Wednesday, March 30, 2011

CLARIFICATION ON REDEPRECIATION OF GIFTED EQUIPMENT VERSUS EQUIPMENT THROUGH AN ESTATE

Q. At your Ag seminar I thought you mentioned that if someone receives a gift, say a pivot and motor from your father who’s retiring, that the son could depreciate that pivot and motor all over again. Is that correct? My accountant is saying no, only if there is unused depreciation left unused by the father. Please let me know, thanks!



A. Your accountant is correct. If the pivot would have passed through your father’s estate then there would have been a basis step up and you would have been able to depreciate based on the fair market value at the time of death. Fortunately your father is still with us, so there is no estate. Sorry if I confused you.

Larry Kopsa CPA

Thursday, March 24, 2011

WHERE IS MY REFUND?

I have had several people email me asking how to check the status of their tax refund. In case you are wondering, here is information from the IRS website. Take note, "the IRS has an ap for that." Larry Kopsa CPA Checking the Status of Your Refund If you already filed your federal tax return and are due a refund, you have several options to check on your refund. Here are eight things the IRS wants you to know about checking the status of your refund:

1. Online Access to Refund Information Where’s My Refund? are interactive tools on http://www.irs.gov and are the fastest, easiest way to get information about your federal income tax refund. Where’s My Refund? give you online access to your refund information, 24 hours a day, 7 days a week. It’s quick, easy and secure.

2. When to Check Refund Status. If you e-file, you can get refund information 72 hours after the IRS acknowledges receipt of your return. If you file a paper return, refund information will generally be available three to four weeks after mailing your return.

3. What You Need to Check Refund Status. When checking the status of your refund, have your federal tax return handy. To get your personalized refund information you must enter: • Your Social Security Number or Individual Taxpayer Identification Number • Your filing status which will be Single, Married Filing Joint Return, Married. • Filing Separate Return, Head of Household, or Qualifying Widow(er). • Exact whole dollar refund amount shown on your tax return.

4. What the Online Tool Will Tell You. Once you enter your personal information, you could get several responses, including: • Acknowledgement that your return was received and is in processing. • The mailing date or direct deposit date of your refund. • Notice that the IRS could not deliver your refund due to an incorrect address. In this instance, you may be able to change or correct your address online using Where’s My Refund?

5. Customized Information Where’s My Refund? also includes links to customized information based on your specific situation. The links guide you through the steps to resolve any issues affecting your refund. For example, if you do not get the refund within 28 days from the original IRS mailing date shown on Where’s My Refund?, you may be able to start a refund trace.

6. Toll-free Number. If you do not have internet access, you can check the status of your refund in English or Spanish by calling the IRS Refund Hotline at 800-829-1954 or the IRS TeleTax System at 800-829-4477. When calling, you must provide your or your spouse’s Social Security number, filing status and the exact whole dollar refund amount shown on your return.

7. IRS2Go. This is the IRS’ first smartphone application that lets taxpayers check on the status of their tax refund. Apple users can download the free IRS2Go application by visiting the Apple App Store. Android users can visit the Android Marketplace to download the free IRS2Go app.

Nebraska Ag Land Values Soar to New Highs

(Nebraska Farmer) -- NebraskaFarmer.com reports, "High commodity prices and farm incomes drove Nebraska agricultural land values to record heights in the last year," as the average statewide all-land value increased 22% over the last 12 months -- "doubling since 2005," according to a UNL study. Check out the increase in cash rents.

http://app.expressemailmarketing.com/get.link?linkid=2730679&subscriberid=143772548&campaignid=728887&linkurl=http%3a%2f%2fnebraskafarmer.com%2fstory.aspx%2fnebraska%2fland%2fvalues%2fsoar%2fto%2fnew%2fhighs%2f9%2f47606

Wednesday, March 23, 2011

ENERGY CREDIT ON NEW HOME

Q. My wife and I built a new home in 2010. We moved in on March 24 so we lived in the house for over a year, if that makes any difference. Can we take the residential energy credit for insulation, windows, & doors on our 2010 tax return?

A. I am afraid that we do not have good news. The nonbusiness energy credit is normally claimed on form 5695 however, the type of costs described are restricted to existing homes only. The credit is designed to help offset the cost of retrofitting an existing home with energy saving devices.

However, you put in any of the following devices these devices qualify for a credit for both new and existing houses:
• Qualified solar electric
• Qualified solar water heating
• Qualified small wind power
• Qualified geothermal heat pump
• Qualified fuel cells

Enjoy your new home.

Larry Kopsa CPA

Tuesday, March 22, 2011

WATCH OUT FOR FAKE IRS NOTICES

These fake scams are out there. I have even received a supposed communication from the IRS. These crooks are good. The communication looks real. Be careful, don't let this happen to you.

The IRS receives thousands of reports each year from taxpayers who receive suspicious emails, phone calls, faxes or notices claiming to be from the Internal Revenue Service. Many of these scams fraudulently use the Internal Revenue Service name or logo as a lure to make the communication more authentic and enticing. The goal of these scams – known as phishing – is to trick you into revealing personal and financial information. The scammers can then use that information – like your Social Security number, bank account or credit card numbers – to commit identity theft or steal your money.

Here are five things you need to know about phishing scams:
1. The IRS doesn’t ask for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts.
2. The IRS does not initiate taxpayer communications through e-mail and won’t send a message about your tax account. If you receive an e-mail from someone claiming to be the IRS or directing you to an IRS site:
• Do not reply to the message.
• Do not open any attachments. Attachments may contain malicious code that will infect your computer.
• Do not click on any links. If you clicked on links in a suspicious e-mail or phishing website and entered confidential information, visit the IRS website and enter the search term 'identity theft' for more information and resources to help.
3. The address of the official IRS website is http://www.irs.gov. Do not be confused or misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on the suspicious site and report it to the IRS.
4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence.
5. You can help shut down these schemes and prevent others from being victimized. Details on how to report specific types of scams and what to do if you’ve been victimized are available at http://www.irs.gov, keyword “phishing.”

Thursday, March 17, 2011

HOW LONG DO I NEED TO KEEP THESE RECORDS

One of the questions I get asked a lot this time of year is "how long do I need to keep these records?" Below is a link to our Record Retention Guide. I hope that this is helpful.

I can guarantee that if the IRS comes around you will be glad that you kept good records. We have an audit going on right now where the IRS is asking for some information back to 1993. If the client had used our guide we would have the records. As it is we are having to depend on the mercy of the auditor. That is a scary thought.

Using our record retention guide will help "audit proof" your return.


http://www.kopsaotte.com/tax/files/file/Record%20Retention%20-%20Farmer.pdf

Wednesday, March 16, 2011

FEWER FARMERS

According to the March 13, 2011 Parade magazine the occupation with the largest decline of employees is Farmers/Ranchers.

Tuesday, March 15, 2011

AG NEEDS POSITIVE PERSPECTIVES MADE PUBLIC

GothenburgTimes.com reports that as "average Americans are three generations removed from the farm," Willow Holoubek, organizational director of the Alliance for the Future of Agriculture in Nebraska (A-FAN), says that disconnect "leads to many people not understanding agriculture and how it has changed." Holoubek said, "Promoting agriculture is important ... (because) it has come under attack from some animal rights groups and others."

She noted that "animal rights extremist groups play on human emotions," while pushing "ballot initiatives in several states (to) put regulations on farming and ranching."

http://app.expressemailmarketing.com/get.link?linkid=2710839&subscriberid=143772548&campaignid=725230&linkurl=http%3a%2f%2fwww.gothenburgtimes.com%2findex.php%3foption%3dcom_content%26amp%3bview%3darticle%26amp%3bid%3d2426%3aholoubek-positive-spin-about-ag-needed%26amp%3bcatid%3d1%3alocal%26amp%3bItemid%3d2

Monday, March 14, 2011

TODAY IN HISTORY: PRESIDENT PAYS TAX FOR FIRST TIME

Today marks the anniversary of the first U.S. President filing an income tax return. On March 14, 1923, President Warren G. Harding filed his income tax return for the 1922 year, paying about $17,000 in tax on his presidential salary of $75,000, although further details were not released.

The income tax had been enacted in 1913, but then-President Woodrow Wilson was protected by Article II, Section 1 of the Constitution, which states that the President's salary "shall neither be increased nor diminished during the Period for which he shall have been elected." From the 1860s until 1939, it was held that a new tax or tax increase diminished salary, and thus could not go into effect for presidents and federal judges (judges have a similar provision protecting them).

The New York Times of February 15, 1921 reports that then-President-elect Harding spoke against a proposed bill that would make the President permanently immune from the income tax, effectively killing it. (Interestingly, many European and international organizations have such an exemption.)

Saturday, March 12, 2011

TAX PLANNING FOR CHARLIE SHEEN

Sitcom star Charlie Sheen's public meltdown has grabbed more headlines than any story since pop star Michael Jackson's death. Public consensus is that Sheen is a man in desperate need of help. So naturally, we were wondering, is there any help waiting for him from the IRS?

We're not here to "pile on" like so many commentators. (That's what Saturday Night Live is for!) But if you're following the story like so many of us, consider how the tax code helps Charlie in these areas:

• Drug Rehab. Charlie's rehab bills are a deductible medical expense. And unlike some deductions that are specifically limited (like mortgage interest on your primary residence and just one additional home), there's no limit to how many times you can write off rehab.

The downside here is that medical expenses are deductible only to the extent they exceed 7.5% of "adjusted gross income." Sheen reportedly makes $1.8 million for each of 22 episodes, which suggests he can only deduct medical expenses topping $3 million/year. Even for Charlie, that might be a stretch! However, he might establish a Medical Expense Reimbursement Plan through a business entity to avoid that 7.5% floor. If you own your own business, even a startup or sideline, call us to see if you can benefit from that same strategy.

• "Goddesses." Sheen lives with two young blondes whom he calls "goddesses," and whom he says help take care of his twin toddler sons. If he actually pays those women for child care, payments up to $6,000 per child may qualify for the Dependent Care Credit. The rules say you can't pay a member of your own family to care for younger children — but they don't say anything about paying goddesses!

• Job-Hunting Expenses. "Two and a Half Men" producers have officially canned Sheen, arguing he's violated a morals clause in his contract. Job hunting expenses to help Sheen find new and artistically challenging roles are deductible as a miscellaneous itemized deductions, subject to a 2% floor on adjusted gross income.

• Legal Fees. Odds are good that anyone with a mouth like Charlie needs a lawyer who bills by the hour. Sheen can deduct legal fees relating to the $300 million lawsuit he just announced against CBS, along with any additional fees related to tax-deductible alimony paid to his three ex-wives.

Sheen has tiger blood and Adonis DNA to help him through his current troubles. But even Hollywood train wrecks can't hide from taxes without a plan. So call us if you're looking for savings without the headlines!

Friday, March 11, 2011

HOW DO I GET A COPY OF MY SOCIAL SECURITY FORM THAT SHOWS MY BENEFITS

Q. I can't find the form that the Social Security gave me showing my benefits for 2010. Now what do I do?

A. Easy just click on the following attachement.

https://secure.ssa.gov/apps6z/i1099/main.html

HOW TO MAKE SURE THAT A IRS LIEN HAS BEEN RELEASED

Q. The IRS has released a lien that they had because I was behind on paying some tax. Even though they said they released the lien I don't trust them. Is there any way I can make sure that the lien has been released?

A. You don't trust the IRS? They are "from the government and here to help."

Here is what you should do. If you have questions regarding basic lien inquiries such as routine lien releases and lien payoff amounts, contact the Centralized Lien Unit by calling the toll free telephone number (1-800-913-6050).

In addition you can request a Certificate of Discharge from the IRS to prove that you paid the tax debt, should any problems arise in the future.

There is a problem is that the lien may impact your credit score even if it is timely paid. If this is a concern, you should dispute the public record notation of the tax lien that appears in your credit report with the credit bureaus. You should do this after you have paid off the debt and the lien has been released. The credit bureaus will then investigate the tax debt. The IRS, however, has little to no incentive to validate the fact that you once owed a tax debt if the debt has already been paid. Paying the lien and having it subsequently removed from your credit report will erase the last traces of the lien for good.

Larry Kopsa CPA

Wednesday, March 9, 2011

HOW WOULD YOU LIKE TO DO W-2'S QUARTERLY?

Don't you just hate preparing those year end W-2 forms, giving copies to the employees and sending the information off to the IRS. Well if President Obama gets his way you will be filing W-2's more often.

In President Obama's 2012 budget there is a provision that would require W-2s to be reported on a quarterly basis, rather than annually. But don't worry. That same provision was in prior years budget and did not get passed.

We will keep you posted.

Larry Kopsa CPA

Tuesday, March 8, 2011

TAXES AND BREAST PUMPS

The IRS has changed their minds on the cost of breast pumps and other lactation supplies and now have classified as a medical expense that can be reimbursed by flexible spending accounts.

Late last year the IRS privately ruled that those costs weren’t deductible medical expenses and could not be reimbursed. I wonder why they changed their mind?

Thursday, March 3, 2011

DO YOU BARTER?

Occasionally I get questions about bartering. There are even companies out there that organize bartering opportunities. These companies claim that you increase sales because potential clients have "barter points," and they look for companies that will accept their barter points. You get barter points and then need to look for someone that you can spend the points on. The normal bartering is someone saying that they will repair my car if I do their tax return.

There are income tax consequences and the IRS is concerned that people are avoiding paying tax by trading taxable services for personal items. There is even a question on the tax return asking if you barter. The IRS auditor always asks about bartering.

The IRS released the following information about bartering. It thought you might be interested.

Larry Kopsa CPA

Four Facts About Bartering

In today’s economy, small business owners sometimes look to the oldest form of commerce – the exchange of goods and services, or bartering. The IRS wants to remind small business owners that the fair market value of property or services received through barter is taxable income.

Bartering is the trading of one product or service for another. Usually there is no exchange of cash. However, the fair market value of the goods and services exchanged must be reported as income by both parties.

Here are four facts about bartering that the IRS wants small business owners to be aware of:
1. Barter Exchange A barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves. Whether this activity operates out of a physical office or is Internet based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS.
2. Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter - barter for another’s products or services - you will have to report the fair market value of the products or services you received on your tax return.
3. Taxes Income from bartering is taxable in the year it is performed. Bartering may result in liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss.
4. Reporting The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.

For more information see the Bartering Tax Center in the Business section at http://www.irs.gov.

Wednesday, March 2, 2011

COMMENT ON WHY NO COMMENT ON OBAMA'S BUDGET

Q. I have been following your blog and I have been waiting for you to chime in on the tax consequences of President Obama’s budget proposal. Did I miss your take?

A. Actually I have not commented much on the tax proposals for a couple of reasons. First of all it’s probably all talk. The chances of his proposal getting through Congress are slim. Secondly, it can get confusing. When people read about a proposed change then next thing you know is that someone get’s it wrong and think that it is the real deal. You know what happens next. It hits the social network and people even get more confused. Finally, there has been a lot written about the proposal so I thought that people that were interested probably already had read the articles.

If you want a summary here is a piece from the Journal of Accountancy.

http://r.smartbrief.com/resp/BeiYvscgyzgKoOqkajaoyAalPcWE?format=standard

Tuesday, March 1, 2011

HOW TO FIX AN OVERPAYMENT TO AN IRA

Q. I accidentally contributed more than $6,000 to my Roth IRS for 2010. I am 61. Am I going to jail?

A. No jail time for this. As a matter of fact you can most likely solve this problem with a call or two. Call your IRA custodian and he or she should be able to walk you through the steps that you need to take.

Generally, the amount that must be withdrawn is computed on Form 5329 Additional Taxes on Qualified Plans (including IRS’s) and Other Tax Favored Accounts. This is a large form not because of the information that goes on it but rather to just fit the title.

If you fail to withdraw the excess contribution you will be liable for a 6% penalty for every year you have over contributed.

Larry Kopsa CPA

WARREN BUFFETT ANNUAL LETTER

Here is Warren Buffett's annual letter. Even if you are not an investor it is interesting to learn how he thinks about business and business climate.

http://www.berkshirehathaway.com/letters/2010ltr.pdf