PKTaxServices

Back by popular demand….Networking for Newbies

PatK — Wed, 19 Dec 2012 16:46:11 +0000

Are you new to networking or new in town and looking to get connected with other small business owners?

This meeting is for local small business owners who are:

=> new to networking, and want to figure out how to use networking to build your business, connect with potential strategic partners, and expand your contacts base.

=> new in town, and want to make connections with the locals in a safe, low-key environment.

=> new in business, and want to learn how to get connected to the local small business community through personal networking.

=> frustrated by networking and the referrals you’re getting (or NOT getting) and want to find out the secrets to making networking your most effective marketing strategy.

Networking 4 Newbies helps networking newbies get comfortable with the basics of networking, including introductions, connecting one-on-one, and more in a safe, facilitated environment that will get you into the swing of networking easily.

About the Meetings

Facilitated by guilt-free business and marketing coach Victoria Cook, this meeting is just for small business owners who want to enjoy the benefits of connection through networking, but don’t know where to start or how to get results without spending too much time and energy in meetings.

Each meeting begins with self-introductions, followed by a networking activity/game designed to increase interaction and participant comfort levels, and a guest speaker from networking organization to answer questions. The meeting concludes with a brief check out.

Attendees can expect to…

· Get confident about networking
· Get feedback, advice, and coaching on your elevator speech and personal introduction
· Meet other networking newbies in a comfortable environment
· Get questions answered about networking groups and opportunities

Date: Thursday, January 17th
Time: 9:30 – 11:30 am
Location: PK Tax Services, L. L. C.
87 S. McLean Boulevard, Ste. A
South Elgin, IL |
Cost: FREE

Charitable contributions of vehicles

PatK — Mon, 10 Dec 2012 18:10:21 +0000

Your clients may ask about donating used vehicles to charitable organizations. Donating a car is a good way to get a tax deduction, but increased scrutiny by the IRS means taxpayers need to have a good understanding of the rules related to the items claimed on their return.

Clients should be told about special limitations and substantiation requirements under Sec. 170(f)(12) as well as applicable general requirements for charitable contributions as itemized deductions. They should also be aware that charities usually sell the vehicle through a third party. In such cases, the deduction is based on proceeds of the sale, which may be less than what the donor considers fair market value (FMV).

The statute specifies that taxpayers must substantiate donations of motor vehicles (including automobiles, boats, airplanes, and motorcycles) with a claimed value of more than $500 by a contemporaneous written acknowledgment from the organization receiving the vehicle and that the taxpayer must attach the acknowledgment to the tax return that includes the deduction. The acknowledgment must contain specific information about the vehicle and certifications by the organization of its use and disposition. For the acknowledgment to be contemporaneous, the donee organization must provide it to the taxpayer within 30 days after the sale or contribution.

For such vehicles, the allowable deduction is the lesser of FMV at the time of the donation or, if the charity sells the vehicle without making any material improvement or using it to a significant extent, gross proceeds the organization receives from the sale. The gross sales proceeds limitation does not apply if the organization gives the vehicle to a needy individual in furtherance of its charitable purpose or sells it for significantly less than FMV to such an individual.

Notice 2005-44 defines “material improvement” as a major repair or improvement that improves the condition of the qualified vehicle in a manner that significantly increases its value. The cost of a material improvement may not be funded by an additional payment to the organization by the vehicle’s donor. Cleaning, minor repairs, routine maintenance, and removal of dents and scratches are not considered material improvements.

The charitable organization must complete and send to the IRS a Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes. Copy B of Form 1098-C can be sent to the donor as the contemporaneous written acknowledgment of the donation.

For vehicles with a claimed value of $500 or less, but more than $250, only the general substantiation requirements under Sec. 170(f)(8) apply: Principally, the organization must provide the donor a contemporaneous written acknowledgment describing the vehicle (but not necessarily its value) and stating whether the organization provided the donor any goods or services in consideration for it and, if so, a description of them and a good-faith estimate of their value.

For charitable contributions of property worth more than $5,000, the substantiation requirements under Sec. 170(f)(11)(C) generally require the donor to obtain a qualified appraisal and attach it to the return. However, vehicles are an exception, as long as the written acknowledgment by the organization states that the vehicle was sold without significant intervening use or material improvement and the donor deducts no more than the amount of the sale proceeds. If the vehicle has a claimed value of more than $5,000 and the organization does not sell the vehicle, the appraisal requirements apply.

An acceptable measure of the FMV of a donated car is an amount not in excess of the price listed in an established used-vehicle pricing guide (such as Kelley Blue Book or the National Automobile Dealers Association Used Car Guide) for a private-party sale (not the dealer retail value), in the same geographic area of a similar vehicle. However, the FMV may be less than the amount listed if the vehicle has engine trouble, body damage, high mileage, or excessive wear. Some charitable organizations advertise that taxpayers can donate vehicles in any condition and the donor can take a deduction equal to the full Blue Book value. However, the taxpayer needs to be prepared to substantiate the deduction on a tax return, knowing that the IRS’s system will perform automated matching of contributions reported by charitable organizations to the deductions claimed. Discrepancies can trigger an audit. Overvaluation of donated vehicles relative to their condition is an area of abuse that is of concern to the IRS.

In addition, Sec. 6720 prescribes potentially severe penalties for fraudulent acknowledgments of vehicle donations or for failing to provide a Form 1098-C or other proper acknowledgment to the donor and to the IRS where required. The IRS emphasized this point in Notice 2006-1.

Update of Taxmaggedon…Congressional GOP Rejects Obama Tax and Fiscal Cliff Plan

PatK — Mon, 03 Dec 2012 16:34:59 +0000

http://nymag.com

Congressional Republicans dug in to fight President Barack Obama’s plan to skirt the fiscal cliff, rejecting his tax-and-spending proposal as the president heads out today to sell it to the American public.

Treasury Secretary Timothy Geithner shuttled among congressional leaders Thursday with a plan to trade $1.6 trillion in tax increases for $400 billion in unspecified entitlement program cuts, Republican congressional aides said.

Republicans complained that the offer was little more than a rehash of old budget proposals, setting the stage for more contentious negotiations over the next several weeks as the year-end deadline approaches for more than $600 billion in spending cuts and tax increases to kick in.

“If the president is going to lead on this critical issue, he has to propose a plan that can actually pass,” said Republican Senator Roy Blunt of Missouri. “This is simply not a serious proposal.”

Obama today is scheduled to visit a manufacturing plant in Hatfield, Pa., about 33 miles north of Philadelphia, to emphasize his call for an extension of George W. Bush-era tax rates for middle-income households. He is using the approach of the holidays to argue that families will curb spending if they don’t know whether they will have to pay more taxes next year.

The fiscal plan presented by Geithner yesterday was modeled on Obama’s budget proposal from February and includes at least $50 billion in economic stimulus spending for this fiscal year, according to the aides. It would permanently increase the U.S. debt limit to avoid the need for congressional action, said one of the aides, who wasn’t authorized to speak publicly.

Obama and congressional Democrats have insisted that the Bush tax cuts should be allowed to expire at the end of this year for the top 2 percent of taxpayers. The tax cuts should be extended for middle-class taxpayers, they contend.

Republicans reject higher tax rates for all income levels. They are seeking an overhaul of entitlement programs in exchange for raising tax revenue through other methods, such as limiting deductions. They want a higher Medicare eligibility age and an alternative yardstick for calculating inflation that would reduce Social Security cost-of-living adjustments, according to a Republican aide who wasn’t authorized to speak publicly.

It would raise taxes for top earners by $1.6 trillion over the next decade with higher rates on income, capital gains, dividends and estates, along with limits on tax breaks. It would call for about $400 billion in cuts to entitlement programs, which Republicans have deemed insufficient.

The plan would either extend or replace a payroll tax cut that is set to expire at the end of the year, according to the Republican aides. It would protect millions more people from having to pay the alternative-minimum tax and defer by a year the federal spending cuts set to start taking effect in January.

The proposal seeks infrastructure spending similar to what Obama proposed in September 2011 in his American Jobs Act, which included $50 billion for roads, rails and airports and $30 billion for schools.

The Congressional Budget Office has warned that if Congress does not avert the fiscal cliff, the economy might slip into recession next year and boost the unemployment rate to 9.1 percent in the fourth quarter of 2013, compared with 7.9 percent now.

The administration and Democrats say tax rate increases are necessary because deduction caps will not generate enough money, especially if they are designed to protect charitable contributions and to avoid affecting 98 percent of taxpayers.

A $25,000 cap on deductions with those features would raise about $450 billion over 10 years, less than one-third of what the administration wants, according to administration economists Gene Sperling and Jason Furman. Keeping tax rates constant would make it more difficult to overhaul the tax code in the future, they said. That would require any future tax overhaul “to raise taxes on middle-class families simply to preserve lower rates for the most fortunate,” they wrote.

Helping Hurricane Sandy Victims

PatK — Mon, 26 Nov 2012 15:33:21 +0000

Treasury & IRS Announce Special Relief to Encourage
Leave Donation Programs for Victims of Hurricane Sandy

As part of the administration’s efforts to bring all available resources to bear to support state and local partners impacted by Hurricane Sandy, the Treasury Department and the Internal Revenue Service on November 6, 2012 announced special relief intended to support leave-based donation programs to aid victims who have suffered from the extraordinary destruction caused by Hurricane Sandy.

Under these programs, employees may donate their vacation, sick or personal leave in exchange for employer cash payments made to qualified tax-exempt organizations providing relief for the victims of Hurricane Sandy.

Employees can forgo leave in exchange for employer cash payments made before January 1, 2014. Under this special relief, the donated leave will not be included in the income or wages of the employees. Employers will be permitted to deduct the amount of the cash payment.

Thanksgiving Wishes

PatK — Tue, 20 Nov 2012 21:11:42 +0000

May the good things of life
be yours in abundance
not only at Thanksgiving
but throughout the coming year.

IRS Warns Consumers of Possible Scams Relating to Hurricane Sandy Relief

PatK — Mon, 12 Nov 2012 17:07:20 +0000

The Internal Revenue Service has issued a consumer alert about possible scams taking place in the wake of Hurricane Sandy.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

The IRS cautions both hurricane victims and people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

•To help disaster victims, donate to recognized charities.

•Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) Web site at fema.gov.

•Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.

•Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds. They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities, in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources. Additionally, scammers often send e-mail that steers the recipient to bogus websites that sound as though they are affiliated with legitimate charitable causes.

Taxpayers suspecting disaster-related frauds should visit IRS.gov and search for the keywords “Report Phishing.”

10 Mistakes to Avoid When Selling a Business

PatK — Mon, 05 Nov 2012 16:14:06 +0000

The Top 10 Series
Session 3

Selling your business is a very important event for the majority of business owners. Doing it right translates in to better pricing and terms. An experienced business broker and former business owner, Pat Grandle of Sun Acquisitions will share insights about business transactions. Common mistakes when selling a business are breaking confidentiality, not valuing the business correctly, and neglecting to put together an advisor team. It takes two to three years to prepare for a business sale and six to nine months to sell a business. What appear to be minor mistakes can turn into major headaches that strip value out of the deal.

Pat Grandle is a Sun Acquisitions business broker with significant experience in sales, marketing, and management. For over 24 years, Pat managed a family business in the manufacturing industry in which she developed an extensive network and experience directing all areas of a business. When her own company was adversely affected by the economic downturn in the automotive industry, she decided to use her experience and growing network to help others plan for their business future. An expert consultant and relationship builder, Pat’s passion is helping individuals and companies reach their goals.

Join us, Wednesday, November 28th
6:00 pm – 7:00pm
87 South McLean Boulevard, Suite A
South Elgin, IL 60177

Please RSVP by November 12th to patk@pktaxservices.com
Or register at top10series.eventbrite.com

Hosted by
Pat Kolodziej of P.K. Tax Services, L.L.C. and
Kei Narimatsu with See The Light Marketing/Send Out Cards

Save the following dates for our upcoming Top 10 Series…

January 16th
March 20th
May 15th

Don’t Fall for Phony IRS Websites

PatK — Mon, 29 Oct 2012 15:00:30 +0000

The IRS warns consumers about a new tax scam that uses a website that mimics the IRS e-Services online registration page.

?The actual IRS e-Services page offers web-based products for tax preparers, not the general public. The phony web page looks almost identical to the real one.

The IRS gets many reports of fake websites like this. Criminals use these sites to lure people into providing personal and financial information that may be used to steal the victim’s money or identity.

?The address of the official IRS website is www.irs.gov. Don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov.

The IRS website has information that can help you protect yourself from tax scams of all kinds. Search the site using the term: phishing.

Work at Home? You May Qualify for the Home Office Deduction

PatK — Wed, 24 Oct 2012 14:17:30 +0000

If you use part of your home for business, you may be able to deduct expenses for the business use of your home. Here are six requirements to help you determine if you qualify for the home office deduction.

1. Generally, in order to claim a business deduction for your home, you must use part of your home exclusively and regularly

• as your principal place of business, or
• as a place to meet or deal with patients, clients or customers in the normal course of your business, or
• in any connection with your trade or business where the business portion of your home is a separate structure not attached to your home.

2. For certain storage use, rental use or daycare-facility use, you are required to use the property regularly but not exclusively

3. Generally, the amount you can deduct depends on the percentage of your home used for business. Your deduction for certain expenses will be limited if your gross income from your business is less than your total business expenses.

4. There are special rules for qualified daycare providers and for persons storing business inventory or product samples.

5. If you are self-employed, use Form 8829, Expenses for Business Use of Your Home to figure your home office deduction and report those deductions on Form 1040 Schedule C, Profit or Loss From Business.

6. If you are an employee, additional rules apply for claiming the home office deduction. For example, the regular and exclusive business use must be for the convenience of your employer.For more information see IRS Publication 587, Business Use of Your Home, available at www.IRS.gov or contact your tax professional.

Deducting Charitable Contributions

PatK — Mon, 15 Oct 2012 20:08:28 +0000

Donations made to qualified organizations may help reduce the amount of tax you pay. Here are some essential tips to help ensure your contributions pay off on your tax return.

If your goal is a legitimate tax deduction, then you must be giving to a qualified organization. Also, you cannot deduct contributions made to specific individuals, political organizations or candidates. See IRS Publication 526, Charitable Contributions, for rules on what constitutes a qualified organization.
To deduct a charitable contribution, you must file Form 1040 and itemize deductions on Schedule A. If your total deduction for all noncash contributions for the year is more than $500, you must complete and attach IRS Form 8283, Noncash Charitable Contributions, to your return.
If you receive a benefit because of your contribution such as merchandise, tickets to a ball game or other goods and services, then you can deduct only the amount that exceeds the fair market value of the benefit received.
Donations of stock or other non-cash property are usually valued at the fair market value of the property. Clothing and household items must generally be in good used condition or better to be deductible. Special rules apply to vehicle donations.
Fair market value is generally the price at which property would change hands between a willing buyer and a willing seller, neither having to buy or sell, and both having reasonable knowledge of all the relevant facts.
Regardless of the amount, to deduct a contribution of cash, check, or other monetary gift, you must maintain a bank record, payroll deduction records or a written communication from the organization containing the name of the organization and the date and amount of the contribution. For text message donations, a telephone bill meets the record-keeping requirement if it shows the name of the receiving organization, the date of the contribution and the amount given.
To claim a deduction for contributions of cash or property equaling $250 or more, you must have a bank record, payroll deduction records or a written acknowledgment from the qualified organization showing the amount of the cash, a description of any property contributed, and whether the organization provided any goods or services in exchange for the gift. One document may satisfy both the written communication requirement for monetary gifts and the written acknowledgement requirement for all contributions of $250 or more.
Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which generally requires an appraisal by a qualified appraiser.

For more information on charitable contributions, refer to Form 8283 and its instructions, as well as Publication 526, Charitable Contributions. For information on determining the value of donations, refer to Publication 561, Determining the Value of Donated Property. All are available at IRS.gov or contact your tax professional.