expenses have increased from 10% to 14%. Most Printers, since they are classified as manufacturers, qualify for this credit, which is both a State and Federal credit.
• Federal Location Tax Credits: Businesses that are located in certain Federal location areas and have employees that live in that area can be eligible to receive tax credits from $1500 to $3000 per employee per year. The Bill extended this credit through 2011.

Each State offers Tax Credits, Grants, and other Incentives for qualified activities by business, while the Federal government offers over 25 different incentives. These programs, enacted into law, can help sustain your business and increase your profit.

Written By Terry McMillian of McMillian & Associates, Inc. LaGrange, Georgia. Contact Rick Linden at 678-468-1955

Corporate & Personal Income Tax Preparation and Reviewing of Prior Filed Returns

One of the unique things you can do as a taxpayer is to continually tax an active stance in growing in knowledge about your own tax situation. To this end, however I do not recommend that as an entrepreneur that you go back to school and get a degree in accounting or to become a CPA. You task as a business owner is daunting enough in the daily and strategic planning of your business. However, I do believe that periodically getting a second opinion for a CPA will do much to help ensure that you are on track. In fact, over the years, I have had several clients do this in an effort to learn what they can, while discovering that everything that legally could be done to keep their taxes as low as legally possible were already done. However, frequently a fresh face on the scene will do much to enlighten a taxpayer or business owner to learn of other valid options that are available to legally lower their taxes.

Examples of items a new CPA might discover include:

-The discovery of tax deductions that you previously missed.

-That you do not have the right retirement plan set up for your business to maximize qualified pension plan deductions for both you and your employers.

-That your present choice of entity selection is not the best suited to your business for both operational and tax issues. An LLC,  LLP, Partnership, C Corporation, S Corporation and Proprietorship all have substantive tax, operational and taxing nuances that are dramatically different. Knowing that your present choice remains the best is critical to sound financial management.

-That your own preparation of your internal financials is providing you with the data and information you need to make sound operational and management decisions.

These are just a few of the important and critical decisions that impact your taxes and business dramatically. Having a check-up or a consultation with a CPA who is independent of your business will do much to ensure your remain financially on track. Having served as a CPA for almost thirty years I have seen service levels of professionals at varying levels. Ensuring that you are receiving sound prudent professional services will save you money and headaches in both the short and long term.

John Dillard is a Christian Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey and to learn about his ministry visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304 proudly serving Duluth, GA, Gwinnett County and Beyond.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Business Acquisitions/Sales,  Forensic Accounting, Business Valuations and Bookkeeping.

Understanding the Differences Between Active & Passive Losses.

It’s time to take another look at the rules for rental properties for your deduction and a few of the tax rules to ensure that you qualify. Generally since the mid to early 80’s the IRS has limited what one can deduct for rental properties based upon your level of participation.

Generally, the least stringent of the qualification rules is under the active participation standard. To qualify a taxpayer needs to participate in making management decisions such as qualifying new tenants, deciding rental terms and the approval of required expenditures while acting in a bona fide and significant sense. If you qualify under this standard then your real estate losses are generally ruled to be passive and to limited to a maximum of $25,000. Also to meet this requirement taxpayers (counting a spouses interests) are required to own at least 10% of the equity/ownership percentage in a given property. The $25,000 maximum is phased out starting at $100,000 of adjusted gross income and is totally phased out after adjusted gross income exceeds $150,000.

Certain real estate professionals, who qualify, can treat real estate activities as non-passive and therefore not subject to the above limitation. To qualify a taxpayer, or their spouse, must spend more than one-half of their personal services actively in the furtherance and performance and provide material participation in real estate activities. Also the taxpayer, or their spouse, must perform more than 750 hours of service during the tax year in the real estate activity in which they actively participate. Generally this exception is applied on a property by property basis, however a taxpayer may elect to this standard to all interests as a single activity for purposes of satisfying the material participation standards and requirements.

Carefully evaluate how you are treating your real estate properties and ensure that you are correctly applying these standards against your properties and to treat the deductions for them accordingly.

John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Atlanta CPA Advises on Completing the Election by a Small Business Corporation and Form 2553

Beginning with the 2009 filing season for 2008 S Corporation Income Tax Returns, the IRS has just made the process easier for those who inadvertently the election late. For years the S Corporation Election, or Form 2553, was to be file within seventy five days of the first day or beginning of the tax year to which a electing corporation desires to make it effective. For example, if you are a brand new corporation who just incorporated on June 1, 2008, then you would have seventy five days from 6-1-08 to make the election. Similarly if you were a corporation that had been a C Corporation for years and would like to be an S Corporation for the 2008 tax year, then under the old rules you would have had to made the election by March 15th or seventy-five days after 1-1-08.

Starting 1-1-08, if you qualify, corporations who neglect to have satisfied the old 75 day requirement can still do so if they qualify. To be an S Corporation you have to:

-Have only Resident Aliens or U.S. citizens as shareholders.

-Generally have a calendar year-end.

-Have less than one hundred shareholders.

-Have one class of stock.

Under the new rules a company desiring to be a S Corporation can elect to do so with the filing of their Corporate Return, Form 1120S, as long as:

-They attach a properly Form 2553, Election by a Small Business Election including the effective date of the election, signed approval of all of the company’s shareholders.

-They attach a reasonable cause for the late election.

-Form 1120S is filed either by the original due date or plus the automatic six month extension, if timely elected.

-None of the shareholders have filed their personal returns showing reflecting that the company is not an S Corporation.

Please note that similar relief is available for an entity eligible electing to be treated as a corporation, such as an LLC converting from a partnership to a corporation for tax purposes.

Generally speaking the IRS will respond to S Election request within sixty days of their original filing. For those not receiving their acceptance on a timely basis you can call the IRS at 800.829.4933. If a company fails to meet the new relaxed filing requirements for S Corporation status, they can still request a Private Letter Ruling and pay a user fee.

John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

U.S. Income Tax Returns for an S Corporation Presented by Atlanta CPA

Understanding the many variables of the correct preparation of a Form 1120S, the year-end income tax return for an S Corporation, is essential to properly managing your business affairs and practices. The tax law for S Corporations originated in some forty years ago and is a federal law allowing business owners to report their income on Form 1120S but to pay the taxes on these monies on their individual return Therefore there is no tax due when the Form 1120S is filed.

As S Corporation owners are going to be taxed on a shareholder’s personal return, care should be exercise at least twice annually to be sure that taxes owed are paid as they are earned or accrued. Rather than having S Corporation owners also make estimated taxes, it is easier and less administrative burdensome to have sufficient withholding done from an S Corporation owner’s paycheck to cover their estimated current year tax liabilities. Also withholding taxes are deemed statutorily to have been made evenly throughout the year which may preclude the potential assessment and liability of unequal earnings and or payments on a quarterly basis.

As a S Corporation does not pay any income tax and its tax issues flow down to a shareholders personal return, “tax preference” items are communicated to each shareholder based upon their respective ownership percentages. Tax preference items are those which are to be reported independently on a shareholders Personal Form 1040. More common examples of these include interest income, ordinary and qualified dividends, capital gains and losses, Section 179 depreciation and charitable contributions. Also communicated to the shareholders include their respective shareholder distributions and non-deductible expenses.

In order to companies to be qualified as an S Corporation they have to have less than 100 shareholders, have a calendar year-end, owners are to be U.S. citizens or resident shareholders and one class of stock. For the first year a corporation is electing S Corporation status it is required to submit, within 75 days of the beginning of the tax year, a Form 2533, which is a Election by a Small Business Election. If you fail to make this election on a timely basis you may still be able to qualify using Rev. Proc. 2003-43. Once a corporation becomes an S Corporation it will remain so for the life of the company unless any one of the rules of being an S Corporation are violated or by consent by more than 50% of the voting and non-voting stock of the company.

John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Atlanta CPA Teaches Understanding Georgia S Corporation Returns

If you own your own business and have set up as an S Corporation you are certainly surprised by many of the nuances of Form 1120S for the IRS and Form 600S for the state of Georgia. Like its federal counterpart Form 1120S, the Georgia Form, the 600S, the return is due by March 15th of each year or by the fifteenth of the third month, after the end of the company’s fiscal year-end. Also, as S Corporations are a “flow through” entity the profits or losses of the business show up on a individual shareholder’s personal return. Thus, there are no income taxes paid with either the filing of the IRS’s Form 1120S or Georgia’s Form 600S. However there is a net worth tax which is assessed and paid on the Georgia Form 600S based upon a company’s net book value, which is essentially the combined total of their retained earnings accounts. Returns are filed to the Georgia Department of Revenue.

As part of the Federal 2008 Economic Stimulus package passed Section 179 Depreciation (what taxpayers can write-off in full for fixed asset purchases) was increased to $250,000. As with past years this limit applies both at the corporate and individual shareholder level. The Georgia limit for Section 179 Depreciation, with the passing of the state’s Small Business and Work Opportunity Act of 2007, was increased to $128,000. Thus Georgia Corporations when making the full deduction at the federal level on Form 1120S must make an adjustment to the Form 600S. A complete copy of the federal return should be attached to the Georgia Return prior to filing. If the Georgia Form 600S is amended at the corporate level, there is no separate return and prepares should check the appropriate box on the form to indicate an amended return is being filed. If for any reason a federal return is adjusted, amended or changed due to an audit the corresponding Georgia Return should be amended as well within 180 days of any IRS change. Amendments to Georgia are reported on Form 500X. If any Georgia Corporation does business or owns property within the state then Form 600S and the Allocation and Apportionment of Income schedules should be completed.

If the Georgia Return or Form 600S needs to be extended it can be by filing a Form 7004 with the Internal Revenue Service that Georgia accepts as having been sufficient notice to them. If you are going to owe any taxes with the Georgia Return you will want to pay them via Georgia Form IT 560C by the original due date of the return as otherwise penalties and interest will be assessed on late payment. Keep in mind at all times, that an extension to file, is not an extension to pay.

In general terms the tax imposed and assessed by the state of Georgia is based upon the portion of business income that is reasonably attributable to Georgia sources, property owned and business done in the state. For tax years beginning January 1, 2008 or later the allocation is calculated by using the 100% gross receipts factor.

If you have a non-resident shareholder (an individual owner of the S Corporation who does not reside in Georgia), they are required to attach a consent agreement acknowledging their responsibility to file a individual or personal Georgia Return, a Form 500, to report and apportion their income to Georgia as well as other states where they file individually.

John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

2009 IRS Tax Filing Deadlines for Atlanta Business Owners & Individuals

Below is a recap of IRS Tax Filing Deadlines for Atlanta Business Owners and Individuals. You will want to refer here again and again to ensure that you do not run afoul of critical deadlines thereby avoiding unnecessary penalties and interest.

Form 1040/Personal Income Tax Return is due on April 15th, 2009. If the deadline falls on a weekend then the revised date is April 17th.

S Corporation and C Corporation Returns are Due March 15th, 2009. An automatic extension to file is available. Please note this is not an extension to pay. Fiscal year taxpayers due date will be the 15th of the third month following the close of the tax year.

LLC, LLP and Partnership Returns are Due April 15th, 2009. An automatic extension to file is available. Please note this is not an extension to pay. Fiscal year taxpayers due date will be the 15th of the fourth month following the close of the tax year.

1040ES and 500ES Estimated Tax Coupons. This are the quarterly forms used for taxpayers to pay their estimated taxes. I encourage all S Corporation owners to increase their payroll withholding to cover their estimated 2009 taxes rather than to also make these quarterly payments. These are due the 15th of April, June and September of 2009 and then January 15th, 2010.

Using an Atlanta Payroll Service. Payroll is the largest and most burdensome administrative responsibility for a business owner. Whether you have one employee or a thousand, both the IRS and your state has a myriad of payroll reports and deadlines for which you are required to complete. Unfortunately there is not a one-stop shop to pay and report all of the varying deadlines and taxes. However, there is a solution that makes the reporting of payroll dramatically more seamless than if you strive to go it on your own.

The easy part of preparing a payroll is the actual paycheck itself, but that is where the simplicity stops and the difficulty begins as there are a dramatic list of reports and varying deadlines to meet. To this end I have recapped below some of the reports and their significance.

Form 941 to the IRS: A quarterly report for payroll to report wages, federal withholding and FICA/Medicaid. These reports are due thirty days after the close of a quarter.

Form 940 to the IRS: An annual report for FUTA/Federal Unemployment. These taxes are paid based upon the first $7000 of an employee’s salary and are assessed at a rate of .007 up to a maximum of $56 per employee/per year.

Georgia Withholding: To report your Georgia withholdings, Georgia will assign you to a reporting cycle; be sure to carefully review the reports they send, as the due dates will be detailed on the forms.

Georgia Department of Labor: This is a DOL/quarterly report due thirty days after the close of the quarter. Employers are required to pay for SUTA/state unemployment taxes using this form. Please note that initially when your business starts the tax rate is statutory. It will adjust over time based upon your claims experience. Please be sure to look for this notice of your annual rate, which Georgia sends at the first of each year.

For those operating in other states you will want to contact the varying local authorities to ensure that you are aware of local tax laws. Please be advised that certain cities also have payroll taxes that should be assessed against wages.

Please note you should file all of the reports by their due date (I suggest filing as soon as you receive especially if you know you will have no payroll) as both the IRS and your state will assess a penalty for late filing. If you have no payroll you will still need to file these reports marking the reports zero in the amounts being sure to keep a file for your records.

Due to the complexity of payroll reports and payments, I suggest that all business owners, regardless of the number of employees, retain a payroll service to prepare and maintain your paychecks, payroll reports, and to ensure continued compliance with local state and other ordinances relative to your payroll requirements. In this way you will aptly delegate one of the more cumbersome aspects of your business to someone who handles payroll each and every day.

Navigating through this administrative nightmare is a critical hurdle that all business owners must overcome. By calling us today we can assist in making you aware of the myriad of the tax laws affecting your payroll responsibilities as well as to refer qualified payroll companies to assist in this important step in your long-term success.

To gain access to all IRS reporting deadlines visit http://www.irs.gov/publications/p509/ar02.html

John Dillard is a Speaker/Author and Certified Public Accountant (All Rights Reserved). To See how he takes Christ along with him to work visit http://www.hiscpa.com/ (An Atlanta Christian  CPA firm) and for his latest book Overcoming Life’s 9/11’s: Job’s Journey visit http://www.john-dillard.com/ To contact John Dillard CPA (Atlanta Christian Author/Speaker) today call 770. 814.9304.

“Dare to Attempt Something so Great for the Kingdom of God that it is doomed to failure, lest Christ be in it!”

What, then, shall we say in response to this? If God is for us, who can be against us? Romans 8:31

Why are these verses here? Learn how HIS CPA became a Christian Accounting firm visit http://www.hiscpa.com/christian-CPA.html

We advise clients on: IRS representation, Offer in Compromise, Tax Problems, Incorporation in Georgia, Corporate and Personal Income Tax Returns, Part-time CFO, Virtual Controller, Business Planning, Offer in Compromise, Back Taxes, Bookkeeping.

Plan Now for Deductions, Deferrals, & Capital Gains to Reduce Your 2009 Taxes

A COUPLE OF DEFERRAL TIPS

• Max out your 401(k). Defer as much of the $15,500 maximum as possible, especially if your employer offers a matching contribution. This maximum is indexed for inflation starting in 2008. Assuming a tax bracket of 35 percent, a $15,500 contribution could defer $5,425 in federal income taxes, plus state and local tax savings. If you are age 50 or older, you could defer an additional $5,000 in 2008 and further indexed in 2009.

• Consider your rollover option. If you change jobs in 2008, “don’t cash in your retirement plan. There are high taxes associated with that — including a 10 percent penalty tax if you are under 591⁄2,” says Scoll. Instead, consider rolling your 401(k) or 403(b) plan into an Individual Retirement Account (IRA). You will ultimately pay taxes on your retirement savings — but in general, the longer you keep them tax-deferred, the better.

FINALLY, CAPITAL GAINS

• Watch your mutual fund purchases. Don’t invest in a mutual fund shortly before a capital-gains distribution. Why? If you buy a mutual fund on Dec. 1, and on Dec. 10 it pays a 10 percent dividend, you will owe capital gains on the dividend. “A lot of people get snake-bitten by this one and they don’t realize it until after it’s done,” says Scoll. Fund companies are required to post anticipated distribution dates, and you can find them on their websites.

• Use losses to offset gains. When you generate short-term gains of investments held one year or less, you pay ordinary income tax — though you can use long-term or short-term losses to offset taxes on capital gains. (The most tax-efficient use of capital losses is to offset short-term capital gains.) You can also use up to $3,000 in excess capital losses to reduce the amount of ordinary income that is subject to tax. That loss can also be used to offset capital gains paid out by mutual funds in their annual distributions.

• Give it away. If you’re planning on making a large charitable contribution, do so in a high-income year. The higher your income, the greater the allowed deduction (subject to phase-out limitations). Also, think about gifting appreciated assets instead of cash to a charity. Neither you nor the charity pays tax on the gift. Meanwhile, you get the deduction and avoid the capital-gains tax.

“When it comes to taxes,” says Scoll, “there is still time for the planning it takes to enhance your position. Don’t wait until April — you’ll only end up paying more than you have to.”

Together, we can discuss:

• Strategies you can use to convert ordinary income tax into capital-gains tax.

• Gifting strategies that can reduce your capital-gains tax.

• Whether you should tap investment assets to purchase business equipment and accelerate an expense deduction

Your financial advisor can help you understand the potential impact of these and other economic indicators on your investment portfolio.

This article was written by Wachovia Securities and provided courtesy of The Strong Gaddy Lilly Wealth Management Group in Gainesville, GA. You can contact Mr. Michael Gaddy at 770-532-6361. 

 2009 Year-End Tax Planning

The end of the year is a good time to focus on tax planning and assess your financial status and goals. These strategies may help minimize your tax bill.

Thinking about your taxes will almost always give you a headache, especially around the holidays. But staying on top of your finances as the year comes to a close can mean the difference between owing thousands of dollars in federal taxes and receiving a sizable check from the government in the spring.

Martin Scoll, Vice President of Life Event Services for Wachovia Securities, says it is paramount to start preparing as early as possible. “Good tax preparation and planning starts on January 1,” he says. “Don’t wait until December to start dealing with your year-end planning. Reviewing your finances and giving some thought to your taxes in October and November will not only keep you ahead of the game — it will also likely save you money.”

Here are some tax-efficient strategies to consider as the end of the year approaches.

Review Your Investments

Real Estate. For many people, a home is their best investment. Not only does a home typically rise in value over the long term — it also provides one of the best tax advantages out there, since the interest paid on a mortgage is generally deductible from your federal taxable income.

Stocks and Mutual Funds. Scoll says it is important to give your entire portfolio a review as the year comes to an end. If you have taken a loss from some stocks this year, it might be wise to sell them off before the end of December. Losses in equity markets can be used to offset any capital gains on stocks that have been realized during the year, and any excess losses can offset up to $3,000 of ordinary income, with any remainder carried forward for use in future years.

If you do decide to sell off stocks, make sure to do it before December31, the last day of the year the stock market is open. Getting stuck holding stocks with losses will not decrease your tax bill.

Also, if you are expecting capital gain to be returned from a hedge fund in which you are invested, try to defer that event until the beginning of next year, unless you think the rates will be substantially higher next year

Retirement. If you are receiving distributions from your qualified plan, you can roll over the entire balance or distributions in excess of any RMD (required minimum distribution) into a traditional IRA. If you do this custodian to custodian or within 60 days (subject to limitations), you will not have to pay taxes on those distributions. Be sure to speak with your Wachovia Securities Financial Advisor before setting up the IRA account.

Give Away Money, Increase Your Deduction

Often people donate money in the fourth quarter to increase their tax deductions. “Philanthropy is definitely something to consider,” says Scoll. “But there are limitations to how much you can give to charity and use the deduction.” You should talk to both your tax advisor and your Financial Advisor before embarking on a philanthropic giving plan.

There are also other kinds of gifts you can make to reduce taxes for long-term estate planning. First, you can give up to $12,000 per donor per recipient to family members and others each year without triggering gift taxes. You can also give to your children’s or grandchildren’s education through 529 savings plans. You can gift $12,000 a year to a 529 plan tax-free — or better yet, take advantage of a law that allows you to give a single contribution, covering five years, to a 529 plan. That means you can give a maximum of $60,000 (five years of gifting) per donor per recipient tax-free in one year — and still be able to move that money between heirs’ education funds.

Please consider the investment objectives, risks, charges and expenses carefully before investing in a 529 plan..

Additional Tax-Saving Tips

In addition to reviewing your investments, there are other strategies that can help save you money come tax time.

Scoll believes it is always cost-effective to hire a good accountant. “Very often a good tax preparer is going to save you more money than he is going to cost you,” Scoll says. “It pays to have a smart professional help you prepare your taxes.”

While spending some time at year-end preparing your taxes is a smart idea, it’s also a good time to assess your financial status and goals for next year — so that when the end of next year rolls around, your investment and tax planning will already be off to a strong start.

Be Sure to Consider:

• Making the necessary adjustments in your portfolio to help maximize your tax savings this year.
• How you should approach and adjust your IRA to avoid paying unnecessary taxes.
• Gifting money to family members or your children’s education fund to reduce your future estate taxes.

Withdrawals are subject to ordinary income tax and may be subject to a federal 10-percent penalty if taken prior to age 59½.

This article was written by Wachovia Securities and provided courtesy of The Strong Gaddy Lilly Wealth Management Group in Gainesville, GA. You can contact Mr. Michael Gaddy at 770-532-6361.