Emancipation Day falls on a Saturday, meaning that it will be observed on Friday, April 15, 2011. The filing deadline for all tax forms and payments required to be filed or completed on or before April 15 will be Monday, April 18, 2011. The IRS will widely publicize that the filing deadline is extended.
In today’s economy, small business owners sometimes look to the oldest form of commerce – the exchange of goods and services, or bartering.
Bartering is the trading of one product or service for another. Usually there is no exchange of cash. However, the fair market value of the goods and services exchanged must be reported as income by both parties.
Here are four facts about bartering published by the IRS.
Barter ExchangeA barter exchange functions primarily as the organizer of a marketplace where members buy and sell products and services among themselves. Whether this activity operates out of a physical office or is internet based, a barter exchange is generally required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions, annually to their clients or members and to the IRS.
Barter Income Barter dollars or trade dollars are identical to real dollars for tax reporting. If you conduct any direct barter – barter for another’s products or services – you will have to report the fair market value of the products or services you received on your tax return.
Taxes Income from bartering is taxable in the year it is performed. Bartering may result in liabilities for income tax, self-employment tax, employment tax, or excise tax. Your barter activities may result in ordinary business income, capital gains or capital losses, or you may have a nondeductible personal loss.
Reporting The rules for reporting barter transactions may vary depending on which form of bartering takes place. Generally, you report this type of business income on Form 1040, Schedule C Profit or Loss from Business, or other business returns such as Form 1065 for Partnerships, Form 1120 for Corporations, or Form 1120-S for Small Business Corporations.
The standard mileage rate for business use of a car, van, pick-up or panel truck is 50 cents for each mile driven. The standard mileage rate for operating a vehicle for medical reason or as part of a deductible move is 16.5 cents per mile. The standard mileage rate for providing services to charitable organizations is 14 cents per mile.
Your requirement to file a tax return is determined by your gross income, filing status and age.
For example, if your filing status is Single and at the end of the year you were under 65, you must file a return if your gross income is at least $9350. Even if your income level is below $9350, there are other factors that could require you to file a return. If you have at least $400 in net earnings from self-employment, if you received advance earned income credit payments, social security or medicare taxes are due on tip income not reported to an employer are a few of the factors that would require you to file a tax return. A professional tax preparer such as a CPA can help you determine your obligation to file a tax return.
Monthly depositors January payroll tax is due on 02/15/2011.
The fines are now $250 per 1099 for not filing with the government and $250 per 1099 for not sending to the recipient for a total of $500 per 1099. If in the course of your trade or business, you have paid anyone that is not a corporation $600 or more or you paid an attorney more than $1 then, you must issue 1099′s. We suggest checking your files and see if any of these situations are applicable to you.
Employees will see changes in their net pays due to the temporary decrease in the social security withholding for the calendar year 2011. The employee portion of social security has been decreased from 6.2% to 4.2%.
The IRS announced on July 2nd that eligible taxpayers who contracted to buy a home before April 30, 2010 now have until September 30, 2010 to close on the purchase of the home.
All other provisions of the law remain the same including the deadline date of April 30, 2010 to enter into the contract and the documentation requirements to claim the credit on the tax return.
There is a First-Time Homebuyer Credit Page on the IRS website with detailed information and you can also find the instructions for Form 5405 on the IRS website. (www.irs.gov)