Congratulations to all my gay and lesbian friends and clients who live in the great state of New York and can now be legally wed. For those of you that are planning on getting married, one thing to be aware of is how this will impact your tax filings. Very simply, once married you will file a combined tax return for New York State. Unfortunately, the Federal government has not come around to recognizing gay marriage as a legal union so you will still need to file your Federal tax returns individually. Until the Federal government recognizes your union, a small conciliation is that the "marriage penalty" usually results in a married couple paying more in taxes so by continuing to file individually you will save some money. Perhaps you could use those tax savings for two extra plates at the wedding so you can invite your favorite Mr. and Mrs. CPA.

Once again, congratulations on this small step towards Equality. If you have any questions, please feel free to contact me.

PRESS RELEASE, MARCH 16, 2011

Scott E. Hunzinger, CPA has been named to the Board of Directors as Treasurer for the Mattituck-Laurel Historical Society & Museums. The MHLHS&M was founded in 1964 in order to preserve the heritage and history of the local area. Mr. Hunzinger is passionate about both the history and the future of the North Fork as demonstrated by his board positions with both the MHLHS&M and the North Fork Chamber of Commerce. Says Mr. Hunzinger, "I was very honored when I was asked to join the Board as Treasurer. History is a very important part of who we are on the North Fork and preserving it is a great responsibility. I am very proud to do my part and privileged to be involved with such a great organization."

In addition to serving on local boards, Mr. Hunzinger is the founder of Hunzinger Accounting & Financial Solutions, a Cutchogue based CPA firm that provides accounting, consulting and tax services to businesses and individuals.

For more information:

Scott E. Hunzinger, CPA
www.HunzingerPC.com
631-734-8016

Mattituck Laurel Historical Society & Museums
www.MLHistoricalSociety.org
631-298-5248

I saw an ad for a refund anticipation loan yesterday and my blood started boiling. These loans provide money equal to your tax refund but they generally charge high interest rates and fees. A study found that taxpayers paid about $800 million in loan fees and other fees for refund anticipation loans in 2008. According to the study, the effective annual percentage rate for refund anticipation loans can range from about 50% (for a $10,000 loan) up to nearly 500% (for a $300 loan), when you include interest charges and refund account fees.

As discussed in our post last week about tax refunds, if you have a good accountant you won't be getting a big refund because you will have been using your money to your advantage all year along. That aside, if you are expecting a refund this year, you can get your money from the IRS almost as quickly as you can by applying for a refund anticipation loan and without any fees or interest charges. E-file your taxes and have your money deposited directly into your bank account and you can generally get your refund in fewer than ten days.

I was speaking to a friend the other day that was telling me how great her accountant was. I told her how happy I was to hear that and that I wouldn't waste my time pitching her on changing accountants. I truly believe that "if it isn't broke then don't fix it." But...

She went on to tell me that last year she received a $10,000 tax refund. You might be thinking "Wow that's great!" But it's not. I explained to her that by getting that huge refund she had merely given Uncle Sam a 1-year interest-free loan. A good accountant can help you to determine how much to withhold without owing a fortune at the end of the year and at the same time making your money work for you instead of loaning it to Uncle Sam. If you're worried that you're going to just spend the money and you're thinking of your tax withholdings as a savings account, instead set up an account just for these monies. It's a great way to save money for a rainy day or to use for focused spending such as paying down high-interest credit cards. Either way, you're putting yourself in a better financial position and making the most of your money.

Choosing a tax preparer isn't as easy as it may seem, especially for those folks that have seemingly "simple" returns. I remember when I first moved to New York, tax time rolled around I wanted to get my taxes done as quickly and as cheaply as possible. H&R Block was one such option, as was the local Joe Shmoe CPA. Looking back I realize that even my "simple" return would have been better taken care of if I'd taken the time to find the right accountant. H&R Block and Joe Shmoe both got my return filed but after having been married to an accountant for many years I realize now that H&R Block's freshly trained staff didn't get me nearly the deductions I should have gotten and Joe Shmoe, well he got me plenty which luckily didn't turn into fines and a jail sentence.

I recommend spending a bit of time to find an experienced and honest accountant to handle your taxes this year. It's not a big effort-spend 15 minutes getting a recommendation from someone you trust or just doing some homework. How much experience does the person have? What are their credentials? Do they have references? What makes them the right choice for you? And what are you getting for your money?

For example, one local accounting firm is seeking a per diem tax preparer with 2-3 years experience. In other words they will be outsourcing the work to a junior tax preparer with little experience and likely charging you full rate for their time as a CPA. My favorite example is the local tax preparation/bookkeeping firm (i.e. not a CPA) who has chosen "Parking in Rear" as their selling point. If the best thing your tax partner has to offer is parking they're probably not the best choice.

Choose the right accountant for the right reasons and know the credentials of the person doing the actual work. And of course for those in the Tri-state area, my husband Scott E. Hunzinger CPA and our firm Hunzinger Accounting & Financial Solutions is an experienced and reliable choice.

Happy New Year! We hope everyone had a great holiday season and enjoyed some quality time with their family and friends. We sure did but it's time to get back to business.

Many of you likely made resolutions for the new year. The most popular seem to always be focused on diet and physical fitness. But what about fiscal fitness? Did you set any financial goals?

Here are some thoughts on goals for 2011:

1. Create a budget

Take the time to understand where your monies are going each month. You'll probably be surprised by how much is spent on things that you just don't need or use. For instance, we haven't used our Netflix account in over two months. Perhaps it's time for us to cancel this.

2. Talk with a financial planner

In this economy it can be tough to make ends meet, much the less to save. It's imperative however that you find a way to do so. Bad economy or not, the future will come and you will need to be prepared. Talk to a financial planner about saving for a rainy day, saving for retirement, saving for your kids' college tuition and ensuring that you have enough life insurance to cover your spouse and/or kids in case, God forbid, something happens to you. Be sure that your financial planner talks with your accountant to ensure that the financial moves you make are the right choice for your tax situation.

3. Review your tax withholdings and benefits

Are you getting a large tax refund this year? If so, you withheld too much money. By doing that you're merely giving Uncle Sam an interest-free loan. Withhold less and save that money in something that will earn interest. Have your money work for you.

What about your benefits? Do you have the right medical plan? Should you add a dental or vision plan? Perhaps saving in the short-term is costing you more in the long run in out-of-pocket expenses.

Does your company have a 401k plan that offers some kind of matching? Are you fully utilizing this benefit? If not, why? You're just costing yourself money if you're not.

Special note: the new tax law will require less monies be taken out for social security so you should have approximately 2% more in your check so there's never been a better time to save.

4. Get ready for tax season

Take some time to get organized and prepared for tax time. The more you can do now, the less you will have to do later. Gather your receipts for charitable contributions, business expenses, and medical bills (if material). Talk to your accountant now and see what else can be done in advance to make getting your taxes done less painful.

Give us a call to talk about how we can help put together a fiscal fitness plan that's right for you.

If you are a business owner who makes monthly payroll deposits to the IRS, you have probably received a letter (or soon will) stating that manual tax deposits will no longer be accepted. As of January 1, 2011 Federal Tax Deposit Form 8109 will no longer be used and instead all federal tax payments will have to be made electronically via EFTPS (Electronic Federal Tax Payment System).

The EFTPS is very easy to use and will actually make your life a bit easier in that it will mean one less trip to the bank. That said, there is some work that needs to be done to register for an EFTPS account and registration can take several weeks to complete (one of the steps involves the IRS mailing you a PIN via the US Postal Service and we all know how busy they are this time of year).

Visit www.eftps.gov/eftps/ to begin the registration process and if you have any questions, please give us a call.

Hot off the presses, a new tax form for your viewing enjoyment. (We can hear the ooohs and ahhhs now). Form 8941 has just been released by the IRS which gives small businesses a tax credit for paying the health insurance of eligible employees (http://www.irs.gov/pub/irs-pdf/f8941.pdf). In a nutshell, if you pay your employees an average of $25,000 or less and pay for their health care, you will be able to claim a credit of 35% of the health care costs paid on their behalf (subject to some criteria of course). If you paid your employees on average over $25,000 but under $50,000, you are still eligible for a credit, but it will be phased out. For employers with average payroll over $50,000, unfortunately you are not entitled to this credit. There are additional rules to consider so give us a call and we can help you with this and other credits for which you or your business might be entitled.

The end of 2010 is quickly approaching which means it's time to do your final tax planning. You want to ensure that when April 15th comes around you don't owe a small fortune and be left scrambling to find money.

Most estimated tax payments are not due until the 15th of January but there is a great advantage to making some payments earlier. If you itemize your deductions (versus taking a standard deduction), any payments made to state and local taxing authorities prior to December 31st are tax deductible in the year that they are paid- meaning you'd get an advanced tax deduction for your federal tax return.

As I often do, I'll quote my old boss Marty (picture the Swedish Chef from the Muppets), "Failing to plan is planning to fail." Let's plan now and save you some money on your 2010 tax liabilities.

How much money did you save this past year? How much money do you have to spend on holiday gifts? Can you afford to give employees bonuses? If you can't answer these questions you probably don't have a budget--something every company, family unit, and individual should have. Without one you will very likely spend money you should be planning to use for something else. For example, retail businesses have sales taxes due every quarter; you may have an annual license or insurance policy due on a certain date; your sales may be seasonal requiring you to hoard cash in the busier months so that you have the funds to get you through the slower months; etc. If you haven't budgeted for these and other expenditures in advance you could find yourself a day late and more than a dollar short.

As you've heard us say many times "Failing to plan is planning to fail." Put a plan together for 2011 and, if you need help, please give us a call.

It's probably not a coincidence that October 15th is both National Grouch Day and the last day that individuals can file a personal income tax return. If you filed a six-month extension on April 15th your tax return is due shortly. The IRS no longer allows an additional extension, so your tax return is due no later than October 15th, period.

Don't wait until the last minute. Contact us today so that we can get your return filed as soon as possible. Perhaps you'll even be able to enjoy National Grouch Day.

http://muppet.wikia.com/wiki/National_Grouch_Day

Ironically a recession can be a very good time to get a business off the ground. A lot of great companies were started during a recession-Burger King, MTV, Microsoft and FedEx to name a few. The Small Business Jobs Act of 2010, or as it's also known "The Main Street Stimulus," provides some good incentives to start or expand your business during the current recession. Here's a brief summary of the main points related to lending initiatives and tax breaks.

Small business lending initiatives

The centerpiece of the bill is the creation of a $30 billion lending facility that would direct taxpayer money to regional banks, on the condition they lend it out to small businesses. Unlike the emergency financial rescue package implemented at the height of the crisis in 2008, banks would have to volunteer to participate in this program. In theory this should make it easier to get a loan for your small business.

Small business tax breaks

• The bonus depreciation scheduled to expire in 2009 has been extended through the end of this year. This tax deduction enables a business to expense fifty percent of the cost of new equipment, such as computers or software, in the year of purchase.
• The section 179 deduction allows taxpayers to write off the cost of a fixed asset in the year of purchase, rather than amortizing the cost over the useful life of the asset. The Act has increased the maximum amount of this deduction to $500,000 for the years 2010 and 2011. (Initially it was to be $250,000 for 2010 and $25,000 for 2011.)
• Prior law required that a business had to substantiate the business use of a cell phone device and plan minutes, which meant a full accounting of the business purpose of each and every minute and then prorating the cost of the device and mobile service accordingly. Business owners will no longer have to keep track of individual calls on their cell phone plans as the Act removes the listed property classification from cell phones and mobile telephone service.
• The Small Business Act expands the start-up expense deduction to $10,000 for the year 2010. The amount was $5,000 for 2009 and will be $5,000 in 2011 unless there is another "stimulus."
• Those that are self-employed can now deduct the cost of their own health insurance as a business expense that will reduce their self-employment tax. This tax reducing provision is valid only for the year 2010. For 2009 and presumably for 2011, the deduction for health insurance is an adjustment that will reduce the regular income tax but does not reduce the self-employment tax.

For assistance with developing a business plan, a business model, a financial forecast, etc., for your small business idea give Hunzinger Accounting & Financial Solutions a call at 631.734.8016 or email us at info@hunzingerpc.com.

Accountants are a lot like grocery stores. People often shop at the grocery store closest to their home and stick with it forever because it's convenient. It might not have the friendliest cashiers, the freshest produce, or the biggest meat department but it's close by and it's the devil you know. Likewise, people and/or businesses often hire an accountant and stick with him or her throughout their entire lives simply due to the convenience of location, familiarity, or out of a sense of loyalty to someone they've known for a long time.

This isn't always the best decision. For example, I was recently speaking to a local business owner who has been using the same accountant for 20+ years for the sole reason that he's been with the guy for so long, and, here is the kicker, "he pays for his mistakes". Wait - what? Of course he pays for his mistakes! If he doesn't, he has a huge legal problem on his hands. That's like saying you stick with the grocery store that sells the spoiled meat because they pay the co-payment on your hospital bill when you get food poisoning. There shouldn't be mistakes for which need to be paid.

So with that, here are the Top 5 signs that you need a new accountant:

• You only see your accountant during tax season. Your accountant should be your financial adviser and partner. If your accountant doesn't meet with you regularly and understand both your business and your industry, you aren't getting the guidance you need.
• Your accountant doesn't know your short- and long-term goals. An accountant is supposed to help you make and keep as much money as possible and cannot do that effectively without understanding what you are striving to achieve.
• Your accountant simply plays the expert card and doesn't give you thorough and understandable answers to your questions. If your accountant isn't educating you, you aren't getting your money's worth.
• Your accountant waits until the last minute for everything, which gives you too little time for questions, changes, and the ability to plan properly.
• Your accountant doesn't provide a prior-to-year-end tax projection. As I often say, failing to plan is planning to fail. Will you owe a fortune on 4/15? Are you withholding too much now? Surprises are great for birthdays, but not for taxes.

If any of the statements above describe your accountant it's time for a change. Give us a call and we'll make sure you are getting your money's worth.

HR3590, or as most people know it “the healthcare reform bill,” has some items in it that don’t just concern healthcare. As it’s often said, the devil is in the details. This is especially true with bills passed by Congress. One of the items hidden into this bill (in section 9006) is the new IRS requirement for 1099s.

Currently form 1099-MISC must be submitted by businesses to vendors, subcontractors, independent contractors, and others paid $600 or more per year. Starting with the year 2012, 1099-MISC reporting is expanded in two ways. First, reporting will be expanded to include payments made to corporations. Secondly, reporting will be expanded to include payments for property.

The first expansion will of course require the issuance of several more 1099s, but what about the second? What does “property” mean? The IRS Commissioner, Douglas Shulman, mentioned this expanded 1099-MISC reporting requirement.

"Congress also recently passed a new information reporting provision requiring expanded information reporting on payments made from businesses to corporations, and on payments businesses make for goods. This new information reporting requirement applies if businesses pay a single entity $600 or more per year in aggregate for these types of transactions starting in 2012.”

The key word there is “goods.” This would mean that businesses would be required to send a 1099 to anyone that they paid $600 or more for either goods or services for the entire year. Think Staples for stationery items, Poland Spring for water delivery, the IT company for servicing your computers, etc., etc. That’s a lot of 1099s.

How to prepare

According to the Mayan calendar, the world will end in 2012. Just in case it’s wrong, we strongly recommend that businesses begin planning now for these new requirements. All businesses should have a computerized accounting system, even if it’s a simple one (for audit trails, customer and vendor information, financial analysis, etc). This becomes even more important in anticipation of the forthcoming 1099 requirements. In particular, it is important to ensure that accounting systems are keeping track of all payments issued throughout the year and the name, address, and taxpayer identification number of the payee. It’s also a good idea to request a Form W-9 from all vendors, contractors, etc. which will provide you with their legal name, address and taxpayer identification number.

Hunzinger Accounting & Financial Solutions can help you find an accounting system to fit both your business needs and your budget. Give us a call at 631.734.8016 and we will help you prepare for the devil in the details of HR3590.

So the health insurance bills have passed and now all US citizens are required to have health insurance by 2014 or face penalties on federal income tax returns. How much you ask? Good question. The penalty for not having health insurance will be the greater of (1) a flat dollar amount or (2) a percentage of your household income, both of which will be phased in over the course of three years...

2014 - $95 per adult or 1%

2015 - $325 per adult or 2%

2016 - $695 per adult or 2.5%

Notice that is per adult. For uninsured minors the amount is one-half the adult fine. In addition, the flat dollar amount per family is capped at three times the adult fine for the year.

Let’s look at an example of how much this would cost. Say that Jane Doe earns $100,000 per year, is married with two children, and is the sole breadwinner. The Doe’s flat dollar penalty for 2014 would be $285 ($95 x 2 plus $47.50 x 2). Their income percentage amount is $1,000 (1% of $100,000). Because the income-based penalty is greater, they would owe a tax penalty of $1000 in 2014 for not having health insurance. In 2016 the Doe's tax penalty would be the greater of $2,085 ($695 x 2 plus $397.50 x 2) or 2.5% of $100,000 which is $2,500. The Doe's would therefore owe $2,500 per year for not getting health insurance.

Weighing the tradeoff

Obviously many people will decide not to buy health insurance and pay the tax penalty instead. Assuming good health and rare doctor visits, annual health care costs (including the tax penalty) might be much less than the cost of buying health insurance. Then in the event of serious illness or injury, health insurance can be purchased at that time since as of 2014 the legislation will prohibit insurance companies from denying applicants because of pre-existing conditions.

What makes sense for you, buying healthcare insurance or paying the penalty? Give us a call. We can look at your specific situation and help you make an informed decision.

We previously posted that the Homebuyers Tax Credit was expiring June 30th (if you signed a contract by April 30th).  Many US taxpayers made the effort to get a contract signed by April 30th only to have their mortgage application take much longer than usual. We're refinancing our mortgage and the process is in its 5th month so we know first-hand how painful it can be. Apparently the US government recognizes this as they have extended the deadline for the tax credit to September 30th. It's important to note that the April 30th contract deadline has not shifted, just the closing deadline. So if you signed a contract to buy a house before April 30th and have yet to close, you can breathe a sigh of relief knowing that your mortgage processor didn't cost you money (up to $8,000 for first time homebuyers and up to $6,500 for current homeowners buying a new house).

http://www.marketwatch.com/story/home-buyers-win-more-time-to-claim-tax-credit-2010-07-02

Hunzinger Accounting & Financial Solutions is thrilled to have our new website launching today (www.hunzingerpc.com for those of you on Twitter and Facebook). We want to thank our friends Josh & Skylar (and Pinky, too) for their creativity and hard work in getting our new website launched. Josh Smith is a talented designer, who among other great work is responsible for our brand identity. Skylar Challand has a company that specializes in website design and web applications. Please visit www.oakmade.com and contact them for all of your website needs. They also have a great blog focused on branding and design at www.idsgn.org. Pinky, well he's just a cute dog. Thanks again to our good friends!