DATA SHARING 

Have you ever sent us your data as an email attachment? Have you experienced any problems in sending us your electronic accounting data? Have we ever traveled to your location to resolve a software issue? If you answered yes to any of these questions we have a solution to streamline your data sharing. It’s called Remote Accounting Solutions (RAS).  

Through our partnership with RAS, we can provide a simple, secure, cost effective way to share your accounting data. All you need is a computer and an Internet connection. Here’s how it works… Remote Accounting Solutions provides a secure online site to manage and share your accounting data with us. There is no software to learn or additional hardware to purchase. RAS handles all the setup, training and support. Generally setup of your first transfer will only take half an hour of your time.  

RAS can do more than transfer data. It also allows us to offer expanded telephone software support with more ease by using RAS Netviewer. This additional tool is available with the RAS service. We can provide live online support by connecting real time with your computer, we can see exactly what you see, by sharing your computer.  

If you are not already enjoying the ease of data sharing thru Remote Accounting, contact us to get set up.

new worker verification rules

Employers will soon be hit hard by new worker verification rules.  Firms that filed a lot of W-2 forms containing Social Security numbers for workers whose names do not match the names on the government’s records will be receiving notices this fall.  Employers will have 90 days to clear up discrepancies or fire those workers.  Firms that keep workers on the job face large fines from the Department of Homeland Security, unless they can show they took reasonable steps to verify identities.

Businesses are crying foul, saying the government is to blame for many of the mismatches…typos, problems with its database, etc.  They’ll join forces with unions and sue to block the regulations.

Source:  The Kiplinger Letter, August 24, 2007

HOW DOES A BUSINESS DEDUCT THE COST OF A GUARD DOG?

Guard dogs are depreciable assets.  With respect to herding dogs used by farmers, the explanation to the CCH US Master Depreciation Guide states:  “A farmer may use dogs to herd cattle, sheep, pigs, etc.  If such a dog is purchased (and, therefore, has a basis), it should be depreciable.  It appears such an animal is property without a class life and, therefore, has a seven-year recovery period.”  The cost of food, vet bills, etc. should be currently deductible.

 Source:  CCH Federal Tax Weekly, August 23, 2007

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CHILD & DEPENDENT CARE UPDATE

In 2004, the most recent year for which statistics are available, more than six million individuals claimed the child and dependent care tax credit on their tax return, but millions more may have missed out because of the complexity of deciphering the credit.  The IRS recently issued final regulations that aim to clarify some key attributes of the credit.

EMPLOYMENT-RELATED EXPENSES

The child and dependent care tax credit is a nonrefundable tax credit of between 20 and 35 percent of qualifying child care expenses to certain thresholds.  Expenses must by employment-related.  Employment-related expenses are primarily for household services or for the care of a qualifying individual and/or the taxpayer’s purpose in obtaining such services is to enable him or her to be gainfully employed.

The amount of the credit is equal to the applicable percentage of the employment-related expenses that may be taken into account by the taxpayer during the tax year.  The applicable percentage is 35 percent reduced by one percentage point for each $2,000, or fraction thereof by which the taxpayer’s adjusted gross income for the taxable year exceeds $15,000, but not less than 20 percent.  The amount of employment-related expenses that a taxpayer may take into account in any tax year is $3,000 for one qualifying individual and $6,000 for more than one qualifying individual.  (A qualifying individual is either the taxpayer’s dependent who is a qualifying child and has not reached age 13, the taxpayer’s dependent who is physically or mentally incapable of self-care and who has the same principal place of residence as the taxpayer for more than one-half of the taxable year, or the taxpayer’s spouse who is physically or mentally incapable of self-care and who has the same principal place of residence as the taxpayer for more than one-half of the taxable year.)

DAY CAMPS

The proposed rules provided that the full amount paid for a day camp or similar program could be for the care of a qualifying individual, although the camp specialized in a particular activity.  However, according to the proposed rules, expenses for overnight camps were not employment-related expenses.

The final rules adopt the proposed rules, but clarify that expenses for summer school and tutoring programs are not creditable.  Summer school and tutoring programs are education, not care, according to the IRS.  The final rules also clarify that the cost of services performed by a dependent care center or day camp are employment-related expenses only if such center or camp complies with state and local laws.

ABSENCES

The proposed rules provided that dependent care expenses for a period in which the taxpayer was absent from work were not employment-related expenses.  However, short, temporary absences from work by taxpayers who had to pay for dependent care expenses on a weekly, monthly or annual basis were considered employment-related expenses.  Whether an absence was short and temporary depended on the facts and circumstances.

The final rules primarily retain the proposed rules, but delete the provision that the temporary absence exception applied only to taxpayers who paid for care on a weekly or longer basis.  The final rules clarify that only costs that the taxpayer is required to pay during the absence qualify for the exception.

SCHOOLS

The proposed rules provided that the expenses of pre-school or similar programs below the kindergarten level were for care and may have been employment-related expenses, if otherwise qualified, although education was a significant part of the programs.  The proposed rules clarified the existing rule that expenses for programs at the level of kindergarten and above were primarily for education and were not employment-related expenses.

The final rules retain the approach in the proposed rules.  Although nursery school and other programs below the level of kindergarten also may include significant educational elements, these programs are still treated as programs for care.

Source:  CCH Tax Weekly: August 23, 2007