Self-employed Basic Points to Remember

 If you work for yourself, as an independent contractor, or you carry on a trade or business as a sole proprietor, you are generally considered to be self-employed.

Key BASIC points about self-employment and self- employment taxes:

As a self-employed you generally have to pay self-employment tax as well as income tax. Self-employment tax is a Social Security and Medicare tax.  

You figure self-employment tax using a Form 1040 Schedule SE, and you can deduct in Form 1040 half of your self-employment tax. 

You report your business transactions on Schedule C, Profit or Loss from Business, or C-EZ, Net Profit from Business.  The applicable Schedule in included with your Form 1040.

You have to make estimated tax payments on your self employment net profits above a threshold. If you are required but failed to make quarterly payments you may be penalized for underpayment. 

You have to make an educated distinction between cost incurred that can be expenses from the ones that required to be capitalized over their useful life or after they are disposed off.  (e.g., Merchandise inventory and equipment comes to mind.)

For an expense to be deductible, the itmem must be both ordinary and necessary; an ordinary expense is one that is common and accepted in your field of business, while a necessary expense is one that is helpful and appropriate to carry on in your trade or business.

For more information see the Self-employment Tax Center, IRS Publication 334, Tax Guide for Small Business, IRS Publication 535, Business Expenses and Publication 505, Tax Withholding and Estimated Tax, available at www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).

(Paraphrased)

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Latest U.S.A. Economic News

Quaterly Data - 2011 Third Qtr. (estimated)

Real GDP (% change)    1.8+

   Business Investments    15.7+

   Residential Construction   1.3+

   Exports     4.7+

   Imports     1.2+

   Net Export Balance (Nominal)   -562.3

   Current Account Bal as share of GDP   -2.9

Price Indexes:
   GDP   2.6+
   Gross Domestic Purchases   2.0+
 
Personal Savings Rate   3.9+

Productivity:
  Nonfarm     2.3+
  Manf          5.0+

Monthly Economic Data:  From 2010 to November 2011 or Dec 2011 * (%)

Unemployment rate -  from 9.6 (2010) to 8.5  *
Inflation CPI (over year or month) - from 1.4 to 3.4
PPI (Producer Price Index)- from 3.8 to 5.9
Oil (West TX) - from 79.4 to 98.2 *

Housing Starts - from 585 to 685
Single Fam sold - from 321 to 315
Auto and Light Truck Sales  - from 11.6 to 13.6 *
Retail Sales and Food Services - from 7.6 to .1 *
Capacity Utilization - from 74.5 to 77.8

New Orders for Nondefense capital goods - 16.2 to 8.1
Buss Inv/Sales Ratio  from 1.29 to 1.27
Index Leading Indicators 5.7 to .5

Interest Rastes"
3 mo T-bill  .13 to .02
10 yr T-note  from 3.21 to 1.98 *
Mortg rate-30 yr Fixed  - from 4.69 to 3.96 *

The economy is improving...no doubt.  2008 and 2009 years most of these numbers were negative  or very anemic.
Source: U.S. Treasury Department

 

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January 31, 2012 Reminders

End-of-Month Federal (IRS) Reminders:

• Must file Form 720 for the Qtr ending 12/31/2011.
• Furnish Forms 1098, 1099 and W-2G to recipients for certain payments during the year ending 12/31/2011. Including Form W-2 to your employees.
• File Form 730 and pay taxes on wagers accepted during the month of December 2011.
• Deposit any FUTA (Federal Unemployment) tax owed through December 2011.
• File Form 2290 and pay the tax for vehicles used in December 2011.
• File Forms 940, 941, 943, 944 and/or 945 if you did not deposit all taxes when due.
• File your tax return if you did not pay your last installment of estimated tax by January 17, 2012.

Source IRS.gov. 

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New Tax Provisions for 2012

New Tax Provisions for 2012

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Payroll due date- for this week

Payroll deposit due date is January 6, 2012 (Friday); Payroll taxes for payments on January 1-3, if the semiweekly deposit rule applies to you.

 

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TAX CALENDAR- January 1-31, 2012

January 6, 2012

Deposit payroll tax on Jan 1-3 if the semiweekly deposit rules applies to you.

January 10, 2012

Employees who work for tips. If you received $20 or more in tips during December, report them to your employer. You can use Form 4070, Employee's Report of Tips to Employer.

January 11, 2012

Deposit payroll taxes for payments on January 4-6. if the semiweekly deposit rules applies.

January 13, 2012
Deposit payroll taxes for payments on January 7-10, if the semiweekly deposit rules applies.

January 16, 2012 Holiday Martin Luther King's Birthday.

January 17, 2012

Individuals. Make a payment of your estimated tax for 2010 if you did not pay your income tax for the year through withholding (or did not pay in enough tax that way). Use Form 1040-ES. This is the final installment date for 2010 estimated tax. However, you do not have to make this payment if you file your 2011 return (Form 1040) and pay any tax due by January 31, 2012.

Farmers and Fishermans: Pay your estimated tax for 2011. Use form 1040ES.

Employers: Deposit payroll tax for December 2011 if the monthly deposit rules applies.

January 19, 2012

Deposit payroll taxes for payments on January 11-13, if the semiweekly deposit rules applies.

January 20, 2012Deposit payroll taxes for payments on January 14-17, if the semiweekly deposit rules applies.

January 25, 2012Deposit payroll taxes for payments on January 18-20, if the semiweekly deposit rules applies.

January 27, 2012Deposit payroll taxes for payments on January 21-24, if the semiweekly deposit rules applies.

January 31, 2012Individuals who must make estimated tax payments. If you did not pay your last installment of estimated tax by January 17, you may choose (but are not required) to file your income tax return (Form 1040). Filing your return and paying any tax due by today prevents any penalty for late payment of the last installment. If you decided to wait, then file and pay your tax by April 17.

(Disclosure: We are not responsible for due dates since it is not within our control, but the IRS.  We are not responsible for choices you made either based on the information provided here, you must consult your tax consultant or get an appointment with us to better explain the IRS due dates and related regulations that may apply to your particular situation.  Allways refer back to the IRS website for a more up-to-date nformation.)

Source: IRS.gov



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Do you qualify as an "Acredited Investor", under the SEC rules?

Interested in purchasing Unregistered Securities? 

New Security and Exchange Commission regulations prevent you from including your primary residence value as an Asset in the calculation.  In the past, investors were allowed to count their principal residence value plus other investments and in the agregate mee the $1 million Net Worth thereshold.   

Who are these Unregister Securities?
These securities may could be; hedge funds to derivatives and private debt.  Generally, these instruments could be less transparent and risky than other publicly registered offerings.  Because, they are highly leverage and risky these securities are only limited to oly acredited investors.

Why the change?

The Security and Exchange Commission (SEC) wants to define an accredited investor the same way is defined under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act.

(Source:  SEC website, 2010 Dodd-Frank legislation.)

Revised wording on 12/26/2011.




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Tax, Accounting, and Auditing: Year end tax tips...do not close the year without ...

Tax, Accounting, and Auditing: Year end tax tips...do not close the year without ...: With a few days to end the year, you must not overlook this last minute tips to reduce your 2011 taxes. Charitable Contributions – Itemiz...

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Year end tax tips...do not close the year without reading this..

With a few days to end the year, you must not overlook this last minute tips to reduce your 2011 taxes.

Charitable Contributions – Itemize deductions, Schedule A, donations to qualified charities no later than Dec. 31 can be deductible for 2011.  Clothing or household items, must be in good used condition or better to be deductible

       Documentation required: canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Rules varied with the amount donated. Consult your CPA.

       Caveat: charges to a credit card by Dec. 31 are deductible for 2011, even if the bill isn't paid until 2012.

Energy-Efficient Home Improvements – Green-energy home improvements to qualify for either of two home energy credits.  What's included?  Generally, insulation, new windows and water heaters to your main home can provide up to $500 in tax savings.

Residential Energy Efficient Property Credit- another Green Credit.  The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property.

Portfolio Adjustment – Very important, you must do this every year.  Generally  net capital losses up to the amount of capital gains, then again $3,000 from other income. The trick is on the carryforward; you must know how to do the matching on your portfolio and going forward planning.

Retirement Accounts – Elective deferrals for next year final date is Dec 31, 2011.  401(k) plans or similar workplace retirement programs. 

        -Do not forget to set up a new IRA or add money to an existing IRA and still have it count for 2011.  If 50 or over, up to $6,000, $1,000 more. 

Retirement Savings Contribution Credit-  Available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples. 

Qualified Charitable Distribution – For TP who are 70½ or over, you can make a distribution paid directly from your individual retirement account to a qualified charity.  The maximum annual exclusion is $100,000.

      Mayor benefit is- can be used to satisfy any required minimum distributions. Available even if you do not itemize deductions.

Small Business Health Care Tax Credit – a tax credit of up to 35 percent of the premiums paid; provided you paid up to 50%+ of the premiums.  Employers with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify.

Merry X-Mass and Happy New year, and remenber that most of you need to have a tax check up at least once a year.

Source: IRS.gov



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2015 Mileage Standard Rates

Beginning on Jan. 1, 2015, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be: 

• 57.5 cents per mile for business miles driven  

• 23 cents per mile driven for medical or moving purposes

• 14 cents per mile driven in service of charitable organizations

Source (IRS.gov)

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