E-File Magic 1099 Software – Blog

Man, every time I go to Vegas I hope to win the car.   You know what I’m talking about, it’s the shiny car sitting on top of the slot machines.  I walk into the casino and think, “I feel lucky today, I should sit down and play a couple rounds on this slot machine.” Alas, the only thing I walk away with from the car giveaway slot machines is an empty purse.

If I did win the car I would be thrilled!  I would be able to drive it home – hair blowing in the wind, radio up loud listening to my favorite music. Along with my shiny convertible the casino would also give me a W2-G!

Form W2-G, Certain Gambling Winnings, will describe the Fair Market Value of the my winnings for the IRS and the amount of taxes I paid, if any, towards my winnings.

Now, here’s something I learned about gambling winnings by reading the W2-G Instructions; you have to pay taxes on your noncash payment.  My shiny red convertible would be a noncash payment.  According to the instructions, “If the FMV exceeds $5,000, after deducting the price of the wager, the winnings are subject to 25% regular gambling withholding. The tax you must withold is computed and paid under either of the following two methods: 1) The winner pays the withholding tax to the payer.  In this case, the withholding is 25% of the FMV (Fair Market Value) of the noncash payment minus the amount of the wager.  Or 2) The payer pays the withholding tax,  In this case, the withholding is 33.33% of the FMV of the noncash payment minus the amount of the wager.

Now, I don’t know about you, but I doubt the casino (payer) will pay the taxes on the gambling winnings of my car so option 1 will probably be the more common scenario.  I guess I better start saving up for the next time I go to Las Vegas.  That way I’ll have extra money to pay for the taxes on my new car!

Download E-File Magic W2-G Software Today!

At the end of every year right before tax season starts, I like to remind everyone of what the mileage rates the IRS will recognize for that tax year.

Business miles -                   From January 1st, 2011 – June 30th, 2011 the rate is 51 cents per mile.

From July 1st 2011 – December 31st, 2011 the rate is 55.5 cents per mile.

Medical & Moving Miles -From January 1st, 2011 – June 30th, 2011 the rate is 19 cents per mile.

From July 1st, 2011 -  December 31st, 2011 the rate is 23.5 cents per mile.

Volunteer Miles -                 From January 1st, 2011 – December 31st, 2011 the rate stays at 14 cents

per mile.

Downloading E-File Magic’s 1099 Software wont help you with deciphering mileage deductions, but it will help you with deciphering 1099-MISC Forms.  Try it today!

Accountingweb has a great posting on some recent updates to the FACTA act, that you should be aware of:

Business owners take heed. A November 1 update to FACTA (the Fair and Accurate Credit Transactions Act of 2003) requires businesses to implement a written policy that monitors the business for “Red Flag” warning signs for identity theft. The policy must also specify how the business will respond to the crime if discovered.
The Red Flag rules have been on the books for years, and lawyers, health care practices, and small business owners have been fighting the changes to the law. In fact, the new deadline is only the latest deadline for the rule that was first introduced in April 2008. The initial deadline was set for November 1st, 2008 and subsequently moved to April 1st, 2009 and then finally November 1st, 2009.

The Red Flag Rule covers “financial institutions” and “creditors.” It is this second group that almost every business falls into. Any business that doesn’t collect payment in full at time of service is considered a “creditor.” This includes doctors, lawyers, accountants, designers, phone companies, or anyone else who offers payment terms.

“Most businesses understand that they need to protect information through security and paper shredding programs,” says Steven Hastert, president of Shred Nations, an expert in identity protection issues. “But even though this new law has been posted for more than a year, few businesses are aware of the scope of these changes.”

The American Bar Association (ABA) and American Medical Association (AMA) have been vocal critics about being covered by the rule. They have a last ditch effort with H.R 3763 to prevent being covered. The bill has passed the House on October 26th and is headed for the Senate. This proposed legislation exempts businesses under 20 employees from the changes.

The Red Flag Rule requires businesses to install four components:

1)   Reasonable policies and procedures must be in place to identify suspicious patterns or practices in day-to-day operations. This activity indicates possible identity theft.

2)   The program should also detect identified red flags for the business. For example, obvious fake identification.

3)   The program should have procedures to take when a red flag is identified.

4)   There must also be having a system in place to re-evaluate the program as threats change.

These new requirements are just part of a good information security program. Hastert reminds businesses to remember the basic steps they need to take. These include locking file cabinets, not giving information over the phone and shredding everything with personal information on it.