Find out what Kevin “Not your ordinary bean counter” Minkoff, CPA, says to look out for – as you file your federal and state income tax returns this year …
At this “Lunch and Learn” session presented by Foster Area Business Association, Kevin Minkoff, CPA, says that the tax codes are changing more rapidly than ever – and every change can be an opportunity or a liability.
Story and photos by David F. Ashton
Over past decades, federal and tax laws changed at a relatively leisurely pace, as compared to the last year or so.
“Beware of these numerous changes; they can have a major impact on taxpayers,” was the message that Kevin Minkoff, CPA, delivered to members and guests of the Foster Area Business Association (FABA) on February 23, when they met at the New Copper Penny in Lents.
“Six or seven years ago, there are ‘only’ about 9,600 pages of the Internal Revenue Service (IRS) Code,” Minkoff began. “Today, the IRS Code contains more than 17,000. Most of that 8,000-page increase happened just in the last two years.”
These rapid and numerous changes, Minkoff quipped, “mean that your federal and state legislators have been ‘working overtime’ on your behalf – and it also means I’ll have a busy career until I retire.”
The accountant went on to point out that there were seven tax law changes in 2009; and ten tax law bills enacted last year in 2010.
17 tax law bills were passed, changing and modifying the tax code as we know it.
That is in comparison to the previous two years – 2007 and 2008. There were eight tax law bills enacted over those two years – and 17 in the last two years.
The State of Oregon’s Department of Revenue is racing to keep up with tax law changes, Minkoff says.
And, new tax acts enacted as late as December 17, 2010, means “The State of Oregon may not be able to process your returns until sometime in May or June. According to Oregon law, the State has to either ‘reconnect’ to the Federal tax changes, or, or ignore any tax changes and keep their system the same.”
Nevertheless, this does NOT excuse taxpayers from submitting their tax returns on time in April, he quickly added.
What does all of this mean for business owners?
“Make sure your accountant or tax preparer is staying on top of the ever-changing tax laws,” Minkoff suggested.
For example, Section 179 allows a business owner to “write off” certain qualified capital expenditures in the year that the equipment was purchased. “Otherwise, these assets must be depreciated – expensed out – over a number of years, on a schedule mandated by the IRS. The amount that can be expensed in the year has gone from $100,000 a couple of years ago, to $200,000 18 months ago – to $250,000 about six months ago – and in December, they raised it to a half million.”
Congress raised the limit, he said, to simulate business-related purchases – hopefully, of American-made goods. “Although, there are very few incentives to specifically buy American-made products,” He added.
During his detailed presentation, Minkoff rapidly covered many other changes including:
- Tax credits for purchasing health care insurance for employees;
- The Small Business Health Care Tax Credit that benefits the self-employed, directly reducing self-employment earnings for tax purposes;
- Hiring incentives to stimulate creating “summertime” and part-time jobs for youths in designated communities; and,
- Business start-up expenses can now be written off in the year they are incurred – instead of over five years.
“The number-one best thing any businessperson can do,” Minkoff advised, “is to get your accounting in order. Doing proper bookkeeping means accounting for every penny you take in and spend. This really helps when it comes time to prepare your taxes.
“But even more important,” he stressed, “is that this information helps you make better decisions.”
Don’t put off filing your taxes, Minkoff says – get them in on time, or be prepared to pay a hefty penalty.
Other suggestions include:
- Never eat alone – “Invite someone – an affiliate, employee, or client – to share a meal. At least 50% of the meal is deductable. At meetings or conferences, you can write off 50% of your own meal.”
- Hire your kids – “If you have children between 7 and 17, you can hire them as a business expense – with no payroll taxes due. They do have to document their hours worked, and must be doing something constructive – even if it’s just taking out the trash.”
- Form an “S Corporation” – “An LLC gives you no tax advantage. Proprietor, partner, or LLC is self-employed. There is no tax form for an LLC. If you form one with you as the sole member, you are normally treated as a sole proprietor with some new benefits. An ‘S-corp’ will save tax on profit after you pay your own ‘reasonable’ salary, on which you pay income tax and SSI. What is left over is free of self-employment tax. An ‘S-corp’ shareholder doesn’t pay the ‘second tax’ on dividends they pay themselves, as you would with a regular corporation.”
Finally, Minkoff pointed out that, because of how the calendar falls, the actual tax deadline day is April 18 this year. “Just because there are still many tax code changes in the air, don’t put off doing your return. And, pay what you believe you owe by the deadline. You may have to amend your return, but there is no tax penalty forgiveness.”
In March, the Oregon legislature finally clarified some of the confusion about the state tax code.
To learn more about his accounting practice, see Minkoff’s website: CLICK HERE to open his homepage.
Meat with FABA
March 23 is the next date for the Foster Area Business Association’s “Lunch and Learn” gathering from 11:45 a.m. until 1:15 p.m. At this meeting, you’ll learn what the Portland Development Commission can do for your business – and a report on the “50s Bikeway Project”.
The organization is subsidizing lunch: it’s just $5 bucks each! RSVP now to firstname.lastname@example.org or call (503) 774-2832. It’s at Foster Burger, 5339 SE Foster Road. Parking is where you can find it.
For more information, see their website: CLICK HERE.
© 2011 David F. Ashton ~ East Portland News