The US Senate recently failed to pass a tax extenders bill which would have taxed S-Corporations with 3 or fewer shareholders who provide professional services medicare and social security taxes on the net income of their businesses. Currently S-Corporation shareholders do not pay this tax on the net income of their businesses. This seemed to unjustly focus on just a few S-Corporations who take advantage of the tax benefits there of. This one did not pass, but watch for future attempts.
June 28, 2010
Tanning tax
The federal government will begin taxing users of tanning services a 10% excise tax July 1, 2010. One of the many ways Congress finds to increase tax revenue with out “raising” taxes.
WA state taxes
As WA state struggles to balance its budget, it changed some taxes. One of the changes is how to determine whether you are doing business in the state suffinciently to owe Business and Occupation tax. New rules went into effect June 1, 2010. These rules particularly effect the service and financial services sectors. So, if you have customers in WA state, make sure you learn the rules.
May 11, 2010
Should you convert to a Roth
Tax laws are quite favorable this year for converting your IRA into a Roth. Whether you should is the question. The conversion requires paying the taxes on the IRA either this year or deferred over 2011 and 2012. This can be beneficial for some and not so beneficials for others. The Roth conversions benefits the most when you pay the taxes for the conversion with non-retirement money, you have 20 or more years before you need to begin drawing money out of the Roth and you expect your future tax rates to be higher than they are currently. The Roth does not have mandatory withdrawal rules, so the money can be left to grow much longer than a traditional IRA. However, IRAs converted to Roths face a penalty for withdrawal within five years of the conversion. Paying the taxes for the conversion with non-retirement money allows all of the principal to continue growing. In some cases this scenario is better than even having lower tax brackets in the future. To know whether you would be better off with a conversion means a discussion with your tax preparer and financial advisor.
March 7, 2010
Personal Property Taxes
One of the many taxes businesses have to pay is a tax on the equipment, supplies and professional libraries on hand at mid-night December 31. This tax is the same rate as real property tax. It is assessed by and paid to the County. Oregon’s report was due March 1st, Washington’s are due April 30th. This tax comes as a surprise to many business owners. If you have not filed in previous years and/or you have not received your 2010 report by early March for Oregon or early April for Washington, call your County to find out why you haven’t received it.
January 18, 2010
Tax Time
Time once again to report to the IRS and other tax agencies. Your tax organizers went in the mail in early January. Please take the time to complete them. It really does save us time in the office when you do.
Many of the tax credits available in 2009 continue in 2010. But if you want to take advantage of the Home Buyer Credit, do it soon. That one expires April 30, 2010. The house has to close by then, so time is short.
December 18, 2009
Reseller’s Permit
All Washington Resale Certificates expire on December 31, 2009. You must now apply for a Reseller’s Permit. The Washington Department of Revenue has the application available at http://dor.wa.gov/docs/forms/misc/appwastateresellerpermit.pdf
If you are a retailer, you can not honor the old Resale Certificate after December 31, 2009. Your customers must have a Reseller’s Permit in order for you to disregard sales tax on their purchase.
December 3, 2009
Standard mileage rates
The mileage rates for 2010 have been released by the IRS. Beginning January 1, 2010, business miles are at $.50 each; medical and moving miles are at $.165 and charitable service miles are at $.14.
This is a decrease in both business and medical/moving rates over 2009. Charity remains unchanged.
November 11, 2009
Home Buyer Credit
Congress has extended the first time home buyer credit to homes purchased before May 1, 2010. It also allows home buyers who have owned the same home for 5 consecutive years during the previous 8 years to get up to $6,500 in tax credits if they purchase the new home after November 6, 2009 and apparently before May 1, 2010. Note, the law does not require you to sell your old personal residence. If you do sell your old residence, you still qualify for the tax free gain of up to $250,000 for individuals and $500,000 for married filing joint.
The purchased home cannot exceed $800,000 for either first time home buyers or those who have owned a home the requisite 5 years. The credit phases out if you make too much money, $145,000 for individuals or $245,000 for married tax payers.
Please check with us to make sure you are eligible for the credit as individual tax situations vary.