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Just A Reminder: Accelerated Tax Deduction For Haiti Earthquake Relief

20.07.2010

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tags: Certified Public Accountant New York City, CPA high net worth individuals Manhattan, income tax manhattan, income tax new york, income tax new york city, income tax nyc, Just A Reminder: Accelerated Tax Deduction For Haiti Earthquake Relief, LLC CPA ew york city, llc cpa nyc, Manhattan Tax Preparation, new york certified public accountant, small business cpa, Small business CPA Manhattan, small business tax advice new york, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

The haunting images of destruction and moving stories of rescue have encouraged Americans to give generously to help their neighbors in Haiti recover from the January 12, 2010 earthquake. To encourage donations to charitable organizations working in Haiti, Congress recently passed, and President Barack Obama signed into law, a special measure making your monetary contributions tax deductible in 2009 even though they are made in 2010. The new law gives you flexibility in deciding when to claim a deduction for your early contributions on your income taxes in NYC. Below is a further look into how this accelerated deduction works, and how an income tax CPA in Manhattan can assist you.

Accelerated deduction. Typically, if you file an itemized individual federal return and you want to deduct your charitable contributions, you can only deduct the contributions you made in that tax year. The earthquake hit Haiti on January 12, 2010. Under the normal rules, charitable contributions made to help Haiti would be deductible when taxpayers file their 2010 New York income tax returns in 2011. The new law makes a special and temporary exception for Haiti relief.

Under the new law, you can treat a contribution made to help Haiti after January 11, 2010 and before March 1, 2010 as if made on December 31, 2009. You can decide whether to deduct your 2010 Haiti contribution on your 2009 Manhattan income tax return or on your 2010 return. However, you cannot deduct the same Haiti contribution on both your 2009 and 2010 income tax returns in New York. You can, however, allocate multiple donations to more than one year. Of course, to take a charitable deduction of any kind, you must opt to itemize your deductions rather than take the standard deduction on your NYC income tax return.

Monetary donations. Your contribution must be monetary to qualify under the new law. You can donate cash or make a donation by check or credit card. Property that is convertible into cash, such as marketable securities, however, is not eligible for this special treatment. Similarly, medical supplies, food and other items of property do not qualify for the accelerated deduction.

Currently, most charities are requesting monetary donations to help the earthquake victims. They use the funds to purchase relief items, such as food, medical supplies and emergency housing. If you want to make a non-cash contribution, make sure the charity will accept it. You will also want to contact our office of trained New York income tax CPAs and we can explain the appropriate tax treatment. Non-cash contributions are subject to special rules. For example, donations of food must be used only for the care of the ill, needy or infants.

Limits on deductions. The tax law imposes a 50 percent limit on the total of all charitable contributions you make during the year. Your deduction cannot be more than 50 percent of your adjusted gross income (AGI) for the year. You can carry over any contributions you are not able to deduct for one year because of the limit. The new law does not raise or remove the 50 percent limit for 2009 or 2010. There are other special limits, for example limits on gifts of capital gain property and qualified conservation contributions. Please contact one of our Manhattan income tax CPAs and we can discuss these limits in more detail.

Another provision in the tax law limits certain itemized deductions, including contributions to charity, for higher income individuals. For 2009, the limitation is reduced by two-thirds. For 2010, the limitation is reduced to zero but this treatment is only available for 2010. Depending on your income and tax strategy, you may find it more valuable to deduct your contributions to Haiti earthquake relief when you file your 2010 new york income tax return in 2011 rather than taking the deduction on your 2009 return filed in 2010.

Qualified charities. Contributions to domestic, tax-exempt, charitable organizations that provide assistance to individuals in foreign lands qualify as tax-deductible contributions for federal income tax purposes, provided that the U.S. organization has full control and discretion over the uses of such funds. Contributions to foreign organizations generally are not deductible. Additionally, contributions to benefit specific individuals or families are also not deductible on your income taxes in Manhattan.

For purposes of the accelerated deduction, contributions must be made specifically for relief of victims in areas affected by the January 12 earthquake. You should ensure that your contribution goes to a qualified charity. If you have a specific charity in mind, one of our Manhattan CPAs can tell you if it is a qualified charity for federal income tax purposes.

Documentation. The IRS has very strict rules about substantiating charitable contributions. To deduct any charitable donation of money, regardless of amount, you must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution. For any contribution of $250 or more (including contributions of cash or property), you must obtain and keep in your records a contemporaneous written acknowledgment from the qualified charitable organization indicating the amount of the cash and a description of any property contributed and whether the organization is provided any goods or services in exchange for the gift.

The new law allows one additional method of substantiation. If you make a donation by texting a contribution to a charity, your telephone bill can provide the required documentation. Your telephone bill must show the name of the charitable organization, the date of the contribution and the amount of the contribution.
IRS disaster designation. Shortly after the earthquake, the IRS designated it as a “qualified disaster for federal tax purposes.” This means that recipients of qualified disaster relief payments may exclude those payments from income on their Manhattan tax returns. Additionally, the IRS is allowing employer-sponsored private foundations to assist victims in Haiti without affecting their tax-exempt status.

Scams. Tragedies not only bring out the best in people, they also sadly encourage fraud. The Haiti earthquake is no exception. First, be an educated donor. Before you make a donation, make sure the charity is legitimate. Many reputable and well known U.S. charities are working day and night to help Haiti.

Be wary about giving out your personal information, such as your Social Security number. Con artists can use your personal and financial information for identity theft. Be especially cautious of emails asking for donations. Some phony charities use names that sound or look like those of respected, legitimate organizations. If you are not sure that a charity is legitimate, call our office or call the Better Business Bureau.
If you have any questions about the accelerated tax deduction or charitable contributions in general, please contact our office. Our New York income tax CPAs will be able to assist you.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Tax Strategies for Dependent Children in Manhattan

15.07.2010

category: Uncategorized
tags: CPA small business Manhattan, cpa small business nyc, income tax manhattan, income tax new york, income tax new york city, income tax nyc, NYC CPA, s-corporation cpa new york, small business cpa, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

Raising a family can be both challenging and rewarding. As a parent, you worry about your children receiving quality child care, paying medical expenses, or saving for college. You want to do what is right for your family, but there are so many factors to consider, including how your choices will impact your family’s overall New York income tax burden. Our Manhattan income tax CPAs can assist you in understanding your options and in taking full advantage of the credits and deductions that you are entitled to on your New York City income taxes as a parent.
For instance, you may be able to take a child and dependent care credit if your child is under the age of 13 at the end of the year.

However, not all expenses qualify, and some expenses may qualify for both the dependent care credit and the deduction for medical expense, depending on your circumstances. In addition, if your employer offers a flexible spending plan, you might consider whether or not participating in the plan saves you more money than claiming the credit on your Manhattan income taxes. If you are divorced, the issues can be more complicated. Who is entitled to an exemption for your child and how does claiming the exemption impact other tax benefits for a dependent? A New York CPA who specializes in income taxes in Manhattan can answer these tough questions for you.

Even if child care is not a concern of yours, these examples illustrate how complex family tax planning can be. There are many other Manhattan income tax considerations, such as the benefits and pitfalls of shifting income to minor children in light of the NYC kiddie tax; determining what expenses qualify for the education credits and deductions and who can claim them; the eligibility requirements for the earned income credit; or the impact of the alternative minimum tax. We can help you see the bigger picture and develop a plan that both meets your needs and saves you money on your income taxes in NYC. Please call our Manhattan office at your earliest convenience to make an appointment with one our CPAs for a full review of your New York income tax situation.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

2010 Second Quarter Federal and New York Income Tax Developments

12.07.2010

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tags: 2010 Second Quarter Federal and New York Income Tax Developments, income tax manhattan, income tax new york, income tax new york city, income tax nyc, llc cpa manhattan, LLC CPA new york, llc cpa new york city, llc new york, Manhattan LLC, small business cpa, Tax Preparation Manhattan, TAX PREPARATION NYC, Taxes NYC

Dear Client:
During the second quarter of 2010, there were many important federal and New York income tax changes. This letter highlights some of the more important federal tax developments for you. As always, please give our team of Manhattan income tax CPAs a call or send us an email if you have any questions about these income tax changes.

Tax legislation. Congress recessed for its Independence Day holiday without passing a tax extenders bill and a small business tax relief bill. The House approved versions of both bills earlier in 2010 but the bills stalled in the Senate over their price tags. The American Jobs and Closing Tax Loopholes Act (H.R. 4213) would extend over 40 temporary individual, business, charitable, energy, and infrastructure tax incentives that mostly expired at the end of 2009. The Small Business Jobs Tax Relief Act of 2010 (H.R. 5486) would, among other things, provide Code Sec. 6707A penalty relief to small businesses and increase the Code Sec. 195 deduction for qualified start-up expenses. Congress did, however, pass two smaller bills that will change your NYC income taxes: the Homebuyer Assistance Improvement Act of 2010 (H.R. 5623) and the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962). The homebuyer act extends the closing date deadline from June 30, 2010 to September 30, 2010 for homebuyers who signed sales contracts prior to May 1, 2010. The pension relief act includes a package of defined benefit pension funding relief measures. The homeowner act is offset, by among other things, by extension of the Code Sec. 6657 bad check penalty to electronic payments.

Health care reform. The IRS issued significant guidance on various provisions of the new health care reform package (the Patient Protection and Affordable Care Act (PPACA) and the Health Care and Education Reconciliation Act of 2010) enacted earlier this year, both of which may affect your Manhattan income taxes. The IRS issued taxpayer-friendly guidance on the new extended exclusion from income for employer-provided health insurance for any employee’s child who has not attained age 27 as of the end of the tax year. For most individuals, this is the calendar year. The IRS also issued temporary and proposed regulations implementing the new requirement that health insurance plans that provide coverage for children continue to make such coverage available until the child turns 26 years of age. The IRS also issued temporary and proposed regulations under which health insurance plans will be treated as grandfathered plans under the PPACA. Additionally, the IRS described notice requirements that grandfathered plans must give to participants and beneficiaries.

Small employer health insurance tax credit. Another New York City income tax change: the IRS and the Department of Health and Human Services (HHS) issued a key component of the new Code Sec. 45R small employer health insurance tax credit. The agencies released the average premium for the small group market in each of the 50 states for the 2010 tax year. The IRS also issued guidance clarifying eligibility for the Code Sec. 45R credit, premiums, coverage, state tax credits, and more.

Form 990 filing deadline. An exempt organization required to file and failing to file for three consecutive years automatically loses its federal tax-exemption status. Form 990 is due on the 15th day of the fifth month after an organization’s fiscal year ends. For calendar-year organizations, the date was Monday, May 17, 2010, since May 15th fell on a Saturday this year. Exempt organizations could request an extension to file Form 990 by filing Form 8868, Application for Extension of Time To File An Exempt Organization Return, by the original due date. The IRS cautioned that many small tax-exempt organizations failed to file the required information return in time. Very small tax-exempt organizations must file Form 990-N (also known as the “e-Postcard”). The IRS indicated that it will provide additional guidance on how these small tax-exempt organizations can maintain their tax-exempt status even if they missed the May 17, 2010 deadline.
Basis overstatement. The Tax Court, in a court-reviewed decision, invalidated the IRS’s temporary and proposed regulations extending the limitations period for partnership assessments based on omissions of income. The court found the regulations contrary to the Supreme Court’s decision in Colony, Inc., 58-2 ustc P. 9593 .

Wrongful death payments. The IRS determined that a survivor could exclude from income a payment received for the wrongful death of another, including claims for emotional distress. The payment was intended to provide compensation for wrongful death and personal injury including the resulting claim for emotional distress.

Tax accrual workpapers. In a controversial move, the U.S. Supreme Court declined to review the decision of the Court of Appeals for the First Circuit allowing the IRS access to a corporation’s tax accrual workpapers. The First Circuit in Textron Inc. v. U.S., 2009-2 ustc P. 50,574 found that the work product privilege did not protect tax accrual workpapers.

HIRE Act payroll tax forgiveness. The IRS unveiled a revised Form 941, Employer’s Quarterly Federal Tax Return, and its instructions to reflect payroll tax forgiveness under the Hiring Incentives to Restore Employment (HIRE) Act.
Tax Court e-filing. Beginning with petitions filed on or after July 1, 2010, taxpayers represented by counsel must file all documents with the U.S. Tax Court using the court’s electronic filing (e-filing) system. The requirement brings the Tax Court into conformity with e-filing policies applicable to other federal courts.

401(k) compliance project. The IRS’s Employee Plans Compliance Unit (EPCU) launched a compliance check on 401(k) plans by sending a comprehensive questionnaire to a random sample of 1,200 plans. The IRS intends to use the information from the compliance checks to obtain a comprehensive view of 401(k) plans, which the agency can then use to focus its 401(k) education, outreach, guidance and enforcement efforts. As information is obtained, the IRS will focus on compliance problems. The project is designed to determine potential compliance issues, gain a better understanding of the reasons for noncompliance, and determine any potential plan operational issues. The survey includes more than 60 basic questions.

SSN and back-up withholding. Due to a change in practice by the Social Security Administration (SSA), the IRS amended the method required for recipients of interest, dividends, and other reportable amounts to validate their Social Security Number (SSN) with the payor of those amounts. As a result of the new procedure, recipients of a second “B notice” from a payor indicating that their SSN is incorrect must obtain a Social Security Number Printout from their local SSA office. Payee recipients of second B notices can no longer request the SSA to send Form SSA-7028 to the payor to validate the payee’s SSN. Instead, the payee must obtain a Social Security Number Printout and send a copy to the payor.

Registered domestic partnerships. In a series of memoranda, IRS Chief Counsel concluded that registered domestic partners in California must each report one-half of the community property income on their separate federal income tax returns. The determination applies for tax years beginning after December 31, 2006, and applies to compensation as well as income from property, such as investment income from community assets.

FICA student exception. The U.S. Supreme Court decided to take up the long-standing dispute between medical schools and the IRS over the treatment of medical residents for FICA tax purposes. The Supreme Court has agreed to hear an appeal from a 2009 case, Mayo Foundation for Medical Education and Research, CA-8, 2009-1 ustc P. 50,432 . In that case, the Court of Appeals for the Eighth Circuit upheld the IRS’s final regs in T.D. 9167, which generally provide that full-time employees are not students for purposes of the FICA student exception.
Indoor tanning tax. The IRS issued temporary and proposed regulations to implement the new 10 percent Code Sec. 5000B indoor tanning excise tax. The tax applies to amounts paid after June 30, 2010 for qualified indoor tanning services.
Whistleblower cases. The IRS posted guidelines on its web site about the investigation and processing of whistleblower claims. The guidelines reflect changes made to the whistleblower rules by the Tax Relief and Health Care Act of 2006.
Therapeutic discovery project credits. The IRS began accepting applications on newly-issued Form 8942, Application for Certification of Qualified Investments Eligible for Credits and Grants Under the Qualifying Therapeutic Discovery Project Program, from companies seeking investment tax credits or tax-free grants for therapeutic discovery projects.

These are just some of the many New York income tax changes during the second quarter of 2010. Please contact our Manhattan income tax CPAs if you have any questions about these or any income tax changes in New York.
Sincerely yours,
Jonathan Medows, CPA

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Life Insurance in A Manhattan Estate Plan

11.07.2010

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tags: CPA Estates and Trusts manhattan, CPA Estates and Trusts new york, CPA Estates and Trusts new york city, CPA Estates and Trusts NYC, income tax manhattan, income tax new york, income tax new york city, income tax nyc, Manhattan CPA, small business cpa, small business cpa new york city, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

Besides protecting your family from financial hardship, life insurance also can be an estate-planning tool to transfer large sums to your loved ones free of New York estate tax and at little or no NYC gift tax cost. This can be done using a life insurance trust. Life insurance trusts can have significant current and future use in a wide variety of individual circumstances.

Life insurance proceeds are subject to New York City estate tax if the insured owned the policy at death, or transferred it within three years of death. Even if the policy was transferred to another, an insured is considered to still own the policy if, for example, the insured possesses any of the following: the right to change the beneficiary, the right to borrow against the policy, the right to surrender the policy for its cash value, or the right to pledge the policy for a loan. In other words, all of these “incidents of ownership” in the policy must be transferred more than three years before death for the proceeds to escape being included in the insured’s estate.
If these obstacles are overcome, substantial New York estate tax savings can be realized by transferring a life insurance policy. But if you give a policy to your spouse who predeceases you, the policy’s value will be taxed in your spouse’s estate. You probably do not want to give the policy to your children either, unless they are mature and financially secure in their own right.

It is for these reasons that life insurance trusts have become such popular devices in New York. If a life insurance policy and all policy rights are transferred to an irrevocable trust, and the ex-owner survives for the next three years, the policy proceeds can escape estate tax in the surviving spouse’s estate as well as the insured’s. A trust also provides flexible settlement options. You can have the funds managed professionally, protecting beneficiaries from financial inexperience. The trustee can be given discretion to pay income in varying amounts to beneficiaries depending upon their needs and their Manhattan tax situations.

If you want to set up a life insurance trust, you also have to decide whether it should be funded or unfunded. If the trust is to be funded, you will have to transfer cash or other property to it to pay the premiums on the policy. If it is unfunded, you or someone else will have to make periodic contributions to it so that the premiums can be paid. As with any trust, there are NYC income tax and gift tax consequences that have to be planned for.

The tax-saving opportunities of life insurance trusts are so substantial that some lawmakers have called for their elimination. Nevertheless, Manhattan insurance trusts have survived the current round of budget balancing and deficit reduction, and if there are any future changes in this area, in all likelihood, they would not apply retroactively. If you are interested in setting up a trust or learning more about this technique, please don’t hesitate to call us. Our experienced New York estates and trusts CPAs will be glad to assist you.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Life Insurance Trusts in New York

02.07.2010

category: Uncategorized
tags: Certified Public Accountant New York City, CPA Estates and Trusts manhattan, CPA Estates and Trusts new york, CPA Estates and Trusts new york city, CPA Estates and Trusts NYC, income tax manhattan, income tax new york, income tax new york city, income tax nyc, Manhattan Tax Preparation, small business cpa, Small business CPA Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

Dear Client:
Although not subject to federal or New York income tax, life insurance death benefits can be subject to both federal and NYC estate tax. Life insurance policies not only boost the value of your total Manhattan estate, but the death benefit could also create an unexpected federal and New York estate tax consequence. This, coupled with the uncertainty in the future of the federal estate tax, calls for careful planning. An irrevocable life insurance trust can be a very useful estate planning tool for this purpose, and a CPA experienced in New York City estates and trusts would be the person to turn to for help. Below are some good reasons why a irrevocable life insurance trust may be your best option when dealing with your NYC estates and funds.

Tax savings. The purpose of an irrevocable life insurance trust (“ILIT”) is to remove your insurance policy from your New York estate, thereby reducing or eliminating federal estate tax on the death benefit if you survive three years after transferring the policy. In addition, cash contributions made to the ILIT to cover insurance premium payments can qualify for the annual gift exclusion ($13,000 in 2010).

Greater flexibility. A skillfully crafted ILIT put together by a CPA experienced in estates and trusts in NYC not only can remove the death benefit proceeds from your estate for estate tax purposes, but also enhances your ability to direct how the insurance proceeds will provide for your loved ones. Once the ILIT instrument is drafted, your new or existing life insurance policy or policies are transferred to the trust. Cash can also be transferred to the trust to cover future premium payments. The trust owns the policy and is also designated as the beneficiary of the policy insuring your life. The trustee (someone other than yourself) makes sure that the insurance premiums are paid, properly manages the trust, and follows the directions you built into the trust regarding distribution of the insurance proceeds after your death.

Your ILIT provisions can be customized to distribute the insurance proceeds in a way that an insurance policy contract alone cannot. Whereas an insurance contract form generally only allows for a beneficiary designation, ILIT provisions can be specifically tailored. For example, an ILIT can direct that your spouse have the benefit of the income and the principal for his or her support during his or her lifetime, after which any remaining assets would be distributed to your children, either in trust or outright once the children reach a certain age that you choose.

Some ILIT caveats. Irrevocable life insurance trusts are, by definition, irrevocable: the trust cannot be changed once it is signed. Moreover, you must give up all ownership rights in the policy, including the right to modify the trust, change the insurance policy beneficiary designation, or borrow against the policy. In addition, someone other than you must serve as trustee in order to satisfy the irrevocability requirement. This irrevocability is necessary, however, in order to remove the insurance policy from your estate for New York City estate tax purposes.

If you would like to discuss how an ILIT might enhance your estate plan, please contact our staff of Manhattan based CPAs experienced in estates and trusts in New York.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Health Care Reform- A Brief Guide for Small Businesses in New York City

21.06.2010

category: Uncategorized
tags: income tax manhattan, income tax new york city, income tax nyc, Manhattan CPA, new york certified public accountant, small business cpa, Small business CPA Manhattan, small business tax advice nyc, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

Now that Congress has passed a landmark health care reform package, much work needs to be done in dealing with new requirements for NYC small business tax preparation. While the end result of the legislative process is necessarily health care related, the small business tax law plays a major role in its implementation. From the tax credits and subsidies used to expand health coverage, to the many penalties, fees and surtaxes designed to pay for it, the NYC Tax Code is front and center.

Two new laws. Health care reform is actually made up of two new laws: the Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010. The Patient Protection Act was crafted largely in the Senate and sets out the general framework of health care reform. The Reconciliation Act was prepared in the House to modify the Patient Protection Act, especially in the areas of NYC tax credits and cost sharing for individuals to help make coverage more affordable. Common features to both laws are delayed effective dates for many of the provisions, which make strategic planning all that more important.

New taxes and penalties. Viewing the historic health care reform package from the context of the New York Tax Code, many new taxes and penalties stand out immediately above the rest. Initially, we would advise taking particular note of the following highlights:

Individuals who earn more than $200,000 for the year ($250,000 for married couples) will pay an additional 0.9 percent in Hospital Insurance (Medicare) tax, starting in 2013;

Individuals whose adjusted gross income for the year exceeds $200,000 ($250,000 for joint filers), whether from wages or otherwise, will also pay an additional 3.8 percent Medicare tax on net investment income, starting in 2013;

Employers with 50 or more employees that do not offer coverage or offer coverage that does not meet new minimum essential coverage requirements will pay a penalty per employee, starting in 2014;

Small for-profit employers with no more than 25 employees are entitled to up to a 35 percent New York tax credit on the cost of providing health insurance for employees, starting immediately in 2010 (small tax-exempt employers may qualify for a reduced credit);

Young adults may remain on their parents’ health insurance plans through age 26;

The health care reform package extends the Manhattan income tax exclusion to any employee’s child who has not attained age 27 as of the end of the New York tax year;

Most individuals will be required to obtain health insurance or be subject to a penalty tax starting in 2014;

NYC tax credits to subsidize the cost of health insurance premiums will be available to individuals earning up to 400 percent of the poverty level, starting in 2014;

Health flexible savings arrangement (FSA) dollars will be limited to prescription medications with some exceptions after 2010, along with a $2,500 annual cap on expenses covered under health FSAs, after 2012;

A 40 percent excise tax will be imposed on high-cost, “Cadillac” employer-sponsored health coverage, starting in 2018;

Fees will be imposed on the pharmaceutical industry and health insurance providers , starting in 2011 and 2014, respectively;
An excise tax will be imposed on medical device manufacturers after 2012; and

Limits on tax-subsidized medical expenses will be imposed by raising the itemized medical expense deduction floor for regular tax purposes from 7.5 percent to 10 percent, generally starting in 2013.

Exchanges. The health care reform package requires each state to establish an insurance exchange by 2014 to help individuals and qualified employers obtain coverage. Coverage will be offered at various levels. Qualified individuals may be eligible for premium assistance NYC tax credits, cost-sharing or vouchers to help pay for coverage through an insurance exchange. An individual’s income, whether or not coverage is provided by his or her employer, will be taken into account when determining if the individual qualifies for a premium assistance tax credit, cost-sharing or voucher.
IRS guidance. Over the course of the next months and years, the IRS and other federal agencies will be filling in details on how to comply with all the provisions under the massive health care reform package. Our office will be staying on top of all developments, with an eye toward how to best maximize results under the new law for our clients. We are prepared to advise our clients on all compliance rules and tax-reduction opportunities that undoubtedly will arise regarding small business tax preparation in New York. In the meantime, if you have any questions about the new law, please do not hesitate to call our office.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

22.05.2010

What’s In a Name?

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tags: accountant new york city, Amended Tax Returns New York, Certified Public Accountant New York City, CPA Manhattan, CPA NYC, income tax manhattan, income tax new york city, income tax nyc, Manhattan Tax Preparation, small business cpa, Small business CPA Manhattan, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

When you were shopping around for a CPA to do taxes for your small business or freelance work, you decided not to risk it. Tax preparation is a sensitive subject, so better to just go somewhere with a recognizable name and a decent reputation to get your taxes done, someone your friend went to and said worked out just fine … right?

So you went to a large firm, because it’s supposed to be a safe choice. But when you got there, it was pretty impersonal. Every time you called with a question, you were bounced to someone new, usually some kid who was one year out of college and said he had to ask someone else. And then they’d take a while to get back to you, and it’d be a different person, and you’d have to re-explain your situation all over again.

Then came all the forms. Top to bottom, the whole process felt very bureaucratic. And to top it all off you got a bill for several grand. You put so much work into your small business to make it personal, and yours–isn’t there a better way to do this?

There sure is. Manhattan accountant Jonathan Medows understands you want prompt, professional tax preparation by senior-level people you can actually speak to. They’ll return your call within a day, usually even less time than that. With an accessible Manhattan office where you can pick up the phone and know who you’re talking to, NYC CPA Jonathan Medows offers reasonable fees and a staff who’s sensitive to your personal needs.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Confession of a Lapsed Tax Filer

15.05.2010

category: Uncategorized
tags: Certified Public Accountant New York City, income tax manhattan, income tax new york, income tax new york city, income tax nyc, Manhattan CPA, Manhattan Tax Preparation, new york certified public accountant, small business cpa, Small business CPA Manhattan, small business cpa new york, small business cpa new york city, small business cpa nyc, small business tax advice nyc, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

A note we received in April 2010 from a satisfied client:

Hi. I’m a small business owner and also freelance here and there and I have a confession to make: I didn’t do my taxes for three years straight. I didn’t file any extensions, I didn’t make any late payments, I didn’t make any arrangements with a CPA—I just completely blew my tax returns off.

For some reason I thought all the sorting and paperwork would just be too complicated. I moved across state lines a couple times before ending up in New York City. I knew I’d have to file a couple of different Schedule Cs, and a Schedule M, a handful of 1099s from prior staff employment, and then all those other forms that have letters and numbers… I just didn’t want to deal with my income tax returns.

It’s funny (or not), because I’d done this once before: I went five years without filing taxes and the IRS caught up with me. They garnished my wages and imposed pretty hefty penalties, money I never got back—and those five years, as it turned out, the government owed me. It was pretty scary and out of my control and I thought that was enough to teach me a lesson. Lucky for me, I decided to take action before it happened again; I contacted Manhattan CPA Jonathan Medows and he helped sort me out.

Maybe you are thinking this is one of those made-up infomercial type stories designed to get you interested in what someone has to offer. No. This is true. I did my research, decided Jonathan Medows could best help me sort through the late filing nightmare I’d created for myself, called him, and he got me into his Manhattan office ASAP.

Jonathan Medows was thorough and knowledgeable and quick, and calmed me down when I was about to have a panic attack. He told me I wasn’t in as big of a bad situation as I thought I was, and figured out a plan for me that was manageable. So if you’re in NYC, sitting there worrying about the tax problems you’re causing yourself because it’s now May and you haven’t done a thing—for several years—I’d suggest you call the office of Certified Public Accountant Jonathan Medows and have him sort you out.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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

Know More about Self Employed Income Tax

13.05.2010

category: Uncategorized
tags: CPA Manhattan, Delinquent Tax Returns Manhattan, income tax manhattan, income tax new york, income tax new york city, income tax nyc, Manhattan CPA, Manhattan Tax Preparation, new york certified public accountant, ny cpa, NYC CPA, small business cpa, Small business CPA Manhattan, small business tax advice nyc, Tax Preparation Manhattan, tax preparation new york, TAX PREPARATION NYC, Taxes NYC

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.

Jonathan Medows, CPA

MEDOWS CPA, PLLC

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