Knowledge is still power! Take a good long look at the Tax Benefits for Education

Knowledge is still power!

There is a variety of tax credits, deductions and savings plans available to taxpayers to assist with the expense of higher education. A tax credit reduces the amount of income tax you may have to pay. A deduction reduces the amount of your income that is subject to tax, thus generally reducing the amount of tax you may have to pay. Certain savings plans allow the accumulated interest to grow tax-free until money is taken out (known as a distribution), or allow the distribution to be tax-free, or both. An exclusion from income means that you won't have to pay income tax on the benefit you're receiving, but you also won't be able to use that same tax-free benefit for a deduction or credit.  Credits American Opportunity Credit Under the American Recovery and Reinvestment Act (ARRA), more parents and students will qualify over the next two years for a tax credit, the American opportunity credit, to pay for college expenses. The American opportunity credit is not available on the 2008 returns taxpayers are filing during 2009. The new credit modifies the existing Hope credit for tax years 2009 and 2010, making it available to a broader range of taxpayers, including many with higher incomes and those who owe no tax. It also adds required course materials to the list of qualifying expenses and allows the credit to be claimed for four post-secondary education years instead of two. Many of those eligible will qualify for the maximum annual credit of $2,500 per student. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels. These income limits are higher than under the existing Hope and lifetime learning credits. Special rules apply to a student attending college in a Midwestern disaster area. For tax-year 2009, only, taxpayers can choose to claim either a special expanded Hope credit of up to $3,600 for the student or the regular American opportunity credit. If you have questions about the American opportunity credit, these questions and answers might help. For more information, see American opportunity credit. Hope Credit The Hope credit generally applies to 2008 and earlier tax years. It helps parents and students pay for post-secondary education. The Hope credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you. The Hope credit you are allowed may be limited by the amount of your income and the amount of your tax. The Hope credit is for the payment of the first two years of tuition and related expenses for an eligible student for whom the taxpayer claims an exemption on the tax return. Normally, you can claim tuition and required enrollment fees paid for your own, as well as your dependents’ college education. The Hope credit targets the first two years of post-secondary education, and an eligible student must be enrolled at least half time. Generally, you can claim the Hope credit if all three of the following requirements are met: You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return. You cannot take both an education credit and a deduction for tuition and fees (see Deductions, below) for the same student in the same year. In some cases, you may do better by claiming the tuition and fees deduction instead of the Hope credit. Education credits are claimed on Form 8863, Education Credits (Hope and Lifetime Learning Credits). For details on these and other education-related tax breaks, see IRS Publication 970, Tax Benefits of Education. Lifetime Learning Credit The lifetime learning credit helps parents and students pay for post-secondary education. For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 ($4,000 for students in Midwestern disaster areas) for qualified education expenses paid for all students enrolled in eligible educational institutions. There is no limit on the number of years the lifetime learning credit can be claimed for each student. However, a taxpayer cannot claim both the Hope or American opportunity credit and lifetime learning credits for the same student in one year. Thus, the lifetime learning credit may be particularly helpful to graduate students, students who are only taking one course and those who are not pursuing a degree. Generally, you can claim the lifetime learning credit if all three of the following requirements are met: You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, your spouse or a dependent for whom you claim an exemption on your tax return. If you’re eligible to claim the lifetime learning credit and are also eligible to claim the Hope or American opportunity credit for the same student in the same year, you can choose to claim either credit, but not both. If you pay qualified education expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. This means that, for example, you can claim the Hope or American opportunity credit for one student and the lifetime learning credit for another student in the same year. Deductions Tuition and Fees Deduction You may be able to deduct qualified education expenses paid during the year for yourself, your spouse or your dependent. You cannot claim this deduction if your filing status is married filing separately or if another person can claim an exemption for you as a dependent on his or her tax return. The qualified expenses must be for higher education. The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000. This deduction, reported on Form 8917, Tuition and Fees Deduction, is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Schedule A (Form 1040). This deduction may be beneficial to you if, for example, you cannot take the lifetime learning credit because your income is too high. You may be able to take one of the education credits for your education expenses instead of a tuition and fees deduction. You can choose the one that will give you the lower tax. Generally, you can claim the tuition and fees deduction if all three of the following requirements are met: You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is yourself, your spouse, or your dependent for whom you claim an exemption on your tax return. You cannot claim the tuition and fees deduction if any of the following apply: Your filing status is married filing separately. Another person can claim an exemption for you as a dependent on his or her tax return. You cannot take the deduction even if the other person does not actually claim that exemption. Your modified adjusted gross income (MAGI) is more than $80,000 ($160,000 if filing a joint return). You were a nonresident alien for any part of the year and did not elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Publication 519, U.S. Tax Guide for Aliens. You or anyone else claims an education credit for expenses of the student for whom the qualified education expenses were paid. Student-activity fees and expenses for course-related books, supplies and equipment are included in qualified education expenses only if the fees and expenses must be paid to the institution as a condition of enrollment or attendance. Student Loan Interest Deduction Generally, personal interest you pay, other than certain mortgage interest, is not deductible on your tax return. However, if your modified adjusted gross income (MAGI) is less than $70,000 ($145,000 if filing a joint return), there is a special deduction allowed for paying interest on a student loan (also known as an education loan) used for higher education. Student loan interest is interest you paid during the year on a qualified student loan. It includes both required and voluntary interest payments. For most taxpayers, MAGI is the adjusted gross income as figured on their federal income tax return before subtracting any deduction for student loan interest. This deduction can reduce the amount of your income subject to tax by up to $2,500. The student loan interest deduction is taken as an adjustment to income. This means you can claim this deduction even if you do not itemize deductions on Form 1040's Schedule A. Qualified Student Loan This is a loan you took out solely to pay qualified education expenses (defined later) that were: For you, your spouse, or a person who was your dependent when you took out the loan. Paid or incurred within a reasonable period of time before or after you took out the loan. For education provided during an academic period for an eligible student. Loans from the following sources are not qualified student loans: A related person. A qualified employer plan. Qualified Education Expenses For purposes of the student loan interest deduction, these expenses are the total costs of attending an eligible educational institution, including graduate school. They include amounts paid for the following items: Tuition and fees. Room and board. Books, supplies and equipment. Other necessary expenses (such as transportation). The cost of room and board qualifies only to the extent that it is not more than the greater of: The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student, or The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. Business Deduction for Work-Related Education If you are an employee and can itemize your deductions, you may be able to claim a deduction for the expenses you pay for your work-related education. Your deduction will be the amount by which your qualifying work-related education expenses plus other job and certain miscellaneous expenses is greater than 2% of your adjusted gross income. An itemized deduction may reduce the amount of your income subject to tax. If you are self-employed, you deduct your expenses for qualifying work-related education directly from your self-employment income. This may reduce the amount of your income subject to both income tax and self-employment tax. Your work-related education expenses may also qualify you for other tax benefits, such as the tuition and fees deduction and the Hope and lifetime learning credits. You may qualify for these other benefits even if you do not meet the requirements listed above. To claim a business deduction for work-related education, you must: Be working. Itemize your deductions on Schedule A (Form 1040 or 1040NR) if you are an employee. File Schedule C (Form 1040), Schedule C-EZ (Form 1040), or Schedule F (Form 1040) if you are self-employed. Have expenses for education that meet the requirements discussed under Qualifying Work-Related Education, below. Qualifying Work-Related Education You can deduct the costs of qualifying work-related education as business expenses. This is education that meets at least one of the following two tests: The education is required by your employer or the law to keep your present salary, status or job. The required education must serve a bona fide business purpose of your employer. The education maintains or improves skills needed in your present work. However, even if the education meets one or both of the above tests, it is not qualifying work-related education if it: Is needed to meet the minimum educational requirements of your present trade or business or Is part of a program of study that will qualify you for a new trade or business. You can deduct the costs of qualifying work-related education as a business expense even if the education could lead to a degree. Education Required by Employer or by Law Education you need to meet the minimum educational requirements for your present trade or business is not qualifying work-related education. Once you have met the minimum educational requirements for your job, your employer or the law may require you to get more education. This additional education is qualifying work-related education if all three of the following requirements are met. It is required for you to keep your present salary, status or job. The requirement serves a business purpose of your employer. The education is not part of a program that will qualify you for a new trade or business. When you get more education than your employer or the law requires, the additional education can be qualifying work-related education only if it maintains or improves skills required in your present work. Education to Maintain or Improve Skills If your education is not required by your employer or the law, it can be qualifying work-related education only if it maintains or improves skills needed in your present work. This could include refresher courses, courses on current developments and academic or vocational courses. Savings Plans 529 Plans Expanded Tax-free college savings plans and prepaid tuition programs can be used to buy computer equipment and services for an eligible student during 2009 and 2010. These 529 plans — qualified tuition programs authorized under section 529 of the Internal Revenue Code — have, in recent years, become a popular way for parents and other family members to save for a child’s college education. Though contributions to 529 plans are not deductible, there is also no income limit for contributors. 529 plan distributions are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Qualified expenses include tuition, required fees, books, supplies, equipment and special needs services. For someone who is at least a half-time student, room and board also qualify. For 2009 and 2010, the ARRA change adds to this list expenses for computer technology and equipment or Internet access and related services to be used by the student while enrolled at an eligible educational institution. Software designed for sports, games or hobbies does not qualify, unless it is predominantly educational in nature. In general, expenses for computer technology are not qualified expenses for the American opportunity credit, Hope credit, lifetime learning credit or tuition and fees deduction. States sponsor 529 plans that allow taxpayers to either prepay or contribute to an account for paying a student's qualified higher education expenses. Similarly, colleges and groups of colleges sponsor 529 plans that allow them to prepay a student's qualified education expenses. Coverdell Education Savings Account This account was created as an incentive to help parents and students save for education expenses. Unlike a 529 plan, a Coverdell ESA can be used to pay a student’s eligible k-12 expenses, as well as post-secondary expenses. On the other hand, income limits apply to contributors, and  the total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is under age 18 or is a special needs beneficiary. Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed. The beneficiary will not owe tax on the distributions if they are less than a beneficiary’s qualified education expenses at an eligible institution. This benefit applies to qualified higher education expenses as well as to qualified elementary and secondary education expenses. Here are some things to remember about distributions from Coverdell accounts: Distributions are tax-free as long as they are used for qualified education expenses, such as tuition and fees, required books, supplies and equipment and qualified expenses for room and board. There is no tax on distributions if they are for enrollment or attendance at an eligible educational institution. This includes any public, private or religious school that provides elementary or secondary education as determined under state law. Virtually all accredited public, nonprofit and proprietary (privately owned profit-making) post-secondary institutions are eligible. Education tax credits can be claimed in the same year the beneficiary takes a tax-free distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. If the distribution exceeds qualified education expenses, a portion will be taxable to the beneficiary and will usually be subject to an additional 10% tax. Exceptions to the additional 10% tax include the death or disability of the beneficiary or if the beneficiary receives a qualified scholarship. Scholarships and Fellowships A scholarship is generally an amount paid or allowed to, or for the benefit of, a student at an educational institution to aid in the pursuit of studies. The student may be either an undergraduate or a graduate. A fellowship is generally an amount paid for the benefit of an individual to aid in the pursuit of study or research. Generally, whether the amount is tax free or taxable depends on the expense paid with the amount and whether you are a degree candidate. A scholarship or fellowship is tax free only if you meet the following conditions: You are a candidate for a degree at an eligible educational institution. You use the scholarship or fellowship to pay qualified education expenses. Qualified Education Expenses For purposes of tax-free scholarships and fellowships, these are expenses for: Tuition and fees required to enroll at or attend an eligible educational institution. Course-related expenses, such as fees, books, supplies, and equipment that are required for the courses at the eligible educational institution. These items must be required of all students in your course of instruction. However, in order for these to be qualified education expenses, the terms of the scholarship or fellowship cannot require that it be used for other purposes, such as room and board, or specify that it cannot be used for tuition or course-related expenses. Expenses that Don’t Qualify Qualified education expenses do not include the cost of: Room and board. Travel. Research. Clerical help. Equipment and other expenses that are not required for enrollment in or attendance at an eligible educational institution. This is true even if the fee must be paid to the institution as a condition of enrollment or attendance. Scholarship or fellowship amounts used to pay these costs are taxable. For more information, see Pub. 970. Exclusions from Income You may exclude certain educational assistance benefits from your income. That means that you won’t have to pay any tax on them. However, it also means that you can’t use any of the tax-free education expenses as the basis for any other deduction or credit, including the Hope credit and the lifetime learning credit. Employer-Provided Educational Assistance If you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer should not include the benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. Educational Assistance Program To qualify as an educational assistance program, the plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work. Educational Assistance Benefits Tax-free educational assistance benefits include payments for tuition, fees and similar expenses, books, supplies, and equipment. The payments may be for either undergraduate- or graduate-level courses. The payments do not have to be for work-related courses. Educational assistance benefits do not include payments for the following items. Meals, lodging, or transportation. Tools or supplies (other than textbooks) that you can keep after completing the course of instruction. Courses involving sports, games, or hobbies unless they: Have a reasonable relationship to the business of your employer, or Are required as part of a degree program. Benefits over $5,250 If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in your wages (Form W-2, box 1) the amount that you must include in income. Working Condition Fringe Benefit However, if the benefits over $5,250 also qualify as a working condition fringe benefit, your employer does not have to include them in your wages. A working condition fringe benefit is a benefit which, had you paid for it, you could deduct as an employee business expense. For more information on working condition fringe benefits, see Working Condition Benefits in chapter 2 of Publication 15-B, Employer's Tax Guide to Fringe Benefits. For help with your tax preparations for businesses or individuals contact Envision Tax & Accounting of Florida at (407)951-1492 or on the web: www.envisiontaxandaccounting.com/

The “What Ifs” of an Economic Downturn - or better yet YOUR survival kit of tax tips!

The “What Ifs” of an Economic Downturn...

The Internal Revenue Service recognizes that many people may be having difficult times financially. There can be a tax impact to events such as job loss, debt forgiveness or tapping a retirement fund. If your income decreased, you may be newly eligible for certain tax credits, such as the Earned Income Tax Credit. Most importantly, if you believe you may have trouble paying your tax bill contact the IRS immediately. There are steps we can take to help ease the burden. You also should file a tax return even if you are unable to pay so you can avoid additional penalties. Here are some “What if” scenarios and the possible tax impact: Job Related What if I lose my job? What if I receive unemployment compensation? What if my income declines? What if I am searching for a job? What if my employer goes out of business? What if I close my own business? What if I withdraw money from my IRA? What if my 401(k) drops in value? Debt Related What if I lose my home through foreclosure? What if I sell my home for a loss? What if my debt is forgiven? What if I am insolvent? What if I file for bankruptcy protection? Tax Related What if I can’t pay my taxes? What if I can’t pay my installment agreement? What if there is a federal tax lien on my home? What if a levy on my wages is creating hardship? What if I can’t resolve my tax problem with the IRS? What if I need legal representation to help with my tax problem but can’t afford it? Related Media Items: Video: What If?

Check out 9 Good Reasons to visit IRS.gov/Espanol this Fall!

Tax information can be difficult to understand in any language but it can be even more difficult if it is not in your first language.  To assist Spanish-speaking taxpayers, the IRS provides a wide range of free products and services on its Spanish Language website IRS.gov/espanol. Here are nine features “en Español” you can find this summer: Get answers 24 hours a day, seven days a week Whether you just arrived in the United States, have tax questions, are wondering how identity theft affects your taxes, or need a form, IRS.gov/espanol provides a wealth of information on these topics and much more. IRS.gov/espanol is accessible all day, every day for individuals and businesses. Get tax forms and publications You can view and download several tax forms and publications in Spanish directly from IRS.gov/espanol at any hour of the day or night. Find out all about electronic filing You can e-file your 2010 federal income tax return through October 17, 2011 from the comfort of your home.  Available in English or Spanish, E-file is fast, easy and there are free options for everyone. Check the status of your tax refund Whether you chose direct deposit or asked the IRS to mail you a check, you can check the status of your refund through the online tool “¿Dónde está mi reembolso?” on our secure website. Find out if you qualify for the Earned Income Tax Credit EITC is a refundable tax credit for people who work but don’t earn much income. Find out if you are eligible by answering some questions and providing basic income information using the “Asistente EITC.” Get help in difficult financial times Events such as a job loss, debt forgiveness or tapping into a retirement fund can have a tax impact. Find answers to these questions and more in “Centro Tributario para Asistir a Contribuyentes Desempleados” or by typing the keyword’s “Qué pasa si” into the search box. Get updated information on tax laws that could affect you  Recent tax law changes could significantly impact you or your business. Learn about the benefits provided by the Affordable Care Act provisions in “Noticias en Español.” Get up to date at the “Multimedia Center” Video tax tips and audio podcasts on various IRS topics can be found in English and in Spanish with keyword “Centro Multimediático.” Twitter @IRSenEspanol - Connect with IRS and all the newest information en español with social media through Twitter @IRSenEspanol. Keeping you in the loop! Envision Tax & Accounting of Florida...Check out the IRS/Espanol site:IRS.gov/espanol

10 Tax Tips for Individuals Selling Their Home - There is hope!

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home. In general, you are eligible to exclude the gain from income if you have owned and used your home as your main home for two years out of the five years prior to the date of its sale. If you have a gain from the sale of your main home, you may be able to exclude up to $250,000 of the gain from your income ($500,000 on a joint return in most cases). You are not eligible for the exclusion if you excluded the gain from the sale of another home during the two-year period prior to the sale of your home. If you can exclude all of the gain, you do not need to report the sale on your tax return. If you have a gain that cannot be excluded, it is taxable. You must report it on Form 1040, Schedule D, Capital Gains and Losses. You cannot deduct a loss from the sale of your main home. Worksheets are included in Publication 523, Selling Your Home, to help you figure the adjusted basis of the home you sold, the gain (or loss) on the sale, and the gain that you can exclude. If you have more than one home, you can exclude a gain only from the sale of your main home. You must pay tax on the gain from selling any other home. If you have two homes and live in both of them, your main home is ordinarily the one you live in most of the time. If you received the first-time homebuyer credit and within 36 months of the date of purchase, the property is no longer used as your principal residence, you are required to repay the credit. Repayment of the full credit is due with the income tax return for the year the home ceased to be your principal residence, using Form 5405, First-Time Homebuyer Credit and Repayment of the Credit. The full amount of the credit is reflected as additional tax on that year’s tax return. When you move, be sure to update your address with the IRS and the U.S. Postal Service to ensure you receive refunds or correspondence from the IRS. Use Form 8822, Change of Address, to notify the IRS of your address change. Keeping you in the loop! www.EnvisionTaxandAccounting.com

The IRS Could Have Money Waiting For You!

Does the IRS Have Money Waiting For You?

If you earned income in the last few years but you didn’t file a tax return because your wages were below the filing requirement, the Internal Revenue Service may have some money for you. The IRS also has millions of dollars in checks that are returned each year as undeliverable. Here’s what you need to know about these two types of “missing money” and how to claim it: Unclaimed Refunds Some people earn income and may have taxes withheld from their wages but are not required to file a tax return because they have too little income. In this case, you can claim a refund for the tax that was withheld from your pay. Other workers may not have had any tax withheld but would be eligible for the refundable Earned Income Tax Credit, but must file a return to claim it. To collect this money a return must be filed with the IRS no later than three years from the due date of the return. If no return is filed to claim the refund within three years, the money becomes the property of the U.S. Treasury. There is no penalty assessed by the IRS for filing a late return qualifying for a refund. Current and prior year tax forms and instructions are available on the Forms and Publications page of www.irs.gov or by calling 800-TAX-FORM (800-829-3676). Information about the Earned Income Tax Credit and how to claim it is also available on www.irs.gov. Undeliverable Refunds Were you expecting a refund check but didn't get it? Refund checks are mailed to your last known address. Checks are returned to the IRS if you move without notifying the IRS or the U.S. Postal Service. You may be able to update your address with the IRS on the “Where’s My Refund?” feature available on IRS.gov. You will be prompted to provide an updated address if there is an undeliverable check outstanding within the last 12 months. You can also ensure the IRS has your correct address by filing Form 8822, Change of Address, which is available on www.irs.gov or can be ordered by calling 800-TAX-FORM (800-829-3676). If you do not have access to the Internet and think you may be missing a refund, you should first check your records or contact your tax preparer. If your refund information appears correct, call the IRS toll-free assistance line at 800-829-1040 to check the status of your refund and confirm your address.    Keeping you in the loop! Envisiontaxandaccounting.com

Start Now - Keep Good Records Can Reduce Tax-Time Stress

Keep Good Records Now to Reduce Tax-Time Stress

You may not be thinking about your tax return right now, but summer is a great time to start planning for next year. Organized records not only make preparing your return easier, but may also remind you of relevant transactions, help you prepare a response if you receive an IRS notice, or substantiate items on your return if you are selected for an audit. Here are a few things the IRS wants you to know about recordkeeping: 1. In most cases, the IRS does not require you to keep records in any special manner. Generally, you should keep any and all documents that may have an impact on your federal tax return. It’s a good idea to have a designated place for tax documents and receipts. 2. Individual taxpayers should usually keep the following records supporting items on their tax returns for at least three years: Bills Credit card and other receipts Invoices Mileage logs Canceled, imaged or substitute checks or any other proof of payment Any other records to support deductions or credits you claim on your return You should normally keep records relating to property until at least three years after you sell or otherwise dispose of the property. Examples include: A home purchase or improvement Stocks and other investments Individual Retirement Arrangement transactions Rental property records 3. If you are a small business owner, you must keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Examples of important documents business owners should keep Include: Gross receipts: Cash register tapes, bank deposit slips, receipt books, invoices, credit card charge slips and Forms 1099-MISC Proof of purchases: Canceled checks, cash register tape receipts, credit card sales slips and invoices Expense documents: Canceled checks, cash register tapes, account statements, credit card sales slips, invoices and petty cash slips for small cash payments Documents to verify your assets: Purchase and sales invoices, real estate closing statements and canceled checks For more information about recordkeeping, or to begin your own business or personal finance records contact us at www.EnvisionTaxandAccounting.com

3 Tips for Employers Outsourcing Their Payroll

It is always wise to know your responsibility in any partnership. Outsourcing major management components of a business has become a very cost efficient way for employers to stay afloat in our our turbulent economy.  Most companies outsource their payroll duties to third-party service providers  which with all intents & purposes does streamline business operations; however recent prosecutions of individuals and companies who - acting under the guise of a payroll service provider - have (sometimes unknowingly) stolen funds intended for payment of employment taxes,  making it even more so important that employers who outsource payroll are aware of the following three tips from the IRS: Employer Responsibility The employer is ultimately responsible for the deposit and payment of federal tax liabilities. Even though you forward the tax payments to the third party to make the tax deposits, you - the employer - are the responsible party. If the third party fails to make the federal tax payments, the IRS may assess penalties and interest. The employer is liable for all taxes, penalties and interest due. The IRS can also hold you personally liable for certain unpaid federal taxes. Communication is key!When in doubt - ask questions. Your Accounting Service Professionals are is there to work with you not against you. Correspondence If there are any issues with an account, the IRS will send correspondence to the address of record. The IRS strongly suggests you do not change the address of record to that of the payroll service provider. That could limit your ability to stay informed of tax matters involving your business. EFTPS Choose a payroll service provider that uses the Electronic Federal Tax Payment System. You can register on the EFTPS system to get your own PIN to verify the payments. Keeping you in the loop! Envision Tax & Accounting of Florida

Filing Time Extended to Aide Those Affected by Hurricane Irene

The Internal Revenue Service is providing tax relief to individual and business taxpayers impacted by Hurricane Irene.

The IRS announced that certain taxpayers in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico and Vermont will receive tax relief, and other locations are expected to be added in coming days following additional damage assessments by the Federal Emergency Management Agency (FEMA).

The tax relief postpones certain tax filing and payment deadlines to Oct. 31, 2011. It includes corporations and businesses that previously obtained an extension until Sept. 15, 2011, to file their 2010 returns and individuals and businesses that received a similar extension until Oct. 17. It also includes the estimated tax payment for the third quarter of 2011, which would normally be due Sept. 15.

Full details, including the start date for the relief in various locations and information on how to claim a disaster loss by amending a prior-year tax return, can be found in tax relief announcements for individual states on this website.

The tax relief is part of a coordinated federal response to the damage caused by the hurricane and is based on local damage assessments by FEMA. For information on disaster recovery, individuals should visit disasterassistance.gov.

Tax Relief That Is Available So Far
Filing and payment relief is currently available to taxpayers in federal disaster areas declared in Connecticut, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Puerto Rico and Vermont. The IRS expects to announce tax relief for taxpayers in other areas as damage assessments continue. The IRS encourages taxpayers and tax practitioners to monitor Tax Relief in Disaster Situations on this website for updates.
So far, IRS filing and payment relief applies to the following counties and municipalities:

• In Connecticut: Fairfield, Hartford, Litchfield, Middlesex, New Haven, New London, Tolland and Windham;
• In Massachusetts: Berkshire and Franklin;
• In New Hampshire: Carroll and Grafton;
• In New Jersey: Atlantic, Bergen, Burlington, Camden, Cape May, Cumberland, Essex, Gloucester, Hudson, Hunterdon, Mercer, Middlesex, Monmouth, Morris, Ocean, Passaic, Salem, Somerset, Sussex, Union and Warren;
• In New York: Albany, Clinton, Columbia, Delaware, Dutchess, Essex, Greene, Montgomery, Nassau, Orange, Otsego, Putnam, Rensselaer, Rockland, Saratoga, Schenectady, Schoharie, Sullivan, Suffolk, Ulster, Warren, Washington and Westchester; 
• In North Carolina: Beaufort, Bertie, Brunswick, Camden, Carteret, Chowan, Craven, Currituck, Dare, Duplin, Edgecombe, Gates, Greene, Halifax, Hertford, Hyde, Johnston, Jones, Lenoir, Martin, Nash, New Hanover, Northampton, Onslow, Pamlico, Pasquotank, Perquimans, Pitt, Tyrrell, Vance, Warren, Washington and Wilson;
• In Puerto Rico: Arroyo, Aguas Buenas, Caguas, Canovanas, Carolina, Cayey, Cidra, Coamo, Comerio, Humacao, Jayuya, Juncos, Loiza, Luquillo, Orocovis, Patillas, Ponce and San Juan.
• In Vermont: Addison, Bennington, Caledonia, Chittenden, Orange, Rutland, Washington, Windham and Windsor;

 The taxpayer’s preparer must be located in an area that was under an evacuation order or a severe weather warning because of Hurricane Irene, even if the preparer is located outside of the federally declared disaster areas.  Do keep in mind the following:

a.  This relief, which primarily applies to corporations, partnerships and trusts that previously obtained a tax filing extension, is available to taxpayers regardless of their location.

b.  This relief does not apply to any tax payment requirements.

c.  This relief is in addition to the filing and payment relief the IRS is providing to taxpayers located in disaster areas declared by the Federal Emergency Management Agency (FEMA).

For details, visit Tax Relief in Disaster Situations on this website.

Keeping you in the loop! www.EnvisionTaxandAccounting.com

10 Tax Tips for Individuals Who Are Moving This Summer

Summertime is a popular time for people with children to move since school is out. Moving can be expensive, however the IRS offers these ten tax tips on deducting some of those expenses if your move is related to starting a new job or a new job location.

1. Move must be closely related to start of work: Generally, you can consider moving expenses incurred within one year from the date you first reported to a new location, as closely related in time to the start of work.

2. Distance Test: Your move meets the distance test if your new main job location is at least 50 miles farther from your former home than your previous job location was.

3. Time Test: You must work full time for at least 39 weeks during the first 12 months after you arrive in the general area of your new job location, or at least 78 weeks during the first 24 months if you are self-employed. If your income tax return is due before you’ve satisfied this requirement, you can still deduct your allowable moving expenses if you expect to meet the time test in the following years.

4. Trave:l You can deduct lodging expenses for yourself and household members while moving from your former home to your new home. You can also deduct transportation expenses, including airfare, vehicle mileage, parking fees and tolls you pay to move, but you can only deduct one trip per person.

5. Household goods You can deduct the cost of packing, crating and transporting your household goods and personal property. You may be able to include the cost of storing and insuring these items while in transit.

6. Utilities You can deduct the costs of connecting or disconnecting utilities.

7. Nondeductible expenses: You cannot deduct as moving expenses: any part of the purchase price of your new home, car tags, drivers license, costs of buying or selling a home, expenses of entering into or breaking a lease, security deposits and storage charges except those incurred in transit.

8. Proper Form: You can deduct only those expenses that are reasonable for the circumstances of your move. To figure the amount of your moving expense deduction use Form 3903, Moving Expenses.

9. Reimbursed expenses: If your employer reimburses you for the cost of the move, the reimbursement may have to be included on your income tax return.

10. Update your address When you move, always be sure to update your address with the Postal Service AND the IRS to ensure you receive refunds or correspondence from the government.

...Just keeping you in the loop! Envision Tax and Accounting Services of Florida