Irs Deductions for Small Businesses by sxn42276


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Small Business Resource Guide CD Still Available
The Small Business Resource Guide (SB RG) CD -ROM is a handy, interactive CD designed to
help the small business owners comply with the tax laws that are regulat ed by the Internal
Revenue Servic e. The SBRG CD covers a broad range of topics from business start -up to closing
a business. The CD includes business tax forms, instructions and publications along with all of
the tax law changes for 2007. In addition to providing a wealth of tax-related information, the CD
contains a wide variety of web links to various government agencies, business associations and
IRS organizations. If you would like to place an order to receive copies of the SBRG CD, email
me. Please provide the contact name, mailing address and the quantity requested.

Upcoming Events:

Free National Phone Forum - Forms 1099: Information Reporting
November 28, 2007
There are three different sessions for this phone forum; choose from 10 a.m. Eastern; 1 p.m.
Eastern; or 4 p.m. Eastern
Who should attend? Tax practitioners, business owners & organizations, accountants,
bookkeepers, payroll processors, and government agencies.
Here is what you will learn during this forum:
      Overview of Information Reporting
      Form 1099-MISC and issues
      Filing requirements and methods
      How to make corrections
Go to the link below to see the scheduled times for the classes, as well as more information on
how to register. Be sure to register by November 26, 2007.,,id=158856,00.html#1099

IRS Updates & News Releases:

Direct Sellers and the Tax Gap room/article/0,,id=175146,00.html
Some people’s income is based on their sales and not on the number of hours they work. They
are known as direct sellers. Sometimes there is confusion regarding the special set of tax rules
that applies to direct sellers. This fact sheet, the seventeenth in the Tax Gap series , is designed
to help direct sellers better understand the rules so they can get the most out of their deductions
and pay their fair share of taxes. To find more resources on the tax gap — the difference between
the amount of tax that taxpayers should pay and the amount that is paid voluntarily and on time,
go to the Tax Gap Web site.

IRS Announces New Chinese, Korean, Russian and Vietnamese Tax Glossaries to
Assist Taxpayers room/article/0,,id=175387,00.html
Five new publications are now available to help foreign -language communities understand federal
tax forms and publications that are written in English. These new glossaries of tax terminology will
help meet increased demand for tax-related resources in languages other than English. The
publications are new versions of Publication 850 for Chinese (simplified), Chinese (t raditional),
Korean, Russian and Vietnamese. A Spanish version was previously available. See the full
article for links to the five new publications.

IRS Warns of E-mail Scam Soliciting Donations to California Wildfire Victims room/article/0,,id=175392,00.html
The Internal Revenue Service today warned taxp ayers to be on the look out for a new e -mail
scam that appears to be a solicitation from the IRS and the U.S. government for charitable
contributions to victims of the recent Southern California wildfires. In an effort to appear
legitimate, the bogus e-mails include text from an actual speech about the wildfires by a member
of the California Assembly. The scam e-mail urges recipients to click on a link, which then opens
what appears to be the IRS Web site but which is, in fact, a fake. An item on the phony Web site
urges donations and includes a link that opens a donation form which requests the recipient’s
personal and financial information.

IRS Offers Relief for Late S Corporation Elections room/article/0,,id=174675,00.html
Businesses that are eligible to elect S corporation tax treatment now have a simpler process for
requesting relief for late elections under a change announced by the Internal Revenue Service
today. Revenue Procedure 2007-62 allows small businesses that missed filing Form 2553,
Election by a Small Business Corporation, before filing their first Form 1120S, U.S. Income Tax
Return for an S Corporation, to file both forms simultaneously. The change is effective for taxable
years that end on or aft er Dec. 31, 2007. The IRS cautioned that the requirement for filing Form
2553 to establish the election in advance of filing the initial Form 1120S remains in effect.
However, the new process will save time and effort for those taxpayers who can establish
reasonable cause for making a late election.
Small business corporations that are eligible for tax treatment under Subchapter S of t he Internal
Revenue Code enjoy the advantages of the corporate structure while being taxed similarly to a
partnership or sole proprietorship. The change, based on suggestions from tax professionals and
small business owners, resulted from the work of an IRS process improvement team led by the
Office of Taxpay er Burden Reduction.
Related Item: Revenue Procedure 2007-62

2008 Inflation Adjustments Widen Tax Brackets room/article/0,,id=174876,00.html
For 2008, personal exemptions and standard deductions will rise, tax brackets will widen and
work ers will be able to save more for retirement, thanks to inflation adjustments announced today
by the Internal Revenue Service. By law, the dollar amounts for a variety of tax provisions must
be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits,
affecting virtually every taxpayer, are being adjusted for 2008. Key changes affecting 2008
returns can be found by linking to the full article.

IRS Announces Pension Plan Limitations for 2008,,id=174873,00.html
The Internal Revenue Service today announced cost of living adjustments applicable to dollar
limitations for pension plans and other items for Tax Year 2008. Many of the pension plan
limitations will change for 2008 because the increase in the cost -of-living index met the statutory
thresholds that trigger their adjustment. However, for ot hers, the limitation will remain

IRS and States to Share Employment Tax Examination Results room/article/0,,id=175457,00.html
Officials from the Internal Revenue Servic e and more than two dozen state workforce agencies
today announced they have ent ered into agreements to share the results of employment tax
examinations. The agreements, part of the Questionable Employment Tax Practice (QE TP)
initiative, provide a centralized, uniform means for the IRS and state employment officials to
exchange dat a, thereby leveraging resources and enc ouraging businesses to comply with federal
and state employment tax requirements.

IRS Warns Taxpayers about Certain Trust Arrangements Sold As Welfare Benefit
The Internal Revenue Service and the Treasury Department cautioned taxpayers about
participating in certain trust arrangements being sold to professional corporations and other small
businesses as welfare benefit funds and identified some of the arrangements as listed
transactions. There are many legitimate welfare benefit funds that provide benefits, such as
health ins urance and life insurance, to employees and retirees. However, the arrangements the
IRS is cautioning employers about primarily benefit the owners or other key employ ees of
businesses, sometimes in the form of distributions of cash, loans, or life insurance policies.

Tax Benefits for Businesses Accommodating the Disabled,,id=175291,00.html
There are tax benefits in the form of credits and deductions for businesses that accommodate the
disabled. There are also special treatments for some disabled workers. The Disabled Access
Credit provides a non-refundable credit for small businesses that incur expenditures for the
purpose of providing access to persons wit h disabilities. The Architectural Barrier Removal Tax
Deduction encourages businesses of any size to remove architectural and trans port ation barriers
to the mobility of person with disabilities and the elderly. The Work Opportunity Credit provides
eligible employers with a tax credit up to 40 percent of the first $6,000 of first -year wages of a
new employee if the employee is part of a “targeted group.” For 2007, there are new Work
Opportunity Credit rules for veterans with a servic e-connected disability. See the full article for
more details on the various credits.

Also, the article discusses the fact that many businesses misclassify workers in a sheltered
workshop as independent contractors when they really are employees.

Poker Tournament Winnings Must be Reported to the IRS,,id=174937,00.html
Starting next year, casinos and other sponsors of pok er tournaments will be required to report
most winnings to winners and the Internal Revenue Service, according to the IRS.

Issue Management Resolution System (IMRS) Monthly Overview
The October overview is now available. IMRS is a streamlined and structured process that
facilitates stakeholder issue identification, resolution and feedback. You can forward signific ant
issues on IRS policies, practices and procedures to your Stakeholder Liaison (S L) local contact.

Recent Articles from e-News for Small Businesses
Maximum Amount of Earnings Subject to the Social Security Tax Increases for 2008
The Social Security Administration recently announced that the maximum amount of earnings
subject to the Social Security tax will increase to $102,000 from $97,500 for 2008.

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