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.

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  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.

Food for thought

As we grow up, we learn that even the one person that wasn't supposed to ever let you down probably will. You will have your heart broken probably more than once and it's harder every time. You'll break hearts too, so remember how it felt when yours was broken. You'll fight with your best friend. You'll blame a new love for things an old one did. You'll cry because time is passing too fast, and you'll eventually lose someone you love. So take too many pictures, laugh too much, and love like you've never been hurt because every sixty seconds you spend upset is a minute of happiness you'll never get back. Don't be afraid that your life will end, be afraid that it will never begin. - Author unknown

QuickTools for a Paperless office

I'd like to share some information with you about a new tool I've seen and used called SmartVault. It's a document management system that integrates with QuickBooks and makes going paperless quick and painless.

Save 10% Off Your Monthly Subscription - SmartVault plans start at only $19 per month and as my client, I can offer you a 10% discount off the monthly subscription price. Just sign up on the SmartVault site and enter referral code "ChouinardWilliams" to get your discount.

If you'd like more information or are interested in viewing a SmartVault demo, just let me know and I'll work with SmartVault to schedule a private web demo and Q&A session.

Best regards,
Shawn M. Williams

For the Love of Pete, How Are We Supposed to Survive?
A Few Ways to Succeed in a Troubled Economy.

A money tree should do the trick; however, since money doesn’t grow on trees, we have opted to help you find a few of the easiest and least expensive ways to endure this deteriorating economy.

Believe it or not, spending less can truly work in your favor. Due to the weakened economy, people have the fear of losing everything, but the smart business owners see unadulterated potential for growth. It is not about the amount you spend; it is about knowing where to spend it. There are innovative resources emerging daily. Most of these untapped resources cost little or NOTHING to implement. In this blog entry we are going to help you locate some of these inexpensive resources, such as bartering, staffing, and providing great customer service.

Bartering seems a bit out-dated. However, when you think about it, the benefits of using this traditional exchange can increase your revenue in the long run. How it works: you receive the product or service that you require; and, in turn, you provide your product or service to that provider. The only cost is opportunity cost. But, once the economy recovers, and you have survived in tact, you now have an ally that will remain loyal and that will enthusiastically provide positive word-of-mouth advertising. All while, increasing revenue in the future! Best of all, IT IS FREE!

During a troubled economy staffing decisions are more important than ever. Someone who is lucidly a web designer should not be doing your books. Prepare to learn your employee’s fortes and their Achilles' heels. Knowing each employee’s strengths and weaknesses is the best way to stretch that dollar that you are paying them. Most importantly, however, is to EMPLOY YOURSELF! There is no one that believes in your business or products more than you do. Remember, this is the venture that you started with your desire to succeed; and, it is the same fuel that you need to rekindle your resources. Your life invented by YOU!

Customer service one of the most important components of success in a troubled economy, among product/service quality and competitive pricing. May we suggest adding greater quality customer service, or maybe just a “free” friendly smile? What if you, the owner of the business, went out in the rain and carried an umbrella for them? Most people are more apt to spend their money where the feel appreciated. What does this mean for you? It means that for the cost of a smile, your client retention rate just increased. People are pressured right now; they want to get in, get what they want, and get out. Give them a reason to stick around and see your other products…Superior Customer Service and Appreciation.

One of the best things that you can do is just hang in there; we can help you do just that. There are numerous ways to tap into your untapped resources. Bartering, making certain that your employees are in the correct, “profitable” positions, and providing unparalleled customer service are by no means exclusively the ways to survive this troubled economy. However, their worth surpasses the effort and at little to NO cost.

There have been a multitude of economic ups and downs. And, just as the others have come and gone, like my father said “this too soon shall pass.” If you would like more information on seeing through the numbers, please contact us to see how we can help.

Shawn M. Williams, CPA
Aimee L. Lafond, Office Manager

After tax season - What's next?

Now that another successful tax season has come and gone, we are now looking forward to successful summer and planning seasons; and, technology is going to assist us in these endeavors. If you are reading this, you already know how fast technology is changing. We used to phone and fax. Then, we e-mailed and instant messaged. Now, we are blogging, tweeting, social networking and texting. Our firm has just embarked on an aggressive update of our website(s) to integrate these and other functions to better serve you, our clients and potential clients.

The website design is engineered to be a central reference point for our firm that integrates all the above-mentioned technologies. The website(s) will allow you to sign-up for (e-)mailings, receive text updates and reminders, follow this blog and twitter. It will also integrate social networking through Facebook and Linkedin. Further, the site will include updated news feeds that you may subscribe to, if so desired. Not only will we integrate these new technologies, we will update and integrate the "best" functions of our current website(s).

We will also be using some of our client's and our favorite functions from our previous website versions. "Pay your Bill," tax resources, tax calendars, calculators, subscribe to our (e-)newsletter, send us your files and "Ask us" function will live on. These functions allow us to provide more efficient and effective communication and service for all our clients. Furthermore, integration with our new technologies will provide quite an enhancement that I'm sure you will appreciate.

As the world moves forward, so must we. We are truly excited about the website design and see great potential and benefits. We hope this investment will make the communications and services that we provide to you, our most valued clients, more efficient and effective.

Please continue to monitor this blog and please subscribe. Subscribers will get an "exclusive" advanced preview of the new website and functions. Also, the "live" date will be announced here first.

Very truly yours,
Shawn M. Williams, CPA
James A. Chouinard, CPA