IRS Multilingual Gateway Offers Online Help in Other Languages

If you speak English as a second language, the IRS online Multilingual Gateway may be a good alternative for you to get the information you need to file your federal tax return. The Gateway provides basic federal income tax information in Chinese, Korean, Russian, Vietnamese and Spanish.

The Multilingual Gateway offers expanded online language services to individuals, small businesses and international taxpayers. Embedded links allow you to obtain tax filing information and products in your native language.

The Multilingual Gateway, found by clicking "Other Languages" on the top right of the IRS.gov homepage, features:

• Downloadable files
• Links to other sections on IRS.gov
• Uniform index for all languages
• Access via a user friendly link: IRS.gov/languages
• Files you can read online or download and print

The IRS.gov website service is designed to be a user-friendly resource as part of increased IRS efforts to better help taxpayers with Limited English Proficiency.

Links:

• Multilingual Gateway
• 中文 (Chinese)
• 한국어 세무 정보 (Korean)
• Налоговое Упраление СШA на русском языке (Russian)
• Tàì Liệu về thuế (Vietnamese)
• Información en Español del IRS (Spanish)

Retirement Savings Contributions Credit

Eligible low-income taxpayers may claim a nonrefundable credit for contributions to elective deferral plans or individual retirement accounts (IRAs) (Code Sec. 25B).  This credit is commonly referred to as the “retirement savings contributions credit” and has also been referred to as the “saver’s credit.”  The credit amount equals the eligible taxpayer’s applicable percentage, determined by filing status and adjusted gross income (AGI), multiplied by the total qualified retirement savings contributions (not to exceed $2,000) for the tax year.  The maximum credit amount is $1,000.  The credit is in addition to the exclusion or deduction from gross income for making elective deferrals and IRA contributions that are otherwise allowed.

Eligibility. To be eligible for the credit, a taxpayer making a contribution to a qualified retirement savings plan must be at least 18 years of age at the close of the tax year, must not be claimed as a dependent by someone else, and must not be a full-time student.  A qualified retirement savings plan contribution is the sum of:

·        Contributions to a traditional or Roth IRA (other than rollover contributions);

·        Any elective deferrals of compensation to a 401(k), 403(b), tax-sheltered annuity, or SIMPLE or SEP plan.

·        Any elective deferrals of compensation to a Code Sec. 457(b) plan of a state of local government or tax exempt organization; and

·        Any voluntary employee contributions to any qualified retirement plan.

Claiming the Credit. Form 8880 is used to calculate the amount of the credit, which is then reported on Form 1040.  For 2011, the credit is phased out when AGI exceeds $56,500 for joint return filers, $42,375 for heads of households, and $28,250 for single and married filing separately.  The applicable percentage is the percentage as determined by the inflation adjusted income ranges for 2011 in the following table:

AGI Joint Return Applicable Percentages Over Not Over 0  $  34,000 50%  $   34,000  $  36,500 20%  $   36,500  $  56,500 10%  $   56,500 -------- 0% Head of Household Applicable Percentages Over Not Over 0  $  25,500 50%  $   25,500  $  27,375 20%  $   27,375  $  42,375 10%  $   42,375 -------- 0% All other cases Applicable Percentages Over Not Over 0  $  17,000 50%  $   17,000  $  18,250 20%  $   18,250  $  28,250 10%  $   28,250 -------- 0%

For Example: if your AGI is $30,000, you contribute $2,000 into a Roth IRA, your 18, and not a dependent on someone else’s tax return; you will get a credit of $1,000. 

This information was quoted from the book “U.S. Master Tax Guide.”

Blog Pages

For those interested in learning the 1040, we have set up an easy way to learn the main parts of the 1040 on the '1040' page.  'New Tax Laws' page will help prepare you for this tax season.  'Meet the Staff!' page inlcudes a video of Max Jr.

American Sign Language

I know ASL for those who are deaf.  My wife is deaf and went to ISD.  We went to ISD basketball homecoming on Saturday.  We had a blast.  If you need help with your tax return, I would be pleased to help.

Heads or Tails? Greatest Entrepreneurs

Eight people are backed up to the edge of a cliff, and each flips a coin three times.  Heads means a step forward; tails, a step back, or utter failure.  By straight probability, half the field falls off the cliff after the first flip.  On the second flip, two will advance another step and two will return to the start, likely terrified to flip again knowing that the cliff is behind them once more.  On the final flip, probability dictates that one will fall off the cliff, two will end up a step ahead and one will be in quite an enviable position-two full steps ahead of the nearest competitors and three ahead of the start point.

This is an example given in the magazine “Entrepreneur.”  The article by Sam Hogg goes on to say, “Probability alone would allow some people to succeed time after time.  Being able to distinguish among people with talent and people just filling probability’s quota is not easy.  It is arguable that those who have failed bring just as much, if not more, to the table but must work much harder to get another chance.  Perhaps that is why many of the greatest entrepreneurs have racked up multiple failures as well.”

7 financial tasks

1.      Read your credit card agreements – If there’s something you don’t understand, now is a good time to dial up customer service and ask for clarification.  Sometimes the answers are obvious – but sometimes they’re not.

2.      Check your service levels – Are you still paying for a gym membership you no longer use?  Forking over a fortune for deluxe cable when you mainly watch Hulu?  Go through you monthly bills and cancel the services you don’t need.

3.      Ask for lower rates – As you review your bills, pick up the phone and ask (politely) for a discount.  It takes only a few minutes to call the cable company, and they just might cut you a break.  But remember: You always have the right to ask for a discount, but its not your right to receive one.  If the answer is no, don’t be a jerk.  Thank the representative and move on.

4.      Optimize your bank accounts – For 17 years, I (J.D. Roth) was an account holder at a large national bank.  I paid an $8 service charge every month, yet I received terrible service and earned no interest.  Eventually I wised up; I switched my checking account to a local credit union and moved my savings to an online high-yield savings account.  You should, too.  To find the best deals, check out bankrate.com or moneyrates.com.

5.      Inspect your investments – examine investment balances and asset allocation to ensure that things are going according to your investment plan.  Don’t have an investment plan?  Start by reading a good introduction, such as Burton Malkiel’s The Random Walk Guide to Investing.

6.      Review your insurance – Are you carrying policies with three different companies?  Consolidate.  Check the deductibles on you auto and homeowners insurance.  Can you afford to raise them and pay the first $1,000 in case of loss?  Is your liability coverage high enough?

7.      Reread your lease or rental agreement – If you rent your home or office, make sure you’re clear on the terms.  While you’re at it, consider asking for a rent reduction.  Sound crazy?  If you’re a good tenant and regularly pay on time, it’s not so far-fetched.

J.D. Roth is the founder of all these ideas.  I, Max Woodbury, did not come up with these 7 tasks.  Check out his blog at getrichslowly.org.

Best Financial Calculators online!

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Tax

Oxford Dictionary Definition
n. money compulsorily paid to the state.  v. impose a tax on; make heavy demands on.  tax return a form declaring income for a particular year, used for tax assessment.  taxation.




Welcome to Max S Woodbury, CPA, LLC for your tax assessment.

CPA SUPERHEROES

My friend Justin Hayes was chosen as a CPA SUPERHEROE by the INCPAS!  Congratulations Justin.

Life Insurance

The purpose of life insurance is to keep your family financially alive if you die.  A good amount of life insurance to have is 8.5 to 10 times your annual income.  So if your annual income is $30,000, purchase around $250,000 to $300,000 worth of life insurance. 

Term is the least expensive life insurance.

Problems with whole life insurance:

1.      “You can borrow your cash value.”

a.      If you need money, you can borrow your cash value at a low interest rate of 5% to 8%.  The insurance company is charging you interest on your own money that you overpaid in premiums.

2.      “Your policy will eventually be paid up.”

a.      Most everyone loves the idea of a paid-up policy; at a point in time that means no more yearly premiums.  In reality, a paid-up policy is created only by overpaying your premiums.  The overpayment will eventually be used to pay your future premiums.  Therefore, all paid-up policies are just prepaid policies.

3.      “You’ll be earning interest.”

a.      The interest you earn is added to your cash value.  The cash value is the amount of premiums you have paid over a number of years (paid $1,000 in  premiums for 20 years. Cash value = $20,000).  You earn interest on the premiums you paid and the interest is added to your cash value.  The cash value is then given to the insurance company when you die and your family gets the Death Benefit (face value).

4.      “Your insurance policy is a tax shelter.”

a.      “You can borrow money from your insurance company tax free.”  You can borrow money anywhere tax free.  There are no income taxes on borrowed money. 

b.      Insurance proceeds at the time of death are subject to estate taxes.

5.      “If you buy life insurance when you’re young, it will cost less.”

a.      Yes because you will pay greater total premiums over a longer period of time.  For example, mortgage payments are less each month on a 30 year mortgage than a 15 year mortgage.  The 30 year mortgage costs more over time due to interest.

Never buy life insurance on a child unless he/she is in a commercial on tv making money or some other form of income.

My source is Charles J. Givens book “More Wealth Without Risk.”  Copyright 1988, 1991  

2012 Combined Traditional and Roth IRA Contribution Limits

If you are under 50 years of age at the end of 2012: The maximum contribution that you can make to a traditional or Roth IRA is the smaller of $5,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $5,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified adjusted gross income (modified AGI).

If you are 50 years of age or older before the end of 2012: The maximum contribution that can be made to a traditional or Roth IRA is the smaller of $6,000 or the amount of your taxable compensation for 2012. This limit can be split between a traditional and a Roth IRA but the combined limit is $6,000. The maximum contribution to a Roth IRA and the maximum deductible contribution to a traditional IRA may be reduced depending upon your modified AGI.

1099

1099 Instructions for Recipient

Recipient's identification number. For your protection, this form may show only the last four digits of your social security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN). However, the issuer has reported your complete identification number to the IRS and, where applicable, to state and/or local governments (Max S Woodbury, CPA, LLC is the issuer!). Account number. May show an account or there unique number the payer assigned to distinguish your account.

Amounts shown may be subject to self-employment (SE) tax. If your net income from self-employment is $400 or more, you must file a return and compute your SE tax on Schedule SE (Form 1040). See Pub. 334 for more information. If no income or social security and Medicare taxes were withheld and you are still receiving these payments, see Form 1040-ES (or Form 1040-ES(NR)). Individuals must report these amounts as explained in the box 7 instructions on this page. Corporations, fiduciaries, or partnerships must report the amounts on the proper line of their tax returns.

Form 1099-MISC incorrect? If this form is incorrect or has been issued in error, contact the payer. If you cannot get this form corrected, attach an explanation to your tax return and report your income correctly.

Box 1. Report rents from real estate on Schedule E (Form 1040). However, report rents on Schedule C (Form 1040) if you provided significant services to the tenant, sold real estate as a business, or rented personal property as a business.

Box 2. Report royalties from oil, gas, or mineral properties, copyrights, and patents on Schedule E (Form 1040). However, report payments for a working interest as explained in the box 7 instructions. For royalties on timber, coal, and  iron ore, see Pub. 544.

Box 3. Generally, report this amount on the “Other income” line of Form 1040 (or Form 1040NR) and identify the payment. The amount shown may be payments received as the beneficiary of a deceased employee, prizes, awards, taxable damages, Indian gaming profits, or other taxable income. See Pub. 525. If it is trade or business income, report this amount on Schedule C or F (Form 1040).

Box 4. Shows backup withholding or withholding on Indian gaming profits. Generally, a payer must backup withhold if you did not furnish your taxpayer identification number. See Form W-9 and Pub. 505 for more information. Report this amount on your income tax return as tax withheld.

Box 5. An amount in this box means the fishing boat operator considers you self-employed. Report this amount on Schedule C (Form 1040). See Pub. 334.

Box 6. For individuals, report on Schedule C (Form 1040).

Box 7. Shows nonemployee compensation. If you are in the trade or business of catching fish, box 7 may show cash you received for the sale of fish. If the amount in this box is SE income, report it on Schedule C or F (Form 1040), and complete Schedule SE (Form 1040). You received this form instead of Form W-2 because the payer did not consider you an employee and did not withhold income tax or social security and Medicare tax. If you believe you are an employee and cannot get the payer to correct this form, report the amount from box 7 on Form 1040, line 7 (or Form 1040NR, line 8). You must also complete Form 8919 and attach it to your return. If you are not an employee but the amount in this box is not SE income (for example, it is income from a sporadic activity or a hobby), report it on Form 1040, line 21 (or Form 1040NR, line 21).

Box 8. Shows substitute payments in lieu of dividends or tax-exempt interest received by your broker on your behalf as a result of a loan of your securities. Report on the “Other income” line of Form 1040 (or Form 1040NR).

Box 9. If checked, $5,000 or more of sales of consumer products was paid to you on a buy-sell, deposit-commission, or other basis. A dollar amount does not have to be shown. Generally, report any income from your sale of these products on Schedule C (Form 1040).

Box 10. Report this amount on Schedule F (Form 1040).

Box 13. Shows your total compensation of excess golden parachute payments subject to a 20% excise tax. See the Form 1040 (or Form 1040NR) instructions for where to report.

Box 14. Shows gross proceeds paid to an attorney in connection with legal services. Report only the taxable part as income on your return.

Box 15a. May show current year deferrals as a nonemployee under a nonqualified deferred compensation (NQDC) plan that is subject to the requirements of section 409A, plus any earnings on current and prior year deferrals.

Box 15b. Shows income as a nonemployee under an NQDC plan that does not meet the requirements of section 409A. This amount is also included in box 7 as nonemployee compensation. Any amount included in box 15a that is currently taxable is also included in this box. This income is also subject to a substantial additional tax to be reported on Form 1040 (or Form 1040NR). See “Total Tax” in the Form 1040 (or Form 1040NR) instructions.

Boxes 16–18. Shows state or local income tax withheld from the payments.

http://www.irs.gov/pub/irs-pdf/i1099k.pdf
 Here is the 1099-K instructions from IRS.gov

Chamber of Commerce

Max Woodbury Sr and Max Jr went to the first company Chamber of Commerce meeting yesterday.  We had a great time.  Met a great deal of members of the community.  We enjoyed going and encourage all business to join the Chamber of Commerce.

Google +

https://plus.google.com/101072266954899928624
This is a site where you can view more information about the company and the employees.  Check it out.

Does a Simple IRA Contribution show up on W-2?

If the employee contributes to the IRA - Yes it does.  If the company contributes to the IRA - No it does not.

Tax Return Folders

Which one do you like the best?

tenenz.com


minepress.com

Prepare for Tax Year

·        No charitable IRA donation: expired 12/31/2011.  IRA owners age 70 ½ or older were able to donate up to $100,000 of assets per year to a tax-exempt charity.
·        No AMT patch: An inflation adjustment for the AMT has expired…So taxpayers making quarterly estimated payments must choose between paying higher amounts they may never owe and risking underpayment penalties if there isn’t a fix.
·        Transportation tax benefits: For 2012, employees may set aside only $125 a month in pretax dollars to pay for transit and commuter bus benefits, down from $230 last year.
·        Inflation adjustments for 2012: The top 35% income-tax rate, both for joint and single filers = $388,350, up from $379,150.  Max contribution to 401(K) & 403(B) is $17,000, up from $16,500.  SS tax cap rises to $110,100 from $106,800 last year.

·        New for 2011 Returns:

o   April 17 is due date for filing tax returns.

o   The cost basis of stock shares bought in 2011 will not be reported to the IRS.  Only when the shares are sold.

o   Foreign bank account:  If you have one you must fill out a new form for the IRS.  Due June 30^th.

o   BIG CHANGE on Schedule C:  LOOK AT THIS: “Did you make any payments in 2011 that would require you to file form(s) 1099?”  AND “If ‘YES,’ did you or will you file all required forms 1099?”

All my information came from the WSJ January 7th - 8th

Newspaper

In our office sits today's WSJ.  We have ordered the WSJ to have it everyday.  For your convenience, as you wait on an answer about your tax return, sit down and enjoy reading a copy of the WSJ!

Letters to Numbers FUN!

CLUES:

1. G * G = F + H
2. B * G * J = A
3. B * D = D
4. D + D = G + J
5. E + H = B + C + F

Each letter represents a different number from 1 - 9.  What letter represents what number?

HINT: Since D + D = G + J, G + J must equal an even number.

Ask me for the answer!

"Bankruptcies Trending Down"

The Daily Journal mentioned Johnson County numbers for bankruptcies:

• 2011 : 974 Bankruptcies
• 2010 : 1208
• 2009 : 1225

Deaf Accountant

Max Jr. knows American Sign Language.  If you are deaf and need help this tax season give us a call on skype: maxwoodburycpallc is our skype name.

Max Sr.

Max Sr. accomplished and received his CPA license in the 70's.  He has been performing tax work ever since then.  He is licensed in the states of California, Florida, and Indiana.  He is an expert in completing tax returns for farmers and their farming business.

Free Quickbooks Lesson!

Max Jr. will give anyone who comes in this week a free Quickbooks Lesson.  The topic of your choice.

Eagle Scout

On my honor I will do my best to do my duty to God and my country and obey the scout law, to help other people at all times, to keep myself physically strong, mentally awake, morally straight ---Scout Oath

A scout is trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, brave, clean, and reverent ---Scout Law

Max Jr. is an Eagle Scout and he lives the Scout Oath and Scout Law

The Best

Best Retiring Planning Calculator : www.etrade.com/quickplan
Best Money Market Account : http://banking.salliemae.com  Earn 1.1% interest
Best Solo 401(K) Resource : www.401khelpcenter.com
Best Roth IRAs for Kides : www.scottrade.com or www.etrade.com Any child who earns income from a job can contribute to a Roth IRA with no minumum - balance requiremt or annual maintenance fee.
Best Fund for Dividends : Vanguard Dividend Growth (VDIGX)
Best ETF for Commodoties : GreenHaven Continuous Commodity Index (GCC), with its 3-year annualized 6.4% return, is a good inflation hedge with broad exposure to commodities.
Best Site for Health Insurance Quotes : ehealthinsurance.com
Best Stock for Dividends : Chevron (CVX)

This information is from Kiplinger's Personal Finance : www.kiplinger.com

January 1st, 2012

Happy New Year!  Write in your journal.