Have you adopted a child in 2005, 2006, 2007, 2008, 2009, 2010 or 2011?

In the past, the adoption credit only reduced your taxes and was not refundable. If you were not able to fully claim all your adoption expenses in the past because of this limitation, or you did not have to file a tax return in the year of adoption, you may want to contact your tax professional. 

For tax year 2010 and 2011, the Adoption Tax Credit is refundable.   That’s right, the government gives you money for adopting!  In certain situations, amending the previous years’ tax returns may create a refund to you.  The credit was $10,630 per child in 2005. In 2011, that amount is $13,360.

The credit carries forward five years. This means that if you were unable to claim the entire amount on a previous tax return, you can claim the remaining tax credit amount on the next return, and the next, until it is used up.Of course, as is usual with the tax code, there are rules. Contact your tax professional, or me, to find out if you qualify.

This is a unique opportunity – take advantage of it!

Well, looks like we have all dug our way out from under the snow drifts here in Elma.  Back to the usual Western Washington weather.

Don’t forget to write down the odometer reading from your work vehicles.  Your tax return preparer will need it.

Keep in mind that the IRS requires a mileage log for the vehicles you use for business.  You must include the date, purpose, location and miles for each trip.  Commuting miles are the miles you drive from home to your job or office.  These are not deductible.  It is deductible if you travel from one job to another, for those of you working more than one job.

There are official mileage logs available at your local office supply stores.  But you can make your own as long as long as it includes the above information.  Keep one for each year.  Write the beginning and ending odometer reading for the year as well as each trip.

Today is the first day the IRS is able to receive e-filed returns.  If you took your information to a preparer before this date, he or she was unable to e-file it until today.

If you only receive one or two W-2s, the irs.gov website will let you file your tax return free.  I recommend simple returns be filed this way.  It is easy to use.

For those of you with more tax issues, it is best to hire a tax return preparer.  As an enrolled agent, I am required to have 24 or more hours of tax training per year.  This training allows me to prepare your tax return within the tax rules, but to your benefit.  At the beginning of this year, I spent two days in a tax update seminar that reviewed the many new tax changes the Congress has voted in and how it affects you the taxpayer.

Call me for an appointment as soon as you receive your tax forms.

Janet M Wood EA  360 482 0201 downtown Elma

A new year is here and there are many things to get in order. 

W-2 forms, 1099 forms, Department of Revenue and city B&O returns, all payroll tax returns are due by the end of this month. 

Your final estimated tax payment for 2011 is due January 15.  It is a good idea to review your books to see if you need to adjust the amount to deposit.  Call me if you need help determining the amount to send in.  You can be penalized if you send in too little and you certainly don’t want to send in too much!

Well, the government has finally figured out that gas prices are sky high!

Beginning July 1, 2011, the rate will change to 55.5 cents per mile.  A four cent increase is better than none.  This means that those of you who claim mileage on your tax return must go out and record the vehicle odometer reading as of midnight June 30th.

This will be required when preparing your tax return for 2011 and will create a headache if you do not have it recorded.  By January 2012, it will be forgotten and you will not be able to recreate the mileage.

Need QuickBooks Help?  Let me help you grow your company by making QuickBooks work for your type of business.

QuickBooks is a user friendly software program for bookkeeping and accounting.  Unfortunately, it also allows you to make errors without even knowing it.  And sometimes you know it, but you don’t know what else to do.

I specialize in “fixing” QuickBooks.  Of course, it would be easiest to set up the accounts correctly, but if you didn’t get help at the beginning, I can come to your office, fix what has been done, and train you or your staff.  If you have a new business, I can work with you to set up QuickBooks so that you can use it for your specific business and ignore what you don’t need.

Give me a call 360-482-0201.

The Internal Revenue Service has issued the date they will allow filing of the Form 1040 with a Schedule A – February 14, 2011.  Congress caused the delay by taking so long to decide on tax changes.  Once the changes were voted in, the IRS had to reconfigure the tax forms and their computer systems.

What is an EA (Enrolled Agent)?

To become a Federally Authorized Tax Practitioner, I passed a comprehensive tax code examination and a background check by the Inernal Revenue Service.  I am required to complete 72 hours of continuing education on taxation.  The US Department of the Treasury empowers me to represent taxpayers before all administrative levels of the Internal Revenue Service for audits, collections, and appeals.

What are the differences between Enrolled Agents and other tax professionals?

Only Enrolled Agents are required to demonstrate to the IRS their competence in matters of taxation before they may represent a taxpayer before the IRS.  Unlike attorneys and CPAs, who may or may not choose to specialize in taxes, all Enrolled Agents specialize in taxation.  Enrolled Agents are the only taxpayer representatives who receive their right to practice from the US government (CPAs and attorneys are licensed by the states).

With the end of 2010, it is time to consider what affects the Form W-2. 

Everything you receive from your employer for services must be included in gross income on the W-2.  This includes commissions, bonuses, tips, jury fees, and fringe benefits. 

What are fringe benefits?  Good question.  The answer can take up many pages, but I will try to highlight and simplify a few.

Employee’s personal use of a company auto is treated as noncash compensation paid to the employee.  This is one of the most complicated and confusing of fringe benefits.  There are a couple of ways to compute the dollar equivalent to your personal use of the auto.  It is best to contact the person or company preparing your W-2 and let them know you have personal use of the company vehicle.  Do this BEFORE the end of 2010.

Owners of an S Corporation that are also employees must include health insurance provided by the company as wages.

There are many exclusions to this rule.  A few are; injury related payments, employee’s business use of a company auto, qualified moving expenses, qualified adoption assistance programs,  payments for child or dependent care assistance services under certain conditions, and educational expenses up to a certain dollar limit.  Consult a tax professional such as myself to assist with determining what is excludable.