IRS delays start of tax filing season to January 30


On January 8th, the IRS announced that it was delaying tax filing your 2012 tax return until January 30th.  However, certain forms won’t be available until late February or early March.  This means that most taxpayers can begin to file their 2012 tax returns on January 30th.  However, if you own a business or rental property, you probably won’t be able to file either business or personal returns until March.

How to determine when you can file:

  1. Did you start a business or buy rental property in 2012?  If yes, you can’t file until March;
  2. Did you own a business or rental property in 2012?  If yes, you can’t file until March;
  3. Are you a partner or S Corp shareholder in 2012?  If yes, you can’t file until March.
  4. If you answered no to all three questions, you can probably start filing on January 30th.

Forms 4562 Depreciation and 8582 Passive Activity Losses won’t be ready until late February or early March.  Just about every business and rental property owner uses Form 4562.  If your rental property generates losses, you also use Form 8582.  There are some other delayed forms like Residential Energy Credits ans Qualified Adoption Credits that might keep you from filing until late February.

Leave a comment or email me with any questions if you are unsure as to when you can file.  My clients will also receive a letter with their estimated filing date.

Why does my accountant take so long


Or cost so much.

Because:

  1. You never bring the information that I request.  Yes I need your W-2, 1099 and every other damned form you get;
  2. You want me to save to save you the most money.  Sometimes it takes meditation or a stroke of genius or a bottle of Jim Beam to find the deductions or planning that ordinary accountants miss;
  3. The price is already set and I’m a craftsman.  Do you think the Pope bugged Michelangelo while he painted?
  4. There’s a lot at stake.  Mess with the IRS?  Are you insane?
  5. I am really @#$?&! busy.  Working 16 hour days can wear a guy out.

My advice to any client, even if you are not enlightened enough to have me prepare your books and tax returns, is be prepared.  If you’ve been working with your accountant for more than one season, you should know what information is needed.  Ask questions in August not February.  Bring cookies or booze or Rolos when you come to see me.  And, realize that I’ve saved people and companies millions of dollars (seriously) in my career.  Sometimes it just takes a little longer to get it right.

 

Starting a small business – Income Tax


I hate paying taxes.  I hate when my clients have to pay taxes.  I hate when my clients say, “I’m happy that I make enough money to have to pay taxes.”  You really shouldn’t be.  Imagine what you could do with the money if you didn’t have to pay it – give to charity, invest in your business, invest in anything, save for your kids, pass it on to your kids, etc.

If you own a business and it’s profitable, you will have to pay Federal, State and maybe local income taxes on the profit.  There is no way around it.  If you don’t, the government will find out and they will come after you.  There are basically three ways to report and pay income taxes on business income:

  1. as a corporation;
  2. as a pass-thru entity, and;
  3. as an individual.

The method depends on the legal and tax structure of your business.  The rates may be higher or lower for a corporation than the other two methods.  A pass-thru entity is a business that does pay the income tax.  Instead, it passes the income thru to your individual tax return and you pay taxes at the individual rates.

Pass-thru entities include partnerships and S corporations.  Your business is automatically a partnership if there is more than one owner.  S Corporation status is an election that your business makes.  It can be made for qualifying regular corporations, partnerships and single person LLCs.  A Limited Liability Company is a legal entity designed to give corporate legal protections to non-corporate entities.  My business is organized as a single person LLC.  LLC really has nothing to do with taxes unless you elect to be taxed as a C Corporation or S Corporation.

If your business is a C Corporation, the profits are taxes at the corporate level.  The corporation files a tax return and pays any tax due.  The owners do not include the corporate profits on their Form 1040.  They would only need to report dividend income if the corporation paid dividends.

If you are the sole owner of your business, you will report your revenue and expenses on Schedule C of your Form 1040.  The earnings are taxed at individual rates.  You are required to pay estimated taxes on a quarterly basis towards your income taxes from your business.

Selection of a tax entity usually makes sense once your business is profitable with annual net income over $40,000 or you have employees.  Otherwise, for the sake of simplicity, it is probably best to use the default tax entity based on your legal structure.

 

Strategy for innovation – Society and Culture – AEI


Strategy for innovation – Society and Culture – AEI.

I think this is all crap.  Innovation shouldn’t be affected by government.  While I agree that government should get out of the way, I believe that innovation needs more private capital.

Let’s go outside the box.  Let’s introduce a 3% annual wealth tax on all accumulated wealth over $10 million.  At the same time introduce a new R&D wealth tax credit that offsets the new wealth tax dollar for dollar with each dollar invested in R&D, software development excluded.

Private capital has been misallocated for decades now.  Job growth and real GDP growth will depend on actual, tangible production.