See this excellent article from the AICPA in their Tax Advisor.
We do not yet know the full ramifications to the resources of the South Carolina Department of Revenue and have asked for assistance as South Carolina CPA’s to block file any necessary SC Forms, IRS forms and other paperwork on behalf of our clients. As of yet we are unable to assist our clients in mass, so action will need to be taken at the individual level.
If you are affected by this problem, we recommend you also file an Identity Theft Affidavit, or Form 14039 with the Internal Revenue Service. You can find out more about this general process at the IRS’s ID Theft Tool Kit page.
Finally, we have also spoken to some banker’s in the area who strongly suggest you consider cancelling any debt or credit card you may have used to pay for any South Carolina taxes owed and ask the bank to reissue that card. While that takes time to transfer any automatic drafts that may be used with that card, it will ensure some additional protection should someone be able to fraudulently charge items on your account. Contact your bank to have them help you through that process. If you did not use a debit or credit card to pay taxes on your return, that information should not be stored in the South Carolina Department of Revenue database and should not be compromised as a result of this cyber attack.
We do not yet know the ramifications of submitting for a refund or payment using a bank account. However, we will post that information once obtained.
Do you have a home computer with all your important documents scanned? If you are like me, you love that Neat Receipts Scanner and now you scan those papers in and throw them out! So here’s my question — who knows your password and can get access to those documents? “No one!” you say? Then how will someone help take care of your estate, or worse, your children? You need to have a plan in place for an executor or trustee to get access to your electronic stash of important documents.
More importantly for e small business owner, what is that password for the server? What is that password for the Quickbooks or accounting package? If a significant asset in your estate is a private business, you don’t want to lose the value if no one can continue to run the business when you are gone.
No more are the days of going through someone’s files or bookcase looking for life policies, bank statements and passwords. Everything is becoming more and more electronic and the risks are increasing.
If you haven’t addressed that risk, then contact us and let us help you. Your family will be glad you did.
The article Avoiding ID Theft On Dead Family Members is an eye opening article. They also reference a non-profit entity to help if identity theft occurs, regardless of whose identity is stolen. I am not familiar with this group, the Identity Theft Resource Center, but the information is abundant on their web site.
The message here is that there is one more item that deserves some attention after losing a loved-one. Be sure to have someone help you complete this task or do it yourself.
Remember, there are stiff penalties for fraudulently reporting information on a tax return. So, the best solution, as always, is to comply with the law. Be sure to start checking through your W-9’s and ensure you have proper social security numbers and addresses!
Your CPA can help if you are not sure what to do.
If . . . → Read More: When are Individual Taxes Due in 2011?]]>
If you look at your calendar this year, April 15th falls on a friday. There is no holiday on friday, but the federal government has moved the due date for income taxes to Monday, April 18th, 2011. Why? The answer isn’t so simple.
Saturday, April 16th is Emancipation Day, which is a Washington, DC holiday. Because that holiday is a Saturday, they will observe it on Friday, April 15th. Now that April 15th is a holiday, the federal government moved the due date to April 18th, the next business day. Whew!
HOWEVER, don’t get caught in the state trap. Make sure that your state tax return is submitted by the correct date. Both North Carolina and South Carolina departments of revenue have moved their due date for individual tax returns to follow the federal government and they are due on Monday, April 18th. Be sure your state has done the same.
More importantly, many of the tax forms will still reflect an April 15th due date. While this is incorrect, the money will not be spent to change the dates. Enjoy the extra time this year if you need it!
This glitch is the ability for the IRS to prepare the . . . → Read More: Taxpayers Itemizing Must Wait!]]>
This glitch is the ability for the IRS to prepare the necessary changes to the Schedule A, or itemized deductions form for the personal tax return, Form 1040. All notices we have received indicate that this form will be done by the middle or end of February, 2011.
This means if you itemize your deductions on your tax return for mortgage interest, property taxes, contributions, and other items, you will not be able to file your taxes until the end of February — whether or not you have a refund. If you take the standard deduction, then you will be able to file quickly as the new year get’s underway.
The ying and yang of income taxes and the IRS!
Just like a business, a nonprofit organization has to pay close attention to it’s customers and sources of revenue. One of the best ways to generate revenue today is through a well designed and maintained web site. The Charlotte Business Journal released an article today that discusses ‘tech services’ and how various nonprofit organizations in our area are best capitalizing on those services.
The article gives us success stories about the United Way of Central Carolinas, Inc. and YWCA Central Carolinas. They have used NPower Charlotte Region to build their web sites with strong content and the ability for people to make donations over the internet. In today’s cash poor economy, many are making donations with credit cards to get additional airline mileage or rebates. Nonprofit organizations need to be able to tap into this market.
If your nonprofit organization does not have a website, or needs to get an updated website, consider outsourcing the work. The money spent may ensure a timely delivery and quality product that helps raise more money than it costs. Frequently, a volunteer doesn’t have the full time and attention to accomplish this work. Most importantly, do your due diligence to find a quality firm.
Second, there were over 40,000 S-Corporations with profits in the $50,000 to $100,000 range that also took zero wages and paid no self-employment tax. Assuming each owner here should have taken $30,000 as a salary and paid 7.51% self-employment tax, then the total tax for each owner would be $2,253 or $79,000,000 in avoided tax.
As a result, Congress is defining a small ‘Personal Service ‘S-Firm’ or S-Corporation as a business with three or fewer workers reputation or skill make up the primary asset of the company. Thus, accountants, lawyers, engineers, architects, consultants, etc. will all fit this definition. Further, Congress will be removing the self-employment limitations on these types of S-Corporations and the profits will be taxable in full.
Thus, because a group of individuals decided to try and scam the IRS for between $2,250 and $4,500 — all small personal service S-Corporations will lose the benefit of lower taxation than partnerships. I am confident, however, that the $237,000,000 that has been avoided will be made ten-fold under this new guidance. Expect this to become law for tax years beginning in 2011.