Tag Archive for tax

County May Owe State For Retro Sales Tax Bill

August 23, 2011 Front Page Comments Off
By Lynette Norris
Greene Publishing, Inc.

Madison County may end up owing the state of Florida more than $22,000 in back sales taxes accrued over the last five years, if the Florida Department of Revenue has its way.

The issue came to light when the DOR questioned why the County of Madison was not collecting sales tax on rental charges for the “green boxes” used by businesses in solid waste removal.

At the Board of County Commissioners meeting Wednesday, Aug. 17, Commissioners stated that the reason the sales tax was not collected was that providing the green boxes was believed to fall under the category of a “service provided” by the county – receptacles for containing and removing of solid waste – and the money charged for placement and use of the boxes was a fee for service provided rather than a rental charge, and therefore not subject to sales tax.

The Department of Revenue, however, may see things a little differently.  DOR may want to go back five years, auditing the county’s records regarding the green boxes.  The question hinges on whether the money is indeed a service fee, and therefore exempt like the county thought it was, or if it is a rental charge and therefore subject to the tax.  If DOR decides the latter and wants to collect sales tax retroactively for that time, Madison may find itself socked with the tax bill.

In other business, the commission proceeded quickly through its agenda, ending up with a total of five items moved to the next meeting’s agenda.  The board also appointed Marianne Green to the Madison County Value Adjustment Board, as the one citizen member owning homesteaded property.  The other two members, from the BOCC, are Commission Chair Renetta Parrish and Commissioner Justin Hamrick.

The purpose of the Value Adjustment Board is to hear appeals regarding denied exemptions, petitions relating to assessments and appeals concerning ad valorem tax deferrals.  Green said she would be honored to serve on the board and happily be of service to the public in that capacity.

 

Share

THE AMT: WHAT’S IT ALL ABOUT?

July 15, 2011 Editorials Comments Off

Business & Tax Insights

By Mark Buescher, C.P.A.Guest Columnist

Many taxpayers have never heard of the alternative minimum tax, but many individuals get hit with this extra tax and do not even understand it.  As the government seeks additional sources of revenue, AMT as it is commonly known, is expanding and more “average” taxpayers are now subject to the tax.

The original idea behind this tax was to prevent people with very high incomes from using special tax benefits to pay little or no tax.  However, the AMT has increased its reach and now applies to some people who do not have very high income or don’t claim many special tax benefits.

Proposals to repeal or reform the AMT have languished in Congress for many years, but effective action does not appear to be forthcoming in the near future.  As it stands, almost anyone is a potential target for this tax.

In simplistic terms, the AMT is nothing more than a parallel tax. First you compute your regular income tax.  Then you compute your minimum tax, and your “alternative” is to pay the greater of the two.

Whereas the regular income tax is computed on taxable income (adjusted gross income less itemized/standard deductions and personal exemptions), the AMT begins with adjusted gross income less deductions, adds back various deductions not allowable for AMT purposes, applies an AMT exemption ($48,450 for single taxpayers, $74,450 for married taxpayers) and is computed on the remaining balance.  The exemption phases out at higher income levels.

One reason that the AMT could be greater than your regular tax is that while the regular tax has graduate rates (from 10% to 35%), the AMT has only two rates, 26% and 28%.  Many deductions allowable for regular tax purposes aren’t allowable for AMT purposes.  The most common of those deductions include (but are not limited to) the following:

Taxes.  No AMT deduction is allowed for state/local income taxes, real estate taxes, or personal property taxes.

Miscellaneous itemized deductions.  No AMT deduction is allowed for unreimbursed employee business expenses, investment expenses, or any other similar miscellaneous deduction.

Large investment income.  For the regular tax, there is a special tax rate (sometimes as low as zero) for qualified long-term capital gains and dividends, but for AMT purposes, there is no special lower tax rate to apply to this income.

Congress was successful in making it difficult to avoid the AMT.  AMT planning requires the understanding of how the AMT is computed and how the various AMT non-allowable deductions factor into your tax return.  Obviously, the AMT can be difficult and complicated, but with a greater knowledge of its makeup, you may be able plan for its impact.

Mark Buescher, CPA, is owner and principal of Buescher and Ruff, LLC, a local full service accounting firm in Madison, specializing in tax preparation, business consulting and tax planning.  Tax laws contain varying effective dates and numerous limitations and exemptions that cannot be summarized easily.  For details and guidance for your specific situation, contact your tax advisor.

 

Share

Maximizing Your Tax Benefits Through A Home Office

February 22, 2011 Editorials Comments Off

Business & Tax Insights

By Mark Buescher, C.P.A.
Guest Columnist

Throughout Madison County and North Florida, there are many individuals that are self-employed.  If you look around, there are florists, farmers, insurance salesmen, plumbers, small contractors, consultants, and even health care providers, to name a few.  Our area is loaded with self-employed individuals and small businesses.  These individuals represent the backbone of our local economy, employ hundreds of people, and pay a large portion of our overall taxes.
However, like all segments of our economy, the self-employed have been hit hard during the economic downturn.  Sales have been squeezed, government and banking regulations have increased, and taxes are on the rise.  The self-employed need every break they can get.
One of these breaks is the home-office expense deduction.  If you’re self-employed (or in some cases even an employee of someone else) and work out of an office in your home, you may be entitled to favorable “home office” deductions.  However, the rules can be quite tricky and there are strict requirements that must be met.
The first requirement is that you have part of your home that you use regularly and exclusively for business purposes.  It doesn’t have to be a separate room, but it must be a clearly defined area.  The exclusive use requirement is very important.  The area must be reserved only for business use, which means if you also use it for personal activities, it will not qualify.  The only exceptions, to the exclusive use test are if you store business samples or inventory at home, or if you run a home daycare business.
The other requirement is that your home office be any one of the following: your principal place of business; a place where you regularly meet customers, clients or patients; or a separate building, not connected to your home.  Keep in mind, your office must meet only one of these tests to qualify.
Your principal place of business.  To meet this test, your office must be where you conduct most of the management and administrative activities of running your office.  You may travel to meet customers at their business or confer with patients in the hospital, for instance, but your principal place of business is where you do most of the work actually managing your business.
A place where you regularly meet customers, clients, or patients.  Even if you run the business from elsewhere, a home office can qualify if you regularly use it for meeting with customers, clients, or patients.
A separate building, not connected to your home.  A freestanding garage or workshop will qualify for this test if it is used exclusively and on a regular basis for business.
If you have an area of your home that qualifies, you can generally deduct a percentage of your total costs, including mortgage interest, insurance, taxes, utilities, and possibly some depreciation.  The percentage is calculated as the area used for business divided by your home’s total area.  For the self-employed, however, home office deductions are limited to the net income of the business.
What if you are not self-employed and you are an employee of someone else?  Are the rules the same?  Yes, but with an added requirement.  An employee’s home office must be for the convenience of the employer, which should be documented in writing.  Furthermore, deductions for employees, other than mortgage interest and taxes, are available only to the extent they exceed two percent of adjusted gross income.
As with most tax laws, these rules can be a bit complicated.  However, proper planning can be the key to nailing down the optimum tax treatment for your home office expenses.
Mark Buescher, CPA is owner and principal of Buescher and Ruff, LLC, a local full service accounting firm in Madison, specializing in tax preparation, business consulting and tax planning.  Tax laws contain varying effective dates and numerous limitations and exemptions that cannot be summarized easily.  For details and guidance for your specific situation, contact your tax advisor.

Share