Dear Client:
Our Manhattan CPAs want yo make sure that you are aware of the following development in NYC small business taxes: The IRS has released guidance on computing the health insurance tax credit for eligible New York small businesses that make nonelective contributions toward their employee’s health insurance premiums.

The Patient Protection and Affordable Care Act added a provision that allows eligible New York City small businesses a tax credit for nonelective contributions that pay for at least one-half of the cost of health insurance premiums for the coverage of participating employees. The amount of the NYC small business tax credit is equal to 35 percent of the lesser of:
1.    The total amount of the nonelective contributions the employer makes on behalf of its employees during the tax year under a contribution arrangement for the payment of premiums for qualified health insurance coverage of its employees, or
2.    The total amount of nonelective contributions that would have been made during the tax year if each employee taken into account in item (1) had enrolled in a qualified health plan that had a premium equal to the amount that the Secretary of Health and Human Services determines is the average premium for the small group market in the state in which the employer is offering health insurance coverage (or the area within the state that is specified by the Secretary of Health and Human Services).

An employer determines its status as an eligible New York small business each tax year. An employer is an eligible small employer if the following conditions are met:
•    it has 25 or fewer full-time equivalent (FTE) employees;
•    the average annual wages of these employees are not greater than twice the applicable dollar amount for the tax year ($25,000 in tax years beginning in 2010 through 2013); and
•    the employer has a qualified health care arrangement in effect.
Certain employees are excluded from the determination of FTEs. Excluded employees are sole proprietors, partners in a partnership, shareholders owning more than 2 percent of an S corporation, and any owners of more than 5 percent of other businesses. Family members of these owners and partners are also not taken into account as employees.

The IRS guidance clarifies, among other things, how employers calculate the credit, the types of coverage that are eligible for the credit, and the interaction of the federal tax credit with New York small business tax credits. In addition, the IRS provides the average premium for the small group market in each state for the 2010 tax year for purposes of computing the amount of the credit.

The health insurance tax credit for NYC small businesses is one of many provisions of the Patient Protection and Affordable Care Act that encourages the shared responsibility for health insurance coverage of all Americans. If you have any questions regarding your eligibility or the calculation of the credit, please call our Manhattan small business CPAs at your earliest convenience.
Sincerely yours,

Jonathan Medows, CPA

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Our Manhattan office of income tax CPAs has been receiving many questions from clients about how the 2009  Recovery act may affect retired workers. Below we will attempt to explain this, and how it will affect your taxes in NYC. The American Recovery and Reinvestment Tax Act of 2009 (2009 Recovery Act) includes provisions that benefit the New York income taxes of certain retired workers. Individuals who receive certain government pensions and annuity payments will receive a $250 credit on their Manhattan income taxes in 2009. Alternatively, economic recovery payments of $250 will be made to individuals who are eligible for certain social security benefits, Railroad Retirement benefits, veteran’s compensation or pension benefits, or supplemental security income (SSI) benefits. These provisions are coordinated with each other and with the “Making Work Pay” credit so that no individual receives a double income tax benefit.

Economic Recovery Payments for Recipients of Certain Federal Benefits. The $250 economic recovery payment is payable to eligible individuals within 120 days of February 17, 2009, the date of enactment of the 2009 Recovery Act. Eligible individuals are those who received benefits in a qualifying program during November 2008, December 2008, or January 2009; and who have an address in the United States or its possessions. A qualifying program includes:

•    Title II benefits under certain provisions of the Social Security Act,
•    Monthly annuity or pension payments payable under certain provisions of the Railroad Retirement Act of 1974,
•    Certain veteran’s compensation or pension benefits, or
•    Supplemental security income (SSI).

Government retirees may qualify for $250 credit for 2009. Some government retirees may not qualify for social security benefits, and therefore may not be eligible for the economic recovery payment on their income tax return in New York City. However, the 2009 Recovery Act includes a $250 credit for certain government retirees who receive an annuity or pension for service performed in the employ of the United States, any state, or instrumentality thereof.

Individuals who receive an economic recovery payment may not claim the credit for government retirees. In addition, if an individual is also eligible for the Making Work Pay credit (MWPC), the amount of the MWPC is reduced by the amount of the economic recovery payment and coordinated with the credit for government retirees.

If you would like to know if you qualify for this credit, and how this would affect your income taxes in New York, please call our CPAs at our Manhattan office at your convenience.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation. We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Breaking news from our Manhattan income tax CPAs: Starting July 1, 2010, many mall businesses offering tanning services in New York must collect a 10 percent excise tax on the tanning services they provide. This excise tax requirement is part of the Affordable Care Act that was enacted in March 2010.

Here are nine tips on the tanning excise tax that providers must collect.
1.       Businesses providing ultraviolet tanning services must collect the 10 percent excise tax at the time the customer pays for the tanning services.
2.       If the customer fails to pay the excise tax, the tanning service provider is liable for the tax.
3.       The tax does not apply to phototherapy services performed by a licensed medical professional on his or her premises.
4.       The tax does not apply to spray-on tanning services.
5.       If a payment covers charges for tanning services along with other goods and services, the other goods and services may be excluded from the tax if they are separately stated and the charges do not exceed the fair market value for those other goods and services.
6.       If the customer purchases bundled services and the charges are not separately stated, the tax applies to the portion of the payment that can be reasonably attributed to the indoor tanning services.
7.       The tax does not have to be paid on membership fees for certain qualified physical fitness facilities that offer indoor tanning services as an incidental service to members without a separately identifiable fee.
8.       Tanning service providers must report and pay the excise tax on a quarterly basis.
9.       To pay the tax, businesses must file IRS Form 720, Quarterly Federal Excise Tax Return using an Employer Identification Number assigned by the IRS. Businesses that don’t already have one can apply for an EIN online at IRS.gov.

If you have any questions about this issue, or how it may affect your small business tax preparation in New York City, call one of our Manhattan income tax CPAs today.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Urgent news concerning NYC income taxes: If you have a financial interest in, or signature or other authority over, any type of financial account in a foreign country, such as a bank account, you may be required to report this to the U.S. government. Taxpayers use Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (known as the “FBAR”) on their New York income taxes, if the aggregate value of these accounts exceeds $10,000 at any time during the calendar year. The instructions are fairly straightforward, asking for account numbers,  New York taxpayer identification number, country in which the account is held and the like. The FBAR is due June 30 (with some exceptions).

Some  Manhattan taxpayers may be eligible for an extension beyond June 30 for 2008 FBARs. Taxpayers who reported and paid tax on all of their 2008  New York City taxable income but only learned shortly before the June 30, 2009 deadline of their responsibility to file a FBAR have until September 23, 2009 to file. Additionally, the IRS has extended the deadline for taxpayers with only signature authority over foreign accounts and taxpayers with foreign hedge funds or private equity accounts to June 30, 2010. The IRS will not impose a penalty. If you are uncertain about whether you need to file a FBAR on you New York income taxes, contact our office. The IRS also has a special FBAR hotline (800) 800-2877.

Failure to file the FBAR and disclose offshore accounts subjects the taxpayer to stiff penalties. In addition to penalties assessed on failing to report  your Manhattan income for US tax purposes from these accounts, the IRS can assess penalties for simply failing to disclosure the existence of the accounts. Taxpayers failing to report foreign financial accounts on their New York City income tax returns risk a civil penalty of $10,000. If the failure is willful, the penalty jumps to $100,000 or 50 percent of the account.

To bring more offshore account holders into compliance, the IRS is offering a deal. Those whole file their Manhattan income taxes with unreported income in offshore accounts now have a temporary window to take advantage of a special IRS settlement initiative. In exchange for full disclosure by taxpayers not already under investigation, the IRS will agree not to criminally prosecute  New York tax evaders. Taxpayers still must pay all back taxes plus interest and penalties (except the 75 percent fraud penalty, which the IRS will waive). The IRS initiative ends in September 2009.

If you own real property outside of the U.S., you may claim a deduction for property taxes paid to a foreign jurisdiction on Schedule A of Form 1040, the same as you would for domestic real property. If this property has been your principal residence for two of the past five years and you sell the property, you may exclude gain on the sale subject to the same rules as for a domestic residence (a maximum exclusion of $250,000, $500,000 for joint filers; a surviving spouse can continue to use the $500,000 exclusion if the jointly owned residence is sold within two years after the death of the individual’s spouse). Although an itemized deduction is generally available for  New York taxes paid on personal property, this deduction is not available for taxes paid on personal property held outside the U.S. However, if this property is used in connection with a trade or business or for the production of income, a deduction for the taxes may be taken in connection with that income on the appropriate form or schedule.

If you have intangible assets in a foreign country, such as a patent, license, trademark or copyright, taxation of the income derived from the ownership or use of these assets may be subject to different rules in comparison with similar domestic income. Note also that the rules for taxation of foreign income as contained in the Internal Revenue Code may be altered by treaty. The U.S. has income tax treaties with many nations. Treaty provisions are treated as equal in weight to statutory law, and some provisions may be overridden by Tax Code provisions. The general rule is that the last in time is controlling. Tax treaties are subject to continuous renegotiation, so it is important to have current information, just as you would want with Tax Code provisions. Please consult our office regarding the applicability of tax treaty provisions with respect to foreign-sourced income to learn whether or not this will effect your income taxes in Manhattan.

Income from all sources must be reported in U.S. currency, regardless of how it is paid. However, if you have received income in a currency that is not convertible to U.S. currency because of that country’s laws, you have a choice in reporting. Income paid in “blocked” currency, as it is called, may either be reported in the tax year when earned according to the most accurate valuation means available and taxes paid from other funds, or you may delay the reporting of the income until the currency becomes unblocked.

Because tax rules for foreign-sourced income and on foreign-based assets may be different from domestic tax treatment, there are many additional layers of complexity. If you have additional questions regarding tax treatment of particular items, and would like to know how this effects your income tax preparation in New York, please do not hesitate to contact me.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Besides assessing mission, goals, and market for yourself, you’ll also want to talk to a trustworthy, knowledgeable accountant about the financial aspects of your small business. What kind of entity structure best suits you: sole proprietorship, partnership, corporation, or LLC? What are the statutory insurance requirements, and what type of other insurances, if any, will you want? Most importantly, how do you set it up to be tax efficient and keep yourself out of trouble? How can the owners of the entity reduce taxes? What about New York City business taxes?

Manhattan CPA Jonathan Medows can help you sort through all of this and more. With experience advising on taxes, profitability, pricing, cash flow management, accounting records, bookkeeping, insurance, he’ll help implement plans to build your small business with a strong foundation so it can enjoy a nice healthy life.

When starting a small business, the ideas and questions are firing fast. The experienced staff at the office of Jonathan Medows know that when you want an answer, you want it immediately. Pick up the phone and give the office a call. They’ll get back to you in a day or less, and help get you started in the right direction.  Taxes are a headaches, Jonathan Medows CPA has the tax aspirin.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Courtesy of  WebCPA:

The recent health care reform bill contains a provision for extra information reporting that could mean many businesses will need to file hundreds more 1099 types of forms to help the government close the tax gap.

Among those forms will be the 1099-K, which will require reporting of credit and debit card payments by payment processors, financial firms, as well as many retailers. The new form will be required when a merchant has at least 200 payment transactions annually, adding up to over $20,000, according to CNNMoney.com. That requirement starts next year.

Starting in 2012, payments to corporations will also be subject to the expanded 1099 rules. Businesses will have to file 1099-MISC forms not only for freelancers and independent contractors, but also for all business payments or purchases of over $600 in a calendar year.

Companies will need to regularly ask for the taxpayer ID number of the various individuals and companies with which they do even a modicum of business, including companies that provide them with computer and phone services. That’s going to mean a whole lot more 1099 forms to hand out to not exactly eager business partners.

This means that if you are a small business in NYC you might have a lot more paperwork to file on your income taxes. To learn more about how this income tax issue applies to you, feel free to contact MEDOWS CPA, PLLC.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

When you work for yourself, it has great rewards but it also makes you responsible for everything, including your income tax returns. When you are self-employed, you may qualify for some deductions that you never would have been eligible for when you work for someone else. How do you know what is deductible and what is not? First you need to find a certified public accountant that can guide you through your first year and every year after that. A NYC CPA will play an important role in the organization of your business in terms of financial and the IRS.

If you are self-employed and work from your home, you will be able to deduct a lot more then if you didn’t work at home. Although it may be confusing to keep up with everything, the general rule is to keep all receipts and go through them during your tax preparation Manhattan or have the NYC CPA go through them to let you know what is taxable and what is not. If you keep receipts, you should write on the receipt as you buy items for your business. For example, if you buy printer ink for your business printer then at the top of the receipt write down “printer ink” so you will know at a glance what you purchased and won’t need to try and interpret the receipt. Not everything on a receipt is labeled correctly. It may be a general title and you won’t know what you get.

If you have a home office, you need to keep track of everything you normally do on your home; mortgage interest receipts, real estate tax receipts, utilities, and any home improvement receipts. At the end of the year, your NYC CPA will be able to look through them and divide them out so that a portion of your payout will be a deduction. You will need to know the size of your home office in order for your CPA to be able to figure out the exact amount.

If you are a freelancer who also works at home, you can hire a NY CPA for freelancers. They can help you determine what you need to keep track of in order to claim the right deductions for your business throughout the year. It’s not easy trying to keep track of everything but a great rule to keep in mind is when you are in doubt, save it and ask your CPA.

When you work for your self you will need to be responsible for your taxes throughout the year. You can hire a NYC CPA to work with you throughout the year to keep records for you so when tax time comes around you won’t be frantic trying to find your box of receipts or wonder what you can deduct. Your CPA can take care of this throughout the year and have it all recorded by the time tax season rolls around again. Then you simply need to go to your CPA and go over everything before you file to verify all the information.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

More and more people are choosing a home based business as their main career then to work for a particular group or company. These home based businesses range from a catering service to a child or adult day care service provided in the home. Today’s generation is one of the popular generations to help themselves and become independent from everything and everyone.

There are so many benefits to owning your own home based business. You have the ability to create your own schedule, work around the kids, and become a contributor to the family income.

A home office is a tax benefit in several ways. You will need to establish a specific area in your home as a home office. You can have an office in the corner of the dining room or the living room as long as it is for business use. However, there is a caveat; if you use your home office for other reasons then you cannot deduct it for taxes. Spend a little money and have your home office built because you will get a majority of that money back at tax time because you can use it as a deduction.

Real estate taxes, mortgage interest, and home owners insurance is a major expense for everyone whether you run a business at home or not. However, if you run your own home based businesses you can use a portion of all of these to help you get more of a deduction. All you need to know is how large your home office is and your Manhattan CPA can help you determine what can be a deduction and how much.

Your utilities are also considered an expense. If you don’t keep track of your utility bills you will not be able to use this. Make sure that you keep a file just for utilities. You will want to keep track of all utilities.

Any furniture or fixtures that you purchase for your office, is considered a deduction so keep track of all receipts. You need to use these expenses in the tax year so you get the credit for them. If you are not sure what is deductible and what isn’t, ask your Manhattan certified public accountant to help you document the deductions and determine how much you will be deducted from your tax return.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

Courtesy of WebCPA.com:

The Commonwealth of Pennsylvania will offer amnesty to those who owe back state taxes, for only the second time in its history.

For 54 days, between April 26 and June 18, 2010, the Pennsylvania Department of Revenue will waive 100 percent of the penalties and half of the interest for anyone who pays delinquent state taxes, including out-of-state businesses who owe Pennsylvania taxes.

Historic budget gaps across the U.S. have been prompting many states to search for additional revenue. In 2009, Connecticut, New Jersey, Louisiana and Virginia were among the states that held tax amnesty campaigns.

The only previous Pennsylvania Tax Amnesty program, in 1995-1996, saw 63,506 returns with a total collection of $92.8 million. That tax amnesty program waived penalties but required full payment of taxes and interest. Pennsylvania received about 10 percent of its tax amnesty returns from out-of-state people and businesses from every state in the country.

Delinquent taxpayers who don’t file during this year’s tax amnesty will be penalized an additional 5 percent.

The 2010 Pennsylvania Tax Amnesty will be completely online.  All returns must be filed via the Internet at www.PATaxPayUp.com. The site officially goes live on April 26.  No paper applications will be distributed or received. Those with questions are encouraged to call the state’s help line at 1-(877) 34-PAYUP. That hotline goes live on April 7.

If you have any questions about how this amnesty effects those living or working in New York, don’t hesitate to contact your NYC CPA.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses

While most of us were finishing up our New York income taxes, the folks in congress were busy proposing new budget plans to get the country back on track.
The senate recently passed  one such budget plan that aims to reduce America’s deficit to 3% in 2015 from it’s current 9.8% in 2010.

According to members of the  Senate Budget Committee, the main goal of this new budget plan is to cut spending and deficits and put the nation back on a reliable fiscal course. If all goes according to plan, it will cut the deficit down 70% by 2015 and it also aims to stabilize the federal debt relative to GDP.

The budget includes a cut on net tax of $780 billion, which is focused largely on the middle class. The budget also invests in education and energy, while still allowing funds for defense and national security.

If you are a small business or freelancer planning your own budget in NYC, don’t forget to consult with an experienced small business CPA in Manhattan. An experienced small business CPA in New York can help you get your budget and income taxes on the right track.

About us: MEDOWS CPA, PLLC is a boutique New York CPA NY Firm serving the needs of Individuals & Small Businesses in New York City and throughout the nation.  We work with the self-employed, freelancers, LLC, C-Corporations and S-Corporations to help them with their accounting and tax needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

http://www.medowscpa.com

http://taxblog.medowscpa.com

info@medowscpa.com

A Unique, Boutique New York CPA Firm Serving the Needs of Individuals & Small Businesses