Health Care Tax Credit

Small businesses and tax-exempt organizations may be eligible for a valuable tax credit. The details can be found here.

In order to take the deduction on line 29 of Form 1040, you must be one of the following:

• A self-employed individual with a net profit reported on Schedule C, Schedule C-EZ or Schedule F.

• A partner with net earnings from self-employment reported on Schedule K-1 (Form 1065)

• A shareholder owning more than 2 percent of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2.

The insurance must be established under your business.

If you need additional information, please contact me. Follow me on twitter.

Majority Believe America Is Overtaxed

A new Rasmussen Poll finds that a majority of Americans believe the nation is overtaxed. 56% of likely voters believe that America is overtaxed. 33% believe that America is not overtaxed. 12% are not sure.

Two years ago, 66% felt that America was overtaxed. Last year, 64% felt that America was overtaxed.

Here is the wording of the questions:

• As a nation, is America overtaxed?
  
  
• When thinking about all federal, state and local taxes, what does the average American pay in taxes as a percentage of their income…..10%, 20%, 30%, 40%, 50% or more than 50%?
  
  
• When thinking about all the services that are provided by federal, state and local governments, how much should the average American pay in taxes as a percentage of their income…..10%, 20%, 30%, 40%, 50% or more than 50%?
  
  
• Should any increase in federal taxes be approved by a vote of the American people?
  
  
• Should any changes in Medicare or Social Security be approved by a vote of the American people?

How would you respond? Do you feel Americans are overtaxed? Leave a comment.

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Approaching Deadlines

March 15th is the deadline for calendar year Corporations and S-Corporations to file their returns. Corporations should file Form 1120. S-Corporations should file Form 1120S. If additional time is needed an extension can be granted until September 15th. File Form 7004 to request a 6-month extension.

If you are seeking to be an S-Corporation for 2012, file Form 2553 by March 15th. If this deadline is missed, you will be a C Corporation, Partnership or Disregarded Entity (whatever the case may be) until 2013.

With the deadline approaching, here is a helpful link with all the due dates that will apply to small businesses.

If you have any questions about this or any other tax topic, please contact me.

IRS Podcast of Common Tax Return Mistakes

Here is a link to the IRS Podcast. The IRS reminds people that mistakes in a tax return can slow down the processing of your return. "Fewer mistakes means quicker refunds." Here is the list of items making the IRS' podcast:

• Incorrect social security numbers for filers or dependents. Double check your entry.
• Incorrect last names for filers or dependents. Make sure the names are as they appear on the social security cards.
• Incorrect filing status. There are 5 choices: Single, Married filing jointly, Married filing single, Head of household or Qualifying widow.
• Math errors. Tax software can eliminate this.
• Computational errors. If you're calculating any credits make sure you are using the correct amounts for things such as income as many credits are phased out for high-income earners.
• Incorrect bank account information. If you want direct deposit, make sure you have both the correct routing number and account number.
• Forgetting to sign the return. If you file by paper you and your spouse must sign. If you e-file, you must obtain a personal identification number to serve as the signature.

If you have any questions to this or any other entries, please leave a comment in the comment section.

20 Tax Changes You Should Know About

Investopedia has a list of 20 tax changes. The list is mostly comprised of current year amounts for things such as personal exemptions and standard mileage rates. There is a good reminder that if you made a Roth IRA conversion in 2011, all of the resulting income must be reported this year. If you made a conversion in 2010, half of the income is reported in 2011 and the rest in 2012.

Small Business & Self-Employed Tax Center

Here are several links that will be helpful to all small businesses and self-employed persons. In it you will find things such as:

• Which forms to use to file tax returns


• How to apply for an Employer ID number


• Information on starting, operating or closing a business


• How to determine if someone you pay should be classified as an employee or independent contractor

Alternative Minimum Tax

The IRS has a list of facts about the Alternative Minimum Tax. After the first two facts, which mention that the AMT was created to target high income taxpayers who could claim so many deductions they owed little or no tax and that the AMT was established in 1969 with no provision inflation adjustments causing a growing number of middle-income taxpayers to be subject, the rest of the bulletin should contain phone numbers of congressmen that should be called to eliminate this tax.

If you have any tax questions, please contact me.

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Tax Penalty Relief For the Unemployed

The IRS has announced an expansion to its "Fresh Start" initiative that can provide tax penalty relieft to unemployed and struggling self-employed people.

Those that qualify can receive a 6 month grace period on payment of taxes. A timely filed extension will also extend the time to pay. Note that all taxes and interest must be paid by October 15, 2012 to avoid the late payment penalty.

Two categories of taxpayers will qualify for this relief.

• Wage earners who have been unemployed at least 30 consecutive days during 2011 or in 2012 up to the April 17 deadline for filing a federal tax return this year.
  

• Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2011 due to the economy.

For more information, leave your question in the comment section of this post.

Helpful Links For Information Returns

Need to file an information return such as a 1099 but not sure which one to use? The IRS has a list of all information returns and a link that provides information about who must file each form.

Tax Credit for Child and Dependent Care Expenses

The IRS published a list of 10 Tips that outline the rules and reporting requirements for anyone who may have child care expenses. The most important of the 10 are that the credit is for expenses that enable a taxpayer and spouse (if married filing jointly) to work. Both spouses must have earned income unless one is a full-time student or were physically or mentally unable to care for themselves.

Use Form 2441 to report the information and claim the credit.

More information can be found in Publication 503.