Our Manhattan small business CPA firm would like to alert you to some significant changes in the way the IRS targets small businesses, LLCs, S-corps and C-corps for  New York tax audits, and how it conducts them. When you read statistics about the percentage of returns that are audited, you might feel justified in playing the odds that your business won’t be among those selected by the IRS for scrutiny. But the numbers are very misleading, because the IRS is getting a lot smarter about how it chooses returns for audit and how its examiners conduct their audits. Our team of  New York City CPAs can help your small business avoid this.

Over the past few years, the IRS has dramatically stepped up its efforts to study specific industries, and to educate its examiners about business practices, terminology, accounting methods, and common industry practices. It has also identified areas of inquiry that produce audit results. Examiners are told specifically to look out for certain red flags to get at what is really going on in a business or transaction. The IRS is also updating its tax gap figures (the estimated $300 billion difference between what taxpayers owe and what they pay). Several research studies are underway into various segments of the taxpayer population.

The result is that examinations are more sharply focused on potential areas that will generate increased taxes, penalties, and interest. Fortunately, there is a positive side to all of this. The IRS has made public a number of its Industry Specialization Program papers and Market Segment Specialization Program manuals. These help us keep up on the areas that the IRS will be targeting in its audits. So far it has issued detailed audit guide information on a range of industries, from general ones, such as retailing, to more specific ones, such as law firms, restaurants, entertainment, communications and petroleum. Much more information on specific industries is expected to be issued as the IRS continues to devote resources to the development of these programs.

Another IRS initiative tries to improve compliance by meeting with representatives of various industries to work out understandings with them about specific tax problems. For example, the IRS and the food service industry have come to an understanding about properly determining and reporting employee tips. Employers that comply will face reduced IRS scrutiny on this issue.

A review of your small business practices done by our NYC CPAs, with a view toward making some changes in light of the new IRS audit and compliance initiatives, may help keep your Manhattan income tax returns from being selected for examination, or help you survive if your return is audited. Please call one of our CPAs today if you feel that we can be of assistance to your LLC, S-corp or other small business in these matters.

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:
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

Although you cannot deduct per se what you pay for child care (whether in-home or at a child care center) on your NYC income taxes, these expenses can generate at least a partial Manhattan tax credit if incurred to enable gainful employment by a parent or other custodian of a child under 13 or other dependent or spouse incapable of self care. The amount of this NYC “nanny tax” credit generally depends upon the amount of qualifying expenses, the number of qualifying dependents and the income level of the taxpayer. Those in higher income levels can usually qualify for a maximum credit of $600 for one dependent and $1,200 for two or more. The maximum credit for lower-income taxpayers is $3,000 for one dependent and $3,000 for more than one. Another way to receive a tax break on child care is to participate in an employer-sponsored child care program or the allocate funds from a flexible spending plan. This brief letter gives you an overview of what is available.
Child-care credit. You are eligible for a  New York City income tax credit if you pay someone to watch your under-age-13 dependent child or children so that you can be gainfully employed. You must be eligible to claim a dependency exemption for such children. (Caution: Do not confuse the child-care credit (also called the child and dependent-care credit) with the child tax credit. Parents eligible for the child-care credit are usually also eligible for the child tax credit, a $1,000 tax credit that is not dependent upon any child-care costs (except providing over half the child’s support)).

The amount of eligible employment related expenses on which you can claim the child-care tax credit is $3,000 each year for the care of one child under age 13; and $6,000 for the care of two or more eligible children. The credit that most of our clients take is 20 percent of that eligible amount (the 20 percent rate applies if your income is more than $43,000). That comes to a maximum credit of $600 for one child and $1,200 for two or more children. Unlike the child tax credit, which is phased out for taxpayers above certain income levels, the child-care credit remains at the $600/$1,200 level no matter how high your income goes.

For taxpayers with incomes of $15,000, or less, the applicable percentage is 35 percent. The percentage is reduced by 1 percent for each $2,000 of income over $15,000 until the percentage reaches the 20 percent level for income or more than $43,000. The 1 percentage point decrease applies even if the taxpayer’s income is just a fraction over the previous level. For example, if a taxpayer has an income of $15,002, the applicable percentage will be reduced to 34 percent.

Qualifying expenses can include the in-home related expenses of a housekeeper, babysitter or cook. Services performed by a dependent care center are allowed only if the center is certified and in compliance with all local laws. A portion of boarding-school expenses may qualify for the credit, but summer camp fees are specifically not allowed. The credit is allowed to enable part-time employment, too, but qualifying expenses must be directly related to the time needed for dependent care.
Employer-provided assistance. You may be fortunate enough to work for an employer that provides for tax-advantaged dependent care assistance:
•    Up to $5,000 of dependent-care assistance that you receive from an employer-paid nondiscriminatory child care program for employees is completely tax free (the figure is $2,500 for married filing separate income tax returns). The excludable assistance must be for the care of children for whom the child-care credit is available.
•    If your employer maintains a so-called cafeteria plan that lets employees choose between receiving fixed amounts of cash or qualified tax-free benefits, the amount you elect to receive for child-care assistance under the plan is tax-free if the benefit provided doesn’t exceed $5,000 ($2,500 for married filing separately).
•    Your employer may maintain a flexible spending account that essentially allows you to choose to reduce your salary by an amount that’s set aside in an account set up to pay for child-care expenses (up to $5,000 or $2,500). In effect, such a plan enables you to pay for part or all of your child-care expenses with pre-tax dollars.
If you are provided with some form of employer-provided assistance other than an outright cash payment of eligible expenses, you may need to consider whether to use the cafeteria plan or flexible spending account or pay for the care expenses with your own cash and claim a New York income tax credit. If you are in this position, a decision must be made well before the beginning of each year. Our CPAs are experienced in NYC nanny taxes and can tell you which choice will save you the most from a financial and a tax perspective in your circumstances. We can also fully explain any other New York income tax issues related to your choice of child care, including your payroll tax responsibilities if you decide to have someone help with a child in your home. Please give our Manhattan nanny tax CPAs a call.

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

This article is in response to many questions that our small business CPAs have received about Archer Medical Savings Accounts (MSAs). These accounts are similar to IRAs. Like IRAs, special rules govern when your money can be withdrawn, for what purpose the funds can be used and the deductibility of contributions. Because Congress has not extended Archer MSAs, they have been eclipsed by health savings accounts (HSAs). Our CPAs know that this is especially important to freelancers, self-employed persons, and small business owners in new york.

If you have an MSA, a decision should be made whether to continue to operate as an MSA. Is the MSA adequate for your needs or should it be rolled over into a new HSA account? Administrative costs for setting up an HSA are generally a good reason not to convert to an HSA. A greater degree of flexibility in certain business settings may be another good reason.

Like an MSA, an HSA is a tax-exempt trust or custodial account to which tax-deductible contributions may be made by individuals with a high deductible health plan. HSAs provide tax benefits similar to, but more favorable than, those provide by MSAs. What’s more, unlike HSAs, only individuals who are self-employed or employed by a small business may participate in an MSA.
Both MSA and HSA participants must be enrolled in a “high deductible health plan.” However, that deductible is higher for MSAs. For 2010, MSA must carry an annual deductible of at least $2,000 (the same as for 2009), and at least $4,050 (up from $4,000 in 2009) for family coverage), with a maximum out-of-pocket cap of $3,000 (down from $4,000 in 2009) for individual coverage ($6,050 for family coverage).

HSAs, on the other hand, must only have an annual deductible of at least $1,200 for self-only coverage ($2,400 for family coverage), with an out of pocket cap of $5,9500 ($11,900 for family coverage). In both cases, the amounts are adjusted for inflation each year.

Qualified distributions from both MSAs and HSAs are tax free, even though contributions to either account are deductible when deposited. You may withdraw money to pay for your medical expenses and the medical expenses of your spouse and dependents. Generally, most medical expenses can be paid by these withdrawals. Withdrawals for most non-medical purposes, however, are subject to federal tax and a penalty.

The future of MSAs and HSAs is uncertain. A final health care reform bill, which is making its way through Congress, will likely impose new limits on these arrangements, such as increasing the penalty for early nonqualified withdrawals from an HSA. Our office of CPAs for the self- employed in New York will keep you informed on the developments, and how they may affect your NYC small business.

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 team of Manhattan CPAs have important news for high net worth individuals in New York. If you are someone who regularly makes charitable contributions, you may be aware that charitable contributions of property in excess of $5,000 require that you attach an appraisal to your New York City income tax return. In response to gross valuation misstatements, the IRS has tightened the definition of a qualified appraisal and qualified appraiser. Unfortunately, this affects many high net worth individuals in NYC.

The IRS has determined that a qualified appraisal is one that is conducted by a qualified appraiser in accordance with generally accepted appraisal standards. A qualified appraiser is a high net worth individual who:
1.    Has earned an appraisal designation from a recognized professional appraisal organization or has otherwise met the minimum education and experience required by the IRS,
2.    Regularly performs appraisals for which the individual receives compensation,
3.    Demonstrates education and experience in valuing the type of property subject to the appraisal, and
4.    Has not been prohibited from practicing before the IRS at any time during the three years prior to the appraisal.
In addition, the appraisal must be made not more than 60 days before the date the appraised property is contributed to a charitable organization, and not later than the time it must be received by the donor.

However, to ensure that you get the full advantage of the value of the appreciated property, it is important to recognize the IRS requirements regarding the appraisal and plan accordingly. Our team of Manhattan income tax CPAs can assist you in planning for your charitable contributions. Our CPAs have many high net worth individuals in NYC as clients, are are familiar with their New york income tax needs. Please call our office at your earliest convenience to arrange an appointment.

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

There have been new guidelines released by the IRS that may affect C-corporations, S-corporations, LLCs and other small businesses in New York. Keep reading to learn more about these new guidelines and how a LLC CPA in Manhattan can help.
The IRS has issued guidance for accrual basis taxpayers as to when they incur a liability for services or for insurance. If a taxpayer wants to change its treatment of liabilities to comply with this guidance, they must obtain the consent of the IRS.
Under the accrual method of accounting, which you use, a liability is incurred, and is generally taken into account for federal income tax purposes in the tax year in which:
1.    all the events have occurred that establish the fact of the liability,
2.    the amount of the liability can be determined with reasonable accuracy, and
3.    economic performance has occurred with respect to the liability (the “all events test”).
There are exceptions, such as when the amount of the accrual is immaterial, or accrual of the liability in the tax year of payment results in better matching of the liability against the income to which it relates than would result from accrual of the liability in the tax year in which economic performance occurs. This is something that a skilled CPA experienced in handling Manhattan C-corporations will be able to assist you in sorting out.

The IRS specifically addresses two situations in which an accrual basis taxpayer incurred liability for services or for insurance in the year payment was due and paid, not in the year the taxpayer executed the contract for the services or the insurance. The IRS further provides guidance on how a taxpayer can change their method of accounting for services and insurance contracts. This is also something that a CPA versed in LLCs in Manhattan can help you with.

If you have any questions regarding this guidance or compliance with the accrual method of accounting, please call one of our New York City small business CPAs 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.

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

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

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