Your 401(k) plan may allow you to borrow from the plan. However, you should consider a few things before taking a loan from your 401(k). If you don’t repay the full amount of the loan, including interest, according to the loan’s terms, the unpaid loan amount is a distribution to you from the plan. Your plan may even require you to repay the remaining amount of the loan in full if you stop working for the employer sponsoring the plan. Otherwise, the unpaid amount is considered a plan distribution to you. Generally, you have to include any previously untaxed amount of the distribution in your gross income for the year in which the distribution occurs. You may also have to pay an additional 10 percent tax on the amount of the taxable distribution, unless you: Are age 59 1/2 or older, or qualify for another exception to the 10 percent additional tax penalty. Any unpaid loan amount also means you will have less money saved for your retirement. Remember, your 401(k) plan is designed so you can save money while working for your retirement. So, before borrowing from your future, carefully consider all other alternatives. __________________________________________________________________________________________
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Stanek Tax Services announces the opening of our newest location close to the Mall of Millenia. The office is located @ 4700 Millenia Blvd Suite 175 Orlando, FL 32839. Our phone number will still be the same @ (407) 434-1040. We understand that many of you would like to be able to visit us at our office in beautiful Clermont Florida but you find the distance too far. As many of our clients are located within a few miles of this location, we felt this would be a good location for our second office. Office hours will still be by appointment only. We do have a little more flexibility at this location as far as appointment hours are concerned. Normal appointment hours will be, Monday through Thursday 8:30 AM to 5 PM and Friday 8:30 AM to noon. After hours appointments are available. However, there will be an additional charge. We do have a conference room that will accommodate up to 25 people where we plan to hold seminars. Stay tuned for more information on available seminars to come. Jay Stanek, Owner Stanek Tax Services. Did you know that it is a felony in Florida for the failure to file six consecutive sales tax returns in Florida? Apparently, neither did a Naples, Florida auto repair shop owner.
On April 25, 2013, [name omitted], owner of Tony Rosado Automotive Services, Inc. located at 1890 Elsa St., Naples, Florida was arrested by the Collier County Sheriff's Department on felony charges for allegedly FAILURE TO FILE SIX CONSEQUETIVE SALES TAX RETURNS. The Naples, Florida resident faces up to 5 years in prison and up to $5,000 in fines in addition to repayment of any taxes, interest, and investigation expenses. According to investigators, [name omitted] collected sales tax from customers in the auto repair business but during periods of 2007 through 2010, he failed to file sales tax returns as mandated by Florida law. Florida law requires business owners that provide auto repair services to act as a sales tax collection agent to the state and they must file returns and remit all sales tax collected to state of Florida. Unfortunately, there is a lot of confusion in the industry because a pure labor service is not subject to sales tax. However, if any tangible personal property transfers to the customer, then the whole transaction is subject to sales tax – even a drop of oil. Thus, the industry faces close scrutiny from the Florida Department of Revenue. Further, Florida sales tax is required to be separately stated on the customers invoice and Florida law mandates that the taxes collected be the property of the state from the moment it is collected from the customer. Therefore, despite putting these amounts in their own checking accounts, business owners must segregate sales tax collect and remit it to the state in a timely fashion/ The Internal Revenue Service is looking to return tax refunds that were not
delivered earlier this year because of mailing address errors. Taxpayers who did not get their refund in the mail as expected and believe their refund check may have been returned to the IRS should use the “Where’s My Refund?” tool on IRS.gov. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954. Nearly three-quarters of all individual income tax filers claim a refund on their annual tax return. Although the vast majority of those refunds are issued as direct deposits, nearly 30 million taxpayers request paper refund checks. The IRS recommends filing tax returns electronically and using direct deposit. Electronic filing eliminates the risk of lost returns and reduces errors on tax returns that can cause refund delays. Direct deposit prevents the possibility a check being returned to the IRS as undeliverable and ends the danger of paper checks being lost or stolen. Taxpayers should be aware that the IRS does not initiate contact with taxpayers by e-mail. E-mail informing taxpayers of pending tax refunds and asking for personal information are phishing scams. The agency urges taxpayers receiving such messages not to release any personal information, reply, open any attachments or click on any links to avoid malicious code that can infect their computers. The best way for an individual to verify if she or he has a pending refund is going directly to IRS.gov and using the “Where’s My Refund?” tool. 5 Things You Should know about Required Minimum Distributions (RMD) from Retirement Accounts5/16/2013 Required minimum distributions (RMDs) are amounts you are required to take from qualified retirement plans and IRAs in order to avoid a 50% penalty on insufficient annual distributions.
Here are 5 things to know: 1. If you turned 70 1/2 in 2012, for example, you must take your first RMDs before the end of this year unless you postpone it until April 1, 2013. However, postponement means taking two RMDs in 2013 and that can adversely impact taxation of Social Security benefits in 2013 and result in increased Medicare premiums for Parts B and D in 2015. 2. If you are still working, you can postpone your RMDs from company retirement plans until you retire; this rule does not apply to IRAs. 3. RMDs for IRAs can be taken from one or more accounts. Total up all IRAs and then decide from which one or more accounts to take the required distribution amount. This rule does not apply to qualified retirement plans; separate RMDs are required from each type of retirement plan. 4. No lifetime distributions are required from Roth IRAs for the owner, but beneficiaries usually must draw down the accounts over their lifetime (a special rule applies to spouses). 5. The penalty for insufficient withdrawals can be waived if you ask the IRS to do so. You must explain why you failed to take RMDs and show that you remedied the situation as soon as you discovered the insufficiency. April 15 is the annual deadline for most people to file their federal income tax return and pay any taxes they owe. By law, the IRS may assess penalties to taxpayers for both failing to file a tax return and for failing to pay taxes they owe by the deadline.
Here are some important points about penalties for filing or paying late: 1) A failure-to-file penalty may apply if you did not file by the tax filing deadline. A failure-to-pay penalty may apply if you did not pay all of the taxes you owe by the tax filing deadline. 2) The failure-to-file penalty is generally more than the failure-to-pay penalty. You should file your tax return on time each year, even if you’re not able to pay all the taxes you owe by the due date. You can reduce additional interest and penalties by paying as much as you can with your tax return. You should explore other payment options such as getting a loan or making an installment agreement to make payments. The IRS will work with you. 3) The penalty for filing late is normally 5 percent of the unpaid taxes for each month or part of a month that a tax return is late. That penalty starts accruing the day after the tax filing due date and will not exceed 25 percent of your unpaid taxes. 4) If you do not pay your taxes by the tax deadline, you normally will face a failure-to-pay penalty of ½ of 1 percent of your unpaid taxes. That penalty applies for each month or part of a month after the due date and starts accruing the day after the tax-filing due date. 5) If you timely requested an extension of time to file your individual income tax return and paid at least 90 percent of the taxes you owe with your request, you may not face a failure-to-pay penalty. However, you must pay any remaining balance by the extended due date. 6) If both the 5 percent failure-to-file penalty and the ½ percent failure-to-pay penalties apply in any month, the maximum penalty that you’ll pay for both is 5 percent. 7) If you file your return more than 60 days after the due date or extended due date, the minimum penalty is the smaller of $135 or 100 percent of the unpaid tax. 8) You will not have to pay a late-filing or late-payment penalty if you can show reasonable cause for not filing or paying on time. The Internal Revenue Service announced today that taxpayers will be able to start filing two major tax forms next week: Education Credits, Form 8863, and Depreciation and Amortization, Form 4562.
The IRS announced Simplified Option for Claiming Home Office Deduction Starting This
Year; Eligible Home-Based Businesses May Deduct up to $1,500; Saves Taxpayers 1.6 Million Hours A Year. The Internal Revenue Service today announced a simplified option that many owners of home-based businesses and some home-based workers may use to figure their deductions for the business use of their homes. In tax year 2010, the most recent year for which figures are available, nearly 3.4 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction). The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and recordkeeping burden on small businesses by an estimated 1.6 million hours annually. "This is a common-sense rule to provide taxpayers an easier way to calculate and claim the home office deduction," said Acting IRS Commissioner Steven T. Miller. "The IRS continues to look for similar ways to combat complexity and encourages people to look at this option as they consider tax planning in 2013." The new option provides eligible taxpayers an easier path to claiming the home office deduction. Currently, they are generally required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Taxpayers claiming the optional deduction will complete a significantly simplified form. Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method. Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees are still fully deductible. Current restrictions on the home office deduction, such as the requirement that a home office must be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option. The new simplified option is available starting with the 2013 return most taxpayers file early in 2014. Further details on the new option can be found in Revenue Procedure 2013-13, posted today on IRS.gov. Revenue Procedure 2013-13 is effective for taxable years beginning on or after Jan. 1, 2013. and the IRS welcomes public comment on this new option to improve it for tax year 2014 a A Very Merry Christmas to all of our friends that celebrate Christmas and Happy Holidays to everyone else!
Starting in January 2012, businesses that accept credit and debit cards when making sales to customers will receive IRS Form 1099-K from their credit card processing company. The 1099-K will report the total payment transactions for each tax year after 2010. The new reporting requirement is part of on-going government efforts to increase collection of income tax.
Form 1099-K was created as part of the Housing and Economic Recovery Act of 2008 to increase compliance in reporting sales income by merchants. Because the IRS also gets a copy of the form, it will help the agency to determine whether or not business owners are reporting correct sales figures on their tax returns. Not only must banks and credit card processing companies comply with the new reporting requirement, third-party networks such as PayPal and eBay, Inc. must also report total credit card transactions to their business customers who use their services to process online sales. Not every merchant will receive a Form 1099-K. Only those merchants who generated both a minimum of 200 transactions and $20,000 or more in sales will receive the form. Casual sellers should keep in mind that even though they may not receive a 1099-K, their sales income is subject to income tax and must be reported on their tax return. Knowing whether your online "garage sale" qualifies as a business in the eyes of the IRS can be tricky so please make sure you contact this office should you have any confusion about what is taxable and what is not. We’re here to help. |
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