I have received an IRS memo explaining that there are scams out there that look like IRS websites to businesses and individuals that pay there taxes through EFTPS Electronic Federal Tax Payment System.
Please be advised that the IRS never requests unsolicited personal information.
Additionally, the IRS does not send e-mails to individuals looking for bank account or credit card information. As a matter of fact, when taxes are paid via credit card the IRS never deals with the credit card company. A third party charges your account and provides cash to the IRS/U.S. Treasury.
For more information, see the entire IRS newsletter click here
The big question is when is the right time to do tax planning?
If you wait until preparing your income tax returns it will be to late.
The time to do planning is as early in the year when you have the information for your current taxes.
Because it is planning some of the information will be estimates. Major sales of investments as well as other income, earned and unearned. It is important to know how much you will owe as early in the year as possible. Knowing how much will be needed on April 15th or whether quarterly estimates are required as well as not spending or tying up funds that should be out away for taxes.
Also, knowing early may allow some planning options to reduce the current year’s income tax.
On May 25, 2007, President Bush signed into law H.R. 2206, the “War Funding” bill. Included in this bill was the “Fair Minimum Wage Act of 2007,” an amendment to the Fair Labor Standards Act (FLSA). The new legislation increases the federal minimum wage for covered, non-exempt employees from its current level of $5.15 per hour to $5.85 per hour effective July 24, 2007.
Over the next two years, the federal minimum wage will increase to $7.25 an hour, in three phases:
• $5.85, effective July 24, 2007
• $6.55, effective July 24, 2008
• $7.25, effective July 24, 2009
The new legislation does not impact the current minimum cash wage for tipped employees of $2.13 per hour. Employers will, however, need to continue to ensure that tips received are sufficient to bring the employee’s total wages to an amount equal to or greater than the new minimum wage rate. More information regarding the FLSA minimum wage provisions and FLSA coverage, can be found on the US Department of Labor (DOL) website at http://www.dol.gov/compliance/laws/comp-flsa.htm.
All employers subject to the FLSA’s minimum wage provisions are required to post a notice explaining the Act. The content of the notice is prescribed by the US DOL, Wage and Hour Division. The US DOL is expected to release materials regarding the provisions of the “Fair Minimum Wage Act of 2007” in the coming weeks.
In addition to the increase in the federal minimum wage, several states whose wage rates are tied to the federal rate will also see an increase in their minimum wage. Several other states will continue to have a minimum wage higher than the federal minimum wage, while still other states will now have a minimum wage rate below the federal minimum wage. Employers covered by both state and federal minimum wage law must observe the higher of the two rates. For information about state minimum wage rates, employers may contact their local Department of Labor or visit their website.
Employers are encouraged to evaluate their pay practices as soon as possible to ensure compliance with all state and federal requirements and to prepare for the increase in the minimum wage rate when it takes effect on July 24, 2007. Employers found to be in violation of this new minimum wage law, or any other applicable employment laws, may be subject to fines or other penalties.
I am sitting in my Intermediate Accounting class while my students are taking their midterm.
I’ve only been teaching since January 2004 and I am still having a blast at it.
Things have really changed since I finished my Undergrad degree in December 1976, Masters in 1984.
I don’t remember when I was in Grad School or undergrad worrying about what grade I was going to get.
I know that some of them need a specific grade to have their employers reimburse them for their tuition. I guess it is differerent now. The cost of the classes are so expensive that they need to get the reimbursement to be able to take the next class.
As we know, when an “S” Corporation has a loss there are 2 hurdles to overcome to determine if and how much of the loss is deductible. The first is whether it is a passive activity. The second is whether the shareholder has basis in the corporation either by amount invested in common stock or as loans made to the “S” Corporation. If the loan is repaid to the shareholder before basis is restored (the corporation earning income that is not distributed) there is a capital gain to the shareholder.
One taxplanning tool was to make certain that by the end of the fiscal year the shareholder(s) make certain that they have enough basis to deduct the loss if any and to avoid capital gain if the loan(s) from the beginning of the year was repaid.
A case in August 2005 Brooks AG Company, Inc. took on just that question (Brooks v. Commissioner, T.C Memo 2005-204). The IRS treated the repayment and the new loans as separate and argued that the shareholder had a capital gain.
Although the IRS lost the case in the tax court, the IRS did not like the result. On April 12, 2007 the IRS prepared a new regulation to undo the tax court decision in the future. There is a comment period through July 11, 2007 at www.regulations.gov.
Although we must wait to find out if this becomes the law, it is very important for tax planning to keep this issue in mind.
Every year it is calculated when the average American has worked enough during the year to cover his or her annual taxes, Federal, state and local, after which you keep all the income you earn. The national average date is today April 30, 2007.
Since each state and locality has different tax rates the tax freedom date varies on a state by state basis. In Massachusetts this year Tax Freedom Day is May 6, 2007.
I recently found a tax blog site that I found very interesting especially when dealing with estate plans and divorce. Not only do the divorced couple have to amend their estate plans and documents; however, anyone who had the couple as guardian of their children and or trustees of trusts for other family members, should have their documents reviewed.
One other option is to add to the document that limits the ability of (your in-law to have control only while he is married to your sibling), John Smith the spouse of my sister to be trustee of the XYZ trust or executor of my will as long as he is married to my sister at the time I die.
For not-for-profit organizations that normally receive less than $25,000 a year and was not required to file Form 990 starting with 2007 tax returns will be required to annually notify the IRS that they still exist and still normally receive less than $25,000 a year.
The organization will electronically file on Form 990-N an e-notice.
On April 23rd I received a synopsis from my Paychex representative about the Massachusetts Health Care Reform Act as it relates to a Premium Only Cafeteria Plan (POP). The POP Cafeteria Plan reduces from gross pay each employee has withheld from his or her paycheck.
Until now each company could decide if they wanted to maintain a cafeteria plan, since there are some administrative costs to prepare the plan documents.
Now effective July 1, 2007 all Massachusetts employers with 11 or more employees are required to to have a plan that at a minimum is a POP.
Of the many tax rap songs on YouTube website I’ve listened to only a few (there are over 170); however, this one by far is the best I’ve heard. Let me know what you think. You can check them out yourself at YouTube
