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Tax News from your friendly CPA! |
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The Sunderland Group E-newsletter
| July, 2012 |
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Online Client Access
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Please remember that all of your tax information is available 24/7 via your Online Client Access (OCA) web portal! Access to your OCA is done via our website under the Client Login section of our website.
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Greetings!
Greetings!
Where has the summer gone? It's hard to believe we are about to send the kids back to school already and we may actually finally see an end to the 90+ degree days here in Colorado.
However, this also signals that we are closing in on another presidential election and many tax issues are hot for debate. This month's issue will begin to touch on some of the more pertinent tax issues. However, we don't expect much to get accomplished seen as we are relying on our wonderful politicians to actually come to an agreement of some sort.
While the political climate makes it a bit more difficult to proactively plan financially and from a tax perspective, there are still many areas that require we be diligent in our reviews and projections to ensure we take full advantage of opportunities.
Please read on!
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Presidential Election & YOUR Taxes
By now we've all seen the typical political positioning as we approach yet another presidential election. However, I'm guessing many of you haven't paid much attention to the potential tax ramifications seen as it appears neither side will ever give an inch to the other side and arrive at some sort of compromise. While I agree we may have continued political stalemate, I wanted to briefly discuss the two sides' views on potential tax changes and what a stalemate could mean for us next year.
Back in 2001, President Bush pushed through what are commonly referred now to the "Bush Tax Cuts", which effectively reduced income tax rates to some of the lowest levels we've ever seen in our country. Over the past ten plus years, we've also seen numerous "temporary" tax "breaks" that have been put in place for various reasons - to stimulate the economy, assist taxpayers, etc. - that generally were very favorable to taxpayers in general. These "Bush-era tax cuts" were set to expire/sunset at the end of last year. However, after more political bickering and a complete inability to compromise on anything - and the looming US default on its debts - a one year extension on these tax cuts was allowed.
Which now brings us to the next expiration of these tax cuts - the end of this year! Republicans are again calling for another one year extension of the Bush tax cuts to allow time for a new political climate/structure to write agreeable, sweeping tax reform legislation sometime in 2013; but generally, they hope to make "permanent" these tax cuts for ALL taxpayers. The Democrats, on the other hand, prefer an extension of these tax cuts but only for those "non-rich" - which has generally been defined by them as those making less than $250k for married taxpayers & $200k for single taxpayers.
Spending cuts are also going to have to be part of any "package" that would be passed on bipartisan lines.
What seems very likely, though, is a complete stalemate which by default would mean the Bush tax cuts would indeed expire at the end of this year. This would mean tax increases across the board for taxpayers, but it would also trigger automatic spending cuts that many fear would cripple an already shaky economy.
Stay tuned.......!!
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The IRS Wants YOU!
As many of you have unfortunately had the privilege to find, the IRS continues to step up their collection efforts. We have seen a dramatic increase in audits, and a huge increase in IRS correspondence. A lot of this is derived from the enhancements in technology that we all enjoy, and even the IRS is dragging itself into the 21st century.
When folks receive letters from the IRS, many assume they are being audited. This is NOT the case! However, it is VERY important that if you receive letters from the IRS (and the state), please get copies of these to us as soon as possible so that we can be sure to respond in a timely and applicable manner. Most of these letters are simply computer-generated - something in the IRS' system doesn't appear to match up with what or how we have reported things on your tax return. The majority of the time this is a simple fix and can be due to a variety of factors - including receiving the tax forms late or not at all, not identifying the originator of particular tax forms (i.e. the payor - banks, customers, etc.) and simply need a qualified explanation.
Many of you have small businesses and receive various 1099 forms from your clients/customers. However, if your clients/customers do not complete the 1099s correctly, or do not provide them to you in a timely fashion, we may not be able to properly indicate from whom specific revenues were derived. Therefore, the IRS' computers assume we did not report the income at all and automatically assigns addt'l taxes. We simply respond to them explaining that the revenue was included in your income via your business income, with an explanation as to why we could not specifically split out that client's revenue specifically.
However, there are also incidents where the IRS may be correct, even if just partially. Again, it's important we are notified as soon as possible so that we can be sure to have time to review the issue(s) and prepare a proper response.
Tax problems do not go away! Ignoring letters from the IRS or the state will not make the issues disappear - they will get worse. Let us help you get them off your back!
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Businesses - It's Planning Time!
Many of you are self-employed - whether it's as a Sole Proprietor, Partnership, or S-Corp - and now that we have over half the year behind us, you need to start thinking about planning for year-end.
For most of you, we urge you to schedule meetings with us for sometime early in the fourth quarter so we can review your business' financials, along with discussing and reviewing your personal tax situations, so that we can begin running tax projections and discuss potential tax strategies and opportunities. The pending presidential election and the potential changes in taxes will also impact our planning. Please contact us soon to get on our calendar for Q4!
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2012 Client Appreciation Party!
Now for some positive news! Our annual client appreciation party is scheduled for Wednesday, September 26th. We will be sending out invites to our clients soon, but please get this on your calendars now.
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