by Amanda O'Brien | Accounting News, Bookkeeping, Tax Planning, Tax Planning - Individual, Technology
A new survey conducted by Rasmussen Reports for the Consumer Federation of America ? the COUNTRY Financial Security Index – shows a gap between what Americans think they’re spending and what’s happening in reality.
Only 9 percent of the 3,000 respondents of the survey said their lifestyle is more than they can afford, yet 21 percent say they spend more than they make at least a few months every year.
The survey suggests the so-called “perception gap” could shrink if more people used a household budget. Those who budget are more likely to set monthly savings goals (61 percent) than those who don’t (30 percent), COUNTRY Financial says.
Other tips:
Review your spending behavior. Take a look at where the money goes every month and make adjustments where needed, Brannan says.
Start a spending and savings plan. Put money in jars or envelopes or start a Christmas fund. When the money’s gone, stop spending. Some people are even stashing their extra cash under their mattress or in a bedframe outfitted with a safe. In fact, safe sales are up 40 percent from a few years ago, SmartMoney reported.
Rethink expenses. When Joe Mihalic earned an MBA from Harvard Business School that resulted in more than a $100,000 debt, he vowed to repay his debt quickly. He blogged about giving up dinner dates and movies, missing parties and weddings, ending 401(k) contributions, and staying home for Christmas. He stopped buying clothes, sold a second car and motorcycle, rented a spare bedroom, and started a side business. He told Fortune magazine, “A lot of people in this country – regardless of socioeconomic status – have an unhealthy obsession with things and experiences and statuses. We shop brands; we drop names. We try to keep up with the Joneses. We comfortably tolerate an unhealthy level of debt.”
Involve your children in your financial plan. Explain your goals for retirement savings and other things you value, Laura Scharr, principal of Ascend Financial Planning LLC in Columbia, South Carolina, told Fox Business. “Be honest and upfront with your children,” she said.
The COUNTRY Financial survey says budgeters and those who don’t budget do have one thing in common: They miss the mark on their savings goals. Of budgeters, 57 percent achieve their savings goals half the time or less, while the number is 54 percent for the non-budgeters.
How are Americans making ends meet when the budget runs out?
- 36 percent raid their savings accounts.
- 22 percent use credit cards.
- 14 percent adjust their spending next month.
Full Article: http://www.accountingweb.com/topic/cfo/survey-shows-americans-need-spend-less-save-more-set-budget
by Amanda O'Brien | Accounting News, Bookkeeping, IRS, Tax Planning - Individual, Tax Preparation - Individual
To commemorate National Financial Literacy Month, a national telephone poll of 1,005 adults was conducted by Harris Interactive on behalf of the American Institute of CPAs (AICPA). The purpose of the survey was to find out what Americans would most likely forego in a financial pinch as well as their overall feelings about their finances.
Here is what the survey revealed:
- 41 percent said they would cut back on eating out, making it the most popular money-saving action.
- 21 percent said they would cut off cable TV.
- 8 percent said they would end cell phone service.
- 8 percent said they would stop downloading songs and digital products.
The survey also found, however, that Americans are still amazingly frugal and farsighted when it comes to planning for their financial futures. Only a small number would take actions that could hurt their long-term financial well-being:
- 2 percent said they would stop contributions to retirement accounts.
- 1 percent said they would skip utility payments.
- 1 percent said they would put paying rent or mortgage payments.
“Financial success depends on setting clear goals and priorities and sticking with them in good times and bad,” said Jordan Amin, chair of the National CPA Financial Literacy Commission. “While it’s clear that Americans’ priorities are changing, these results suggest that in tight times, they won’t jeopardize tomorrow to deal with the financial challenges.”
Since 2007, the AICPA has conducted an annual survey of Americans to determine their top financial concerns and assess their financial well-being. In 2011, 29 percent of Americans said they were “worse off” than “better off,” compared to the prior year’s 16 percent. Today, 24 percent say they are better off, while 23 percent say they are worse off.
This year, 94 percent of survey participants said they have financial concerns of one sort or another. Interestingly, for the first time in three years, the price of gas – not retirement – is the top financial concern in America.
Addition survey findings include:
- 41 percent said basic living expenses, including the cost of gas, uninsured medical expenses, and lack of emergency savings, as their top financial concern.
- 27 percent said their main concerns are related to long-term goals, such as paying for education and saving for retirement.
- 53 percent reported they are in the same financial position as they were the prior year.
- 35 percent of those aged 18 to 44 say their financial situation has improved over the past year, compared with 13 percent of older adults.
- 31 percent of college graduates say they are better off today, compared with 22 percent of those who have not completed college.
The CPA profession has a comprehensive financial literacy program – 360 Degrees of Financial Literacy – to help Americans achieve long-term financial success. The website is the centerpiece of the program, with tools, calculators, and advice to help Americans understand and manage their financial needs during the ten life stages, from childhood to retirement.
The site is a rich resource for small and mid-sized CPA firms, giving them tools and information to help explain key issues, not only to their clients, but to members of their communities and the media. The AICPA regularly hears stories from CPAs who find that their clients go on to use Feed the Pig.org, to educate their children about financial issues.
Harris Interactive conducted the telephone survey on behalf of the AICPA within the United States between March 8 and March 11, 2012, reaching a nationally representative sample of 1,005 adults eighteen and older by landline and mobile phone.
Full Article: http://www.accountingweb.com/topic/cfo/aicpa-survey-reveals-americans-concerns-about-finances-and-saving
by Amanda O'Brien | Accounting News, Audit and Accounting, Healthcare, IRS, Tax
The Internal Revenue Service (IRS) is bracing for one of the biggest challenges it has faced in years: the implementation of the massive new health care legislation.
A few select provisions in the Patient Protection and Affordable Care Act of 2010 – the Affordable Care Act (ACA) for short – have already taken effect; however, the most controversial sections of the new law are not scheduled to kick in until 2014. According to a new report released by the Treasury Inspector General for Tax Administration (TIGTA) on January 5, 2012, the IRS Appeals Office is gearing up for the anticipated onslaught.
The TIGTA report indicates that the new law’s impact on appeals should be minimal for the next two years, but it expects the floodgates to open in 2014. The IRS Appeals Office has made some initial preparations, including reassigning some of its staff to the IRS ACA division, as well as creating an internal website with links to ACA-related IRS training, guidance, and other resources.
“Because of the potential for the ACA to affect most taxpayers, effective planning is critical to ensuring Appeals’ readiness to prepare for this legislation and resolve taxpayer requests in a timely and effective manner,” said J. Russell George, Treasury Inspector General for Tax Administration, in a press release.
The latest TIGTA report follows up on a mostly positive audit conducted last year. In that audit, TIGTA determined that the IRS appears to be on track in meeting the new technological challenges it can expect to face as a result of the health care legislation.
Under several key provisions in the new law, individuals who are not eligible for Medicare or Medicaid must obtain minimum health coverage, while businesses are generally required to offer minimum coverage to their employees. The IRS bears the burden of collecting penalties from taxpayers and business entities that fail to live up to their responsibilities. In addition, health insurance coverage will become available through exchanges operated by the individual states.
Currently, a qualified small business can claim tax credits for providing health insurance coverage to its employees. For 2014 and thereafter, an employer may benefit from tax credits offsetting part of the cost of offering coverage through one of the state-run exchanges.
The IRS expects to face numerous appeals on these issues as both individuals and employers grapple with the new ACA rules. In the meantime, what can you do? Tax professionals are advised to educate themselves well in advance of 2014 in order to be responsive to their clients’ needs.
Full Article: http://www.accountingweb.com/topic/fitness/irs-gears-health-care-law-appeals
by Amanda O'Brien | Accounting News, IRS, Retail & Distribution, Tax, Technology, Uncategorized
This holiday season, online shoppers will find more states are looking to make sure gift givers also give their state its fair share – in terms of sales tax for online purchases, according to CCH, a Wolters Kluwer business and a global provider of tax, accounting and audit information, software, and services. Last year, online shoppers spent more than $1 billion just on Cyber Monday, and online shopping this holiday season is expected to continue to grow at a double-digit rate.
“Whether people shop online or in stores, states expect them to pay sales tax on their purchases,” said Daniel Schibley, JD, CCH senior state tax analyst. “However, few online shoppers comply, unless the tax is collected by the merchant.”
Under existing laws, retailers are required to collect sales taxes for purchases made in states in which they have a physical presence, or nexus. As more sales head online, it is projected that states are losing billions of dollars annually in sales tax revenue they once collected from local retailers, and they are increasingly looking for ways to shore up their tax base.
Two ways to do this, according to CCH, are to require more online retailers to collect sales tax through broader nexus rules and to require consumers to pay the required use tax portion of sales tax. Sales tax has two parts – the sales portion paid by the retailer and the use portion paid by the consumer. Under existing rules, individuals are required to pay use tax in states with a sales tax if the retailer does not collect the tax.
State Sales Tax Collection Approaches
Overall, 45 states currently have a sales tax. This includes every state with the exception of Alaska, Delaware, Montana, New Hampshire and Oregon. The District of Columbia also imposes a sales tax.
Several states also are more aggressively enacting rules to help ensure more retailers and consumers pay sales tax, as outlined below. For a chart of state sales tax activities, click here.
Eleven states have enacted broader nexus rules that require online retailers to collect sales and use tax even if the retailer does not have a physical presence in the state but does solicit sales through online links or pays commissions to an in-state business (known as click-through nexus); or if the retailer has an affiliation with a company doing business in the state (known as affiliate-nexus laws). These states include: Arkansas, California, Colorado, Connecticut, Illinois, New York, North Carolina, Rhode Island, South Dakota, Texas and Vermont. The California, Texas and Vermont provisions are not yet in force, however. Four other states have legislation for these rules pending: Massachusetts, Michigan, Pennsylvania and Tennessee.
“Each of these laws increase the likelihood that if you live in these states, some online retailers will be charging you sales taxes when you make online purchases,” said Schibley.
Additionally, Colorado law requires retailers selling into the state but not collecting sales tax to send the state an annual reporting notification statement of everyone in the state it shipped to and the value of those purchases so that it can pursue collection of use taxes. However, a federal court in Denver has put enforcement of this law on hold for now.
Several states also require online retailers to provide explicit notifications on their websites letting consumers know about their obligation to pay their state sales tax. States with these website notification rules include Colorado, Oklahoma, South Dakota and Vermont.
States collecting sales tax also have information on their websites about how to pay uncollected use tax. Many states provide a line item on their income tax return where consumers can report the amount of use tax they owe.
Full version at at AccountingWeb.com – Sales Tax on Online Purchases Is On the Rise
by Amanda O'Brien | Accounting News, IRS, Retail & Distribution, Tax, Technology, Uncategorized
By Ken Berry
Just a week after this year’s Veterans Day, President Obama signed new legislation providing a tax credit to employers who hire military veterans. The VOW to Hire Heroes Act is a small piece of a much larger jobs bill that has stalled in Congress.
According to White House data, approximately 240,000 veterans of the wars in Iraq and Afghanistan remain unemployed, while a total of 850,000 veterans overall are out of work. To compound the problem, the Obama administration reports that 1 million other service members are expected to return to civilian life by 2016. “No veteran who fought for our nation should have to fight for a job when they come home,” said the president.
The new law allows a company to claim a tax credit of up to $2,400 if it hires veterans who have been looking for work for at least one month. The maximum credit is increased to $5,600 for hiring veterans who have been searching for work at least six months. And employers may be granted a $9,600 tax credit for hiring out-of-work veterans with service-related disabilities. The new legislation also provides job training to help returning vets return to work.
Under prior law, qualified veterans are included as one of the target groups eligible for the Work Opportunity Tax Credit (WOTC). The WOTC is currently scheduled to expire after December 31, 2011.
A Department of Defense official said that the agency will expand its programs to help returning veterans.”Combat is incredibly tough business, and we are finding that the human toll on a 10-year veteran, the physical and mental toll, it is incredible,” said Philip Burdette, principal director of the Office of Wounded Warrior Care and Transition Policy. “As we end the war in Iraq and wind down in Afghanistan, we are absolutely planning for returning service members.”
Finally, in a separate provision, the new legislation repeals the three percent withholding requirement for payments made by federal, state, and local governments to contractors for goods and services. The withholding requirement, which was established by a 2006 law, was scheduled to take effect in 2013.
Full Version at AccountingWeb.com – Congress Salutes Veterans with New Hiring Tax Credits
