February, 2012

1099-B: The Delayed 1099

The IRS has set up new rules for brokerage houses (Schwab, Scott Trade, etc) that they now have to include BASIS as well as their estimation of long term or short term holdings. This means your 1099-B may be delayed this year. And that may mean a delay in processing your tax return.

The tax return for 2011 has a new Schedule D—the place we report capital gains and losses. It is now a summary only, with details of the transactions getting reported on a new form, the Form 8949. There are two sides to this new form, one side for short term, and the other for long term. Also, there are three boxes at the top of each side of each page—and you can only check one box per page. The boxes are to tie to the 1099-B forms: box A is checked when reporting transactions where the brokerage house IS reporting the basis to the IRS. Box B is checked when reporting transactions where the brokerage house IS NOT reporting the basis. Some securities transferred from one brokerage to another didn’t include the basis information, so the new brokerage just doesn’t have the information about basis, so they can’t report it on the 1099-B. If you’ve only used one brokerage house over the years, they MAY have the basis info, but they previously didn’t have to report it to the IRS, so I’m not promising they’ll have it.

Since there is a change in the reporting requirements, several brokerage houses have said it may take them until February 15th to report.

To report stock trades for 2011, we’ll need to have the 1099-B in hand, to make sure what we submit to the IRS on your tax return matches what the brokerage house reports – or you’re likely to get a letter from the IRS asking you to explain the difference.

There IS a column on the Form 8949 for “adjustments” in the unlikely (!) event your brokerage house does not compute the gain/loss correctly when reporting the sale price and the cost.

If you have several 1099-B transactions that are short term, and the brokerage has the basis for some and not for others, you’ll have two pages of Form 8949, one with box A checked and another page with box B checked. Since most returns will be efiled, this is not so much a waste of paper as it might seem.

Personal Returns due April 17th

Emancipation Day is April 16th this year, and April 15th is a Sunday, so the filing season is extended again for 2011 returns until April 17th. Extensions are still good until October 15th, you don’t get an extra two days on the extension deadline.

April 16th was the day Abraham Lincoln signed the Compensated Emancipation Act in 1862 for the release from slavery of people held in the District of Columbia. This was nine months before the Emancipation Proclamation, the one you’ve heard of before, was signed on January 1, 1863—and for tax purposes, this one was already a holiday. Because the Mayor of DC declared this day a public holiday, it has affected Federal tax filing deadlines.

The Emancipation Proclamation provided freedom for slaves in states that did not return to the Union, but didn’t outlaw slavery. That wasn’t until the Thirteenth Amendment took effect in December 1865.

When I was in St Louis at an NATP conference last year, I had a few hours before I had to be at the airport, so I got a cup of coffee and wandered around the neighborhood next to the St Louis Arch. I went into the old courthouse building behind the hotel, and discovered an exhibit about the Dred Scott case, which had been decided there in the 1850s. And I was reading Team of Rivals by Doris Kearns Goodwin at the time, which I’ll recommend. The book includes some of the same images they have in their display at the courthouse.

Little Box of Inc: Incorporations Made Easy published on Kindle

The book with tips about how the S Corporation works is now published to Amazon’s Kindle, updated with additional information about S Corporations, and can be found by searching for Andrew S Rogers as author, and click on “Kindle.” Here’s the blurb:

Considering incorporating as an S Corporation? This booklet will help you understand how the S Corporation works, what you need to do to become incorporated and what you need to do once you have a corporation to stay out of trouble. The structure and the requirements are reviewed, as well as helpful tips to use your corporation to reduce your tax liability and retain your status as an S Corporation. I’ve worked with S Corporations for many years, and as a tax preparer, I can choose the kind of entity I have for my business: I choose the S Corporation myself, and I’ve convinced many of my fellow tax preparers to incorporate as well. I’ve divided the information into clear, easy-to-understand topics, and cross-referenced sections when it might be helpful.

After you’ve read this material, you can view on-line videos via YouTube.com for free to access more advanced information about S Corporations.


Household Workers Payroll Tax 2012 published on Kindle

If you have someone providing child or elder care in your home in California and you’re paying them more than $750/quarter or $1,800/year, you need this book! Clear instructions with examples to help you calculate wages properly and stay out of trouble (even if you are not running for senate!). Don’t expose your parents or yourself to the risk of a worker injury or filing an unemployment claim, pay them right! Updated for 2012 and includes both Federal and California rules.

Tax Buddha Messenger Bags

Want to be the first person in your tax bracket to sport the fabulous Tax Buddha Messenger Bag? I’ve now got a “shop” on Café Press at www.cafepress.com/TaxBuddha in case you’d like to order your own Tax Buddha logo items. The messenger bag came out particularly well, not quite “saffron,” but easy to find in an airport.

The Eightfold Path to Pay Less Tax and Avoid an Audit

Eight basic things business owners want to know printed in a booklet in “executive summary” form. This is ten years of working with the IRS Tax Code distilled down so it doesn’t take YOU ten years.

Just another way we’re trying to simplify your life. And the purchase is tax deductible!

You can order from Amazon.com. Here’s the link to Amazon: http://www.amazon.com/Eightfold-Path-Less-Avoid-Audit/dp/0615233422/ref=sr_1_22?ie=UTF8&s=books&qid=1226611038&sr=1-22 

The booklet also contains sections on how returns are selected for audit, when to seek professional help, and how long to keep your tax records.

EBAEA—Audit and Representation Group

Our Audit and Rep meeting is scheduled for Wednesday February 8th, but unless I hear of a case we’ll discuss, it may be cancelled. I’ll still go to breakfast, but we won’t have an official meeting.

The Speakers Development Group is on hiatus until after the tax season.

At Audit and Rep, we’ll try to take a case and review it, and discuss other audit and representation issues. We meet in Lafayette at Millie’s Café at 9:30 am for two hours at 1018 Oak Hill Road, A, just off highway 24. Go to the link for the current bulletin for more information: http://www.ebaea.org/Bulletin/current.pdf. We need a case in advance to offer CPE. If we have a case and I can get the IRS authorization before the day, be sure to bring $5 and your PTIN number, and we’ll mail you a certificate for CPE.

Classes—New Online Catalog, Basic Payroll, Tax Update and Household Employees, Schedule C and Entity Choices Workshop

Here’s a link to the seminars page on my website: www.taxbuddha.com/seminars.html

Basic Payroll
In conjunction with the IRS and EDD, I’m going to be doing some Basic Payroll seminars coming up in the near future.

Basic Payroll Seminar runs 9 am ­ 3 pm with an hour for lunch

The next seminars will be:

San Francisco at the SBA office 455 Market Street, 6th floor (I take BART to Embarcadero or Montgomery Street)
10 am ­ 4 pm, February 7 and again March 6.

Oakland at 1515 Clay Street, 2nd Floor, Room 11, in the Eliju Harris Building
9 am ­ 3 pm, March 7.

San Rafael at 120 North Redwood Dr, 2nd Floor Bay Room E-209, the EDD building
9 am ­ 3 pm, March 27.

Register by going to http://www.edd.ca.gov/Payroll_Tax_Seminars/ and find your favorite location.

These seminars have proven to be very popular for business owners and bookkeepers, plus they’re free.

Tax Update
I have an IRS CPE approved class available on the web for Enrolled Agents and RTRPs who need an hour of credit. This was first presented for the East Bay Association of Enrolled Agents as a January 2012 dinner meeting topic. See my online catalog at
https://student.gototraining.com/67ts9/catalog/777367154206641920 or email me at Andy@TaxBuddha.com.

Household Employees
This is an update class for both employers and the tax practitioners who help them. This is scheduled for January 21, 2012 as a webinar. The cost to attend this class will be $75. For more info, please email me at Andy@TaxBuddha.com or see the Kindle book at Amazon.com.

How to Prepare your Own Schedule C
Get ready for next year and filing your own Schedule C for last year. Review what the IRS wants to know from you and how to report it for your business. This is a class for business owners who need a basic understanding of their 1040 Schedule C tax forms. We’ll also talk about what to do with the numbers once you have them. We can’t guarantee you won’t get audited, but this class will make it less likely.

I will be at the US SBA office in San Francisco at 455 Market Street, 6th Floor.
Tuesday, February 14, 6:00 pm – 8:30 pm.

I will be at the Women’s Initiative for Self Employment, 519 17th Street, Suite 240 Oakland near 19th Street BART station.For more information, contact: cgonzalez@womensinitiative.org 415-308-8652
Tuesday, March 13, 4:00 pm – 6:30 pm.

Entity Choice Workshop
I will be at iGate (be sure to bring you iPhone—just kidding!), 1052 S Livermore Ave, Livermore CA 94550 for the Alameda County SBDC
Wednesday, March 21, 1:00 pm – 3:00 pm.

Phone and Fax Numbers

Our northern California physical office is shared commercial space in Alameda, but we’ve been meeting people at Starbucks on Mt. Diablo Blvd in Lafayette near the mailing address.
Phone numbers are:
Phone (510) 332-0401
Fax (925) 478-2726
Our mailing address:
3527 Mt. Diablo Blvd #366
Lafayette CA 94549

“You too can be enlightened about tax” — Tax Buddha