Dear Client:
The following is breaking news that may affect your Manhattan corporation, LLC or small business income taxes. The IRS has released the 2011 inflation adjusted amounts that may be contributed to health savings accounts (HSAs). Contributions to HSAs are deductible on NYC LLC income taxes by determining adjusted gross income, which effectively allows New York corporations with high-deductible health insurance to make contributions on a pre-tax basis to cover health care costs. For calendar year 2011, the annual limitation on deductions for HSAs for an individual with self-only coverage under a high deductible health plan is $3,050 ($6,150 for an individual with family coverage). These are the same limits that applied for 2010.
As an individual who is eligible to participate in a health saving account or has previously reported a deduction for a HSA, you may wish to consider utilizing this tax-efficient plan for medical expenses. If you are not sure how this affects your New York City corporation income taxes, we can help.

Please contact our Manhattan small business income tax CPAs at your earliest opportunity if you would like more information about health savings accounts, how they relate to your New York LLC income taxes, your eligibility to participate and how you can get the maximum tax benefit from deductible contributions.
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

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

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.

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

The American Recovery and Reinvestment Tax Act of 2009 (2009 Recovery Act), which provides billions of dollars of tax relief, includes a New York City tax credit for individuals seeking a college education. This provision may benefit your income taxes in Manhattan as a parent of a child working toward a college degree.
There are many federal tax incentives available to help reduce the costs of higher education. Some of these incentives offer tax breaks for current educational expenses, such as the above-the-line deduction for qualified tuition and related expenses, and the Hope scholarship and lifetime learning credits. In lieu of claiming the Hope scholarship credit, the 2009 Recovery Act provides an “American Opportunity” tax credit for 2009 and 2010. This credit may be able to help you save money on your income taxes in New York if you qualify.

Eligible Manhattan taxpayers may claim an American Opportunity tax credit up to $2,500. The credit is determined as 100% of the first $2,000, and 25% of the next $2,000 of tuition and related expenses paid during the year. Forty percent of the credit is refundable.

Unlike the Hope credit, the American Opportunity credit is not limited to the first two years of post-secondary education. Also, the American Opportunity credit covers “course materials” such as books. This credit phases out for taxpayers with adjusted gross income in excess of $80,000 ($160,000 for married couples filing jointly).

Educational incentives can provide significant New York City income tax relief for families. The American Opportunity credit is one of several tax options related to saving and paying for higher education. Some may be more beneficial than others in your specific circumstances. Maximizing the benefits of the education tax breaks requires careful planning, particularly because of the interrelationship between the rules that apply to each provision. It is important to go to a CPA who is experienced in dealing with income taxes in New York. At MEDOWS CPA,We can help you sort through the options. Please call our office of income tax CPAs in Manhattan to arrange an appointment at your earliest 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.

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

In recent years, many options have become available to self-employed individuals, LLCs, S-corps and small businesses owners in Manhattan to provide for their retirement. New York Tax planning for retirement can include deductible contributions to a Keogh plan, traditional or Roth IRA, SEP plan, SIMPLE plan or a one-person 401(k) plan. You may wish to consider implementing one of these plans for yourself and/or your employees to benefit from a current tax year deduction and accumulate tax-deferred retirement savings.

Each of these plans has advantages and disadvantages, and some may not be applicable to your situation. For example, a sole-owner 401(k) retirement plan allows a contribution for you as both an employer and as an employee. Therefore, a sole-owner 401(k) plan may provide for the largest deductible contribution. However, a sole-owner 401(k) is not available to the self-employed in New York with employees other than a spouse or relative. As an alternative, a Keogh plan provides more flexibility, but is more complicated to maintain than a SEP or SIMPLE plan and may have additional administrative costs. Which plan would work for you depends on your unique New York income tax situation.

Ultimately, the choice of savings vehicle will depend on factors related to your NYC small business and your retirement needs. Regardless of which plan you qualify for or what your retirement needs are, it is important to begin planning now for your retirement.

Please call our Manhattan office to arrange an appointment with one of our CPAs who are experienced in giving advice to self-employed individuals in your situation. We will be happy to discuss the various retirement plan options and how they might apply to your small business and New York income 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

When you work hard throughout the year, you don’t want to become audited but sometimes it’s hard to avoid. While most IRS audits are random, you can avoid attention on yourself by filing your income tax returns on time and making any payments to the IRS on time.

There are common income tax audit issues that you can also avoid if you find yourself in the auditing seat or afraid of being audited. The first thing that draws the attention over to you is not reporting income. When you work for someone during the year and you do not report it thinking that you don’t need to and the person you worked for decides to report it then the IRS will wonder why you didn’t report it and become suspicious. This may make them wonder what else you have not reported and thus begins your audit.

If you are audited you may be requested to meet with the IRS agent and bring your tax returns for the last few years. You can be audited several years after filing your income tax papers so always save your forms or have a way to make a copy whenever it is needed.

Another common issue is reporting the wrong information. Mistakes happen, especially if you are in a hurry and you may put down the wrong social security number or the wrong amount on your tax return. For example, if you made $52,000 last year and you put down $552,000 you may only pay taxes on $52,000 and the IRS wants to know why you didn’t pay taxes on $552,000.

You can avoid these common errors by choosing an accountant New York to help you determine what you need to put down on the tax return forms and to verify that all the information is correct and accurate before you send in the form. This is the best way to prevent an incorrect number from being recorded.

Doing your own taxes can save you money on filing fees but one mistake can cost you thousands of dollars compared to preparation fees of a Certified Public Accountant NY.

If you are audited and you do your taxes yourself, you will have no one there to represent you and defend your expenses. You may need to consider hiring a tax attorney who can sit in with you and help you deal with the tax auditor. The only problem with this idea is that a tax attorney is going to be more expensive then if you paid for a certified public accountant Manhattan to do your taxes for you. If you have a NYC CPA handle all of your taxes then you don’t have to worry about sitting alone. They will sit in on your audit with you and help to explain some or all of the expenses that the IRS is questioning. A simple mistake can always be avoided if you have help. A certified public accountant can offer you that help.

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

So you just started a S-corp in Manhattan or the New York City area, and you’re looking for a CPA who can help you out with your income tax issues. Logically, it would make the most sense to trust your taxes to a Manhattan CPA with prior experience dealing with S-corps like yours.

There are very specific issues that pertain to S-corps in NYC and the state of New York, and only a CPA in Manhattan experienced in all of the ins and outs of S-corps can give your business what it deserves. If you take your New York S-corp taxes to an unexperienced CPA outside of New York City, the results could end up being pretty bad on your wallet.

Besides, when you go to the right S-corp CPA in Manhattan, they can do more than just file your taxes. The right CPA in New York City will be able to give you advice on various matters pertaining to your S-corp, which will likely lead to better business.

Also, if you aren’t sure whether or not a S-corp is the right business structure for you, you could consult an S-corp CPA in NYC and they could give you the information you need to make the right decision for you.  Don’t settle for a CPA who will just file your income taxes and push you out the door. Your S-corp deserves a CPA in Manhattan who specializes in small business like yours.

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

President Obama has been proposing that Congress approve quite a few changes for individuals in the 2011 budget.  His overall changes suggest letting any Bush tax cuts for the wealthiest Americans, as defined by their annual taxable income, expire, and extending indefinitely any Bush tax cuts for all other Americans who are not considered to be as wealthy by this definition.

The wealthiest Americans are considered to be, for this purpose, households with incomes of over $200,000 if they are individuals or over $250,000 if they are families.  President Obama would like to let both the 2001 and 2003 Bush tax cuts for these high income households to expire as scheduled by 2011, and he would not offer any extension on them.  By doing this, President Obama would raise the two top individual federal income tax rates to 36% from 33% and to 39.6% from 35%.  The capital gains tax rate would increase to 20% from its current 15% rate.  The new rates in 2011 would be the same as the 2001 tax rates, prior to the Bush tax cuts.  President Obama would also like to cap the rate for itemized deductions at 28%, which would be lower than the highest tax brackets and would cause the highest income Americans with itemized deductions to pay more taxes.

For the majority of American households, however, annual taxable income is lower than $200,000 for individuals and $250,000 for families.  President Obama would like to make any Bush tax cuts from 2001 and 2003 permanent for these less wealthy families.  He also would like to exempt middle-class families from paying the Alternative Minimum Tax (AMT).  President Obama would like to help the working class by extending for another year the “Make Work Pay” tax credit which adds money to workers’ paychecks.  He would like to expend permanently a very low-income tax credit for the extremely poor families with three or more children, expand a different child care tax credit for all families with under $85,000 of taxable income, and permanently extend the American Opportunity Tax Credit relating to educational expenses.

Whether your income falls in the top tax brackets, or like the majority of Americans, a lower tax bracket, MEDOWS CPA, PLLC can assist you with your tax preparation.  We are a boutique CPA firm located in downtown New York with numerous clients.  Our individual clients are both individuals and families of all tax brackets, and we are highly competent in current tax law.  For a reasonable charge, we can assist you with your personal tax strategies to meet your financial goals.  We also work closely with small businesses and provide business consulting.  One of our main strengths is providing tax and business advice to individuals starting their own business.  We are highly educated, experienced, personable, and reliable New York accountants.

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

The American Recovery and Reinvestment Act of 2009 (ARRA) offers tax incentives for purchases of energy-efficient vehicles or home improvement products and systems.  In this way, American taxpayers can lower their utility bills, help the environment, and realize tax benefits at the same time.  The U.S. government is clearly supporting this initiative for our country to become more environmentally aware when making long-term purchases relating to our residences and homes and our vehicles we drive.

Some of the existing tax credits relating to energy-efficient products and systems expire at the end of 2010, while others continue into 2011 or after.  MEDOWS CPA, PLLC is a boutique accounting firm located in New York that can assist you with making a significant purchase that might be able to realize tax benefits due to its energy efficiency.   MEDOWS CPA, PLLC is staffed with tax accountants who are familiar with all aspects of the current tax law.

Tax credits due to energy efficiency can vary from 30% of the cost of the product or system up to $1500 to 30% of the cost with no upper limit.  Residential products and systems that might be relevant to this act include biomass stoves, energy efficient fans, central air conditioning, natural gas furnaces, propane furnaces, oil furnaces, insulation, metal and asphalt roofs, water heaters (both solar and non-solar), energy efficient windows and doors, storm windows and doors added to older windows and doors, heat pumps, and solar energy systems.  In some cases, tax incentives are only offered to primary residences, and MEDOWS CPA, PLLC can assist you with making a purchase related to energy efficiency in order to maximize tax advantages and meet your financial goals.

Tax credits are also currently available for certain plug-in electric drive vehicles as well as for plug-in electric drive conversion kits.  Beginning last year in 2009, a new tax law began to allow purchases of hybrid vehicles to be applied against the Alternative Minimum Tax (AMT).  MEDOWS CPA, PLLC is a New York accounting firm which can also assist you with realizing any tax advantages associated with making an energy-efficient vehicle purchase.

MEDOWS CPA, PLLC is a New York boutique accounting firm located in downtown Manhattan.  We are highly educated and experienced in the current tax laws and in providing financial advice to individuals and business advice to small businesses.  If you are contemplating purchases relating to home-improvement or a new car or vehicle, our downtown New York CPA firm can assist you with making the right decision for tax purposes and for your own personal goals and needs.  We are unique among New York accounting firms as we are truly able to provide personalized consultations and advice with each client and can offer solutions that meet your goals.

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

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