Medical; HSA's amd MSA's
Cost of non prescription Drugs are no longer a qualifying expense for Health Plan Reimbursements and Withdrawals from health savings accounts
The penalty tax rate for nonqualified dirstibutions from HSA's and MSA's is 20% for 2011
Quailfied medical expenses paid with tax free HSA's distributions cannot also be deducted on SCH A (Form 1040) Itemized deductions, or used as a basis for the health coverage tax credit
Self employed individuals (Sole Propreitors, partners, and independant Contractors and "S" Corp shareholders who own (or are deemed to own under the constructive ownership rules) more than 2% if the corporations stock are not included in definition of employees for Cafeteria plan participation ( Treas Reg 1.125( G)
INFORMATION REPORTING PENALTIES (1099 MISC's)
These are the penalties for not reporting these by the Due Date of January 31, 2012 for tax year 2011
IRC $6721 inposes a penalty on any person who is required to file a correct information return, but fails to do so on or before the prescribed filing deadline
The penalites varies based on when(if at all) the correct information return is filed. For returns required to b filed in 2011 and later tax years, the following penalties are in effect.
Teir 1, if filed after but within 30 days of the due date
the penalty is $30.00 per return with a $250,000.00 maximun penalty per calander year.
Teir 2 If filed more that 30 day but on or before August 1, of the filing year is $60.00 per rturn and a $500,000. maximun penalty per calancer year
Teir 3, If it is not filed before August 2, of the filing year the penalty is $100.00 per return and a max of 1.5Mil per penalty fer calender year.
This Guys and Gals is serious , it is not the 1096,'which shows the Number, and total of the items, but it is for each 1099 MISC that is included.
SELF-EMPLOYMENT TAX
Self Employment tax rate Effective January 1, 2011 is 13.3% of the Gross Profit instead of 15.5% for all years up to 2010
The breakdown is as follows.
Social Security Tax is reduced from 12.4% to 10.2%
Medicare has not been reduced.
To figure Self Employment tax take this calculation
Net Gross Profit (if any) X 7.65% reduction
take the net earning from Self Employment minus the reduction times .133 and that will give you your SS Self Employment tax
Example:
Sch C net Income $100,000.00
7.65% reduction (7,650.00
Net Earnings $ 92,350.00
Times .133 % + 12,283 total Self Employment tax owed.
Depreciation:
If you decide to take the full depreication on any property the Maximun Deduction on 4562 for tax year 2011 do so now if you plan to get rid of the asset in the following year 2012, The fact is that in 2012 the rate of depreciation will be the same as 2010, It will decrease in 2012 to $139,000, and 2013 decreases to $25,000 max full deduction for using 179 Deduction.
Comon Law Marriages
There are 10 Common law states plus the District of Columbia,
1. Alabama, 2. Oklahoma, 3. Colorado, 4. Rhode Island,
5. Iowa, 6. South Carolina, 7. Kansas, 8. Texas, 9. Montana,
and #10. Utah
In General a couple must live together and represent themselves as being Married,as a Spouse or as signing into a Motel, of for any other purpose stating that he or she is the spouse on any papers.
THE STANDARD MILEAGE RATE FOR 2011 IS SPLIT
From January 1, 2011 to July 1, 2011-.51 Cents per mile
From June 30, 2011 to Dec. 31, 2011 -.55.5 cents per mile
On lease vehicles the rate is $.22 cents per mile included in the lease deduction
So if you leased your cargo van you have to deduct the $.22 cents per mile of the total , but the standard mileage deduction is still available to you.
We will give you more information weekly between now and April 1, 2010 if there are any major changes in the tax law,
If you have another questions concerning the tax law, please do not hesitate to ask
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online
Franklin Katz, ATP, PA, PB,
Providing Professional Accounting, Bookkeeping, Payroll and Income Tax Preparation Services
Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding related
penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax
related matters addressed herein.
Cost of non prescription Drugs are no longer a qualifying expense for Health Plan Reimbursements and Withdrawals from health savings accounts
The penalty tax rate for nonqualified dirstibutions from HSA's and MSA's is 20% for 2011
Quailfied medical expenses paid with tax free HSA's distributions cannot also be deducted on SCH A (Form 1040) Itemized deductions, or used as a basis for the health coverage tax credit
Self employed individuals (Sole Propreitors, partners, and independant Contractors and "S" Corp shareholders who own (or are deemed to own under the constructive ownership rules) more than 2% if the corporations stock are not included in definition of employees for Cafeteria plan participation ( Treas Reg 1.125( G)
INFORMATION REPORTING PENALTIES (1099 MISC's)
These are the penalties for not reporting these by the Due Date of January 31, 2012 for tax year 2011
IRC $6721 inposes a penalty on any person who is required to file a correct information return, but fails to do so on or before the prescribed filing deadline
The penalites varies based on when(if at all) the correct information return is filed. For returns required to b filed in 2011 and later tax years, the following penalties are in effect.
Teir 1, if filed after but within 30 days of the due date
the penalty is $30.00 per return with a $250,000.00 maximun penalty per calander year.
Teir 2 If filed more that 30 day but on or before August 1, of the filing year is $60.00 per rturn and a $500,000. maximun penalty per calancer year
Teir 3, If it is not filed before August 2, of the filing year the penalty is $100.00 per return and a max of 1.5Mil per penalty fer calender year.
This Guys and Gals is serious , it is not the 1096,'which shows the Number, and total of the items, but it is for each 1099 MISC that is included.
SELF-EMPLOYMENT TAX
Self Employment tax rate Effective January 1, 2011 is 13.3% of the Gross Profit instead of 15.5% for all years up to 2010
The breakdown is as follows.
Social Security Tax is reduced from 12.4% to 10.2%
Medicare has not been reduced.
To figure Self Employment tax take this calculation
Net Gross Profit (if any) X 7.65% reduction
take the net earning from Self Employment minus the reduction times .133 and that will give you your SS Self Employment tax
Example:
Sch C net Income $100,000.00
7.65% reduction (7,650.00
Net Earnings $ 92,350.00
Times .133 % + 12,283 total Self Employment tax owed.
Depreciation:
If you decide to take the full depreication on any property the Maximun Deduction on 4562 for tax year 2011 do so now if you plan to get rid of the asset in the following year 2012, The fact is that in 2012 the rate of depreciation will be the same as 2010, It will decrease in 2012 to $139,000, and 2013 decreases to $25,000 max full deduction for using 179 Deduction.
Comon Law Marriages
There are 10 Common law states plus the District of Columbia,
1. Alabama, 2. Oklahoma, 3. Colorado, 4. Rhode Island,
5. Iowa, 6. South Carolina, 7. Kansas, 8. Texas, 9. Montana,
and #10. Utah
In General a couple must live together and represent themselves as being Married,as a Spouse or as signing into a Motel, of for any other purpose stating that he or she is the spouse on any papers.
THE STANDARD MILEAGE RATE FOR 2011 IS SPLIT
From January 1, 2011 to July 1, 2011-.51 Cents per mile
From June 30, 2011 to Dec. 31, 2011 -.55.5 cents per mile
On lease vehicles the rate is $.22 cents per mile included in the lease deduction
So if you leased your cargo van you have to deduct the $.22 cents per mile of the total , but the standard mileage deduction is still available to you.
We will give you more information weekly between now and April 1, 2010 if there are any major changes in the tax law,
If you have another questions concerning the tax law, please do not hesitate to ask
Frank’s Tax and Business Service
120 York Rd
Kings Mountain, NC 28086-3151
(704) 739-4039 Fax: (704) 739-3934
e-mail: [email protected]
Web Site: File Your Return Online
Franklin Katz, ATP, PA, PB,
Providing Professional Accounting, Bookkeeping, Payroll and Income Tax Preparation Services
Circular 230 Disclaimer – Any tax advice in this communication (including any attachments) is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding related
penalties under the Internal Revenue Code or (2) promoting, marketing or recommending to another party any transaction or tax
related matters addressed herein.
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