Small Employer Health Insurance Credit

The Small Employer Health Insurance Credit is a credit for Employers with a staff of no more than 25 full-time workers who earn average annual wages of no more than $50,000 the credit can be claimed on your Annual Income Tax Return with attached Form 8941 Showing the calculation of the credit.

If you need help with this credit our firm is able to help Call us Today!

Financial Fitness Friday

As a member of the Florida Institute of CPAs (FICPA), I wanted to let you know about a terrific opportunity we have coming up. On Friday, Nov. 5, 2010, from 9 a.m. to 3 p.m., volunteer FICPA members will be available to answer financial-related questions – free of charge – to Florida residents.

According to The National Foundation for Credit Counseling’s 2010 Consumer Financial Literacy Survey Final Report, about 4 in 5 adults agree that they would benefit from advice and answers to everyday financial questions from a professional.

• Are you part of Florida's high unemployment rate?
• Do you have a budget in place? Have you put it into action?
• Are you expecting an addition to your family?
• Have you been thinking about withdrawing from or increasing your contribution to your retirement funds?
• Did you recently start or are ready to graduate from college?
• Are you a recent empty-nester?
• Are you aware of any year-end tax breaks that could affect you?
• Did you start your own business this year?

Our certified public accountants are qualified professionals who can help answer questions you have about these and any other life and financial changes you’re experiencing.

I hope you can take advantage of this once-a-year event, free to Florida residents.
FICPA Financial Fitness Friday

Nov. 5 from 9 a.m.-3 p.m.
(800) 342-3197 Ext. 554 (in Florida) | (850) 224-2727 Ext. 554
Submit your question(s) today

Questions may be asked online anytime, but will be answered on Nov. 5, between 9 a.m. and 3 p.m.

For more information on this event, visit www.ficpa.org/public/financialfitnessfriday or contact Brenda Hubbard, the FICPA Director of Academic Relations & Student Initiatives:
(800) 342-3197 Ext. 419 (in Florida) | (850) 224-2727 Ext. 419 | hubbardb@ficpa.org.

I am pleased to be a part of an association that helps Florida get financially fit and wanted to share this information with you. Please feel free to forward this to your friends, family and coworkers.

Thank you for participating in and helping to make this event successful.

Small Not-for-Profit Organizations May Be at Risk of Losing Tax Exempt Status

Small nonprofit organizations at risk of losing their tax-exempt status because they failed to file required returns for 2007, 2008 and 2009 can preserve their status by filing returns by October 15, 2010, under a one-time relief program, the Internal Revenue Service announced today.

The IRS today posted on a special page of IRS.gov the names and last-known addresses of these at-risk organizations, along with guidance about how to come back into compliance. The organizations on the list have return due dates between May 17 and October 15, 2010, but the IRS has no record that they filed the required returns for any of the past three years.

“We are doing everything we can to help organizations comply with the law and keep their valuable tax exemption,” IRS Commissioner Doug Shulman said. “So if you do not have your filings up to date, now’s the time to take action and get back on track.”

Two types of relief are available for small exempt organizations — a filing extension for the smallest organizations required to file Form 990-N, Electronic Notice, and a voluntary compliance program (VCP) for small organizations eligible to file Form 990-EZ, Short Form Return of Organization Exempt From Income Tax.

Small organizations required to file Form 990-N simply need to go to the IRS website, supply the eight information items called for on the form, and electronically file it by October 15. That will bring them back into compliance.

Under the VCP, tax-exempt organizations eligible to file Form 990-EZ must file their delinquent annual information returns by October 15 and pay a compliance fee. Details about the VCP are on the IRS website, along with frequently asked questions.

The relief announced today is not available to larger organizations required to file the Form 990 or to private foundations that file the Form 990-PF.

The IRS will keep today’s list of at-risk organizations on IRS.gov until October 15, 2010 which can be found by Clicking Here. Please note that this is an incomplete list, as there may be entities out there that need to comply but are not found at that link. Organizations that have not filed the required information returns by that date will have their tax-exempt status revoked, and the IRS will publish a list of these revoked organizations in early 2011. Donors who contribute to at-risk organizations are protected until the final revocation list is published.

The Pension Protection Act of 2006 made two important changes affecting tax-exempt organizations, effective the beginning of 2007. First, it mandated that all tax-exempt organizations, other than churches and church-related organizations, must file an annual return with the IRS. The Form 990-N was created for small tax-exempt organizations that had not previously had a filing requirement. Second, the law also required that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status. The IRS conducted an extensive outreach effort about this new legal requirement but, even so, many organizations have not filed returns on time.

If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.

Amend a 2009 / File a 2010 Return for Homebuyer Credit

Taxpayers who qualify for the first-time homebuyer credit or the long-time resident homebuyer credit who buy a home in 2010 don't have to wait to claim the credit when filing their 2010 returns. They can instead amend their 2009 tax returns to claim the credit and receive it sooner.

Buyers who purchased in 2009 and didn't claim the credit on their 2009 returns can also amend those returns to get the credit. Recently we have been asked which documents our clients must prepare in order to claim the credit on either an original 2009 return or on an amended 2009 return:

First-time homebuyer

•A copy of the settlement statement showing all parties' names and signatures, property address, sales price, and date of purchase. Normally, this is the properly executed Form HUD-1, Settlement Statement.

•For mobile home purchasers who are unable to get a settlement statement, a copy of the executed retail sales contract showing all parties' names and signatures, property address, purchase price and date of purchase.


•For a newly constructed home where a settlement statement is not available, a copy of the certificate of occupancy showing the owner’s name, property address and date of the certificate.


Long-time residents

Long-time homebuyers claiming the credit for buying a new principal residence must show that they lived in their old homes for a five-consecutive-year period during the eight-year period ending on the purchase date of the new home. The IRS has stepped up compliance checks involving the homebuyer credit, and it encourages homebuyers claiming this part of the credit to avoid refund delays by attaching documentation covering the five-consecutive-year period:

•Form 1098, Mortgage Interest Statement, or substitute mortgage interest statements,


•Property tax records or


•Homeowner’s insurance records.


The IRS says it's not necessary to have five years of the same documentation. Any combination of these documents verifying that you owned and lived in your home as a principal residence for at least five consecutive years is acceptable.

For example, suppose you owned and lived in your previous home from Nov. 1, 2004, to Oct. 31, 2009. You could send a copy of Form 1098 showing the mortgage interest you paid for the part of 2004 during which you owned and lived in the home, as well as the Form 1098s for 2005, 2006 and 2007, proof of homeowners insurance for 2008 and a property tax statement for the part of 2009 when you owned and lived in the home.

Florida Tax Amnesty July 1 - September 30, 2010

Florida taxpayers who owe unpaid state taxes can save money and clear up tax liabilities by going online to learn more about Florida's 2010 tax amnesty beginning July 1 and running through September 30. Tax amnesty information, including a Tax Information Publication and Tax Amnesty Agreement form, is available on Revenue's website at www.myflorida.com/dor/amnesty.

Why take advantage of Florida's tax amnesty period? Taxpayers can:
•Significantly reduce the interest that is due, up to 50 percent.
•Pay no penalty.
All Department of Revenue (DOR) administered taxes due before July 1, 2010 are covered during the amnesty period except unemployment taxes and the Miami-Dade County Lake Belt fees. An amnesty agreement form must be submitted to the department to participate.

Taxpayers who identify a tax liability unknown to Revenue will be required to pay only half as much interest as they would if DOR found the unpaid tax later. If DOR already identified the tax liability in a bill, jeopardy assessment, or other assessment, or had already scheduled an audit, the taxpayer is eligible for a one-fourth reduction in interest charges. In addition, taxpayers will receive a complete waiver of penalty under tax amnesty. (Taxpayers who comply with tax laws already save money—they never owe penalty or interest!)

"For taxpayers who owe taxes or who may have made a mistake in the past, tax amnesty is a chance to pay taxes owed to the state and save money," said Lisa Echeverri, Executive Director, Florida Department of Revenue. "We also want to thank the thousands of businesses and citizens who work hard every day and comply with Florida's tax laws so our state has the critical funding it needs to build roads, educate our children and serve our most vulnerable citizens."

How does a business know if they are eligible?
You and your business are eligible if your liability for tax, penalty or interest was due on or before June 30, 2010, and:

•You complete a Tax Amnesty Agreement (www.myflorida.com/dor/amnesty).
•Your liability is not already covered by a settlement or payment agreement.
•You are not under criminal investigation for violating a Florida revenue law.
•You have not been convicted of violating any Florida revenue law.
For more information about Florida Tax Amnesty 2010, visit our website www.myflorida.com/dor/amnesty or a local service center http://dor.myflorida.com/dor/taxes/servicecenters.html soon!

Congress passes homebuyer tax credit relief!

Congress has extended the closing deadline from June 30 to September 30, 2010 for qualifying contracts signed prior to May 1, 2010. The extension is estimated to allow an additional 180,000 homebuyers to utilize the credit. Contact us if you need assistance with this or any other matters.

American Opportunity Credit Helps Pay for First Four Years of College

More parents and students can use a federal education credit to offset part of the cost of college under the new American Opportunity Credit. This credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers. Income guidelines are expanded and required course materials are added to the list of qualified expenses. Many of those eligible will qualify for the maximum annual credit of $2,500 per student.

In many cases, the American Opportunity Credit offers greater tax savings than existing education tax breaks. Here are some of its key features:


Tuition, related fees and required course materials, such as books, generally qualify. In the past, books usually were not eligible for education-related credits and deductions.

• 
  The credit is equal to 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
  
• The full credit is available for taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less ($160,000 or less for filers of a joint return). The credit is reduced or eliminated for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits.
  
• Forty percent of the American opportunity credit is refundable. This means that even people who owe no tax can get an annual payment of the credit of up to $1,000 for each eligible student. Existing education-related credits and deductions do not provide a benefit to people who owe no tax. The refundable portion of the credit is not available to any student whose investment income is taxed, or may be taxed, at the parent’s rate, commonly referred to as the kiddie tax. See IRS Publication 929, Tax Rules for Children and Dependents, for details.
  

Though most taxpayers who pay for post-secondary education qualify for the American Opportunity Credit, some do not. The limitations include a married person filing a separate return, regardless of income, joint filers whose MAGI is $180,000 or more and, finally, single taxpayers, heads of household and some widows and widowers whose MAGI is $90,000 or more.

There are some post-secondary education expenses that do not qualify for the American Opportunity Credit. They include expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college. That’s because the credit is only allowed for the first four years of a post-secondary education.

Students with more than four years of post-secondary education still qualify for the lifetime learning credit and the tuition and fees deduction.

For details on these and other education-related tax benefits, please contact us at 239-275-9997, or see IRS Publication 970, Tax Benefits for Education.

Significant Changes to 1099 Reporting Requirements

The passage of the Healthcare reform bill included some of the most drastic changes to 1099 information reporting in over a decade. The bill included revenue raising provisions meant to seek greater compliance of the tax code via 1099 information reporting. General provisions included:

- The elimination of the corporate exemption from 1099-MISC reporting. (Public Law 111-148)

- The requirement to report payments for property (goods, materials, merchandise, supplies, etc.). (Public Law 111-148)

- A six-fold increase in penalties from $250,000 to 1.5 million. (H.R.4213, H.R.4849)

- A doubling of penalties per record from $50 to $100. (H.R.4213, H.R.4849)

Beginning for payments made after December 31, 2011, companies will be required to furnish and file form 1099-MISC for payments made to all for-profit companies regardless of corporate status. In addition all payments for goods, materials, merchandise, supplies, and other property will need to be reported as well. Early indications reveal that these changes will likely cause the 1099 reporting volume to increase significantly for most companies as well as the associated B-Notices.

While the law applies to payments made after December 31, 2011 companies need to make broad changes to: 1) W-9 procedures to include all vendors. 2) Solicit W-9's for corporate vendors. 3) Prepare for larger 1099 year-end printing, mailing, and filing. 4) Make the appropriate budgetary and system updates to accommodate these changes.

President Obama signed into law the Hiring Incentives to Restore Employment Act (HIRE), an economic stimulus plan that contains $15 billion dollars in new incentives for businesses which hire unemployed workers in 2010.

Two provisions that may affect you and your business: Eliminating the current 6.2% employer Social Security tax for eligible new hires. A $1,000 business tax credit for keeping eligible employees for at least 52 consecutive weeks.

Contact us to review your accounting needs and to find out how your business can benefit from the newly enacted law.