This summer you might receive some heat in the form of an IRS Notice or other communications regarding this year or a previous year tax returns. Many of these notices will indicate that further funds are owed or that a mistake was made. If you receive any documents of the sort, it is important that you (1) understand what your are receiving, (2) know your options and rights in dealing with the matter, and (3) actually resolve the issue. The worst thing you can do as a taxpayer is receive a notice from the IRS and ignore it; simply hoping it will disappear. This can cost you more time and money in the long run.
The IRS actually provides a great starting point for reviewing your taxpayer rights at the following link:
http://www.irs.gov/advocate/article/0,,id=98206,00.html
In many cases, taxpayers are left confused about what the IRS Notice means and what the implications are for them as they move toward trying to resolve the issues with the IRS. If you find yourself in this situation, contact your CPA, provide them with the Notice, and file a Power of Attorney with the IRS granting your CPA the right to discuss the matter directly with the IRS. This will remove you as the middleman and allow your CPA to most effectively provide the IRS with the information needed to resolve your issues.
There’s not enough time or space on this blog to discuss the multitude of Notices that exists and varying implications for your personal tax situation; however, please take home with you today the importance of acknowledging IRS Notices and finding a solution.
brad@mcarthurco.com
704.544.8429
Tuesday, July 19, 2011
Wednesday, July 13, 2011
Congratulations John!
During the doldrums of the summer heat, we'd like to share some exciting news regarding our Firm. Our President, John McArthur has been recognized in Charlotte Magazine as a 2011 Five Star Wealth Manager!
This is the third consecutive year that John has been recognized for this award, and it is because of our loyal clients and colleagues that he has again received this accolade. Only two percent of the Five Star award recipients have been recognized three years in a row.
What does this award mean? The Five Star award recipients are selected through a survey process. The survey given is blank and nominations must be written in, not chosen from a list. The recipients are chosen because they provide excellent service for their clients, act with integrity and are committed to consistently performing their job to the best of their ability.
We are thrilled that John has been recognized again this year, please look for the awards in the September 2011 issue of Charlotte Magazine. Thank you for your continued support of John and our Firm.
brad@mcarthurco.com
704.544.8429
Tuesday, July 5, 2011
Back to Retirement Planning
This week, we’ll pick up where we left off in our series on Retirement planning for the small business owner. Today, we’re going to take a look at the Owner-Only 401(k), also commonly referred to as the Solo 401(k).
The IRS actually has a great resource regarding this plan and its specifics as found at the following link:
http://http://www.irs.gov/retirement/article/0,,id=238750,00.html
Let’s hit the highlights!
This plan is, as the name indicates, applicable to employers/owners with no eligible non-owner employees other than their spouse. Your business can be a corporation, partnership, or sole proprietorship. It offers flexibility and the ability to put away a large of sum of funds based on your taxable compensation.
What are your funding options?
There are two elements to the funding of a Solo 401(k). First, like any 401(k) plans, the employee (you the owner) can make elective deferrals up to 100% of compensation up to the annual contribution limit - $16,500 in 2011 ($22,000 if age 50 or over). In addition to this elective deferral, the employer (you the owner) can make nonelective contributions up to 25% of compensation as defined by the plan or per the self-employed individual guidelines as established in IRS Publication 560. The overall level of contributions cannot exceed $49,000 (or 54,500 if over age 50) in 2011.
In order to establish your funding pattern and understand your funding deadlines, contact your CPA to coordinate with your payroll service provider and your 401(k) provider.
Nondiscrimination Testing
One roadblock that small business owners often cite regarding 401(k) plans is that of nondiscrimination testing. This testing, “top heavy” testing, ties what you as an owner can match in employer funds directly to that of your employees. With the Solo 401(k), this potential roadblock is removed since there are no employees who could have received disproportional benefits. It is important to note that this test-free advantage disappears if an employee is hired.
Administration & Reporting
This sort of plan is generally required to file an annual report on Form 5500-EZ once plan assets are $250,000 or more in value at the end of the year. A plan with fewer assets may be exempt from the annual filing requirement.
As with any retirement plan decisions, your specific facts will determine the best fit for you. However, this plan can be a great tool for those business owners who do not employee any statutory employees. If you fall into this category and want more information on whether this plan is a good fit for you, please contact our Firm.
brad@mcarthurco.com
704.544.8429
The IRS actually has a great resource regarding this plan and its specifics as found at the following link:
http://http://www.irs.gov/retirement/article/0,,id=238750,00.html
Let’s hit the highlights!
This plan is, as the name indicates, applicable to employers/owners with no eligible non-owner employees other than their spouse. Your business can be a corporation, partnership, or sole proprietorship. It offers flexibility and the ability to put away a large of sum of funds based on your taxable compensation.
What are your funding options?
There are two elements to the funding of a Solo 401(k). First, like any 401(k) plans, the employee (you the owner) can make elective deferrals up to 100% of compensation up to the annual contribution limit - $16,500 in 2011 ($22,000 if age 50 or over). In addition to this elective deferral, the employer (you the owner) can make nonelective contributions up to 25% of compensation as defined by the plan or per the self-employed individual guidelines as established in IRS Publication 560. The overall level of contributions cannot exceed $49,000 (or 54,500 if over age 50) in 2011.
In order to establish your funding pattern and understand your funding deadlines, contact your CPA to coordinate with your payroll service provider and your 401(k) provider.
Nondiscrimination Testing
One roadblock that small business owners often cite regarding 401(k) plans is that of nondiscrimination testing. This testing, “top heavy” testing, ties what you as an owner can match in employer funds directly to that of your employees. With the Solo 401(k), this potential roadblock is removed since there are no employees who could have received disproportional benefits. It is important to note that this test-free advantage disappears if an employee is hired.
Administration & Reporting
This sort of plan is generally required to file an annual report on Form 5500-EZ once plan assets are $250,000 or more in value at the end of the year. A plan with fewer assets may be exempt from the annual filing requirement.
As with any retirement plan decisions, your specific facts will determine the best fit for you. However, this plan can be a great tool for those business owners who do not employee any statutory employees. If you fall into this category and want more information on whether this plan is a good fit for you, please contact our Firm.
brad@mcarthurco.com
704.544.8429
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