Thursday, January 26, 2012

When Life Hands You Lemons, Ask if it has Anything Else in the Fridge...


I was visiting with a friend of mine who is in his late sixties. He has been in the trucking business for most of his adult life.  In fact, he owns a trucking company.  Now that he is getting a bit older, he has tried several times to sell the company.  He has tried to sell it to his son and to a couple of old friends.  Every time they started to take over, but because they don’t have his experience, they don’t know how to run the company, and he ends up taking it back.  As we talked, he admitted that he loved the trucking business.  He said, “The only way I will ever quit is if I go bankrupt.”  My friend is passionate about what he does.  Because of that passion he is good at it and successful. 

I have another young friend who is in his early thirties.  He doesn’t have a high school diploma let alone a college degree.  He has had a few setbacks in life and was going to, out of desperation, try and get a job working in a coal mine.  As I talked with him the other day, I asked him what he likes to do and what he thinks he is good at.  He told me that no one had ever asked him that before and that he had no idea.  A couple of days later I talked to him again, and he said he that likes to help people and make them laugh.  So we talked about how to go that direction instead of a career as a coal miner. 

These experiences remind me of on of my favorite sayings, “Many things in life will catch your eye, few will catch your heart.  Pursue those” (Author Unknown).  Many people spend their life stuck, taking what life gives them and trying to make the most of it.  They rationalize that it is ok because they feel that they don’t have any choices.  But they do have choices and so do you!  You can do and be anything you choose.  If there is one thing I have learned from life it is that when you choose to pursue your passions, you will be successful and happy. 

My mother used to say, “When life gives you lemons, make lemonade.”  That is a good positive attitude.  But I like to take it a step further.  I like to ask the question, “What if you don’t like lemonade?”  Why not trade those lemons for oranges or grapes or apples.  I would like to challenge each of you to discover your passions.  Think about what you really enjoy doing.  What do you feel strongly about?  What kinds of things would you do if money was not an issue?  What kinds of things would you do whether others thought you were ridiculous or not?  After a lifetime of doing what you might think is the right thing to do and what you think you have to do, it may be hard to discover your passions.  But give it some thought – find your passions!  As Dale Carnegie once said, “People rarely succeed unless they have fun in what they are doing.” 

Once you think of some things you are passionate about respond below.  I would love to hear what you are passionate about!

Saturday, January 21, 2012

Understanding the New Form 1099


Photo provided by 401K via Flickr.com

Last week I mentioned that there are changes in 1099 reporting this year 1099s can be tricky in general not to mention there is a lot involved in the changes, so I thought I would use this week’s blog post to expound a little on 1099s.  This is especially helpful for you ladies who own your own business.

There a couple of new rules to be aware of.  First, investment companies are now required to report the cost of investments, such as stocks, sold during the year on a 1099B.  This “basis” will help the company and the IRS when reporting investment sales. 

The second change is the addition of a form 1099K.  If you or your business have a merchant account and take payments from people by credit or debit card, the credit card processing company is now required to report those transactions to the IRS.  If you receive a 1099K this year, make sure you give it to your tax preparer, as there is now a special line to record it on.

Now that we have the new rules out of the way, let’s review who receives a 1099.  Form 1099s are sent to individuals, businesses, and/or attorneys who have been paid $600 or more by another company.  For example, if a company pays an independent web designer $500 a month to maintain their website, the company would need to send the web designer and the IRS a Form 1099 with the total amount you paid them.  So in this case the 1099 would report $6000.

There is one more instance where a 1099 is given, and that is for owners of rental properties who use property managers to maintain their rental properties.  The property managers must send the property owners a 1099 reporting the rental income from the properties—as long as the income was $600 or more.

1099s are an important tax document and they must be submitted to the IRS and sent to the respective recipients by a certain due date each year, which is January 31st.

I hope this has helped you understand 1099s a little better.  If you have any questions, post them below! I’d love to answer any questions you have!

You an also check out www.avoidbeingaudited.com to learn a lot of information just like this.

Saturday, January 14, 2012

Changes and Updates for 2011 Tax Preparation

The 2011 tax filing season is here, and as a accountant, I wanted to give you all some updates on some of the things that have changed as well as a few things that haven’t remained the same.
  1. There are changes in 1099 reporting this year.  Investment companies are now required to report the cost of investments, such as stocks, that you sold during the year on a 1099B.  This “basis” will help you and the IRS when reporting investment sales.  There is also a new form 1099K.  If you or your business take payments from people by credit or debit card, the credit card processing company is now required to report those transactions to the IRS.  If you receive either one of these forms you should review them, and if there are any amounts that are incorrect, bring them to the attention of the one who sent the form to you so they can correct it. 
  2. The Standard Deductions have gone up as usual.  For 2011 the deduction for Single and Married Filing Separate is $5800.  For Married Filing Jointly it is $11,600 and for Head of Household it is $8500. 
  3. The Standard Mileage Rate for 2011 is different for the first half of the year than the last half.  This happened once before in the year of hurricane Katrina.  Business travel will be $0.51 per mile the first half and $0.555 for the second half.  Medical and Moving Mileage is $0.19 for the first half and $0.235 the second.  But Charitable Work Mileage stays the same all year at $0.14 per mile. 
  4. The IRS is implementing a new efile system called MeF.  It is supposed to make efiles more accurate and process refunds better/ faster.   However, the system has not been tested with the anticipated tax return volume expected this year, so we will see how well it goes.
  5. The Child Tax Credit remains at $1000. 
  6. Qualified teachers may continue to deduct up to $250 of out-of-pocket classroom expenses. 
  7. You may continue to take the Sales Tax Deduction as an itemized deduction instead of deducting State Income Taxes. 
  8. The College Tuition and Fees deduction also remains in place. 
These are just a few of the changes this year.  You can go to avoidbeingaudited.com to learn more about changes in the tax system.  Also check out their tax organizers.  They'll help you capture all your deductions this year!