THINK AN IRS AUDIT IS NO BIG DEAL ?
An audit can cost many times more than a tax return. That's because of the preparation for the audit, research, bookkeeping, and time spent with the auditor. The auditor can play hard-ball and force you to Appeals. All of that increases costs to you. We can help with that.
CAPITAL GAINS REPORTING
Expect to see a new Schedule D this coming tax year. The IRS has greatly complicated the process of reporting sales of stocks, bonds, and mutual funds. Now there are 6 possible categories for a transaction, depending on what the 1099-B has on it. There is a new 8949 Form to list transactions which then gets summarized on the Schedule D.
Since this is the first year brokerage firms will have to provide the new 1099-B, we can anticipate some delays and corrections.
WORKER MISCLASSIFICATION
A new California law makes the willful misclassification of employees as independent contractors unlawful and provides for severe penalties.The Labor Commissioner is now authorized to assess a civil penalty of $5,000 to $15,000 for each violation. It is not just for the employer; the fine applies to accountants, enrolled agents, and CPA's.
CELL PHONES NOT TAXABLE FRINGE
The IRS has ruled that the value of the business use of an employer-provided cell phone is tax-free as a working condition fringe benefit.
EMPLOYER'S HEALTH INSURANCE DEDUCTION
The deduction of self-employed health insurance from self-employment tax ended in 2010 and is not available in 2011.
IRS Examiners May Increase Small Corporation Audit
Small corporate clients may be subject to more exacting audits from the IRS in the near future. The Treasury Inspector General for Tax Administration (TIGTA) recently issued a report containing recommendations for improving the IRS's performance in audits of corporations falling within the purview of the IRS Small Business/Self-Employed Division (SB/SE).
