If you work in an occupation where tips are part of your total compensation, you need to be aware of several facts relating to your federal income taxes. Here are four things the IRS wants you to know about tip income:
Tips are taxable. Tips are subject to federal income, Social Security and Medicare taxes. The value of non–cash tips, such as tickets, passes or other items of value, is also income and subject to tax.
Include tips on your tax return. You must include in gross income all cash tips you receive directly from customers, tips added to credit cards, and your share of any tips you receive under a tip–splitting arrangement with fellow employees.
Report tips to your employer. If you receive $20 or more in tips in any one month, you should report all of your tips to your employer. Your employer is required to withhold federal income, Social Security and Medicare taxes.
Keep a running daily log of your tip income. You can use IRS Publication 1244, Employee's Daily Record of Tips and Report to Employer, to record your tip income.
For more information see IRS Publication 531, Reporting Tip Income and Publication 1244 which are available at http://www.irs.gov
Thursday, January 20, 2011
Wednesday, January 19, 2011
The Team Mediation Model: Cost-Savings with Added Expertise
The Team Mediation Model Saves Fees
More chairs around the mediation conference table are occupied these days. A developing trend is for each party’s attorney to bring a financial expert to the mediation. When financial stakes are high (and they are in most cases, money being the hot issue for most clients), a financial expert’s advice is brought to the table to help structure a better deal for each party.
As a result, mediations are becoming more costly. Adding up the hourly rates of 2 attorneys, 2 financial experts and the mediator, clients can be billed well in excess of $1,100 per hour for the mediation! Even if this amount is equally divided by the clients ($550 per hour or more), sticker shock sets in when clients are presented with the bill for mediation after the conclusion of the mediation session.
We have developed a much more efficient mediation model. In lieu of 2 financial experts and a mediator, we provide team mediation, conducted by Sue Varon (Georgia mediator/retired attorney with more than 20 years mediation experience) and Marty Varon (CPA, CVA, CEBS with more than 30 years financial expertise).
The Benefits Are Clear:
Clients are provided the opportunity to structure a mutually beneficial settlement with the assistance of the financial neutral while moving the negotiation process along with the assistance of the experienced mediator.
The cost-savings to clients is a reduced hourly rate. Our unique service is available to mediation clients at the rate of $425 per hour for our combined expertise. Instead of being charged $850 per hour for 2 financial neutrals and the mediator, clients are paying half that amount.
We welcome the opportunity to work with you.
Sue and Marty Varon
Alternative Resolution Methods, Inc.
770-801-7292
mvaron@armvaluations.com
svaron@armvaluations.com
More chairs around the mediation conference table are occupied these days. A developing trend is for each party’s attorney to bring a financial expert to the mediation. When financial stakes are high (and they are in most cases, money being the hot issue for most clients), a financial expert’s advice is brought to the table to help structure a better deal for each party.
As a result, mediations are becoming more costly. Adding up the hourly rates of 2 attorneys, 2 financial experts and the mediator, clients can be billed well in excess of $1,100 per hour for the mediation! Even if this amount is equally divided by the clients ($550 per hour or more), sticker shock sets in when clients are presented with the bill for mediation after the conclusion of the mediation session.
We have developed a much more efficient mediation model. In lieu of 2 financial experts and a mediator, we provide team mediation, conducted by Sue Varon (Georgia mediator/retired attorney with more than 20 years mediation experience) and Marty Varon (CPA, CVA, CEBS with more than 30 years financial expertise).
The Benefits Are Clear:
Clients are provided the opportunity to structure a mutually beneficial settlement with the assistance of the financial neutral while moving the negotiation process along with the assistance of the experienced mediator.
The cost-savings to clients is a reduced hourly rate. Our unique service is available to mediation clients at the rate of $425 per hour for our combined expertise. Instead of being charged $850 per hour for 2 financial neutrals and the mediator, clients are paying half that amount.
We welcome the opportunity to work with you.
Sue and Marty Varon
Alternative Resolution Methods, Inc.
770-801-7292
mvaron@armvaluations.com
svaron@armvaluations.com
Tuesday, January 18, 2011
Two Tax Credits to Help Pay Higher Education Costs
There are two federal tax credits available to help you offset the costs of higher education for yourself or your dependents. These are the American Opportunity Credit and the Lifetime Learning Credit.
To qualify for either credit, you must pay postsecondary tuition and fees for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. If the student was claimed as a dependent, the student cannot file for the credit.
For each student, you can choose to claim only one of the credits in a single tax year. You cannot claim the American Opportunity Credit to pay for part of your daughter's tuition charges and then claim the Lifetime Learning Credit for $2,000 more of her school costs.
However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.
Here are some key facts the IRS wants you to know about these valuable education credits:
1. The American Opportunity Credit
The credit can be up to $2,500 per eligible student.
It is available for the first four years of post-secondary education.
Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
The student must be pursuing an undergraduate degree or other recognized educational credential.
The student must be enrolled at least half time for at least one academic period.
Qualified expenses include tuition and fees, coursed related books supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.
2. Lifetime Learning Credit
The credit can be up to $2,000 per eligible student.
It is available for all years of postsecondary education and for courses to acquire or improve job skills.
The maximum credited is limited to the amount of tax you must pay on your return.
The student does not need to be pursuing a degree or other recognized education credential.
Qualified expenses include tuition and fees, course related books, supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.
You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.
For more information about these credits see IRS Publication 970, Tax Benefits for Education available at http://www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).
To qualify for either credit, you must pay postsecondary tuition and fees for yourself, your spouse or your dependent. The credit may be claimed by the parent or the student, but not by both. If the student was claimed as a dependent, the student cannot file for the credit.
For each student, you can choose to claim only one of the credits in a single tax year. You cannot claim the American Opportunity Credit to pay for part of your daughter's tuition charges and then claim the Lifetime Learning Credit for $2,000 more of her school costs.
However, if you pay college expenses for two or more students in the same year, you can choose to take credits on a per-student, per-year basis. You can claim the American Opportunity Credit for your sophomore daughter and the Lifetime Learning Credit for your senior son.
Here are some key facts the IRS wants you to know about these valuable education credits:
1. The American Opportunity Credit
The credit can be up to $2,500 per eligible student.
It is available for the first four years of post-secondary education.
Forty percent of the credit is refundable, which means that you may be able to receive up to $1,000, even if you owe no taxes.
The student must be pursuing an undergraduate degree or other recognized educational credential.
The student must be enrolled at least half time for at least one academic period.
Qualified expenses include tuition and fees, coursed related books supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $80,000 or $160,000 for married couples filing a joint return.
2. Lifetime Learning Credit
The credit can be up to $2,000 per eligible student.
It is available for all years of postsecondary education and for courses to acquire or improve job skills.
The maximum credited is limited to the amount of tax you must pay on your return.
The student does not need to be pursuing a degree or other recognized education credential.
Qualified expenses include tuition and fees, course related books, supplies and equipment.
The full credit is generally available to eligible taxpayers who make less than $60,000 or $120,000 for married couples filing a joint return.
You cannot claim the tuition and fees tax deduction in the same year that you claim the American Opportunity Tax Credit or the Lifetime Learning Credit. You must choose to either take the credit or the deduction and should consider which is more beneficial for you.
For more information about these credits see IRS Publication 970, Tax Benefits for Education available at http://www.irs.gov or by calling the IRS forms and publications order line at 800-TAX-FORM (800-829-3676).
Thursday, January 13, 2011
Simpler Filing for Small Non-Profits
The Internal Revenue Service today announced that small tax-exempt organizations may be able to shift to the simpler Form 990-N (e-Postcard) for their 2010 annual information reporting.
The IRS today issued guidance (Revenue Procedure 2011-15) that will allow more tax-exempt organizations to file the e-Postcard rather than the Form 990-EZ or the standard Form 990.
For tax years beginning on or after Jan. 1, 2010, most tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the e-Postcard. The threshold was previously set at $25,000 or less. (However, supporting organizations of any size must file the standard Form 990 or, if eligible, Form 990-EZ).
A tax-exempt organization’s annual gross receipts or total assets are used to determine which of the three versions of Form 990 it is required to file. IRS.gov contains information about which form to file.
The Pension Protection Act of 2006 made important changes to rules regarding tax-exempt organizations’ annual filing requirements, which took effect as of the beginning of 2007.
First, it mandated that small tax-exempt organizations, other than churches and church-related organizations, file an annual notice with the IRS if they were too small to file Form 990 or Form 990-EZ. (The Form 990-N was created for small tax-exempt organizations that had not previously had a filing requirement.) Second, it required all supporting organizations, regardless of their size, to file the standard Form 990 or Form 990-EZ. Finally, the law specifies that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Any tax-exempt organization that has not yet complied with these new requirements should do so immediately. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
The IRS today issued guidance (Revenue Procedure 2011-15) that will allow more tax-exempt organizations to file the e-Postcard rather than the Form 990-EZ or the standard Form 990.
For tax years beginning on or after Jan. 1, 2010, most tax-exempt organizations whose gross annual receipts are normally $50,000 or less can file the e-Postcard. The threshold was previously set at $25,000 or less. (However, supporting organizations of any size must file the standard Form 990 or, if eligible, Form 990-EZ).
A tax-exempt organization’s annual gross receipts or total assets are used to determine which of the three versions of Form 990 it is required to file. IRS.gov contains information about which form to file.
The Pension Protection Act of 2006 made important changes to rules regarding tax-exempt organizations’ annual filing requirements, which took effect as of the beginning of 2007.
First, it mandated that small tax-exempt organizations, other than churches and church-related organizations, file an annual notice with the IRS if they were too small to file Form 990 or Form 990-EZ. (The Form 990-N was created for small tax-exempt organizations that had not previously had a filing requirement.) Second, it required all supporting organizations, regardless of their size, to file the standard Form 990 or Form 990-EZ. Finally, the law specifies that any tax-exempt organization that fails to file for three consecutive years automatically loses its federal tax-exempt status.
Any tax-exempt organization that has not yet complied with these new requirements should do so immediately. If an organization loses its exemption, it will have to reapply with the IRS to regain its tax-exempt status. Any income received between the revocation date and renewed exemption may be taxable.
8 Facts About Your IRS Filing Options
The first step to filing your federal income tax return is to determine which filing status to use. Your filing status is used to determine your filing requirements, standard deduction, eligibility for certain credits and deductions, and your correct tax. There are five filing statuses: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) with Dependent Child.
Here are eight facts about the five filing status options the IRS wants you to know so that you can choose the best option for your situation.
Your marital status on the last day of the year determines your marital status for the entire year.
If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2008 or 2009, you have a dependent child and you meet certain other conditions.
There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available at http://www.irs.gov
Here are eight facts about the five filing status options the IRS wants you to know so that you can choose the best option for your situation.
Your marital status on the last day of the year determines your marital status for the entire year.
If more than one filing status applies to you, choose the one that gives you the lowest tax obligation.
Single filing status generally applies to anyone who is unmarried, divorced or legally separated according to state law.
A married couple may file a joint return together. The couple’s filing status would be Married Filing Jointly.
If your spouse died during the year and you did not remarry during 2010, usually you may still file a joint return with that spouse for the year of death.
A married couple may elect to file their returns separately. Each person’s filing status would generally be Married Filing Separately.
Head of Household generally applies to taxpayers who are unmarried. You must also have paid more than half the cost of maintaining a home for you and a qualifying person to qualify for this filing status.
You may be able to choose Qualifying Widow(er) with Dependent Child as your filing status if your spouse died during 2008 or 2009, you have a dependent child and you meet certain other conditions.
There’s much more information about determining your filing status in IRS Publication 501, Exemptions, Standard Deduction, and Filing Information. Publication 501 is available at http://www.irs.gov
Friday, April 23, 2010
Divorcing Long Island couple agrees to share kids, not photos
BY Thomas Zambito
DAILY NEWS STAFF WRITER
It's not a pretty picture.
A divorcing Long Island couple agreed to share custody of their two kids - but couldn't decide how to divvy up 7,000 family photos snapped during a 21-year marriage.
So Nassau County Family Court Judge Vito DeStefano jumped in and put everything into focus.
The husband gets 75% of the photos or three out of every four on each page of 75 photo albums, DeStefano wrote. His wife gets what's left.
"The court finds that the husband was intricately involved with taking, compiling and cataloging the thousands of photos at issue," DeStefano wrote in a case in which the spouses were identified only by initials.
"He equated his collecting of photographs of family with the hobby of collecting rare books."
The hubby claimed his camera-shy wife was being vindictive by trying to take the pics, which are mainly of their kids. She said she wasn't in most of them because she was holding the camera.
The judge tried to get the warring sides to resolve their differences before issuing his ruling, and the couple paid $2,100 to scan the photographs onto a disk.
But both sides were unhappy with the quality and demanded originals.
DeStefano has given them until June 3 to split up the photos or he'll have them back in court to do it under his watch.
tzambito@nydailynews.com
DAILY NEWS STAFF WRITER
It's not a pretty picture.
A divorcing Long Island couple agreed to share custody of their two kids - but couldn't decide how to divvy up 7,000 family photos snapped during a 21-year marriage.
So Nassau County Family Court Judge Vito DeStefano jumped in and put everything into focus.
The husband gets 75% of the photos or three out of every four on each page of 75 photo albums, DeStefano wrote. His wife gets what's left.
"The court finds that the husband was intricately involved with taking, compiling and cataloging the thousands of photos at issue," DeStefano wrote in a case in which the spouses were identified only by initials.
"He equated his collecting of photographs of family with the hobby of collecting rare books."
The hubby claimed his camera-shy wife was being vindictive by trying to take the pics, which are mainly of their kids. She said she wasn't in most of them because she was holding the camera.
The judge tried to get the warring sides to resolve their differences before issuing his ruling, and the couple paid $2,100 to scan the photographs onto a disk.
But both sides were unhappy with the quality and demanded originals.
DeStefano has given them until June 3 to split up the photos or he'll have them back in court to do it under his watch.
tzambito@nydailynews.com
Thursday, April 22, 2010
Here’s What Happens After You File
Most taxpayers have already filed their federal tax returns, but many may still have questions. Here’s what the IRS wants you to know about refund status, recordkeeping, mistakes and what to do if you move.
Refund Information
You can go online to check the status of your 2009 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2009 tax return available because you will need to know your filing status, the first Social Security number shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:
* Go to IRS.gov, and click on "Where’s My Refund"
* Call 1-800-829-4477 24 hours a day, seven days a week for automated refund information
* Call 1-800-829-1954 during the hours shown in your tax form instructions
What Records Should I Keep?
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending already filed returns or preparing future returns.
Change of Address
If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also file a change of address with the U.S. Postal Service.
What If I Made a Mistake?
Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return.
Visit IRS.gov for more information on refunds, recordkeeping, address changes and amended returns.
Refund Information
You can go online to check the status of your 2009 refund 72 hours after IRS acknowledges receipt of your e-filed return, or 3 to 4 weeks after you mail a paper return. Be sure to have a copy of your 2009 tax return available because you will need to know your filing status, the first Social Security number shown on the return, and the exact whole-dollar amount of the refund. You have three options for checking on your refund:
* Go to IRS.gov, and click on "Where’s My Refund"
* Call 1-800-829-4477 24 hours a day, seven days a week for automated refund information
* Call 1-800-829-1954 during the hours shown in your tax form instructions
What Records Should I Keep?
Normally, tax records should be kept for three years, but some documents — such as records relating to a home purchase or sale, stock transactions, IRAs and business or rental property — should be kept longer.
You should keep copies of tax returns you have filed and the tax forms package as part of your records. They may be helpful in amending already filed returns or preparing future returns.
Change of Address
If you move after you filed your return, you should send Form 8822, Change of Address to the Internal Revenue Service. If you are expecting a refund through the mail, you should also file a change of address with the U.S. Postal Service.
What If I Made a Mistake?
Errors may delay your refund or result in notices being sent to you. If you discover an error on your return, you can correct your return by filing an amended return using Form 1040X, Amended U.S. Individual Income Tax Return.
Visit IRS.gov for more information on refunds, recordkeeping, address changes and amended returns.
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