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Hodgson CPA 2.0
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If you’re like most taxpayers, you find yourself with an ominous stack of “homework” around TAX TIME! Unfortunately, the job of pulling together the records for your tax appointment is never easy, but the effort usually pays off when it comes to the extra tax you save! When you arrive at your appointment and are fully prepared . . . Continue reading
Posted Jan 31, 2013 at Hodgson CPA 2.0
On New Year's Day, the Senate and the House voted on a last-minute budget deal worked out between President Barack Obama and congressional Republicans averting the so-called fiscal cliff. Details of the deal were sketchy at press time, but here are some highlights of the compromise bill as provided by unofficial sources. This is an evolving story, so we will keep you updated as additional information and details become available. Continue reading
Posted Jan 2, 2013 at Hodgson CPA 2.0
For several years now, Congress has left the taxpaying public hanging to the last minute with tax changes and extensions. And each year, the political gridlock seems to get worse, leaving taxpayers pondering how to plan their finances and businesses undecided about capital investments and hiring new employees, not knowing what the tax laws will bring in the next year. Continue reading
Posted Dec 19, 2012 at CPA 2.0 The Next Generation
Whether it is a good idea or not to keep investments in a safe deposit box depends on the investment. Certainly, some investments definitely require this sort of protection. These would include investments such as rare coins, stamps, and similar collectables, gold and silver, and negotiable instruments, such as bearer bonds that can be cashed by anyone who possesses them. The cost of renting the box is justifiable for keeping these items safe. What about stock certificates and other such proof of ownership? The need is less critical since these can be replaced, but the delay and inconvenience of replacing... Continue reading
Posted Aug 7, 2012 at CPA 2.0 The Next Generation
Without Congressional action before the end of the year, just about everyone, rich and poor alike, will be hit by tax increases. These increases are the result of temporary tax benefits that will expire at the end of 2012. Just about everyone will be affected in one way or another. The following is a list of the expiring benefits and how taxpayers will be affected. Check the list for items that will apply to you to get an idea of how your taxes will be impacted. Bonus Depreciation Expires – For several years, businesses have been able to take advantage... Continue reading
Posted Jul 10, 2012 at CPA 2.0 The Next Generation
For small business owners, tax breaks often come in the form of tax deductions – which can offer a nice little instant cash savings – if you know how to navigate tax law and claim the deductions you deserve (not what you believe you are entitled to). Large tax deductions are a notorious red flag for the IRS, with home-based businesses, in particular, facing an increase in tax audits due to suspicious deduction activity on income tax returns. To help you navigate the complex world of business tax deductions, here is some foundational guidance that will help you take the... Continue reading
Posted Jun 28, 2012 at CPA 2.0 The Next Generation
Without Congressional action before the end of the year, just about everyone, rich and poor alike, will be hit by tax increases. These increases are the result of temporary tax benefits that will expire at the end of 2012. Just about everyone will be affected in one way or another. The following is a list of the expiring benefits and how taxpayers will be affected. Check the list for items that will apply to you to get an idea of how your taxes will be impacted. Exemption Phase-Out - Each taxpayer is entitled to a $3,800 (2012) tax exemption (deduction)... Continue reading
Posted Jun 28, 2012 at CPA 2.0 The Next Generation
Last month, we cautioned you about Internet scams aimed at tricking you into divulging information that will compromise your identity. That article described how Internet crooks disguise themselves as the IRS in an attempt to steal your identity. The IRS is not the only disguise these scammers use. They pretend to be attorneys representing estates, lottery payouts, and other such subterfuge to draw you into their web. Here are some good rules to follow: 1. If it’s too good to be true, it probably isn’t true. 2. If you receive a request for financial information via the Internet, it is... Continue reading
Posted May 29, 2012 at CPA 2.0 The Next Generation
Reporting Stock Transactions Becomes More Complicated Beginning with the 2011 tax return, reporting stock transactions has become significantly more complicated because of the new requirement for brokerage firms to track the purchase price of stocks acquired in 2011 and subsequent years and to include that information on the information-reporting document 1099-B. For several years now, the IRS has required brokerage firms to report the gross proceeds from the sale of stocks and other securities on the Form 1099-B. But just knowing the proceeds from a security sale does not allow the IRS to verify the profit or loss reported by... Continue reading
Posted May 22, 2012 at CPA 2.0 The Next Generation
If you took advantage of the escalating gold and silver prices and made any sales of gold, silver, gems, jewelry, or the like during 2011, you are required to report the sales on your tax return. Whether or not the sales are subject to tax, and at what tax rate, depends upon the type of item sold and your tax basis for the item. Determining Basis - Generally, your tax basis is what you originally paid for the item, assuming that you can recall the amount. It may be difficult to remember how much you paid for an item; however,... Continue reading
Posted Apr 17, 2012 at CPA 2.0 The Next Generation
It’s not too late to make an IRA and/or SEP contribution or undo a Roth IRA conversion for 2011. Generally, after the close of the year you can no longer take steps to alter the outcome of your tax return. However, both IRA contributions and SEP contributions can be made for a year after it has closed, and if you converted a traditional IRA into a Roth IRA, you can undo that conversion after the close of the year. Here are the details: Traditional IRA Contributions - IRA contributions (tax-deductible and non-deductible) for 2011 can be made up to and... Continue reading
Posted Apr 10, 2012 at CPA 2.0 The Next Generation
New for 2011 is a requirement for any individual who, during the tax year, holds any interest in a “specified foreign financial asset” to complete and attach Form 8938 to his or her income tax return if a reporting threshold is met. The reporting threshold varies depending on whether the individual lives in the U.S. and files a joint return with his or her spouse. For example, someone who is not married and doesn’t live abroad will need to file Form 8938 for 2011 if the total value of his or her specified foreign financial assets was more than $50,000... Continue reading
Posted Apr 3, 2012 at CPA 2.0 The Next Generation
Now that tax season is upon us, so are the e-mail scammers pretending to be the IRS. Most of these scams fraudulently use the IRS name, logo, and/or website header as a lure to make the communication appear more authentic and enticing. They lead you to believe you had a refund of some sort coming and request personal information. The goal of these scams - known as phishing - is to trick you into revealing your personal and financial information. The scammers can then use your information - like your Social Security number, bank account, or credit card numbers -... Continue reading
Posted Mar 27, 2012 at CPA 2.0 The Next Generation
April 15 is getting uncomfortably close. QuickBooks, of course, can't do your taxes for you. But it helps you lay some of the groundwork. Following up on last month's column on customizing reports, we'll look at the program's tax-related reports and its powerful report-filtering options. But first, you'll need to make sure that this output will be accurate. Describe your company accurately Your tax entity setting should have been established when you first set up QuickBooks, but verify that you've specified the correct one. Go to Company | Company Information. Your Report Information is in the lower left corner. Click... Continue reading
Posted Mar 20, 2012 at CPA 2.0 The Next Generation
Before negotiating a settlement, it is important to know what effect it will have on your taxes. Depending on the type of damages, your settlement may be tax free. Physical injury awards are tax free; however, the interest, punitive damages and emotional distress from a physical injury are taxable. When negotiating, keep in mind that only the physical injury and medical expenses are tax free. Severance pay and discrimination settlements are taxable income. Another important thing to remember is attorney fees are not deducted from the settlement. You must recognize 100% of the award you receive as income and then... Continue reading
Posted Mar 13, 2012 at CPA 2.0 The Next Generation
A regular form of fundraising by charitable organizations consists of sales or auctions of property or services at a price in excess of value. These are referred to as “quid pro quo” contributions or dual payments made that consist partly of a charitable gift and partly of consideration for goods or services provided to the donor. Quid pro quo contributions typically include the purchase of tickets for sightseeing tours, all-expense-paid trips, theatrical or concert performances, books or subscriptions to magazines, stationery, candy, etc., and are sold with a generous mark-up that is designed to help the charity in performing its... Continue reading
Posted Feb 29, 2012 at CPA 2.0 The Next Generation
The IRS has launched the IRS2Go app for IPhone and Android. This application allows taxpayers to check the status of their refunds and obtain tax information. To check the status of a refund, taxpayers will need to enter their social security number, filing status and the amount of their refund. If the return was e-filed, the status should be available approximately 72 hours after filing the return. For paper filers, status takes approximately three to four weeks. Users of the IRS2Go app can enter their email address to receive automatic daily tips. Continue reading
Posted Feb 28, 2012 at CPA 2.0 The Next Generation
If you make one resolution about improving your accounting procedures in 2012, it should be this: Make extensive use of the tools that QuickBooks offers for report modification. Comprehensive, meticulously-shaped reports that flow out of your carefully-constructed records and transactions are your reward for pounding on the keys every day, conscientiously recording income and expenses. QuickBooks supplies you with a wide variety of pre-formatted reports whose modification options can help you do focused, critical analysis of your financial data. The right set of numbers will help you understand your history and plan for the future more effectively. Note: The reports... Continue reading
Posted Feb 21, 2012 at CPA 2.0 The Next Generation
Frequently, taxpayers think that gifts of cash, securities, or other assets they give to other individuals are tax-deductible and, in turn, the gift recipient sometimes thinks income tax must be paid on the gift received. Nothing is further from the truth. To fully understand the ramifications of gifting, one needs to realize that gift tax laws are related to estate tax laws. When a taxpayer dies, the value of his or her gross estate (to the extent it exceeds the excludable amount for the year) is subject to estate taxes. Naturally, individuals want to do whatever they can to maximize... Continue reading
Posted Feb 14, 2012 at CPA 2.0 The Next Generation
The IRS has returned refund checks for 99,123 taxpayers, totaling $153 million dollars. These refunds were all returned due to mailing address errors. If you believe your refund may have been returned, you can check the status of your return on the “Where’s my refund” tool on www.irs.gov or by calling 1-800-829-1954. To avoid this problem in the future, the IRS urges taxpayers to take advantage of electronic filing and direct deposit of refunds. Continue reading
Posted Feb 7, 2012 at CPA 2.0 The Next Generation
The Small Business Jobs Act of 2010 has dramatically increased penalties for late filing of information returns. The change refers to Forms 1099 and other information returns required to be filed after December 31, 2010. The Internal Revenue Service (IRS) aims to improve the reporting of income by recipients, like independent contractors, on their Forms 1040 and thus, improve collection of taxes. Continue reading
Posted Jan 31, 2012 at CPA 2.0 The Next Generation
Employees have some special tax-saving considerations to take into account that retirees and other nonworking individuals don't face. Below are three of those opportunities. Please contact us if you need additional information on these items. Adjustments to federal withholding Consider adjusting your federal withholding if you usually have a balance due when you file your return and face a penalty for underpayment of federal estimated tax. Perhaps a raise in salary has put you in a higher tax bracket. You can eliminate the penalty and save the pain of a large payment by having a little more withheld each payday.... Continue reading
Posted Jan 18, 2012 at CPA 2.0 The Next Generation
There have always been U.S. taxpayers who try to avoid paying U.S. taxes by hiding income in offshore bank and brokerage accounts. The practice is at the top of the IRS's 2011 "Dirty Dozen" annual list of tax scams. The IRS is increasing its pursuit of taxpayers and promoters of these scams. U.S. taxpayers are required to report and pay tax on their "world-wide income." In February, the IRS announced a second voluntary disclosure initiative available through August 31, 2011 designed to encourage taxpayers to report offshore money previously unreported and to help those who have not been reporting income... Continue reading
Posted Dec 20, 2011 at CPA 2.0 The Next Generation
The IRS has issued its annual list of "dirty dozen" tax scams, Don't Fall Prey to the 2011 Dirty Dozen Tax Scams. "The IRS works with the Justice Department to pursue and shut down perpetrators of these and other illegal scams. Promoters frequently end up facing heavy fines and imprisonment. Meanwhile, taxpayers who wittingly or unwittingly get involved with these schemes must repay all taxes due plus interest and penalties." Beware; the 2011 list goes like this: 1. Hiding Income Offshore Taxpayers try to evade U.S. Income tax by hiding income in foreign banks and brokerage accounts among other means.... Continue reading
Posted Dec 6, 2011 at CPA 2.0 The Next Generation
In recent years, the IRS has become very strict about the documentation of charitable deductions. A LETTER from the charitable organization must document donations of cash over $250 - email is acceptable. Even for cash donations under $250, you need documentation - in the form of a cancelled check or receipt. "Get the letter. Get the letter. Get the letter.," writes Laura Saunders in a recent Wall Street Journal, Tax Report. "There isn't any room for error here. If you don't have the correct paperwork, there's no way to fix the problem." The letter must be received no later than... Continue reading
Posted Nov 22, 2011 at CPA 2.0 The Next Generation