October Newsletter Details: How will the Affordable Care Act impact you?

The Affordable Care Act contains new health insurance coverage and financial assistance options for individuals and families, it also contains new benefits and responsibilities for employers.  In 2014 most people will have to have health insurance or pay a fee.  The Health Insurance Marketplace found at www.healthcare.gov helps uninsured people find health insurance.  Open enrollment for the Marketplace ends on March 31, 2014 and if you enroll by December 15, 2013, your coverage can begin as soon as January 1, 2014.  You will be considered covered if you are insured through an employer, an insurance plan bought on your own, Medicare, Medicaid, CHIP, COBRA, retiree coverage, TRICARE, or VA health coverage.

On the Marketplace website when you complete an application you will find out what you qualify for including private insurance plans, Medicaid, and the Children's Health Insurance Program (CHIP).  The Marketplace will tell you if you qualify for lower costs based on your household size and income.  Plans cover essential health benefits, pre-existing conditions, and preventive care.  If you do not qualify for lower prices you can still buy insurance at the standard price on the Marketplace website.   If you qualify for Medicaid or the Children’s Health Insurance Program (CHIP), the Marketplace will share that information with your state agency, many states are expanding Medicaid to cover more people in 2014.   If you are eligible for insurance through an employer you have the option to switch to a marketplace plan, however you will not qualify for lower costs based on your income unless the job-based insurance is not affordable or does not meet the minimum requirements.

The IRS will be administering the tax provisions.  There is a premium tax credit that may help make the cost of purchasing health insurance coverage.  In January of 2014, you must either have health care coverage, have an exemption from coverage, or make a payment when you file your 2014 tax return in 2015. If you do not have health insurance in 2014 you will pay a penalty of $95.00 per adult, $47.50 per child, or 1% of your income (whichever is greater). This fee is called the Individual Shared responsibility payment and these fees will increase every year, these fees will be due when you make your tax payment.  You may qualify for an exemption from paying the fee, there is a list on the Marketplace website, some of them include: if you were uninsured for less than 3 months of the year, the lowest-priced coverage available to you would cost more than 8% of your household income, you don’t file a tax return because your income is too low and different types of hardships that may have affected your ability to purchase an insurance plan.  You can apply for an exemption on the Marketplace website or when you file your 2014 federal tax return. If you get insurance through the Marketplace you may be able to claim a premium tax credit, which you can have advance payments sent directly to your insurer during 2014 or you can claim them when you file your tax returns.  If you choose payments in advance you will have to reconcile the payments on your 2014 tax return.

If you are a business owner, depending on the size of your business will determine if you are eligible for tax credits, health care options, and your responsibilities as a business owner.  If you have less than 25 full-time equivalent employees may be eligible for a Small Business Tax Credit to help cover the cost of providing coverage.  If you have less than 50 employees you might be eligible to buy coverage through the Small Business Health Options Program.  If you have 50 or more employees an annual return will need to be completed to state what insurance was offered their employees and they may also be subject to the Employer Shared Responsibility provisions.

All information in regards to the Affordable Care Act was found at www.healthcare.gov or www.irs.gov.

Role of Accountant in your small business

 It is very important for you to understand the role accountants play in the success of today’s small business?

Even with the best tax software, without being an expert on accounting, tax, and finance, you need an accountant. A professional accountant is well trained and should be able to help you save money as well as add value to your starting or existing business.

Our Monthly service Charge starts from $85 and which includes the payroll, quarterly tax returns, annual tax return, and tax consultation. Our payroll service includes direct deposit, online access to the payroll records, paystubs as pdf in the email, E-Payment and E-filing the payroll tax and reports, Payroll Audit, and Insurance Audit. When you use our monthly accounting service, $1020 a year will cover all the accounting, Payroll, and year-end corporate tax returns.


If you are not using our monthly service, you will be charged $250 for each consultation by phone, email or in person and $250 for the annual tax return preparation. Most of the business owners contact their accountant at least 4 times a year and which will cost $1000 plus the annual tax return fee and the payroll software charges


If you have not yet set up your business, find out the role accountants play and endeavor to talk to an accountant before you start. All businesses have to produce annual accounts for the tax preparation Most jurisdictions have a threshold or guidelines, for which kind of business qualifies for audit exemption.   Whatever form (Corp, S Corp, LLC) your business is going to take; business accountants can offer you a range of valuable services.


The accountant can advise you on how to start your business.

· What form your business should take — sole trader, partnership, limited liability partnership or limited company.

· The role accountant play involves assisting with your business plan.

· Assist you with the Legal and tax aspects of registering your new small business

· Professional accountants will provide all the accounting and book-keeping expertise you need including :

· The setting-up of manual or computerized book-keeping systems — sales ledger, purchase ledger, cash book, petty cash book, debtors ledger, creditors ledger, fixed-asset register.

· The preparation of financial statements — profit and loss account, balance sheet, cash flow statement and related notes.

· Tax returns and corporation tax, VAT, PAYE, and National Insurance contributions, and income tax for sole traders and partnerships.

· Tax planning — minimizing your tax bill.

They can give you general financial advice.

· This may include recommendations on the financing of your business through overdrafts, loans, leasing, hire purchase, factoring, venture capital (including business angels) or grants.

· They can be instrumental at advising and introducing you to viable sources of finance and also help with drafting and presenting your business case to them.

The role accountants play towards the success of your small business or personal financial planning can only be compared to a doctor-patient relationship.



If you like to start your monthly accounting service from us please give us a call @ 630-663-1500

Whats new in 2011 tax return

Personal Exemptions

The personal and dependent exemption for tax year 2011 is $3,700, up $50 from 2010.

Standard Deductions

In 2011 the standard deduction for married couples filing a joint return is $11,600, up $200 from 2010 and for singles and married individuals filing separately it's $5,800, up $100. For heads of household the deduction is $8,500, also up $100 from 2010.

The additional standard deduction for blind people and senior citizens is $1,150 for married individuals, up $50, and $1,450 for singles and heads of household, also up $50.

Income Tax Rates

Due to inflation, tax-bracket thresholds will increase for every filing status. For example, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $69,000 for a married couple filing a joint return, up from $68,000 in 2010.

Alternative Minimum Tax (AMT)

AMT exemption amounts for 2011 are slightly higher than those in 2010 at $48,450 for single and head of household fliers, $74,450 for married people filing jointly and for qualifying widows or widowers, and $37,225 for married people filing separately.

Flexible Spending Accounts (FSA)

The Affordable Care Act, enacted in March, established a new uniform standard, effective January 1, 2011, that applies to FSAs and health reimbursement arrangements (HRAs).

Under the new standard, the cost of an over-the-counter medicine or drug cannot be reimbursed from the account unless a prescription is obtained. The change does not affect insulin, even if purchased without a prescription, or other health care expenses such as medical devices, eye glasses, contact lenses, co-pays and deductibles.

The new standard applies only to purchases made on or after Jan. 1, 2011, so claims for medicines or drugs purchased without a prescription in 2010 can still be reimbursed in 2011, if allowed by the employer's plan.

A similar rule went into effect on Jan. 1, 2011 for Health Savings Accounts (HSAs), and Archer Medical Savings Accounts (Archer MSAs).

Long Term Capital Gains

In 2011, long-term gains for assets held at least one year are taxed at a flat rate of 15% for taxpayers above the 25% tax bracket. For taxpayers in lower tax brackets, the long-term capital gains rate is 0%.

Individuals - Tax Credits

Child and Dependent Care Credit

If you pay someone to take care of your dependent (defined as being under the age of 13 at the end of the tax year or incapable of self-care) in order to work or look for work, you may qualify for a credit of up to $1,050 or 35 percent of $3,000 of eligible expenses.

For two or more qualifying dependents, you can claim up to 35 percent of $6,000 (or $2,100) of eligible expenses. For higher income earners the credit percentage is reduced, but not below 20 percent, regardless of the amount of adjusted gross income.

Child Tax Credit
The $1,000 child tax credit has been extended through 2012. A portion of the credit may be refundable, which means that you can claim the amount you are owed, even if you have no tax liability for the year. The credit is phased out for those with higher incomes.

Energy Tax Credits for Homeowners

Energy tax credits for homeowners expire at the end of 2011 and are not as generous as in previous years. In addition, a taxpayer who has claimed an amount of $500 in any previous year is not eligible for this tax credit.

Homeowners can claim an Energy Star window tax credit of up to $200 maximum as well as a water heater tax credit, which includes electric, natural gas, propane, or oil, up to a maximum of $300. The same maximum ($300) applies to air conditioners, but insulation, doors, and roof credits are capped at $500. The furnace tax credit (includes natural gas, propane, oil, or hot water) and is capped at $150 maximum and efficiency must be at 95%.

Earned Income Tax Credit (EITC)

The maximum EITC for low and moderate income workers and working families is $5,751, up from $5,666 in 2010. The maximum income limit for the EITC has increased to $49,078, up from $48,362 in 2010. The credit varies by family size, filing status and other factors, with the maximum credit going to joint filers with three or more qualifying children.

Individuals - Education Expenses

Coverdell Education Savings Account

For two more years, you can contribute up to $2,000 a year to Coverdell savings accounts. These accounts can be used to offset the cost of elementary and secondary education, as well as post-secondary education.

American Opportunity Tax Credit (Higher Education)

The expansion of the Hope Scholarship Credit by the American Opportunity Tax Credit has been extended through 2012. For 2011, the maximum Hope Scholarship Credit that can be used to offset certain higher education expenses is $2,500, although it is phased out beginning at $160,000 adjusted gross income for joint filers and $80,000 for other filers.

Lifetime Learning Credit

A credit of up to $2,000 is available for an unlimited number of years for certain costs of post-secondary or graduate courses or courses to acquire or improve your job skills. For 2011, the credit is fully phased out at $122,000 adjusted gross income for joint filers and $61,000 for others.

Student Loan Interest

For 2011 and 2012, the $2,500 maximum student loan interest deduction for interest paid on student loans is not limited to interest paid during the first 60 months of repayment. The deduction begins to phase out for higher-income taxpayers.

Tuition and Related Expenses Deduction

For 2010 and 2011, there is an above-the-line deduction of up to $4,000 for qualified tuition expenses. This means that qualified tuition payments can directly reduce the amount of taxable income, and you don't have to itemize to claim this deduction. However, this option can't be used with other education tax breaks, such as the American Opportunity Tax Credit, and the amount available is phased out for higher-income taxpayers.

Individuals - Retirement

Roth IRA Conversions

There is no longer an income limit for taxpayers who want to convert regular IRAs into Roth IRAs. The difference is that taxpayers who convert to Roth IRAs in tax year 2011 must pay taxes on the conversion income now instead of deferring it in later years as was the case in 2010.

Greatways Tax Service Inc: 2012 Tax Season Deadline Extended to April 17 2012...

Greatways Tax Service Inc: 2012 Tax Season Deadline Extended to April 17 2012...: The Internal Revenue Service today opened the 2012 tax filing season by announcing that taxpayers have until April 17 to file their tax re...

2012 Tax Season Deadline Extended to April 17 2012

The Internal Revenue Service today opened the 2012 tax filing season by announcing that taxpayers have until April 17 to file their tax returns.

Taxpayers will have until Tuesday, April 17, to file their 2011 tax returns and pay any tax due because April 15 falls on a Sunday, and Emancipation Day, a holiday observed in the District of Columbia, falls this year on Monday, April 16. According to federal law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; therefore, all taxpayers will have two extra days to file this year. Taxpayers requesting an extension will have until Oct. 15 to file their 2012 tax returns.

Wage Compensation for S Corporation Officers

Corporate officers are specifically included within the definition of employee for FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act) and federal income tax withholding under the Internal Revenue Code. When corporate officers perform services for the corporation and receive or are entitled to receive payments, their compensation is generally considered wages. Subchapter S corporations should treat payments for services to officers as wages and not as distributions of cash and property or loans to shareholders. S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. The Internal Revenue Code establishes that any officer of a corporation, including S corporations, is an employee of the corporation for federal employment tax purposes. S corporations should not attempt to avoid paying employment taxes by having their officers treat their compensation as cash distributions, payments of personal expenses, and/or loans rather than as wages. This fact sheet clarifies information that small business taxpayers should understand regarding the tax law for corporate officers who perform services. Who’s an employee of the corporation? Generally, an officer of a corporation is an employee of the corporation. The fact that an officer is also a shareholder does not change the requirement that payments to the corporate officer be treated as wages. Courts have consistently held that S corporation officers/shareholders who provide more than minor services to their corporation and receive or are entitled to receive payment are employees whose compensation is subject to federal employment taxes. The Treasury Regulations provide an exception for an officer of a corporation who does not perform any services or performs only minor services and who neither receives nor is entitled to receive, directly or indirectly, any remuneration. Such an officer would not be considered an employee. What's a Reasonable Salary? The instructions to the Form 1120S, U.S. Income Tax Return for an S Corporation, state "Distributions and other payments by an S corporation to a corporate officer must be treated as wages to the extent the amounts are reasonable compensation for services rendered to the corporation." The amount of the compensation will never exceed the amount received by the shareholder either directly or indirectly. However, if cash or property or the right to receive cash and property did go the shareholder, a salary amount must be determined and the level of salary must be reasonable and appropriate. There are no specific guidelines for reasonable compensation in the Code or the Regulations. The various courts that have ruled on this issue have based their determinations on the facts and circumstances of each case. Some factors considered by the courts in determining reasonable compensation: Training and experience Duties and responsibilities Time and effort devoted to the business Dividend history Payments to non-shareholder employees Timing and manner of paying bonuses to key people What comparable businesses pay for similar services Compensation agreements The use of a formula to determine compensation Medical Insurance Premiums treated as wages. The health and accident insurance premiums paid on behalf of the greater than 2 percent S corporation shareholder-employee are deductible by the S corporation as fringe benefits and are reportable as wages for income tax withholding purposes on the shareholder/employee’s Form W-2. They are not subject to Social Security or Medicare (FICA) or Unemployment (FUTA) taxes. Therefore, this additional compensation is included in Box 1 (Wages) of Form W-2, Wage and Tax Statement, issued to the shareholder, but would not be included in Boxes 3 or 5 of Form W-2. A 2-percent shareholder-employee is eligible for an AGI deduction for amounts paid during the year for medical care premiums if the medical care coverage is established by the S corporation. Previously, “established by the S corporation” meant that the medical care coverage had to be in the name of the S corporation. In Notice 2008-1, the IRS stated that if the medical coverage plan is in the name of the 2percent shareholder and not in the name of the S corporation, a medical care plan can be considered to be established by the S corporation if: the S corporation either paid or reimbursed the 2percent shareholder for the premiums and reported the premium payment or reimbursement as wages on the  2percent shareholder’s Form W-2. Payments of the health and accident insurance premiums on behalf of the shareholder may be further identified in Box 14 (Other) of the Form W-2. Schedule K-1 (Form the 1120S) and Form 1099 should not be used as an alternative to the Form W-2 to report this additional compensation.

Individual Taxpayer Identification Number (ITIN)

What is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service. It is a nine-digit number that always begins with the number 9 and has a range of 70-88 in the fourth and fifth digit. Effective April 12, 2011, the range was extended to include 90-92 and 94-99 in the fourth and fifth digit, example 9XX-90-XXXX.
IRS issues ITINs to individuals who are required to have a U.S. taxpayer identification number but who do not have, and are not eligible to obtain a Social Security Number (SSN) from the Social Security Administration (SSA).
ITINs are issued regardless of immigration status because both resident and nonresident aliens may have a U.S. filing or reporting requirement under the Internal Revenue Code.
Individuals must have a filing requirement and file a valid federal income tax return to receive an ITIN, unless they meet an exception.

What is an ITIN used for?ITINs are for federal tax reporting only, and are not intended to serve any other purpose. IRS issues ITINs to help individuals comply with the U.S. tax laws, and to provide a means to efficiently process and account for tax returns and payments for those not eligible for Social Security Numbers (SSNs).
An ITIN does not authorize work in the U.S. or provide eligibility for Social Security benefits or the Earned Income Tax Credit.

Who needs an ITIN?IRS issues ITINs to foreign nationals and others who have federal tax reporting or filing requirements and do not qualify for SSNs. A non-resident alien individual not eligible for a SSN who is required to file a U.S. tax return only to claim a refund of tax under the provisions of a U.S. tax treaty needs an ITIN.

Other examples of individuals who need ITINs include:
• A nonresident alien required to file a U.S. tax return
• A U.S. resident alien (based on days present in the United States) filing a U.S. tax return
• A dependent or spouse of a U.S. citizen/resident alien
• A dependent or spouse of a nonresident alien visa holder


How do I know if I need an ITIN?If you do not have a SSN and are not eligible to obtain a SSN, but you have a requirement to furnish a federal tax identification number or file a federal income tax return, you must apply for an ITIN.
If you have an application for a SSN pending, do not file Form W-7. Complete Form W-7 only if the Social Security Administration (SSA) notifies you that a SSN cannot be issued.
To obtain a SSN, see Form SS-5, Application for a Social Security Card. To get Form SS-5 or to find out if you are eligible to obtain a SSN, go to Social Security Administration Website or contact a SSA office. By law, an alien individual cannot have both an ITIN and a SSN.
IRS processes returns showing SSNs or ITINs in the blanks where tax forms request SSNs. IRS no longer accepts, and will not process, forms showing "SSA205c," "applied for," "NRA," blanks, etc.

How do I apply for an ITIN?Use the latest revision of Form W-7, Application for IRS Individual Taxpayer Identification Number to apply. Attach a valid federal income tax return, unless you qualify for an exception, and include your original, notarized, or certified proof of identity and foreign status documents.
Because you are filing your tax return as an attachment to your ITIN application, you should not mail your return to the address listed in the Form 1040, 1040A or 1040EZ instructions. Instead, send your return, Form W-7 and proof of identity and foreign status documents to:

Internal Revenue Service
Austin Service Center
ITIN Operation
P.O. Box 149342
Austin, TX 78714-9342

You may also apply using the services of an IRS-authorized Acceptance Agent or visit an IRS Taxpayer Assistance Center in lieu of mailing your information to the IRS in Austin. Taxpayer Assistance Centers (TACs) in the United States provide in-person help with ITIN applications on a walk-in or appointment basis. Applicants outside the United States should contact an overseas IRS office to find out if that office accepts Form W-7 applications. The IRS's ITIN Unit in Austin issues all numbers by mail.

When should I apply for an ITIN?
You should complete Form W-7 as soon as you are ready to file your federal income tax return, since you need to attach the return to your application.
If you meet one of the exceptions to the tax filing requirement, submit Form W-7, along with the documents that prove your identity and foreign status and the required supplemental documents to substantiate your qualification for the exception, as soon as possible after you determine that you are covered by that exception.
You can apply for an ITIN any time during the year; however, if the tax return you attach to Form W-7 is filed after the return's due date, you may owe interest and/or penalties. You should file your current year return by the prescribed due date to avoid this.

Where can I get help with my ITIN application?You may call the IRS toll-free at 1-800-829-1040 for information and help in completing your Form W-7 and your tax return, or to check on the status of your application six weeks after submitting Form W-7.
Assistance is also available at IRS Taxpayer Assistance Centers in the United States to provide in-person help with ITIN applications on a walk-in or appointment basis. Applicants outside the United States may contact an overseas IRS office to find out if that office accepts Form W-7 applications.
You may also use the services of an IRS-authorized Acceptance Agent.

How and when can I expect to receive my ITIN?If you qualify for an ITIN and your application is complete, you will receive a letter from the IRS assigning your tax identification number, usually within six weeks. If you have not received your ITIN or other correspondence six weeks after applying, you may call the IRS toll-free number at 1-800-829-1040 to request the status of your application.