New Requirements Under Ssap 10r May Cause Significant Alterations To Your Company’s Deferred Tax Cal

The NAIC approved SSAP 10R, a revised, temporary replacement of the income tax standard under SSAP 10. The revised standard is effective for year-end 2009 and year-end and interim 2010.

The NAIC revised this standard in order to be more in line with the “Statutory Statement of Concepts” of conservatism and transparency. The revisions are considered a change in accounting principle and will be accounted for as a cumulative effect adjustment to unassigned surplus as of December 31, 2009. If applicable and elected by company, these changes will require significant alterations to the company’s deferred tax calculation under statutory accounting.

The main differences as a result of SSAP 10R are the concept of GAAP valuation allowance, reversal and carryback periods, increase in surplus limitation and additional disclosures.

GAAP Valuation Allowance Concept -
The addition of the valuation allowance concept applies to all companies. As under FAS 109 for GAAP reporting, the Company must consider if their gross deferred tax assets (“DTA”) will more likely than not (greater than 50 percent chance) be able to be realized. This concept must now be applied under statutory prior to the admissibility calculations.

Admissibility Changes –

The most significant changes under SSAP 10R in admissibility are the following:
• Eligibility – If the company is subject to Risk Based Capital (“RBC”) requirements or files a RBC report then they may be allowed additional admitted DTA if their RBC level is above the following thresholds laid out in the new paragraph 10.d:

1. The risk based capital trend test (if subject to risk-based capital trend test); or
2. If not subject to risk-based capital trend test, the maximum risk-based capital level where an action level could occur as a result of a trend test (i.e. 250% for life/fraternal and 300% for P&C/health).

• Reversal/Carryback Periods – If the company is subject to RBC and meets one of the above thresholds, they may elect to follow paragraph 10.e to calculate additional admitted DTA. The calculation under 10.e starts with the net DTA from original SSAP 10 less a
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ny valuation allowance. The reversal periods now correspond with the IRS tax loss carryback provisions, not to exceed three years, based on the tax character of the temporary difference. For example, life companies are allowed to carryback tax losses three years so a life company would follow a three year reversal under paragraph 10.e.i (increased from the current one year reversal). Whereas a non-life company would follow a two year reversal. Capital tax items would use a three year reversal period since that is consistent with the capital loss carryback provisions. For purposes of the realization calculation and the with and without test, a three year period would apply regardless of character of temporary differences but can still only apply as the law allows (i.e. capital loss cannot offset non-capital income).

• Surplus Limitation Increased – The DTA admitted under 10.e.ii is limited to 15% of adjusted statutory capital and surplus, an increase from 10% under 10.b.ii.

Disclosure –
SSAP 10R also requires several additional disclosures for all companies, regardless of whether the additional DTA admissibility applies.
The following are some of the additional disclosures required:
• DTA must now be broken out by gross, adjusted gross, admitted and non-admitted;
• DTA and DTL shown by tax character;
• Statement as to if the company has elected to admit DTAs under 10.e;
• Increased amount and change in amount of admitted adjusted DTA as a result of 10.e, by tax character;
• Amount of admitted DTA, by tax character, calculated under each 10.a, 10.b.i, 10.b.ii, 10.c, 10.e.ii.a, 10.e.ii.b and 10.e.iii and the risk-based capital level used to determine if the company meet the required threshold; and
• Amount of admitted DTA, admitted assets, statutory surplus and total adjusted capital used in the RBC calculation resulting from the calculation under 10.a, 10.b and 10.c and the increased amount of DTA, admitted assets, and surplus resulting from use of 10.e, if any.

By: Brandy Vannoy

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Brandy Vannoy, CPA is affiliated with Johnson Lambert & Co. LLP, a CPA firm formed in 1986. Johnson Lambert is a US based auditing and tax service accounting firm focused on serving several niches including insurance companies and Accounting Internships.

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How A Tax Accountant Equals Safety In Numbers

A tax accountant is hired for personal and business tax purposes. These individuals can help prepare income tax returns and any other business or personal tax forms. This is created through data that businesses provide directly to the tax accountant. Tax accountants will be sure to be up-to-date on new tax laws and what they mean for your business. They can also help you in any endeavor that may involve taxes.

Tax accounting firms can help you all year round with your tax issues, including closing your books. Not only can a tax accountant help your business with the yearly income tax, they can also help with state and local income taxes, estates, trusts, corporate tax laws, employee tax returns, gift taxes, tax exemptions and pension plans. A tax accountant is also an expert on business labeling. They can advise you on what type of corporation your business should be and what federal, state and local rules you must follow. Consultations with a tax accountant can come in other forms as well.

A tax accountant can advise your business how and when to develop retirement plans, purchase new companies and where to put company assets. The most important role a tax accountant can play is representing a business if matters involving tax infringement, auditing, appeals and collections. With the tax laws constantly changing from year to year, it’s vital that you have a well group of tax accountants that will be able to figure out the twist and turns of any situation you may be facing. Regardless you can file your own taxes but unless you have a very straight forward business such as one product for a set price then I suggest tax accountants.

The tax accountant is a very important part of the every day procedures of businesses. It is important to hire the firm that will work with your business needs. Try and also find someone that will be able to work with your particular accounting software, if you use one, then it’s less costly for an accountant to update your account and make the best out of your returns.

By: cashusg

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Eric Fetty is a proud contributing author and writes articles on several subjects including ebook publishing. You can read more of Eric’s articles about the Financial Reporting and Managing Your Cash Flow.

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The Prime Seven Tax Deductions For Home Businesses Has Been Revealed Now

If you’re fully new to home business tax deductions, I’ve written this text with you in mind. Specifically, I can teach you 7 things that you’ll write off your tax immediately.

The primary thing you’ll write off is that the half of your rent. If 15% (simply an example) of your home is employed regularly for business and ONLY for business purposes, your home-office will let you deduct that share of your rent as a business expense.

The second write-off is for using your personal vehicle for business purposes. If, as an example, you place 10,000 business miles on your vehicle this year, you’ll qualify for $5,000 in tax deductions.

Third is the health and medical prices of your whole family. If you rent your spouse to work part-time in your home-based business, Section one hundred and five of the Tax Code helps you to provide him/her a Medical Reimbursement Plan as an “employee benefit.” That lets you take a business deduction for all out-of-pocket health expenses for your whole family.

Number four is your very little employees. The congress needed to encourage home business and that’s why they allowed the homeowners to rent their children as employees. Your worker can be as young as 7 years old and the quantity you pay them in wages is a tax-deductible business expense.

The fifth is tax deduction — Combining business with pleasure after you travel, does not mean you can’t still write off most of the expenses. Simply create certain that more than half of your days far from home qualify as “business days.”

Number 6 — How often do you eat-out with a business contact while discussing business with them? Every time you are doing, half of the value will be tax deductible as a business expense.

Finally, tax deduction is #7 — All the furniture, furnishings, equipment and supplies used in your home office are totally deductible as business expenses. (But keep in mind that a “home office” must be a space that is used for business functions, and business ONLY for business purposes.)

All of the above tax deductions can apply only if you’ve got written records of the costs. You need proof so as to qualify for any tax deductions you’re applyin
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g for.

In conclusion, there’s nothing else that saves as a lot of tax as owning a home business. If you’ve been brooding about starting a home-based business, the longer you wait, the longer you will over-pay your taxes, so why not start one right currently?

By: Ron Mueller

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Ron Mueller, a businessman has provided more information about home business tax deductions at his website www.HomeBusinessTaxSavings.com. Log on to the website www.HomeBusinessTaxSavings.com and get more information NOW.

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Every year, many people end up paying too much taxes without even realizing. They do not take the advantage of the tax deductions that the federal government has given. However, if you are running a home business, here are three deductions that you can take to save yourself thousands of dollars in taxes.

o Most expenses related to running your home business can be deducted from the taxable income. You can deduct expenses like pens, paper, printer, ink, phone line, internet connection charges, utility expenses, gasoline used for business travel and even taking clients out for a meal. However, you will need to keep meticulous records of all the expenses that you incur for your home business so that you can claim the deductions when filing your taxes.
o Equipment that you use for business can be claimed as a part of the deduction. So, if you use a car solely for business, fax machine, computer, and even special uniforms can be deducted.

o You can get a big tax deduction if you are using your home office to run your business. However, if you are using the office for any other purpose besides running your business, you cannot claim this particular tax deduction.

It goes without saying that when running a home office, you need to maintain proper records and also keep all the receipts safely and in an organized manner. You can create a simple filing system for each time of expenses so that you can refer to it when the need arises. Alternatively, you can invest in a computer software to help make the recording keeping easier.

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Every business budget should have a provision for tax payments. Sometimes, this may seem like an expense, but, in order to make the process easier for an entrepreneur, there is a system that allows you to make payments online or electronically. This system is known as the EFTPS. It works for sole proprietors and large corporations. All you need to do is enroll and provide an Employer Identification Number from which the tax deduction will be traced.

The next thing is to wait for a package to be sent to you which gives you details on how the system works. They will then give you a Personal Identification Number which will activate the payment process. It allows you to make your payments as regularly as you wish instead of waiting till the day when tax levels have accumulated to an overwhelming level.

For the payment process to be complete, you must sign in to the EFPTS with the Employer Identification Number and then use the PIN to complete the rest of the transaction as required. After logging in, you will be required to fill in a form, which you can easily access if you know the number of the form according to the category of tax you are paying.

The system prompts you to indicate the settlement date. This is the date on which you wish to have the funds transferred from your bank towards your tax payment. The advantage with the arrangement is that you can schedule for payments up to one year in advance. However, if the settlement date is on a weekend or public holiday, the payment will be due on the next working day.

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Real Estate: An In-home Business, With Tax Write Off Perks

One of the best parts about being a real estate agent is that you have the power to be your own boss. You may align yourself with a specific over-arching company, but in the end you call the shots. You determine the hours you work – you can do paper work at 5 at night, 5 in the morning or over lunch. You determine how hard you work and, as a result, how much you make. And quite often, you can determine where you work. This means you can work in your home, and when you set up a business in your home, you have the added perks of tax write offs. But those write offs only benefit you if you know what you’re doing.

First, know how to set up your business so that it is legitimately tax deductible. Your office space should be just that: office space. You cannot use that area for anything other than business. It shouldn’t double as your TV room, your kids’ playroom after school, your kitchen or your bedroom. This needs to be your place of business, not leisure. If the majority of your work is off-site, at a home on the market you are showing for instance, but you do your paperwork and handle all other meetings in-house, you can still write off the space. When you do write it off, be sure to do so properly. If your office is half of your apartment, deduct half of your rent. If your office is one-tenth of your house, deduct ten percent of your mortgage.

Within that space there are also numerous deductibles. Your phone bill, for example, can be written off, provided the calls you make on it are for business. It is easiest, then, to have a separate line for your office instead of using the same land line you do for the house (this will also minimize the number of calls and messages not received because of family miscommunication). All of your office furniture and supplies can also be written off. The desk and chair, the lamp, the pens, the files and the filing cabinet are all potential write offs. Hang on to your receipts when you purchase them to make deducting the cost as easy and accurate as possible.

Stepping outside of the office provides additional opportunities for write offs. Every time you get in your car and drive to a home, condo, commercial real estate lot or any other work-related destination, you are covering miles that can be written off. Kee
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p track of the odometer. The miles to and from your home to a homeowners or a seller’s will add up quickly: Texas is a big state; Austin is a big city. You’ll be surprised how much you can deduct come tax day.

Finally, be honest. It may be tempting to write off everything you can imagine as a business expense, but your mother’s visit for lunch isn’t a business meeting. You may get away with claiming it was once or even a handful of times, but eventually, the IRS will catch wind, and every deduction you’ve made will come into question. Take advantage of the deductions available to you as a real estate agent running your own business in your home. Do not take advantage of the government.

By: Joe Cline

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About the Author:
Joe Cline writes articles for Austin Texas real estate. Other articles written by the author related to Round Rock MLS and Tarrytown real estate Austin can be found on the net.

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With tax season right around the corner it can be easy to get a little flustered by all the tax rules, new changes, credits and deductions. Things are even more confusing if you’re a small business owner. Read below to learn top small business tax deductions you should be taking on your 2009 tax return.

Start-Up Costs

You can deduct the expenses of running your business on your taxes, but nothing can be deducted before your business opens its doors. You can deduct up to $5,000 in start-up and $5,000 in organizational costs for the first year of business. Expenses that are not deducted can be amortized over a 180 month period, which begins the moment you open your business. These expenses include market research, advertising, employee training, business travel and other costs.

Auto Expenses

A lot of business owners will merely take the standard mileage rate deduction, 55 cents per mile for 2009, because it’s easier to keep track of your mileage records, but you could actually get a larger deduction if you keep track of everything, including repairs, maintenance, mileage, parking fees and insurance. You can only deduct the business portion of your auto expenses if your car is used for both business and pleasure, so keep track of the mileage accurately.

Education

You can deduct educational expenses on your taxes only if they are related to your current business or occupation. The expense can be deducted if you are furthering your education to maintain or improve skills required for your job-not to get a new job.

Equipment and Furniture

Some businesses can deduct the full cost of their equipment the year they purchased them rather than capitalizing them-meaning to deduct their cost over a number of years. You can deduct up to $250,000 of the cost of new equipment on your 2009 tax return, but some assets don’t qualify, such as real estate or property bought from a relative.

Advertising and Promotion

The cost of marketing, including business cards, Yellow Page ads, commercials, etc. is deductible on your 2009 tax return. Promotional costs that create business goodwill, such as sponsoring a little league baseball team, are also deductible as long as there is a definite connection between the sponsorship and your business.

Interest

If you used credit to finance business purchases, the interest on that credit is fully deductible. This also goes for the interest taken on a personal loan. You just need to make sure you conform to the IRS’ rules if you borrowed money from a relative or a friend. Also, you must prove that the money borrowed was only used for business.

Travel

With business travelling, you can deduct the cost of your airfare, costs of operating your car, taxis, lodging, meals and more. You must have records for all of these expenses. If you’re combining business and pleasure, you can only deduct these expenses if business was the main purpose of your trip. However, you can’t deduct the expenses of taking your spouse or your family on your trip.

Entertaining Expenses

The IRS will approve the deduction of up to 50% of entertainment expenses for your business, but you must follow these rules: it must be directly related to the business and business must be discussed (such as a meal catered to the office), or it must be associated with the business and the entertainment occurs directly before or after a business discussion. Make sure when you’re keeping records to make note of the business purpose of these entertainment outings.

Professional Fees

Professional and legal fees are deductible, but if the costs are part of your start-up expenses, you may need to amortize the cost over 60 months.

Charitable Contributions

If your business is a partnership or a limited liability company, your business can make a charitable contribution and pass the deduction onto you to claim on your individual tax return. If you own a corporation, the corporation can deduct charitable contributions on the company’s taxes.

Technorati Tags: business tax, business tax deductions, small business tax

Simplify Your Business Tax By Hiring Professional Tax Accountant

While deciding the annual budget of the organization, accountants find their schedule a bit hectic. That is only because preparing the annual budget analyzing the capital income for the overall growth and progress of the organization is not an easy job. Very tough to understand all these isn’t it! You want to get rid of it? Yeah! Surely you can get rid of the accounting calculation but you can not get rid of the business accounts, then what is the conclusion?

Taxation service is a part of accounting planning that plays a considerable role in the business. Payment of taxes on time is important in order to save your business from income tax audit. Paying taxes on time following the updated tax policies and laws is mandatory in order to save your precious amount and the government income.

Professional Taxation Accountant:

While preparing the tax notes it is important to know each end every minute detail regarding the expenses made by the organization along with that the annual income of the organization. All these data has to be entered accurately in the book of accountancy. Accuracy is important for the correct amount of tax payment.

All these things should be done by the individual who knows accountancy well, but the whole process is very time consuming and a cumbersome one. To reduce your effort and burden, the quickest and simplest solution is hiring professionals from outside who can service the clients well. Professional taxation accountants are the accounting experts who provide the taxation services in exchange of some monetary amount. These professionals are experts in their respective field and share their expertise with other firms for managing their accounting records and all the complexities then handled by these professionals.

Advantages of having Tax Professionals:

Tax preparation services when handled by the third party then no one else but your organization gets the maximum benefit. The various advantageous scenarios that your organization might go through by hiring taxation service professionals can be enlisted as:

Reduces your Burden:

You might be from one of those common business persons who hate to calculate their organizational tax. If you are bored with
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entering the data correctly and then filing them up for the final tax payment then this can be easily reduced by the professional tax accountant. Your burden will be minimized immediately.

Accurate Taxation Services:

Professional tax accountants are experienced in preparing the tax files and they do not even commit any mistakes which might occur while the tax file is prepared by a normal individual. Thus 100% accuracy can be achieved through the professional taxation service provider.

Affordable Tax Services:

Hiring the professional is comparatively less costly than a surprise visit from the auditors in the company. Just think! In exchange of certain amount you can get best tax preparation services.

Update Taxation as per New Laws:

The tax laws by the government changes sporadically, to keep yourself updated with new tax laws is however a bit tough job. But with the dedicated third party professionals it becomes an easy job and they prepare the tax files based on the newest tax laws.

All these advantages could be at your door step if you will hire the third party for the tax preparation services. Thus enjoy the best taxation services by hiring professionals and continue to enhance the growth and development of the organization.

By: Akash Patel

Article Directory: http://www.articledashboard.com

Author is related with reputed business accounting services providing firm Aditech Accounting Services. Get detailed information about tax services from professional tax accountants at its official website aditechaccountingservices.com.

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Some Business Tax Tips For 2010

‘Tis the season of taxes!

Keep in mind that I am not a CPA nor am I a tax professional but I am, like many business owner, facing a lot of confusion in this arena; especially given the last two plus years of financial distress in the country and the constant changes to the tax code to generate more state and federal income.

Properly managing for taxes can really help a business survive from one year to the next. Don’t get blindsided by your tax obligations and fatally hurt your business.

First things first: Understand how your form of business organization will be taxed. Some forms of organization are pass-through entities where all business income flows through to the individual owners’ personal tax returns (regardless if actual cash makes it into personal bank accounts) like partnerships, S Corporations and sole proprietorships while others are taxed as if they are separate, individual entities like C corporations.

Also, while not covered here, business owners must also understand their state tax requirements. Some states have similar tax policies to that of the federal income tax, some states only tax certain income like capital gains from the sale of assets and some have completely different tax regulations where they only tax business asset values – but not income. Thus, know your state.

The first thing a business should do is attempt to reduce its taxable income. This can come in the form of taking additional depreciation on business assets – look into the expanded Section 179 Deduction – or from charitable contributions (make sure that the net effect benefits the business) or even from just realizing all business expenses that can be taken prior to the year’s end or the filing deadline (if permitted).

The following are some of the top issues businesses will face this tax year:

Employees vs. Contractors. One of the biggest issues that businesses face is determining if a person is an employee and subject to taxes via the business or is an independent contractor responsible for their own taxes. The IRS provides detailed information on this subject. But, as a business owner, you do not want to have to make up for all the payroll taxes of a person who you thought was an independent contractor but the IRS deemed an employee simply by how that person was treated in the b
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usiness.

Schedule K-1s – those, like LLCs and some partnerships and many S Corporations must provide accurate Schedule K-1 to the IRS. The main issue here is to match those schedules to what partners, members and owners show on their individual tax returns.

W-2s – it is the employer’s responsibility to file W-2s with the social security administration showing total wages paid to employees. Further, those businesses with more than 250 employees MUST file their W-2s electronically.

Smaller business owners, earning less than $48,800 may qualify for the Earned Income Tax Credit (EITC).

Spouses. Many small businesses are operated by husband and wife teams and the IRS, depending on how each spouse is treated in the business, may tax these spouses differently. Some will be treated as partners or owners while other can be treated as employees (requiring the business to account for and pay Social Security and Medicare on their behalf via their payroll – regardless if your business generates payroll or not).

Lastly, regardless if you can pay your tax obligation or not, you should always file your business tax returns. This will go a long way in ensuring that these taxing entities will work with you not against you; especially if they think you are trying to avoid paying your taxes.

Some Helpful Resources:

Score offices, SBA offices and Small Business Development Centers – all of which are free to use and offer classes and seminars conducted by local tax professionals.

The IRS website which provides useful information for nearly every business tax issue as well as offers webinars that cover some of the most common tax issues for businesses.

Local state sponsored resources. The IRS and many states have local offices in and around major cities in every state. These offices can be visited in person or via the phone and internet.

Lastly, the IRS, via its website, offers numerous ways to file for free should your business not be too complicated. Visit the IRS’s website and look for the Free File Logo.

By: Business Money Today

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Joseph Lizio holds a MBA in Finance and Entrepreneurship, is the founder of Business Money Today, has a strong commercial lending background and is regarded as an expert in business and finance.

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Riding Your Motorcycle Home On A Business Tax Saving

You will be happy to know that the treatment of your motorbike, within your business affairs, for tax purposes is much more favourable than your motor counterparts and whilst owning a company car is an expensive business, owning a company motorcycle isn’t. Javeed Baig of Gower Accountants in Leicester explains why.

Assuming you are VAT registered, you can claim upto 100% of the VAT paid on the purchase of your beloved bike. This is on the basis that you use the motorcycle only for business purposes. With a car, no matter how much you use it for business you cannot reclaim the VAT.

Motorcycle Tax Benefits

Having purchased your motorcycle, you can claim a deduction against tax for the full purchase price in your year of purchase using part of your Annual Investment Allowance of £50,000. A car typically would attract an annual writing down allowance of only 20% per year. In corporation tax terms, for the small business, this represents a saving of 21%.

Assuming the VAT reclaim and the corporation tax relief that’s a whopping 36% off the purchase price of your motorbike. So you could choose to take the saving, or maybe trade up and get that mean machine that you have always promised yourself.

As with a car it is unlikely that you will use your motorcycle only for business and therefore a private use element will occur. Take the assumption that 75% is used for business and 25% is used privately. This 25% is the benefit you have derived from using a company asset and as a result a Benefit in Kind charge will arise on both the company and on you as an individual. How this benefit is calculated is where the magic lies and it’s where motorcycles ownership thrives and company cars dive.

The basic differences are as follows:

Motorbike Car
Base Value Market Value or Purchase Price List Price When New
% for Cash Value Fixed 20% Between 10% & 35%
Fuel Benefit Fixed 20% of Usage Base £14,400 fixed

Here’s an example of the potential tax benefits:
Motorcycle costs £8,000. 25% private & 75% business.
Cash Value of benefit in kind : £1,600
Reduction Due to Business Usage : £1,200
Taxable Benefit : £400
£400 represents your cash value of the benefit from using the company bike. If you are a basic rat
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e taxpayer you will pay £80. The company will pay a further £51.20 National Insurance on this.

The equivalent tax position regarding a company car is as follows:
Car Cost £8,000 List price £16,000. Some private use assumed. CO2 = 20%
Cash Value of benefit in Kind : £3,200
Reduction due to Business Usage : N/A
Taxable Benefit : £3,200
Tax At Basic Rate : £640 Company Charge : £410

Moving back to motorcycles you can see the savings on purchase would far exceed the annual cost of owning your bike through a company.

Additional Tax Benefits

In addition all safety equipment, insurance and fuel can all be paid for by the company with the Benefit in kind calculated in much the same way.

The article has been written for information purposes only and does not constitute formal advice. The rates are those prevailing at the time of writing and are subject to change.

By: melaverty

Article Directory: http://www.articledashboard.com

If you have a business and require specific assistance regarding tax savings for limited companies or for any other accounting matter, then please contact Gower Leicester Accountants on 01162 206019 or visit our website www.accountantsleicester.net

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