109 Bedford Avenue
Bellmore, New York 11710
516-409-1120
sjohnson@sgjcpa.com

Thursday, July 19, 2012

When is it Time to Find a New Accountant?

  • My accountant doesn’t return my calls.
  • My tax return is always on extension.
  • I often receive penalties from the IRS.
  • My accountant doesn’t answer my questions to my satisfaction.
  • My accountant is too far away.
  • My accountant is too busy to spend time with me.
  • My accountant doesn’t explain my financial statements to me.
  • I don’t know what my accountant does for his/her fee.
  • I never sign any tax returns, my accountant takes care of that.
  • I don’t know if my business is making a profit or not.
  • I haven’t filed a tax return in ___ years.
IRS Circular 230 Disclosure


Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.

Thursday, July 12, 2012

Why Use a CPA?

Today, many people choose to prepare tax returns on their own or hire one of many unlicensed and/or unregistered tax preparers. Following is only a partial list of why you should hire a CPA to prepare your tax returns:

• CPAs must pass an intense uniform exam.
• CPAs must take continuing education (40 hours per year in New York State.)
• CPAs must have experience to become licensed.
• CPAs must have a college degree (150 credits as of 2009 in New York State.)
• CPAs must follow a strict code of ethics.
• CPAs must sign a tax return they are paid to prepare.
• CPAs can represent you in an audit.
• CPAs provide consistency and stability.
• CPA offices are open all year round.
• CPAs provide tax planning.
• CPAs have been rated the most trusted business professional in national studies.


IRS Circular 230 Disclosure

Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.

Thursday, July 5, 2012

Get Out There and Network

Summer is here! For many of us, summer means a slow down in business. If that’s the case for your business, take advantage of networking opportunities and hone your networking skills.

For many of us, networking is sheer torture! 93% of all people consider themselves shy. Consider the reasons why we don’t like networking:
  • Mother always told us, “Don’t talk to strangers!”
  • We haven’t been formally introduced.
  • We don’t want to appear too pushy.
  • We don’t want to risk rejection.
If you are a wallflower at networking events and believe that good things come to those who wait, you may be waiting a very long time. The only thing that comes to those who wait is gray hair! If you prepare ahead of time, you can become an expert networker.
  • Practice your 30-second elevator speech in front of the mirror.
  • Prepare icebreaker questions ahead of time.
  • Think about what you have in common with other attendees.
  • Consider joining the planning or greeting committee. It will enable you to act like a host instead of a guest.
Networking is a learned skill that you can master. Start by reading some of the many books that have been published on the subject. Observe others who seem to have mastered the skill. Practice, practice and practice some more. Then go out and have fun.

Networking is a great way to meet potential customers, find new referral sources and make new friends.

IRS Circular 230 Disclosure

Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.

Thursday, June 28, 2012

The Importance of Competition in Business

Competition, according to Wikipedia, is the foundation upon which capitalism is justified. Competition keeps prices low and quality high. It encourages the development of new products, services and technology. So if competition is such a good thing, why are so many small business owners afraid of it?
Use your competition to evaluate how you are doing. What products or services do they offer that you don’t? Are your competition’s products or services better quality than yours? Do they have a better location than you? Does their advertising pop off the page while yours gets lost on it? Evaluate what you see and use it to improve your business.

How often do you wish you had more hours in the day? As hard as we try, we cannot do everything. Try referring business that you cannot or do not want to handle to your competition. Perhaps they will refer back to you.

Do you have enough time to stay current on all the changes or innovations taking place in your industry, probably not? The next time you learn something new, email that information to one of your competitors. Maybe one day they will email a valuable piece of information back to you.

How about taking a vacation? I know half of you just said “What vacation?” Wouldn’t it be great if you had someone to rely on so you could take off one day or maybe a weekend or thank you Lord, a whole week? Become good friends with your competition and they could cover emergency situations while you take a vacation.

And last but absolutely one of the most important issues every small business owner must think about is a continuity plan. Someday, when you decide to retire or God forbid you become ill, a friendly competitor could be part of your continuity plan and buy you out.

Every one of the suggestions I have posed here has worked for me. I guarantee that if you choose the right competitors to work with you can turn competition into a win/win situation!

IRS Circular 230 Disclosure

Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.


Tuesday, June 19, 2012

Summer Employment

Did your high school or college student get a job this summer? Is she working at a summer camp? Is he doing yard work? If you have a working teen or student, there are tax implications to consider.

Your working youngster is still your dependent. However, the student could still be obligated to pay both federal and state taxes depending on the level of income both earned (from work performed) and unearned (usually interest and dividends). For 2012, a single dependent, your working child, can have a total income up to $5,980 without paying taxes.

When beginning employment, the student will be asked to complete a W-4. The W-4 tells the employer if taxes should be withheld from the employee’s wages. The level of withholding is determined from the number of allowances claimed. Each allowance claimed lowers the amount of taxes withheld.

The student must first estimate the total amount he will earn in the year. This includes wages from this summer employment and any other wages anticipated from part time work. If the student is sure that the wages (plus interest and dividends from accounts in his name) do not exceed $5,980, the student may claim to be exempt from withholding. The exemption can not be claimed if interest and dividends exceed $300 and total income exceeds $950. In today’s environment of low interest rates, very few students have interest and dividends which exceed $300. (Remember interest and dividends from 529 accounts and retirement accounts are not included in total income).

If the student will be exempt from withholding, the W-4 identification info is entered and EXEMPT is written in box 7. The comparable NY form is IT2104-E. It is to the teen’s advantage to claim the exemption. No income taxes will be withheld and no tax return will be required. If taxes are withheld and the teen does not exceed the $5,980, he will have to file a return to get a refund of the withheld taxes.

If the student is not exempt, the form should be filled out claiming 1 allowance. If the student has multiple employers, it is best to file with 0 allowances to ensure adequate withholding. The comparable NY form is IT2104.
W-4 form: http://www.irs.gov/pub/irs-pdf/fw4.pdf
NY IT2104-E: http://www.tax.ny.gov/pdf/current_forms/wt/it2104e_fill_in.pdf
NY IT2104: http://www.tax.ny.gov/pdf/current_forms/wt/it2104_fill_in.pdf

Suppose your student is self-employed. He can earn up to the same $5,980 without owing federal income tax. However, if his net income (receipts less any expenses) is above $400, he must pay self-employment tax. Self-employment tax is the way the self-employed make their contributions to social security and Medicare. If self-employed, the teen must keep accurate records of receipts and expenses which will be used to prepare his tax return.

The IRS gives tax relief to teens working traditional part time jobs. If your teenager (under 18 at any time during the year and a student) is working as a household employee, he will not owe self-employment tax. A household employee is a housekeeper, babysitter, tutor, gardener, and others who work in or around a private residence. However, being exempt from self-employment tax does not mean the teen is exempt from income tax.

Your working teen will receive a W-2 (from an employer) or a 1099-MISC (if worked as contractor). If self-employed, he should be able to compute his net income. His total income (earned and unearned) should be calculated to determine if a tax return is required. A tax return must be filed for your working teen if he has exceeded the income levels or if he hasn’t but has had taxes withheld.

A teen’s first job can be exciting and is certainly a learning opportunity. Becoming familiar with the responsibilities of a working taxpayer is no small part of the experience.

IRS Circular 230 Disclosure
Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.

Monday, May 14, 2012

Lobbying on Capitol Hill



Sandra Johnson, president of Sandra G. Johnson, CPA, P.C. was part of a group representing the National Conference of CPA Practitioners that met with representatives of the Senate, Congress and the Internal Revenue Service to lobby for tax law changes.

On the agenda was the AMT. Originally designed to tax only the wealthy, AMT now affects middle-class taxpayers living in high cost-of-living areas like the east and west coasts. Among other topics, the organization was looking to effect a change in the deductibility of health insurance premiums for small business owners and sought to increase the deductibility of Long Term Care insurance premiums for taxpayers.

Sandy’s participation in these conferences reflects her commitment to her profession, small businesses and individual taxpayers.





IRS Circular 230 Disclosure


Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.






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Tuesday, March 13, 2012

Is IRS’s Fresh Start for You

The IRS wants you to voluntarily file your tax return and pay your taxes. Recognizing that taxpayers may be struggling, particularly those who have experienced unemployment, the IRS has introduced a program to eliminate “failure to pay” penalties. Additionally, the IRS has changed some payment options to encourage taxpayers to meet their tax obligations.


All taxes on 2011 income are due on April 17, 2012. If not paid on time, the IRS levies a “failure to pay” penalty. This penalty is a half percent per month with a cap of 25 percent. Under the “Fresh Start” program, a taxpayer may receive a six month extension for payment of taxes due with no “failure to pay” penalties being assessed during the six months. Interest on the tax due will accrue over the extension period.

The taxpayer must meet the following criteria to be eligible for the extension and penalty relief.
• The 2011 tax liability must be less than $50,000, and
• The adjusted gross income must be less than $100.000 for single ($200,000 for married filing jointly), and
• The taxpayer or spouse must be a wage earner who was unemployed for 30 consecutive days between January 1, 2011 and April 17, 2012 or self-employed whose 2011 income decreased by 25% or more as compared to 2010 business income.

To receive the extension a new form must be filed (Form 1127-A) by April 17, 2012.

Getting the extension will give you some breathing room, but the taxes still have to be paid. Part of the IRS Fresh Start program is an expansion of the installment payment plan, Tax liabilities of up to $50,000 may be paid via installments, the payment period has been expanded to 72 months, and the financial information required to qualify for an installment payment plan has been streamlined based on tax liability level.

The IRS also has more flexibly with its “Offer in Compromise” program. An Offer in Compromise is an agreement between the IRS and the taxpayer that settles the tax liability for an amount less than owed. The IRS looks at the taxpayer’s financial situation to determine what amount of the liability can be paid.

Although you may be struggling due to unemployment or reduced self-employment income, you are still obligated to file a tax return and pay your taxes. If you can’t pay, do not skip filing. The penalties (failure to file and failure to pay) will make the burden worse. The IRS Fresh Start program may help with payment extension, penalty relief, and payment plans. Our office can determine your eligibility and develop a plan for you to meet your tax obligations.





Saturday, February 18, 2012

Organization for an Accurate Tax Return

It’s tax season. Now is the time we scramble to find forms and receipts. We wonder if we should have done something to help in lowering our taxes. It’s a good time to plan for 2012 while pulling together the information to complete the 2011 return. There are some things we can still do for 2011 and certainly now is the time to start preparing for 2012.

Let’s talk about organization. At a minimum you should have a folder, envelope, or yes, even a shoe box to store pertinent receipts as you get them. But going through that pile of receipts will take time, cost money (if done by your CPA), and likely result in errors. The IRS, your CPA and tax software all step through tax preparation from income to deductions to payments. Your files should be organized the same way.

For income:
• Keep pay stubs until you receive a W-2.
• Keep bank statements and brokerage statements until you receive a 1099.
• If you are self employed keep all income and expense records related to the business separate from your personal expenses. Vehicle expense records should be maintained during the year. Keep a notebook in the vehicle to record business usage.
• If you rent part of your home or use it for your business, records of expenses to maintain the home should be kept.
• If you rent property, keep those income and expense records in its own folder.
If you’ve maintained income records all year you can verify that you received each W-2 and 1099 that you should have. Having the IRS discover missing income forms could significantly change your return.

For deductions:
The best way to save supporting documents is in folders or envelopes by category – medical expenses, charitable contributions, education expenses, etc. At a minimum, keep all receipts, write an explanation on the receipt and save. Although the IRS doesn’t require copies with the return, you must be able to provide supporting documentation for every deduction if you are audited. If you don’t have the documentation, the deduction could be disallowed.

OK. You’ll make a resolution to get organized for 2012, but you weren’t for 2011. What now? Start digging. Make sure you have a W-2 for each job you had. Make sure you have a 1099-INT from each of your banks, a 1098 from your mortgage company. Look at the 2010 return. Are there items reported on the return that occurred again in 2011? Do you have the form? Look for deductions. Did a child start college? Did you pay for child care? What about medical costs? Chain pharmacies can provide reports of prescription costs. Were you looking for a job? Job search expenses may be deductible. Did you buy a house or refinance a mortgage? Did you contribute to an IRA? This is one step you can still make and impact your 2011 taxes. The more you find, the more accurate your return.

Committing to treating tax preparation as a year round activity could save you money (no lost deductions). It will certainly save you time and anxiety when facing the filing deadline.

IRS Circular 230 Disclosure
Pursuant to U.S. Treasury Department Regulations, we are now required to advise you that any federal tax advice contained in this communication, including attachments and enclosures, is not intended by the Sender or Sandra G Johnson, CPA, P.C. to constitute a covered opinion pursuant to regulation section 10.35 or to be used for the purpose of (i) avoiding tax-related penalties under Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any tax-related matters addressed herein.