ILLMAS

Thanks, I will look into QB then. Another question, would there a problem (efile rejection) if some of my client employees don't have a valid SS# or use a ITIN for work? Or is it better to just to send them by mail?

First of all, Happy Year to all!!! I know many accountants/tax preparers are efiling their clients 941's, W-3, W-2, 1096 and 1099 etc.... I haven't efiled any of these types of return before, I usually prepare paper returns, this year I would like to start doing so. What are the pros and cons of efiling payroll forms and do I need start efiling. I have have a EFIN already, since I efile tax return using ATX, but I also use quickbooks and just recently Medillin, I really don't mind using ATX if it can do it all. Thanks

Talk to me about running ATX on a MAC, that is how I roll.... I have a 20" iMac and a Macbook Pro running XP Prof on boot camp. I tried VM Parallel at first, but it was crashing constantly so I went with Bootcamp plus its free with any Mac. I am retiring my 20" iMac in a few days, I bought a 27" iMac with 1TB hard drive last week, and I am going to transfer my complete XP installation + all my installed application to the new Mac (no need to reinstall any software, now this is a plus). How much HD space do you have on your MBP? I can help you or advice you if would you like. MAS

He did in our case, both for the 3 shareholders and the corporation, client only paid for the additional tax + interest. So it wouldn't hurt to ask to abate the penalty, saving your client 6K would be nice.

I read this in another forum I participate in, very interesting reading. Heidi is the proprietor of a bar in Detroit. In order to increase sales, she decides to allow her loyal customers - most of whom are unemployed alcoholics - to drink now but pay later. She keeps track of the drinks consumed on a ledger (thereby granting the customers loans). Word gets around about Heidi’s drink now pay later marketing strategy and as a result, increasing numbers of customers flood into Heidi’s bar and soon she has the largest sale volume for any bar in Detroit. By providing her customers freedom from immediate payment demands, Heidi gets no resistance when she substantially increases her prices for wine and beer, the most consumed beverages. Her sales volume increases massively. A young and dynamic vice-president at the local bank recognizes these customer debts as valuable future assets and increases Heidi’s borrowing limit. He sees no reason for undue concern since he has the debts of the alcoholics as collateral. At the banks corporate headquarters, expert traders transform these customer loans into DRINKBONDS, ALKIBONDS, and PUKEBONDS. These securities are then traded on securities markets worldwide. Naive investors don’t really understand the securities being sold to them as AAA secured bonds are really the debts of unemployed alcoholics. Nevertheless, their prices continuously climb, and the securities become the top-selling items for some of the nations leading brokerage houses. One day, although the bond prices are still climbing, a risk manager at the bank (subsequently fired due his negativity), decides that the time has come to demand payment on the debts incurred by the drinkers at Heidi’s bar. Heidi demands payment from her alcoholic patrons, but being unemployed they cannot pay back their drinking debts. Therefore, Heidi cannot fulfill her loan obligations and claims bankruptcy. DRINKBOND and ALKIBOND drop in price by 90 %. PUKEBOND performs better, stabilizing in price after dropping by 80 %. The decreased bond asset value destroys the banks liquidity and prevents it from issuing new loans. The suppliers of Heidi’s bar, having granted her generous payment extensions and having invested in the securities are faced with writing off her debt and losing over 80% on her bonds.. Her wine supplier claims bankruptcy, her beer supplier is taken over by a competitor, who immediately closes the local plant and lays off 50 workers. The bank and brokerage houses are saved by the Government following dramatic round-the-clock negotiations by leaders from both political parties. The funds required for this bailout are obtained by a tax levied on employed middle-class non-drinkers.

I do work for a CPA, and over the summer one of his client was being audited, the auditor disallowed about 25% (expenses, auto loan, depreciation) for personal use for each shareholder, the 25% became a constructive dividend, shareholders were happy because the CPA has told them to repay part of personal use of the auto or to report it on their W-2 as additonal compensation. Business owners never followed through until they were audited, the auditor made the changes on both the corporate return the the shareholders tax returns, so I would ask him to make the changes himself, saves you time if you and your client agree to change. The constructive dividend on the shareholder return was tax at 15% vs 35% if they would added as additional compensation. There was some interest, he gave them a break on the penalty.

An attorney refered me a client, so that I can review his tax return and to see if one of the dependents really qualified as a dependent because of his situtation. Well I interviewed the client over the phone and right away he asked me how much I'm going to charge him, because he is not working and does not have any money. So I told him it would be half of what I regulary charge, but I needed to see his return first before I notified the attorney regarding the 1 dependent in question. What a mistake, I have spent so much time on this case, calling him, calling the attorney and the IRS to verify some things. What has my blood boiling is when it was time to pay for my services, he had more the $300 in his pocket + plus another $200,000 in his bank account (I calculated based on his interest he is receiving using a 1%), I am going to stick to him now, because I need to amend 3 years to remove that one dependent, sorry for the rant, but I just dislike people like, no wonder he has all that money in the bank.

What is the proper way of taking a distribution from a S-corp with no payroll? The S-corp had two shareholder at one point, one sold his interest to the other, back in 2003, there after, the only shareholder left gets a k-1 and he pays the tax on his personal return. Payroll stopped when he bought out the other shareholder, he is getting paid from another business he owns, Let's say company A (1120) is a auto repair shop and his company B (1120S) owns the building and rents to company A. Company A pays rent to company B, company B pays the mortgage, insurance, r/e taxes and any major improvement, company A pays the payroll. So far company A has only paid about 4 months of rent for 2009, company B has had enough in its account to cover expenses, as of the end of October 2009, company has a profit (approx. 100K) which is the rent not paid to company B. If company A pays another 4 months of rent (approx. 40K) and the owner gives himself a bonus of about 20K, this will reduce his profit to about 40K, which is an average for this particular company. Here is my delimena, if he pays the rent to company B, there will be enough money for him to take a distribution, there is about 80K in retained earnings, so if he takes about 40K as a distribution/dividends then he will pay 15% of tax and not pay the 25 or 28% rate. Would taking a reasonable amount fly, company A pays him a salary of about 73K, so taking about 40K from company B as a distribution sound reasonable? Any help will be greatly appreciated.

TP has not filed his 2007 return, first year of activity, it turns out that we wants a to file as a 1120S and not 1120, we are in 2009, do you know if one can can still file an 1120S and make the election or should the 2007 be filed as 1120 and make the election in 2008 or 2009?

I have a question for any Medlin payroll users, how does the direct deposit feature work? I setup a client a while ago to do payroll using Medlin (check printing), but now they want to set up direct deposit for their employees. Can one print out direct deposit enrollment forms from the program or they have to created? Do all employees have to have the same bank? Any help would be greatly appreciated. Thanks MAS

Jainen, thank you so much, this is great info that I will probably use for the letter. MAS

I have a new NP client and they fell behind on paying their payroll taxes on time, they are up to date now, but now they started receiving notices for penalties and interest. From what I am seeing, the NP always had money to cover payroll taxes on time, the new executive director just doesn't know why they were not paid. I regret telling the client that I would talk to the IRS or prepare a letter asking them to forgive either the penalty or interest, becuase now I am seeing they always had money. I have worked with other NP that when they don't have money, they don't pay their employees until some funding comes in and this wasn't the case with this NP. I would like for the NP client to see that I saved them some money, but another part of me is just saying pay it and don't make the same mistake again. What your thought? By the way, I like the new design of the site, great work!!

I heard about this last night, this really sucks for many hard working tax payers!! Many To Pay Back Obama Stimulus Tax Credit Taxpayers At Risk If With More Than One Job, Receive Social Security More than 15 million taxpayers could unexpectedly owe taxes when they file their federal returns next spring because the government was too generous with their new Making Work Pay tax credit. Taxpayers are at risk if they have more than one job, are married and both spouses work, or receive Social Security benefits while also earning taxable wages, according to a report Monday by the Treasury Department's inspector general for tax administration. The tax credit, which is supposed to pay individuals up to $400 and couples up to $800, was President Barack Obama's signature tax break in the massive stimulus package enacted in February. Most workers started receiving the credit through small increases in their paychecks in April. The tax credit was made available through new withholding tables issued by the Internal Revenue Service. The withholding tables, however do not take into account taxpayers with multiple jobs or married couples in which both people work. They also don't take into account Social Security recipients with jobs that provided taxable income. The Social Security Administration sent out $250 payments to more than 50 million retirees in the spring as part of the economic stimulus package. The payments were meant to provide a boost for people who didn't' qualify for the tax credit. However, they went to many retirees who also received the credit. Those retirees will have the $250 payment deducted from their tax credit -- but not until they file their tax returns next year, long after the money may have been spent. "While implementing a credit through reduced withholding is an effective way to provide economic stimulus evenly throughout the year, it is difficult to account for everyone's circumstances," said J. Russell George, the Treasury inspector general for tax administration. "More than 10 percent of all taxpayers who file individual tax returns for 2009 could owe additional taxes." The tax credit is also available for 2010. Russell said the problems will continue in 2010 if they are not resolved. The credit pays workers 6.2 percent of their earned income, up to a maximum of $400 for individuals and $800 for married couples who file jointly. Individuals making more than $95,000 and couples making more than $190,000 are ineligible. "Making Work Pay was designed to deliver much needed boosts to the paychecks of 95 percent of all working Americans," said Nayyera Haq, a Treasury Department spokeswoman. "Since enactment, more than 110 million families have benefited from as much as $60 in additional take home pay each month to put toward their family budgets, serving as a steady boost to spending and consumption." For many, the new tax tables will simply mean smaller-than-expected tax refunds next year. The average tax refund this year was about $2,800. The IRS, in a response to the audit, advised taxpayers to check their withholding throughout the year to make sure they don't get hit with an unexpected tax bill. "The withholding system must approximate the tax liability of tens of millions of Americans, and therefore, cannot be tailored precisely to fit every individual situation," Richard Byrd Jr., commissioner of the IRS' wage and investments division, wrote in the agency's response to the report.

Back in September a client of mine that is in Houston called to let me know they were going to cancel his business license because he didn't file a franchise tax return, I called Texas Comptroller of Public Accounts and they guided to file the return online, it was very straight forward and it's file instantly. No payment was due because it was the initial return. If I remember, you need the account # and setup a user, you can also file sales tax return via there webfile. Below is a link to their website: http://www.window.state.tx.us/taxinfo/taxforms/05-smart.html MAS

Thanks, I think her concern is that her employer gave her the stock a while ago, so her cost basis is zero unless it was report as income to her, which I doubt happen.

Client of mine called today to ask me if she can avoid paying taxes from sale of stocks because of hardship, I did a quick research on the IRS website and it seems it's only for some retirement plans. Based on what I found I told her no, sale of stock is subject to tax if there is a gain on the sale, then she tells me her co-worker sold some stock and used hardship to avoid paying tax. So I am asking to see if someone knows if hardship can be used for sale of stocks? Thanks

Something I don't understand about your client is why he decided to represent himself in the first place, did he ever call you and told you he was going to be audited or did you just find out recently? Another thing I find hard to believe is the auditor asking how you get paid, makes me wonder if your client had the return modified to qualify for a mortgage or some type of loan that he needed to show more income and the modified return is labeled as "Self-Prepared". Just a thought, client presented the modified return in your CPA folder or in the package you give your client and sees "Self-Prepared", then I would question the paid preparer bill. For your meeting just give the auditor the depreciation schedule and let him and your client talk, allow them to use your conference, incase auditor starts asking more questions, be honest and let him know there is no engagement between you and your client to represent him, thats all. Let your client dig himself out of the hole in got himself into.

TP sister's LLC did not submit it's annual report, so it was dissolve, now the LLC name is up for grabs, TP wants to open a new LLC witht the same name, then sell it back to the sister. The cost to reinstate the LLC would be around 2K vs 500 to create a new one, there is no FEIN# assocaited with this LLC, I recommended just to make it active again and pay the 2K, but he asked me to look into it to see if it's possible. So if anyone knows, I would greatly appreciate it, not looking into breaking any law here, TP see it as when someone buys your R/E taxes and then sell back at a profit.

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Thanks everyone, I did call this morning and placed the ordered + the 10%, they didn't know why no one called me to renew early, so they went ahead and gave me the discount because of that. I did mention to them that I received the 2008 expess answer book after the tax season, and the sales person was not surprised. I prefer the quickfinder anyway which I always order. MAS

Ok, what should be cost with the discount? Thanks MAS

This year I haven't heard from the people of ATX to renew, nor have I recieved any email or promo, I'm I the only who hasn't renewed for 2009? I probably missed out on the early bird discount :-(

You can setup a VPN router using your laptop, but you would have to setup it up every where you go, mind you the VPN requires LAN, so if you are at the coffee shop (wireless), your assistant won't have access. Sounds like Logmein or VNC is right for you, like I mention before only one person can work at a time. Something else to consider when using a laptop as your main source to run your business, laptops can break easily, can be stolen easily or are proned to water spills, sometimes they cannot be repaired or someone might have access to your clients SS# and other personal information. If I may recommend something inexpensive, you can buy a used business workstation for under $200 sometimes running windows xp professional and use it as a server, you don't need to buy a dedicated server that can cost over $500 + labor to set it up, there are a lot of "how to" on the internet, so you can setup a workstation+vpn yourself. Also, if you have an old computer at home, you can set it up as a server. You don't need a powerful computer with massive memory or hard drive, a 512MB of RAM and a minimun 80GB, your server is going to used only to store data, the applications will be run from your laptop. I believe there companies that can host your information for a monthly fee, it's secured, backed up daily so that might be another route for you. MAS

That's one solution exporting the return from the main computer to the laptop, however you will need to import back to the main computer for a couple of reasons (ERO #, e-file and the benefit of the server backup system). There are other ways to work from the laptops when out on the field, there are web-based programs like Logmein and VNC that allow you connect to your server remotely, the free version dosen't allow you to print when out on the field, if you send something to print, it will print at your office. If you purchase the program, it should allow you to print anywhere, just a little FYI, with the free or paid all you are doing is connecting to your computer thats in the office, so if someone uses that computer you cannot both work on it at the same time Second option is getting an exchange server (I think that the name?), it will allows you to log in to your office computer from any where, someone else can be using your computer and it won't affect you, the only know problems I have had with a system like this, is with Outlook, if you open an email when logged in from home, the next day return to your office and look for that important email, there is a chance it won't be there, there is some type of sync problem, but the last time I used an exchange server was in 2007, so maybe it's better now, I forgot to mention, a system like this is expensive to implement + to maintain. Third option is a VPN (Virtual Private Network), this type of network allows you to connect to your server securely to specific files or drives, any change that you make on your laptop is recorded on the server, it allows you to print when out on the field, cost is very low and no maintenance required. Hope this helps

Just wondering if someone knows of a software that out there specifically for a trucking business? I don't know much about how a trucking company operates, but a software that helps them keep track of hours, loads, mileage, fuel, trucks, repairs, dispatch etc..... 10-4