General Article

Miscellaneous Taxable Income

As more tax revenue is sought to alleviate the growing US government budget deficit, the IRS is working to assure reporting of income from all sources-including miscellaneous income. Expanded requirements are in place for reporting of paid amounts on Form 1099. In addition, the IRS requires tax professionals to follow ethical standards for helping taxpayers identify and report all sources of income. Enrolled agent continuing education requirements include an enrolled agent ethics course.

The fiscal deficits of state governments are also leading to increased scrutiny of income by state tax collection agencies. In addition to requirements for California tax preparers to guide taxpayers toward accurate income reporting, other states are initiating registration of tax preparers. Tax continuing education requirements in most of these states is similar to coursework for CA enrolled agents.

Many taxpayers neglect to account for income from miscellaneous sources, such as side jobs, bartered exchanges, gambling, contest winnings, prizes, and awards. Income from all of these sources is taxable. Such income is subject to income tax for US citizens even when earned in another country. It usually incurs state income tax for the state in which it’s earned.

Many types of income from odd jobs are not reported on Form 1099, usually because the amount paid by any single source is less than $600. This includes fees received for babysitting, lawn care, house cleaning, and repair services. All of these amounts are reportable by the recipient as self-employment income. The only exception is for recipients with income that’s too low to require filing a tax return. Ordinary and necessary expenses incurred to generate the income are deductible before calculating the tax liability. Self-employment tax is also assessed on this income.

Even when no money changes hands, income may be reportable. This occurs when property is exchanged for services in a barter arrangement. In such cases, the fair market value of the goods-or services-obtained in the exchange are taxable income.

Gambling winnings are taxable as miscellaneous income. This includes amounts received from casinos and racetracks plus winnings from lotteries, raffles, and tournaments. The full amount received is reported as income. Taxpayers who itemize deductions and have accurate records may deduct gambling losses up to the amount of gambling winnings.

In most cases, an amount received as a prize or award is miscellaneous taxable income. This includes cash prizes and the fair market value of any merchandise or products awarded.

These sources of income can have substantial effects on tax liability. Penalties apply when an insufficient amount of tax liability is paid through either withholding or quarterly estimated tax payments. This requires taxpayers with miscellaneous income to anticipate the tax consequences as well as accurately report final results. Enrolled agent continuing education provides the knowledge to help taxpayers address these matters.…

Advice From Enrolled Agent School Graduates Averts Big Tax Mistakes

Advice from a high quality tax expert helps people avoid mistakes they can make with limited information. A top source of assistance on tax matters is enrolled agents. Graduates of enrolled agent school learn about only tax subjects for their professional examination. By contrast, the CPA exam covers other topics.

Differences in the services of an enrolled agent vs. CPA became clear when national accounting firm KPMG marketed a tax shelter to owners of S corporations. As it turns out, the arrangement appears to have destroyed taxpayer S corporation elections.

The tax shelter involved S corporation shareholders donating shares to a tax-exempt entity. When the type of income was interest and dividends, the charity had tax-free income and did not incur tax on “unrelated business income.” During a pre-determined period, the S corporations made no distributions to shareholders. At the end of the period, the charitable organizations donated the shares back to the original owners.

The income that had accumulated tax-free within the corporations was then available for distributions to shareholders. Instructions from enrolled agent exam preparation convey that distributions to S corporation shareholders are not taxed because the shareholders have already paid tax on the corporate income. But the KPMG program sheltered the income from tax. The result was nontaxable distributions on income that was never taxed.

It all seems like a neat way to legally avoid tax. However, enrolled agent classes reveal that nothing is ever neat when applying the tax code. The work is always fraught with difficulty and challenges.

One of the measures KPMG had to implement in the tax shelter was assurance that the stock shares would revert back to an original owner. To protect against a charity’s refusal to return shares, warrants were issued to the original shareholder. These warrants enabled potential purchase of a large number of new shares that could dilute the charity’s holdings into insignificance. In addition, shareholders retained control over their S corporations during the donation periods by only donating non-voting stock. They retained a separate class of all the voting shares.

These facts would have raised an eyebrow of any IRS enrolled agent if only a purchaser of the KPMG tax shelter had consulted with one. The troubling feature of the entire program is the multiple classes of stock. S corporations can only have one class of stock. Distribution and liquidation rights must remain identical for all shares.

The court pointed out that warrants are alternative “instruments, obligations and arrangements” that are prohibited for S corporations. That is, the warrants prevent the charity from future enjoyment of the full rights of distribution and liquidation. This case points out the trouble with S corporations using warrants or options to achieve discriminatory results among shareholders. Adding that information to EA continuing education can allow enrolled agents to save many taxpayers from the agony of losing S corporation status.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.…

Help Your Child Build Skills During the Summer Months With Continuing Education

You can enroll your child in on of the countless continuing education programs out there today for young children and help him mold his brain while school is out of session. He may be upset with you for making him go to school while his friends are out playing, but he will thank you later on for how ahead it put him in the education game.

Many churches offer summer bible camps that allow students the opportunity for continuing education on their religion. Or, there are also countless summer camps that you can enroll your child in to give them the opportunity to learn more about building important life skills while meeting and reconnecting with kids his own age.

You are also sure to find continuing education programs put on by the local school districts, art centers, science centers or language programs. For example, you could enroll your child in an intensive Spanish language course to help him learn the language before taking the class this fall in school.

The opportunities to engage your child in education and positive activities during the summer is endless, as long as your child is a willing participant. If he is adamant that he does not want to participate in anything that does not involve sitting on the couch or lounging by the pool, let him know that his choices now will affect everything in his future life: from his future allowance increases to the colleges he can choose from in the future.

He may not react to the college part now, depending on his age, but he will most likely recognize the importance of his decisions when his allowance is involved! You can use this as a powerful bargaining chip when discussing summer continuing education options.

This will pay off for you in the future. Your child will no doubt come to you one day and thank you for the extra push you gave him on his educational path. He will understand how important it was when he realizes how far ahead of his peers he is and how many more options he will have in his life resulting from the summer continuing education classes he had to take. So pull him off the couch and into the world of education!…

CPA Continuing Education Now Available Online

CPA continuing education courses are now available online covering a variety of subjects including Ethics, Management, Taxation and Accounting and Auditing. Online courses are the modern equivalent of old-fashioned correspondence school. In the old model of distance learning however books were sent through the post, you marked the workbook, completed the final test and returned the entire package. It could be weeks before your work was graded and you received your certificate of completion. In addition, due to the fact that verification was difficult many professional courses required you to take the final test at a local testing center. The internet has made the entire process more efficient.

CPA continuing education courses on the internet provide flexibility and ease of completion that far outstrips the old correspondence system. Now you simply go to the website, create a unique username and password and your progress is automatically tracked every time you log on. They system will keep track of such administrative proofs as number of hours logged and test scores. This leaves you free to concentrate on the course material and the new concepts you will be learning. In addition, upon successful completion of the course the system will issue an e-certificate immediately and in the cases where it is necessary a hard copy will be sent in the mail.

Learning over the internet is the height of flexibility and convenience. Because web-pages are available 24 hours a day, 7 days a week your CPA continuing education training program is available around the clock. This means you can log on at your convenience and it does not have to be at the same time every day. In addition you can access your training from anywhere there is an internet connection – home, the office, the local library, a coffee shop with WiFi. It couldn’t be easier to get the training you need when you want it.

CPA continuing education courses covering a variety of subjects are available to you any time at the touch of a button. Far more elegant than old fashioned correspondence courses this new generation of distance learning courses is so convenient you will find yourself taking personal development and career building courses as well as the maintenance and refresher courses needed for licensing. Try it out for yourself and discover how the flexibility and convenience of online training can give you a real boost in business and career knowledge.…

Radiology – Continuing Education State Requirements

The ARRT requires that technologists earn 24 Category A or A+ credits of continuing education during their biennium. A maximum of 12 CE credits per biennium may be claimed for tumor boards. Effective January 1, 2011, the maximum number of CE credit for applications facility training will be capped at 8.0 Category A credits. Directed readings, home study courses, or Internet activities reported in a biennium may not be repeated for credit in the same or any subsequent biennium. Lecture presentations may not be repeated for credit in the same biennium. The 24 CE credits may also be earned by passing a primary or a post-primary examination in a discipline not previously passed and for which the individual is eligible and which the ARRT recognizes for this purpose. Most states follow the ARRT’s guidelines for CE requirements. The following states have specific rules which differ from, or are in addition to, the ARRT requirements:

TEXAS

At least 3 hours of the required number of hours shall be satisfied by attendance and participation in instructor-directed activities.

No more than 21 hours for MRTs or 9 hours for LMRTs of the required number of hours may be satisfied through verifiable independent self-study. These activities include reading materials, audio materials, audiovisual materials, or a combination thereof.

At least 50% of the required number of hours must be activities which are directly related to the use and application of ionizing forms of radiation to produce diagnostic images and/or administer treatment to human beings for medical purposes.

CALIFORNIA

Certified Radiologic Technologists possessing a current Mammographic Radiologic Technology Certificate are required to earn at least 10 of those 24 approved CECs in mammography and to perform at least 200 mammographic examinations.

An approved continuing education credit means one hour of instruction received in subjects related to the application of X-ray to the human body.

Please note that “subjects related to the application of X-ray to the human body” may include X-ray administration, X-ray management, X-ray pathology, X-ray diagnosis and X-ray quality control. However, subjects in MRI, Ultrasound, CPR, or other topics not related to the application of X-rays to the human body cannot be accepted. It is the responsibility of the certificate or permit holder to ascertain the acceptability of courses.

FLORIDA

All CE taken in Florida must have an approved provider number and course number on the certificate. This includes home study courses, Internet courses and self-learning activities.

No more than 3 of the 12 hours required by Florida each biennium can be in the personal development category (CPR, etc.) – the rest must be technical (radiation protection, equipment operation, etc.).

IOWA

CT Technologists- Complete 6.0 hours of continuing education in CT-related subjects each two-year reporting period. These hours may be a part of the 24.0 hours of continuing education required.

General diagnostic radiographer: Complete 1.0 hour of continuing education in radiation protection.Individuals not holding the additional category in CT may not submit continuing education hours in CT.

Nuclear Medicine technologist- One clock hour in principles of radiation protection and exposure each year, a total of two hours each two-year period. One clock hour in quality assurance each year, a total of two hours each two-year period. The remaining 20 clock hours of continuing education in each two-year period must be in subjects directly related to nuclear medicine procedures.

All other states adhere to the CE requirements set forth by the ARRT.

It’s your responsibility to keep up on your CE credits. Make sure you know your state’s rules before it’s too late.…

Tax Impact of Real Estate Purchase Closing Costs

So many different types of costs are involved in a real estate purchase that a special report is provided at closing. A frequent question of taxpayers is how much of the closing costs are tax-deductible. Details about the tax impact of each item is covered in a CPE course for tax professionals.

Acquisition costs include title insurance, recording fees, legal fees, survey fees, document preparation fees, and any other expenses associated with purchase. These amounts are added to the cost basis of the property. Doing so reduces a future gain from the property sale. Basis is also used to calculate depreciation when the acquired property is rental real estate. Retaining the closing statement as a record of cost basis is therefore very important. The tax assistance of enrolled agents requires records of the taxpayer.

Real estate taxes are deductible in the year they are paid. The owner of a property pays the entire property tax bill before the due date. This means that a seller usually reimburses a purchaser at closing with an advance covering the seller’s pro rata time of ownership. This reduces the purchaser’s part of the tax-deductible real estate taxes. However, a buyer adds to cost basis any reimbursement to the seller for real estate taxes the seller paid in advance of the due date. Other amounts, such as a few days of rent, paid by the seller reduce the purchaser’s basis.

No tax deduction is available for amounts paid to an escrow account with the lender. These are simply advances for future real estate taxes and insurance. The real estate taxes paid from the escrow account are deductible when paid later. Enrolled agents are qualified to help taxpayers with common matters like these itemized deductions as well as unusual tax situations. Basic topics are covered in free CPE available to enrolled agents.

Fees charged by a mortgage company for items such as a credit report or an appraisal are not tax-deductible. Premiums for mortgage insurance are deductible when the property is a residence. Other costs paid to the lender include pro rated interest for a partial month and points associated with the mortgage. Interest is tax-deductible. Points are also deductible when incurred for purchase of a principal residence. For rental real estate, points are amortized as a deduction over the life of the mortgage.

There are other considerations involved in purchasing real estate. A basic concept is that the purchase involves both land and a building. For rental property, only the building is depreciated. The land value is segregated and not depreciable.

Addressing the tax treatment of various closing costs is tricky for most purchasers of real estate. Taxpayers in this circumstance can locate professional assistance from the membership of an enrolled agent association.

Another possible acquisition technique involves a like-kind exchange. These purchases involve only business or investment property. The cost basis in a like-kind exchange includes the adjusted basis of the property relinquished in the exchange. The tax impact from selling the relinquished property is transferred to the acquired property. This defers the payment of tax on the relinquished property. Accomplishing a tax-deferred like-kind exchange involves following some specific procedures required by the IRS. Tax professionals learn to correctly handle these situations in their tax continuing education.

IRS Circular 230 Disclosure

Pursuant to the requirements of the Internal Revenue Service Circular 230, we inform you that, to the extent any advice relating to a Federal tax issue is contained in this communication, including in any attachments, it was not written or intended to be used, and cannot be used, for the purpose of (a) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code, or (b) promoting, marketing or recommending to another person any transaction or matter addressed in this communication.…

Continuing Education Courses for Everyone

Education is one of, if not the most valuable attributes an individual can have. With education someone is able to solve problems, sell products, analyze data, and much more. There are many different types of continuing education available. There is industry specific continuing education. This type of education is usually required by the state and enforced by state legislature. Some common forms of continuing education are continuing legal education (for lawyers), insurance continuing education (for insurance agents), real estate continuing education (for realtors) and adjuster continuing education (for public and insurance adjusters). These are just a few of the regulated professions out there. Most of these professionals do their continuing education either online or in a classroom to meet their compliance deadline.

Another type of continuing education is for individuals who want to go back to school to enhance their resume, change career fields or move up in their current company. Formal education at a college or University is one of the most widely used resources for everyone. College classes used to be done on campus, but now with technology changing online courses for adults have taken a huge leap. They are now almost as popular as adults continuing their education in a classroom. Many students complete a bachelor’s degree then work full-time for 15-20 years. They then find out they need higher education to continue to advance their career. This is where online education comes into play. Adults are able to balance their career, school, and their families at the same time. With the economy changing, other online students decide to go back to school for a complete career change. The healthcare industry for example has been booming. So a Master’s in Healthcare Management has been a popular degree choice over the past five years.

Adults are not the only ones utilizing online courses. Many 18-25 year old students also pursue online education. Many feel online education is more flexible and easier to do. They also like the fact they are learning the same material whether in a classroom or online. This was a major issue some time ago. Employers perceived online education as a “discounted” degree and only hired graduates from a campus based institution. Times have definitely changed! Now, large Universities such as Penn State, Drexler, and even Harvard offer online classes and online degree programs. These larger accredited institutions have really helped change the perception of an online degree.…