Payments to the Government after 13/31/2011 requires a 3% or not?

Withholding on government payments delayed. For payments made after Dec. 31, 2011, governments at the federal, state and local levels will have to deduct and withhold tax in an amount equal to 3% of any payments they make to a person providing property or services. However, the IRS has announced that withholding and reporting requirements will not apply to any payment made by payment card, including credit cards, debit cards, and stored value cards, for any calendar year beginning earlier than at least 18 months from the date further guidance on this subject is finalized. Thus, the new requirements will not apply to payment card payments for the 2012 calendar year.

IRS source





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Are you filing a 1040 with Schedule A? You may want to delay filing 'til Feb.

The 2010 Tax Relief Act passed later in the year had caught the IRS of guard and they need time to reprogram its computers for the new changes.  This does not apply to all taxpayers.  Some taxpayers planning to file their 2010 tax returns early have been advised by the IRS to wait until mid- to late-February, 2011.

Who are affected? Affected taxpayers are those planning to file Schedule A or claim above-the-line deductions for higher-education tuition and fees or educator expenses.

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When is the tax return due date?

Extended due date this year. Because of the Emancipation Day holiday in the District of Columbia, the due date of Form 1040 for 2010 is Apr. 18, 2011, instead of Apr. 15, 2011. The Apr. 18 due date applies even for taxpayers who do not live in the District of Columbia.

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Deduction allowed

Repairs to your personal residence incurred because of corrosive drywall can be deductible.  However, there is a catch as to when they were installed.   Source IRS.

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Payroll Deductions...

The 2010 Tax Relief Act reduces the employee OASDI tax rate under the FICA tax by two percentage points to 4.2%. The self-employment income is reduced by two percentage points to 10.4% percent.  Thus, you should see an increase in your paycheck and a reduction in your deductions in 2011.   The limit remains at $106,800.   Source IRS 

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Gift Card received during X-mass...is it reportable income or not?

A new revenue procedure allows a taxpayer to defer recognizing in gross income advance payments received from the sale of gift cards that are redeemable for goods or services of the taxpayer or a third party.   Excerts from the IRS.

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Reporting requirement- Recipients of Rental Income

Recipients of rental income from real estate generally are subject to the same information reporting requirements as taxpayers engaged in a trade or business. In particular, rental income recipients making payments of $600 or more during the tax year to a service provider (such as a plumber, painter, or accountant) in the course of earning rental income are required to provide an information return (typically Form 1099-MISC) to IRS and to the service provider.

Source IRS




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Retainer workers credit- in 2011

Up-to-$1,000 credit for “retained workers” in 2011. For any tax year ending after Mar. 18, 2010, Sec. 102 of the Hiring Incentives to Restore Employment Act provides an up-to-$1,000 increase (retention credit) to the general business credit for “retained workers.”

Source IRS

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What's New for 2011

Brief Summary of Few:

• Medicare Part D coverage gap rebate is not taxable.
• Qualifying parking max deduction is $230/month-same amount for employer provided transit.
• 2010-Start-up cost can be deducted raised to $10, 000.
• Standard milage rate for business is 50 cents.

Source IRS

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