The IRS announced January 20, 2011 that they will begin accepting paper and efile tax returns that have Schedule A itemized deductions beginning February 14, 2001.

Initially the IRS had announced a delay for returns with  itemized deduction of late February. I was fearing early March and had visions of getting all my clients finished in only 6 weeks! This is good news for me!

The IRS needed the extra time to update its systems to accommodate the tax law changes without disrupting other operations tied to the filing season. The delay followed the Dec. 17 enactment of the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010, which extended a number of expiring provisions including the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction. (http://www.natptax.com)

Happy filing!

Carol Topp, CPA

I’ll be discussing taxes for writers on Monday January 17, 2011 with Felice Gerwitz on her online radio show:

Information In A Nutshell Radio Show

Congress was very busy in 2010 creating new tax laws. Are there any tax breaks for writers?

I’m happy to report some good news.

All workers and self-employed business owners, such as freelance writers, will get a 2% raise thanks to our Uncle Sam for 2011.

Congress decided to stimulate the economy by getting Americans to spend more money. They have done it before with checks in the mail, but this year they will do it by reducing the Social Security tax from 6.2% to 4.2%, but only for 2011.

I’ll discuss the new tax bills, how they may affect freelance writers, authors and publishers.

Tune in live on Monday, January 17 at 3:30 pm EST  at this link:

http://www.blogtalkradio.com/informationinanutshell

Hop on over to TaxesForWriters.com to receive that handout from the show. Look in the bottom right corner for my report: New Tax Laws in 2010. Anything for Writers?

Carol Topp, CPA

Please don’t tell my tax clients this…

The IRS extended the 2010 federal income tax filing deadline to Monday, April 18, 2011 because Emancipation Day, a District of Columbia holiday, falls on Friday, April 15. Taxpayers requesting an extension have until Oct. 17 to file their 2010 tax returns.

I want to be finished doing tax returns by Friday April 15 and have a nice restful weekend, so please don’t tell my tax clients that they have 3 more days!

Seriously, most of my clients get me their information in enough time. We all prefer to be finished with tax season as soon as possible!

Carol Topp, CPA

I remember when ObamaCare passed that they also passed an amendment to the IRS regulations requiring you to issue 1099s to anyone to whom you made a payment of more than $600, including suppliers. Do you know if we need to do that for this year or will it start later? (Or hopefully, be repealed)

Thanks for your help,
Melanie

Melanie,

Well, Congress tried twice to overturn this 1099MISC requirement that was a part of the Patient Protection and Affordability Act (ObamaCare), but neither attempt succeeded.

I learned the details about one of the bills to overturn the reporting requirement and it was more complicated than the original! It had different dollar thresholds based on the type of transaction and an exemption if a credit card was used (bu no mention of a debit card!). I was imagining some of my small business clients dealing with all of that in their QuickBooks programs! Ugh!!!

As of today (Dec 27, 2010), all businesses will be required to send 1099MISC forms to all suppliers including corporations for payments made beginning Jan 1, 2013.

That means that in 2012, you will need to collect W-9 forms (that request legal names and SSNs or EINs) from every business that you purchase more than $600 in goods or services. This means even corporations like a hotel chain or Office Depot!

You have all of 2011  to get your record keeping in place. Make sure that your accounting system is keeping track of payments issued to specific vendors, contractors, and other businesses. Track the name, address, and taxpayer identification number of the vendor. Make sure that your accounting system can separate payments made by credit or debit card from payments made by cash or check. QuickBooks can do all that if you or your bookkeeper enter in all the information as each bill is paid.

From http://www.accountingweb.com/blogs/scotth/exuberant-accountant/get-ready-onerous-new-1099-reporting-rules

Fortunately, the new Form 1099 reporting rules don’t cover payments made before 2012. So there’s still plenty of time to plan for what is likely to be a daunting task…use it wisely!

By the way, I wrote to each of my US senators about this onerous reporting requirement and explained that it was an unnecessary burden on small businesses. Both of my senators now say they oppose the reporting requirement and will work to overturn  (or amend) it.

Carol Topp, CPA