Quickbooks at ECC and payroll tax audit warning

My associates Jose and Janett are Quickbook ProAdvisors and received an invitation to attend a Chicagoland ProAdvisor group meeting on January 26th at Elgin Community College. Last month Jose and I attended a meeting in Chicago at which Quickbook experts gave us an introduction to the features of the 2010 version, and we felt that presentation was excellent. I've asked Janett to ask the hostess for next week's meeting if I can come along. I mention these meetings in case any readers have purchased or are considering purchasing Quickbooks, and are concerned about whether customer support is available. My experience indicates that Intuit is well aware of the need for excellent customer support services, and will be available at every opportunity to assist customers. Besides local meetings such as I've described, on line and phone assistance is also available.

On a not so pleasant note I came across this article at Idomenei Enterprises web site:

"Payroll Tax Audit

The IRS is launching a nation wide employer audit in February 2010. Are you prepared?

What are they looking for?

Accurate records and payment of Federal withholding taxes, such as Social Security, Medicare and Federal Unemployment.

Worker classification – are your workers properly classified. Independent contractor status will be closely reviewed.

Fringe benefits – health plans, life/accident benefits, educational assistance, meals, transportation benefits. All will be carefully reviewed for proper documentation and determination as to whether they are considered taxable wages.

Reimbursed expenses – your expense policy and process is subject to audit.
Compensation of Owner Employees – proper payment to owners of closely held corporations.

Forms – completeness and accuracy of various forms, including W-2s

6,000 employers will be randomly selected for this initial audit. And, as Federal and State agencies look for additional sources of funding, the frequency of audits is expected to increase dramatically.

In September the US Government Accountability Office (GAO) released a report urging the US Department of Labor and the IRS to increase ‘their efforts to probe the improper classification of workers” as independent contractors."

You're welcome to call us at (847) 401- 2431 if you are uncertain or concerned as to whether you would be vulnerable to such an audit.

The IRS and the ARRA

Here's a link to the IRS publication explaining provisions of the American Recovery and Reinvestment Act which explains the act's importance to individuals and business taxpayers. I've copied the front page of the publication below for readers to review for items of possible interest. Expansion of Sec 179 allowance for the deduction of purchases of new and used equipment is one item worth reviewing. Extending the roll back period for losses is another. If you visit the linked site and click on captions of interest you may learn more. Feel free to give us a call for guidance in areas you think might apply to tour 2002 tax return.

The American Recovery and Reinvestment Act of 2009: Information Center

Updated Nov. 6, 2009: The newly-enacted Worker, Homeownership And Business Assistance Act Of 2009 extends and expands the first-time homebuyer credit.

Información en Español

Information for Individuals
Some of the provisions of the law primarily affect individuals.

Making Work Pay Tax Credit. This tax credit means more take-home pay for many Americans. To make sure enough tax is withheld from their pay, taxpayers can use the IRS withholding calculator. See Making Work Pay for more.


First-Time Homebuyer Credit Expands. Homebuyers who purchase in 2009 can get a credit of up to $8,000 with no payback requirement. New legislation extends and expands this credit.


Money Back for New Vehicle Purchases. Taxpayers who buy certain new vehicles in 2009 can deduct the state and local sales taxes they paid or other taxes and fees they paid in states with no sales tax.


Education benefits. The new American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.


Enhanced Credits for Tax Years 2009, 2010. Find details on the earned income tax credit and the additional child tax credit.


Increased Transportation Subsidy. Employer-provided benefits for transit and parking are up in 2009.


Up to $2,400 in Unemployment Benefits Tax Free in 2009. Individuals should check their tax withholding.


$250 for Social Security Recipients, Veterans and Railroad Retirees. The Economic Recovery Payment will be paid by the Social Security Administration, Department of Veterans Affairs and the Railroad Retirement Board.


Energy Efficiency and Renewable Energy Incentives. See what individuals can do to reap tax rewards.


Health Coverage Tax Credit. The credit increases from 65 percent to 80 percent of qualified health insurance premiums, and more people are eligible.
Information for Businesses
Some of the provisions of the law primarily affect businesses.

Making Work Pay Tax Credit. Businesses should use the new withholding rates for their employees. For pension plan administrators, new optional withholding procedures are available to supplement the February withholding tables.


Work Opportunity tax credit. This newly-expanded credit adds returning veterans and "disconnected youth" to the list of new hires covered by the credit that businesses may claim. Businesses have until Oct. 17 to request certification for the tax credit for some new hires.


COBRA: Health Insurance Continuation Subsidy. The IRS has extensive guidance for employers, including an updated Form 941, as well as information for qualifying individuals.


Energy Efficiency and Renewable Energy Incentives. See what businesses can do to reap tax rewards.


Net Operating Loss Carryback. Small businesses can offset losses by getting refunds on taxes paid up to five years ago. Information on the carryback, an expanded section 179 deduction and other business-related provisions, is now available.


Municipal Bond Programs. There are new ways to finance school construction, energy and other public projects.
2008 and 2009 Tax Returns
The law could affect some 2008 tax returns due in 2009. However, most of the changes in ARRA will affect 2009 individual tax returns filed next year and due April 15, 2010.

Way to go, Kids

FromNBCChicago.com

Local Community College Beats Yale
Elgin Community College takes down Ivy League school in mock trial competition
By DICK JOHNSON and ANDREW GREINER
Updated 7:08 PM CST, Tue, Nov 10, 2009


They might object to a David and Goliath comparison but, then again, as their twitter message said yesterday ...

"WE BEAT YALE!!!!"

Elgin Community College’s Mock Trial team didn’t win the Harvard Crimson Classic this year, but they did trounce a practiced Ivy League competitor -- no mean feat, considering Elgin completed its first full mock trial season just last year.

"What allowed the students to [beat Yale] was dedication," said coach Ron Kowalczyk. " That's the bottom line. Hard work."

Sassy or Trashy: Miniskirts
LOOK
Sassy or Trashy: Miniskirts
Illinois' Fugliest Political Web Sites
LOOK
Illinois' Fugliest Political Web Sites
Zoo Babies
LOOK
Zoo Babies
ECC was one of 11 teams participating in the annual two-day event, which usually pits Ivy League types against each other in a faux courtroom setting.

The team from ECC wasn’t even allowed into the tourney until a regular team dropped out and they got a call to fill in.

So ECC made the best of it during their weekend run, beating Villanova in the first round, losing to Brown in the second round, beating Yale in the third round and losing to Princeton in the finals.

Brown, which barely beat ECC in the second round, went on to take the tournament.

For the coach who put together the Elgin team, the victory was a shocker.

"I would say we were stunned. You never know in the end how the judging is going to come down,” Kowalczyk said.

Kowalczyk has good reason to be amazed. Two years ago he didn’t even have a team – an interested student asked him to create one in 2007 – and he wasn’t even on Harvard’s radar.

But that didn’t stop him from writing letter upon letter until the stodgy university put his team on the waiting list.

And once that happened, Kowalczyk – and students Anastasia Toufexis, Jennifer Rieger, Rebecca Day, Jessica Bianchi, Elizabeth Martzel, Eleni Bala, Robert Dalin, Rita Russo and Mary Burke – shocked the upper crust with their come-from-nowhere performance.

"I was beaming thoughout this whole period and I still have not gotten my face back from the beam!" said Elgin president David Sam.

ECC's team celebrated with a nice dinner in Boston.

Overall, they had a better record than Boston College's "A" team, Wake Forest, Boston University, Dartmouth's "A" and "B" teams, and Wellesley's A&B teams. ECC also tied Penn State, the Herald notes.

The ECC squad has a few more tournaments before heading to the American Mock Trial Association regionals in February.

As for Yale, a spokesperson said ECC's victory was "impressive."

"I'm sure their reputation will precede them next time."

Financing

I'm passing along a recent email from the folks at SCORE. That organization provides great mentoring to entrepeneurs and a calendar of events and instruction you may wish to monitor. Here's a link: www.scorefoxvalley.org/

Borrowing from Friends, Family Requires Wise Management

Friends and family are an invaluable source of support for the aspiring small business owner. And often, they're an invaluable source of financial assistance as well.

In fact, more small businesses rely on loans from friends and family than any other funding source. Familiarity with the person and his/her business goals, the investment opportunity, and the ability to monitor the venture's progress are among the major reasons why friends and family members willingly contribute to a start-up or expansion.

However, a ready source of cash is not without its potential pitfalls. Business loans from family and friends also can be a disaster if they are not done right. Unstructured or loosely structured financing and payback terms can haunt both sides later on. Research shows that 14 percent of business loans from family and friends go into default, compared to about one percent for bank loans.

To increase the odds of success, approach family and friends with a detailed loan proposal, including financials from your business, just as you would a bank or venture capitalist. Be frank about the risks. If things go badly, they could lose all or some of their money. Consider the consequences of a soured business deal to your relationships.

Pick a financing structure that works best for your business and make certain everyone understands it. Specifically, be clear on whether the deal involves an ownership stake in your business, or whether it is a simple debt you plan to repay. And be clear about repayment terms.

To legally seal the deal, use a document such as a "Promissory Note." Putting the terms of your borrowing agreement into proper legal form is crucial. You can find the downloadable legal documents you need, including many different Promissory Note variations, at www.findforms.com. Self-help legal publisher Nolo also offers loan forms and related information at www.nolo.com.

Another helpful resource is Virgin Money at www.virginmoneyus.com, previously known as CircleLending.com before it was acquired by well-known entrepreneur Richard Branson. Virgin Money helps small business owners avoid the problems that can arise with loans from friends and family by providing loan administration, recordkeeping, payment processing and structural support. The service emphasizes flexibility to meet the needs and concerns of both borrowers and lenders, from terms and interest rates to repayment strategies.

To learn more about financial issues facing your small business, contact SCORE "Counselors to America's Small Business."
The Fox Valley SCORE Chapter offers free, confidential counseling to small businesses, including start­ups. Affiliated with the U.S. Small Business Administration, SCORE has counselors available in nine locations in the counties and suburbs west of Chicago.


We look forward to helping you work out financing possibilities for your business.

Sincerely,

The Counselors at SCORE

Frist-Time Homebuyer Credit

Ten Facts about the First-Time Homebuyer Credit

Many taxpayers who purchase a home this year will qualify for an $8,000 federal tax credit. The refundable first-time homebuyer credit is a major tax provision in the American Recovery and Reinvestment Act of 2009. But time is running out to qualify for this credit.

Here are ten things the IRS wants you to know about the first-time homebuyer credit:

1. To be considered a first-time homebuyer, you and your spouse if you are married – must not have jointly or separately owned another principal residence during the three years prior to the date of purchase.
2. You cannot claim the credit before there is a completed sale and purchase of the residence. The sale and purchase are generally completed at the time of closing on the purchase.
3. To qualify for the credit, the completed purchase must occur before December 1, 2009.
4. The home must be located in the United States.
5. The credit is either 10 percent of the purchase price of the home or $8,000, whichever is less.
6. The amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000 or $150,000 for joint filers.
7. The credit is fully refundable. A homebuyer with no taxable income, who qualifies for the credit, may file for the sole purpose of claiming the credit and receive a refund. The credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed.
8. The credit is claimed on IRS Form 5405, First-Time Homebuyers Credit.
9. Taxpayers can claim the credit for a qualified 2009 purchase on either their 2008 or 2009 tax return. For those who have filed a 2008 return, a Form 1040X, Amended U.S. Individual Income Tax Return can be filed in order to get a refund in 2009.
10. The credit for qualified 2009 purchases does not have to be repaid, as long as the home remains your main home for 36 months after the purchase date.

Qualified taxpayers who have been considering a main home purchase may find extra incentive from this tax credit to buy now so they can complete the purchase before the December 1 deadline.
Links: YouTube video: English-Spanish