November/December, 2010 Newsletter
Olsen Thielen Holiday Greeting
Written by Newsletter Editor on December 6, 2010
All of 
us at Olsen Thielen Join in Saying
Thank You and Wishing You a
Happy Holiday and a
Prosperous New Year
Important W-2 and 1099 Filing Reminders
Written by Jilayne Leary on December 6, 2010
W-2’s
The Employee copies must be postmarked on or before January 31, 2011.
The due date for filing your 2010 Forms W-2 on paper or electronically with Minnesota Revenue is February 28, 2011. The Social Security Administration copy along with Form W-3 must be postmarked on or before February 28, 2011. For electronic submission the due date is extended to March 31, 2011.
Note: For tax year 2010, Forms W-2 must be electronically filed with Minnesota Revenue if you file more than 25 forms, and for tax year 2011 and beyond, Forms W-2 must be electronically filed if you have more than 10 forms.
Social Security Administration requires electronic submission if you file 250 or more Forms W-2. Read the rest of this entry »
Estate Tax Law Uncertainty Makes Planning a Challenge
Written by Joel Grundmeier, CPA, MST, CFP on December 6, 2010
In the past couple years there has been much talk by our politicians about the need to address the Federal estate tax laws. Yet most of 2010 is over and Congress has not addressed the Federal estate tax laws either for 2010 or future years. At this point it appears that Congress is prepared to let the Federal estate tax die for 2010, only to return again on January 1, 2011. Taxpayers and estate planning professionals are rightfully confused, as it could have significant implications for how estates are distributed. All in all, the situation is a HUGE mess, especially for those individuals with large estates.
The “Economic Growth and Tax Relief Act of 2001″ (EGTRRA) was intended to provide relief from the then $675,000 exemption and 55% tax rate. EGTRRA lowered the maximum estate tax rate to 45% and steadily increased the exemption amounts to $3,500,000 in 2009 and totally eliminated the Federal estate tax and generation-skipping tax (GST) in 2010. Unless Congress takes action, the estate tax will return again starting in 2011, with a $1,000,000 exemption and the previous 55% rate. Read the rest of this entry »
Tax Reminder–Document Your Charitable Contributions!
Written by Linda Nelson, CPA on December 6, 2010
As you make your year-end contributions and start putting your charity information together for your 2010 taxes, we remind you that:Donations must be made to qualified tax-exempt organizations to be tax deductible.
- All donations of $250 or more must be documented with a written acknowledgement from the recipient charity. For smaller donations, your cancelled check, credit card statement, donee acknowledgement, or payroll deduction statement are ok. Cash donations without documentation are not deductible.
- If you receive merchandise or services in return for your contribution (i.e. a charity event or auction purchase), your tax deduction is the amount in excess of the fair market value of the benefit you received.
- Non-cash contributions must be in good or better condition to be deductible–get a receipt here too!
- Non-cash contributions over $500 will require additional disclosures on your tax return.
What’s in a Number?
Written by Newsletter Editor on December 6, 2010
86 – Number of area codes originally assigned to all of North America by AT&T in 1947.
86 - Number of symbols in the Cherokee alphabet, as developed by Sequoyah and completed in 1821.
90 – Number of antique horses on Cinderella’s Golden Carousel at Walt Disney World.
94 pounds – Standard U.S. weight of a bag of cement.
111 - Emergency phone number in New Zealand, comparable to 911 in the United States.
111 – Number of articles in the Charter of the United Nations.
132 – Number of islands that make up the state of Hawaii.
132 – Number of rooms in the White House.
Benefits of an Up-to-Date Buy/Sell Agreement
Written by Laurel Sorensen, CPA on December 6, 2010
What would happen to your business in the event of premature death, disability, termination, or retirement of a partner or co-owner? Would the remaining owners have the funds available to continue the business? Would there be the risk of losing the business or would the remaining owners have to accept new or unwanted owners? Would the families of disabled or deceased owners be compensated fairly for their share of the business? How would the IRS value the business interest for tax purposes?
Having an up-to-date and properly funded buy/sell agreement in place can help provide the answers to these questions. A buy/sell agreement is a legally binding contract that spells out what will happen to a business when a specific “triggering” event occurs. The event could be death, disability, retirement or resignation. The agreement provides a business arrangement in which one owner or owners agree to buy the other owner or owners’ interest in the business, at a pre-determined price. Read the rest of this entry »
Rental Expense 1099 Requirements
Written by Mark Angell, CPA on December 6, 2010
On September 27, 2010, President Obama signed into law the “Small Business Jobs Act of 2010.” The bill contains a number of tax provisions that are designed to give tax breaks to individuals and small businesses. The bill also includes multiple revenue raisers in an attempt to pay for the tax breaks. Among the revenue raisers is the expanded use of Form 1099 to rental property owners.
Beginning January 1, 2011 rental property owners will be required to file Form 1099-MISC with the IRS reporting payments of $600 or more during the year for rental property expenses. Separate 1099’s must be filed for each person providing services of $600 or more during the year. The taxpayers will be required to provide a duplicate copy of the form to the service providers (painter, plumber, accountant, etc.).
The forms must be filed by January 31 of the year following the expense. The service providers are required by law to give the taxpayer his name, address, and Federal identification number to be used on the 1099. Rental property owners will need to include their own information and the total amount they paid to the recipient on the Form 1099.
Failure to comply with the law will result in increased fines. Individual violations result in fines from $30 to $100, with the maximum calendar year penalties ranging from $500,000 to $1,500,000.
As with any tax law, there are exceptions. Taxpayers who are temporarily renting their principal residence, or whose rental income does not exceed an IRS determined amount (which is TBD), will be exempt from the new filing requirements. For those whom the filing requirement would create a hardship, as defined by the IRS, would also be exempt from filing. For more information contact Mark Angell, CPA at 952-941-9242.
2010 Self Employment Health Insurance Deduction
Written by Mark Angell, CPA on December 6, 2010
The Small Business Jobs Act, signed by President Obama on September 27, 2010, provides self-employed individuals a tax break for the cost of their health insurance. For tax year 2010, the self-employed are allowed to deduct their health insurance premiums from self-employment tax as well as their income tax. Prior to the new law, health insurance (other than for employees), was not allowed as a deduction from self-employment income, only a deduction from income tax. The law serves to equalize for the self-employed taxpayer the treatment of health insurance as provided to employees.
Self-employment income is subject to 15.3% self-employment tax, as well as the regular income tax. Self-employment tax is made up of two parts: Social Security and Medicare. The Social Security portion is 12.4% and only applies to the first $106,800 of self-employment income. Medicare is 2.9% and does not have a ceiling.
The law will benefit all self-employed taxpayers eligible to claim the health insurance deduction. Those with self-employment income under $106,800 will experience a full 15.3% tax benefit for the cost of their health insurance. For more information contact Mark Angell, CPA at 952-941-9242.
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November/December, 2010 Newsletter
