APRIL, 2013

Message from Nelson & Company, P.S., CPAs

Extensions, Extensions, Extensions?

Every year around April 15th, people tell us they need an extension because they can't pay their taxes. To repeat (for the umpteen-millionth time), extensions merely extend the time to file a return - not to pay the tax. All tax due must be paid by April 15th in order to avoid penalties and interest. An extension avoids only the 25% failure to file penalty - not the penalties for under or late payment, and not making estimated payment. It does not prevent the IRS from charging interest on any unpaid tax.

Tax Planning

Many folks have asked us what, exactly, is involved in tax planning. It's not so much what is involved, as it is timing. Tax planning is generally done between November 1st and December 31st. Since most taxpayers are cash basis, any monies must be paid to increase deductions must be spent by December 31st. Tax planning typically starts with calculating (projecting) what the year’s estimated tax will be for the current and following tax years. Then it must be decided what moves can be made before year-end, i.e. the amount of pension contributions, purchase of equipment, delays or accelerating expenses - it all depends on the individual person’s situation.


Individuals usually have a few days, to January 15th, to make their final estimated payment, whereas corporations usually have only 3 days from the end of the year to pay tax on owner's bonuses. The actual owner's bonus and payroll checks must be issued by December 31st.

New Form I-9

The Department of Homeland Security has issued a new I-9 Form. This form must be filled out within 24 hours of hiring a new employee. It does not have to be mailed in, but it must be maintained by the employer. You can find the form at: http://www.uscis.gov/files/form/i-9.pdf
We strongly recommend all employers keep a few forms on hand. This form is in addition to the employee filling out IRS Form W-4. DSHS Reporting –

New Requirement for Employers

NOTICE: Employers are required to provide new hire employee information to the State of Washington DSHS.
Required information is:

Employers can fax a copy of Form W-4 to Washington State DSHS at: 800-782-0624, but remember to include employee date of hire and date of birth on the form. Form more information about the new requirement, and to find out how to file online, go to the DSHS web site at: http://www.dshs.wa.gov/pdf/esa/dcs/18-463.pdf.

David S. Nelson, CPA, CTRS
NELSON & COMPANY, P.S.
Certified Public Accountants


IRS Times & Inquirer

Inside This Issue...

Terrell Owens Owes $430k in Back Taxes
Businessman Tried to Avoid Paying $250k in Taxes


Terrell Owens Owes $430k in Back Taxes

Terrell Owens, a six-time NFL Pro Bowl wide receiver, has caught an enormous tax bill from the Internal Revenue Service.

According to celebrity news web site TMZ, Owens — popularly known by his initials, T.O. — owes $430,000 in unpaid taxes for the years 2007 and 2009.

During the years Owens racked up the IRS debt, he had lucrative contracts to play football for the Philadelphia Eagles, Dallas Cowboys and Buffalo Bills.

Since not being re-signed by the Cincinnati Bengals after the 2010 season, Owens has struggled with his career. He played in 2011 in the Indoor Football League. Then, on Aug. 6, 2012, he signed a one-year contract with the Seattle Seahawks. Twenty days later, the Seahawks released Owens.

 


Businessman Tried to Avoid Paying $250k in Taxes

A Michigan businessman pleaded guilty to obstructing the IRS after evading payment and falsifying quarterly tax returns, resulting in a tax loss of more than $250,000.

George Adatsi, 49, of Lansing, Mich., owned two companies, Health Staffers Inc. and Health Staffers of Michigan Inc., which employed nurses and home health aides who provided health care services in private homes and nursing homes.

Adatsi admitted that he did not forward to the IRS $121,214 of the Social Security and Medicare taxes he had withheld from the employees and underreported employment taxes owed by an additional $129,929.

 


TAX TIP:


Use our non-cash charitable contribution valuation sheet to keep track of non-cash items you donate to charity. You can download it at: http://dnelsoncpas.com/sworksheets.htm
At the end of the year, all you'll need to do is simply total the number and value of the items you have donated.

Remember to save any receipts you get from your charities. Go to: http://www.irs.gov/taxtopics/tc506.html for detailed information.
--Our Policies-- www.DNelsonCPAs.com

Nelson & Company, P.S., CPAs Since 1979

====NOTICE REQUIRED BY IRS====
Circular 230 Disclosure:
To ensure compliance with requirements imposed by the IRS, we inform you that (i) any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used for the purpose of avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.

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