First let’s understand the difference between an accountant and a CPA. An accountant is the individual who earned a bachelor’s degree in accounting from a 4 year college or university. An accountant helps maintain and analyze financial records and assure that taxes are paid on time and correctly.

A CPA (Certified Public Accountant) has also earned a bachelor’s degree in accounting, but also has earned a certificate from the state of California or some other state and has certain amount of hours working under supervision of other Certified Public Accountants in accounting.  Your LA CPA also took accounting and business courses and was eligible for the Uniform CPA Examination, offered by California board of accountancy.

A Your LA CPA can do the same work as an accountant, but an accountant cannot do the same work as a CPA.

Finding the right CPA is essential to get the best return in your taxes and to make sure that you will be on time for the IRS deadlines.  To report your financial information, either personal or business, you need to find an accountant that will ensure you will not pay more taxes then you are supposed to.

To get the best out of your accountant, you need to learn how to find the right one for your case. The most qualified CPA are detail oriented, focused, a good listeners, and are problem solvers.  They also have strategic thinking and understand the law, how to best apply the law for the type of business your company operates.

Since the population in the USA, specially California, is from all over the world, and when English is not your primarily language, it’s essential that you find an accountant that speaks your language or has an assistant that can mediate the conversation. Not only they will be able to explain the financial terms in a way you can understand, but they will represent your interest in a better way.

You should also check their area of expertise and find the one that has more experience related to your particular needs.  The more experienced the accountant, the better and faster the service will be done.

A good accountant can prepare taxes for individuals or businesses, professional corporations, partnerships, and limited liability companies.  Whether you are in the entertainment industry, real estate, construction or development, if you find the right Los Angeles accountant or CPA, they should be able to help you!

Last but not the least, you need to trust the CPA you choose.  A great CPA is always there to help you!

Thank you for reading….

If you are in a position to itemize your deductions on schedule A of your tax return in lieu of claiming the standard deduction, then you may be able to take advantage of claiming certain miscellaneous deductions. These deductions reduce the amount of your taxable income and reduce the amount of taxes you may have to pay.

Here are some things you should know about miscellaneous tax deductions for US income tax purposes:

Deductions Not Subject to the 2 Percent Limit.

• Casualty or theft losses from income producing property; for example, theft of stocks, bonds, gold, works of art, vacant land, etc.
• Gambling losses to the extent of gambling winnings.
• Work expenses of persons with disabilities, if they are impairment-related.
• Losses from Ponzi-type investment schemes.

Deductions Subject to the 2 Percent Limit.

In United States as a resident one is able to deduct the amount of certain miscellaneous expenses that exceed 2 percent of your AGI. Deductions that are subject to the 2 percent limit include:

• Unreimbursed employee expenses such as certain uniforms and work clothes, tools, union dues and subscriptions, expenses related to searching for a new job in the same profession, and work related travel and transportation.
• Tax preparation fees; you can deduct the fees that Your Los Angeles or US accountants charge you for the preparation of your tax returns.
• Other expenses that are deductible are:

Legal fees that produce or help collect taxable income,

Expenses that Manage, maintain and conserve property that is held to produce taxable income,

Fees associated with and that help you determine, pay or claim a refund of any tax.

Some additional expenses include certain investment fees and expenses, some legal fees, some hobby expenses that cannot exceed your hobby income and safe deposit box fees.

If you are able to deduct qualified miscellaneous deductions, you report them on Schedule A; under Itemized Deductions of your US Tax return.
We at Your LA CPA, Inc. recommend that you keep good records of your miscellaneous deductions to make it easier for you and your tax preparer to prepare an accurate tax return.

There are many miscellaneous expenses that are not deductible so please always consult your accountant.  If you are not happy with your accountant or don’t have one, GIVE US A CALL!  Here at Your LA CPA Inc. we value each and every client and we are always glad to be of service to our new clients. We will assist you in taking advantage of the all deduction available to you.

If you have any questions about anything mentioned above feel free to contact us through our website @ losangelescpa.org or call us at 323-528-1512.
Thank you for reading….

You can still claim the dependent care credit if you use a flex plan for child care costs:

The credit can be claimed on the United States taxpayer’s second page of their form 1040. The amount is calculated on form 2441 “Child and Dependent Care Expenses”.  You can claim credit to the extent your expenses are more than the amount that you pay through your flexible spending account.

Filers with two or more children under the age of 13 qualify to apply the credit to as much as $6,000 of eligible expenses. However, the allowed maximum for dependent care costs funded through an FSA is only $5,000.

When you run the first $5,000 of dependent care costs through the Flexible Spending Account, the next $1,000 of expenses would still be eligible for the credit on Form 2441.

For most filers, taking the dependent care credit would save an extra $200 in taxes.  Keep in mind double dipping is not allowed! So, no credit is allowed for any child care costs that are paid via the flex plan.

If you have any questions about anything mentioned above feel free to contact us through our website @ losangelescpa.org or call us at 323-528-1512.
Thank you for reading….

Best Regards,

Your Accounting Team at Your LA CPA

HERE ARE SOME NEWS!

The IRS has developed audit programs that Overview focus on employers who “misclassify” workers as independent contractors. These IRS programs can be expensive for employers and particularly painful for small businesses that may not be able to withstand the “economic strain” of additional employment taxes. And a worker who was misclassified as an independent contractor could also put the business’s retirement and benefit plans in jeopardy for failing to cover all employees.

Here are the factors that determine whether someone should be put on payroll as an employee or can be treated as an independent contractor.  Willful misclassification of employees as contractors is subject to severe penalties including civil penalties of $5000 to $15,000 for each violation in addition to other penalties allowed by law.  Employers that demonstrate a pattern or practice of such violations is subject to civil penalty of $10,000 to $25,000 for each violation.  Aside from the IRS, employee misclassifications may be enforced by the Labor Commissioner or in civil suit.

THE 20-FACTOR CONTROL TEST

(1) Instructions: A worker who must comply with instructions about when, where and how to work is considered an employee. An employer has control in this area if he/she has the right to require compliance with instructions.

(2) Training: Independent contractors ordinarily use their own methods and receive no training from their customers about how to do the job. On the other hand, training given the worker by the employer usually shows employee status.

(3) Integration: Employee status is often shown when a worker’s services are integrated into the business’ operations and the success of the business depends on the performance of those services. This factor may be one that works against supporting independent contractor status in nearly every situation–it’s very difficult to establish whether or not success of a business would depend on the worker’s contribution to an overall effort.

(4) Services rendered personally: A business which requires the worker to personally perform the services shows that the Business is interested in the methods used to accomplish the tasks. This, then, shows control by the employer.

(5) Hiring assistants: If a worker hires, pays and supervises assistants to complete a contract that requires the worker to supply materials and labor and be responsible for the result, then the worker is independent. When the employer hires, supervises and pays assistants to help the worker, employee status is indicated for the worker.

(6) Continuing relationship: An employer-employee relationship is indicated if there is an on-going relationship between the employer and worker. This kind of relationship often exists where work is performed at frequently recurring (although irregular) intervals.

(7) Set hours of work: While employees normally have set hours of work, independents set their own hours.

(8) Full-time work: Independents work when and for whom they choose, while employees must work full-time for a business, with restrictions on the worker being able to work elsewhere.

(9) Work done on the premises: Work required to be done on the employer’s premises often indicates control, especially if the work could be done elsewhere. However, control may even be present when a worker performs services in his/her own offices. To pinpoint the importance of this factor, look at the nature of the services being performed. Control over the place of work may be indicated when the business has the right to compel the worker to travel a certain route or work at specific places. The worker should be required to work from his/her own office.

(10) Order of sequence set: When the employer sets the order of an employee’s duties, it shows control by the employer.

(11) Reports: If a worker must submit reports (oral or written) to the employer to account for his/her actions, control is also shown.

(12) Payments: Employee status is shown if a worker is paid by the hour, week, etc. The worker should not be guaranteed a minimum salary nor be offered any fringe benefits. If a drawing account is set up for the worker, the worker should be required to repay any excess drawn from the account over commissions earned. In effect, the job should be paid on a straight-commission basis.

(13) Payments of expenses: If the employer pays business or travel expenses of the worker, the worker is likely to be classed as an employee.

(14) Tools and materials: An employer furnishing all the tools and materials to do the job usually shows that an employer-employee relationship is operative.

(15) Significant investment: An independent has significant investment in facilities or equipment used to perform services for someone else.

(16) Profit or loss: An independent contractor can realize a profit or loss as a result of services performed. For example, a worker who has invested in expensive equipment to do a job runs the risk of incurring a heavy loss from the job. This indicates that the worker is an independent contractor. However, the risk that a worker will not be paid is not sufficient risk to categorically show independent status.

(17) Working for more than one business at a time: When a worker performs services for multiple firms at the same time, independent status is indicated.

(18) Offers service to the general public: When a worker who regularly and consistently makes his/her services available to the general public, he/she is an independent contractor.

(19) Right to fire: Whereas an independent can’t be fired as long as he/she produces a result that meets the specifications of the contract, an employee can be fired.

(20) Right to quit: The reverse of (19) is true here: an employee can quit a job at any time without incurring liability. However, an independent is responsible to meet the terms of a contract.

If you have any questions about anything mentioned above feel free to contact us through our website @ losangelescpa.org or call us at 323-528-1512.

Thank you for reading….

Best Regards,

Your LA CPA, Inc. 

When dealing with money, not everyone can handle the labyrinth of nowadays bureaucracy. That is why many of us seek financial counseling. This implies certain aspects: accounting, tax services, advisory service and wealth management. You can opt for all of them, or just one.

1. Accounting is called nowadays “the language of business”. Therefore, if you plan on starting a business or already have one, you need good accounting. Simply put, it is the process of communicating financial information to the users of a certain company (such as shareholders and managers).
2. Tax services. Having someone do your taxes for you can be a true relief. Everyone can benefit from this type of management. You’re free to focus on growing your business while someone else is developing a financial plan in order for you not to waste money and time. It is both beneficial and efficient.
3. Advisory service is extremely useful. The people who specialize in advisory services are some sort of dictionaries, or mediums – between the financial world and common people. Whatever your doubts or misapprehensions are, they are there to explain everything to you and advise you in order to get on a good track.
4. Wealth management implies guidance in order to protect your actual assets and develop them, in order for them to last in time, and eventually be passed to a further generation.

Our firm offers superior guidance. Integrity and professionalism are our trademarks, so do not hesitate to contact us if you are having any kind of financial problems or simply looking for accounting advice!

Many of our Los Angeles CPA (Your LA CPA, Inc.) clients are having different reactions after submitting their returns.  Some of our less prepared clients who waited until 2012 to think about what they earned in 2011 are still in shock because their liability was greater than what they’ve anticipated, while those who did some tax planning and called us with their plans this time last year are joyfully planning ways to spend their big refunds.

As long time tax-practitioners and accountants, we realize that much of your hard earned money ends up in the government’s spending account.  Therefore, we urge you to consider legitimate ways of keeping more of it in your own pocket.

Here are some questions that you might have and some tips to help you plan for a happy experience next Tax Season.

Did you get a big fat refund for 2011? If you enjoyed a nice chunk of change this year, consider this: The IRS had your money all year long and paid you 0% interest!

There are two schools of thought on this:

• Some of our clients prefer it that way and look at it as a forced savings account, and since interest rates are at near 0% they rather have it be held by the government and then put their refund check directly into their savings and not worry about owing comes April 15^th.
• If you have outstanding credit card debts or any other debts that you are paying high interest on, you might want to call your LA CPA, Inc and ask us to help you adjust your withholdings so that you can use the extra cash monthly to either invest or settle your high interest debts.  If interest rates that banks pay for savings accounts increase and you are disciplined, we may suggest you open a savings account.  If your employer provides direct deposit, you can request that the extra cash goes directly to savings.

Do I need to refinance again or do a loan modification?

Interest Rates were at their all time low again last week and many of you (our clients) who are refinancing or going through loan modification programs are going to have your tax liabilities affected.  Activities that will reduce your payments, forgive outstanding delinquent payments, and/or reduce your balance or interest rates, are going to increase your tax liability in many cases.

Several of our clients last year who refinanced to a 5 year fixed arm loan at rates around 2% were able to decrease their mortgage payments by more than half  thereby reducing their deductions and increasing their tax liability. When clients lose that much of a write-off, it can cause mayhem on their tax bill.  This being said, it doesn’t mean that it’s not a smart overall financial decision anyway.  Call us and we will help you crunch the new numbers and adjust your withholding or increase your estimated tax payments accordingly.

If I have a business, can I throw away old payroll tax records? If I throw them out early, what harm can it do?

IRS says that you must keep records for at least four years after the due date for employees.  Records to be retained include wages and payment dates, and employee data such as names, Social Security numbers and addresses. Also, retain copies of W-4 forms, payroll tax returns and valuation records for fringe benefits provided to employees.  If you don’t keep these forms and have proper support you might have a serious issue on your hands if a payroll audit occurs and it could totally ruin your day, week or even month.  We recommend that you keep electronic files of everything in pdf format and back up your documents on a regular basis.

I lost my job last year… Will I still have to pay taxes?  I call this getting kicked while you’re down–but you need to plan for it. There is no state tax on unemployment income in California; however, you will be required to pay federal income taxes on the benefits. You can ask for federal withholding from the checks in order to meet this obligation.

If I am not able to pay my tax liability what do I do? 

Couple of options here:

• You can extend the filing of the tax return, but it will not extend the fact that you were supposed to pay 100% of your tax liability by April 15^th.
• If you filed the return but you were unable to pay your tax liability on April 17, you may request an installment agreement by completing and submitting an Installment Agreement by filing form 9465.   Do not fill this form out if you can pay what you owe within 4 month of when it is due.

It’s important to determine why you aren’t able to pay your tax bill on time. Was it a one-time financial event that led to this problem or do you habitually find yourself owing and incurring penalties and interest? If the latter is the case, adjust your withholding or increase your estimated tax payments to cover your liabilities. The IRS is willing to combine an existing installment plan with a new one, but it does not take kindly to a third request if you already owe for prior years.

Will 2012 Tax law changes affect me?  If you’re thinking is “I am just a little guy with a small S corporation” it will not affect me you are most likely wrong.

It seems as if tax law changes every 30 minutes, so be sure to keep an ear to the ground and learn about any new tax laws that could affect your financial situation.

It’s an election year and candidates want to be heroes, but the law changes they propose may not be helpful to you.   For example:

Government again wants to start with a crackdown on a payroll tax gimmick involving S corporations.

• Many owners of S companies take artificially low salaries so they can receive the bulk of the corporation’s profits as dividends, which are not subject to payroll taxes.

The proposal by Senate Democrats is aimed at preventing hanky-panky in this area.

When in doubt if a new law applies, call your tax professional to discuss ways to minimize your liabilities.

Thank you for reading….

Best Regards,

Your LA CPA

Your LA CPA is located in Los Angeles, California and specializes in small business taxation, various types of real estate transactions, as well as, entertainment clientele.  

IRS is planning to increase the number of random line-by-line tax audits of small corporations in a near future. The examiners will randomly select the 2010 returns of approximately 2,500 corporations with total assets of less than $250,000 to look for the signs of noncompliance by firms and their owners. The IRS will use the findings to update its return selection formulas.

The average tax deficiency per exam of closely held firms has increased more than 58%. The Service gets productive leads from outside sources, such as States referrals. But, it is clear that the Service needs to update its return selection formulas: approximately 30% of tax audits of closely held firms result in no change in taxes.

IRS has validated new audit techniques for businesses with electronic records. The IRS summons metadata; this information shows how the records of the company were created and whether they were altered in any way. Agents are more productive in determining whether changes were made to the records and by whom. This can be useful in uncovering fraud if the changes are related to lowering income or boosting deductions.

A lot more penalties are imposed by the IRS agents on taxpayers, especially for large understatements and negligence. In the past five years, there has been an 800% increase in accuracy penalties assessed on individuals and nearly threefold increase in penalties on businesses. However, over 25% of the $1 billion in accuracy penalties that were levied on individuals in 2010 were abated by the examiners’ superiors.

For more information regarding Los Angeles financial services, consult a friendly Los Angeles tax preparer today!

Call your LA CPA at 1.323.528.1512

There numerous advantages of having a Sep IRA rather than a traditional IRA if you qualify. If you live in Los Angeles, West Hollywood, Sherman Oaks, Encino, Beverly Hills or any other dense neighborhood in Los Angeles county there are plenty of financial services providers, such as banks to help you set up a SEP IRA account. My advice is before you choose the right type of pension plan set up for yourself you may want to talk to your Los Angeles Tax Preparer or someone that provides tax services and Planning Services in the Los Angeles area. This type of conversation is usually done face to face with you accountant, so it would help if it was a local accountant in the Los Angeles area.

Saving money for your retirement is a very important part of wealth planning and should always be discussed as part of tax preparation services.

Here are some benefits of having a SEP IRA:

• SEP plan is easy to administer
• Start-Up and Maintenance costs for SEPs are usually very low compared to Qualified pension plans
• Contributions are discretionary
• Employees may use same account for their SEP Contributions as for their regular Traditional IRA Contributions

Any qualified Los Angeles accounting firm should be able to assist you with tax preparation services in Los Angeles. A right type of pension plan is a big part a good tax planning. If you have any questions regarding this article or need a CPA to take a look at your overall accounting, and tax planning needs give us a call.

Your friendly Los Angeles Accountants,

Call Your LA CPA, Inc. to schedule your consultation today 1.323.528.1512
www.losangelescpa.org

First, let me preface this article by warning all the readers that this is a complicated matter and you should ask your tax adviser. Whether you live in Los Angeles, West Hollywood, Sherman Oaks , Studio City or anywhere within the Los Angeles County area; Losangelescpa.org is a local Los Angeles tax advisor and we will look into your particular situation in further detail.
This article discusses ONLY the basics in regards to foreign income and your tax reporting requirements if any income was earned abroad.

As a permanent resident or a citizen of United States one must report all income earned/received worldwide. This includes any jobs you might have had abroad and also any investments income you have received from foreign investments.

This article specifically focuses on income you earned by “Working abroad”. If you are a U.S. citizen or a U.S. resident alien living in a foreign country, you are subject to the same U.S. income tax laws that apply to citizens and resident aliens living in the United States. However, depending on your situation your friendly Los Angeles tax preparer should be able to help you exclude a substantial amount of income earned from your United States tax return. The maximum exclusion amount has increased in 2011 to $92,900. If a taxpayer qualifies he can use Form 2555 to figure his/hers foreign earned income exclusion. Also, depending on the city where you lived and worked you might be eligible for a higher exclusion.

If you have any questions on this article or on whether you qualify for this type of exclusion; CALL US AT 323-528-1512 and we will be glad to go over your situation particulars with you.

Looking forward to hearing from you!

Sincerely,
Your Friendly Losanglescpa.org Team.

In certain states, this is the only incorporation option available for certain professionals, whereas in others, they are given the choice of being either a professional corporation or S or C corporation.

Professional corporations can shield owners from liability. While it can’t protect a professional from his/her own malpractice liability, it can protect against liability from negligence of an associate.