Immediate Action Required by April 1 to Claim the Refundable Tax Credit for Virginia Research and Development Costs
In 2011, The Virginia General Assembly passed a Research and Development Tax Credit (R&D Credit) for companies that incurred or paid qualified research and development expenses during 2012 in Virginia. Companies interested in receiving the tax credit are required to apply with the State of Virginia by April 1st, 2013 for the 2012 tax year!
If you have computed a federal credit but are not claiming a Virginia refundable credit then you are leaving money on the table!
Here are the basics:
1. The R&D Tax Credit applies to tax years beginning on or after January 1, 2011 but before January 1, 2016.
2. Companies who qualify can receive a tax credit equal to:
A. 15% of the first $167,000 ($25,050) in VA qualified research and development expenses; or
B. 20% of the first $175,000 ($35,000) in VA qualified research and development expenses if the research was conducted in conjunction with a Virginia public college or university.
3. The R&D Tax Credit is refundable and companies can receive a refund even if they are in an NOL position.
4. The total aggregated amount of available tax credit is $5 million every year; therefore, the amount of applicants that will qualify are limited.
5. The deadline for companies to apply for the available R&D Tax credit is April 1st, 2013 for the 2012 tax year.
What To Do:
If your business paid or incurred research and development costs, you may qualify for a tax credit. Our R&D professionals have deep technical expertise in the area of R&D Tax Credits. In addition, we have an affiliation with the former IRS District Counsel and co-counsel on the IRS Research Credit ISP team.
To learn about the refundable Virginia R&D Tax Credit, contact me at:
Ebong Eka, CPA
8300 Greensboro Drive, Suite 425
Tysons Corner, VA 22102
Email: eka (at) Levyti.com
Fox News Dot Com Live – 1/17/2013
Unlike many, who literally fought their way to savings on Black Friday, I chose to shop online and visit local merchants. Black Friday and Cyber Monday are great but these days seem to pass local stores by…. well, not anymore!
Small Business Saturday is the first Saturday following “Black Friday”. Black Friday and Cyber Monday focuses on big box retailers and ecommerce sites while Small Business Saturday encourages shoppers to visit their local brick and mortar small businesses. Small Business Saturday was created and promoted by American Express on November 27, 2010.
Small businesses fuel the economy and Small Business Saturday is a great opportunity to financially support your local merchants. This year’s Small Business Saturday is November 24th, 2012 and here are a few things you can do to get the word out regardless of whether you’re a local merchant or a shopper:
1. Get Paid to Shop Locally – American Express is offering a $25 rebate to AMEX card holders who shop at eligible local stores on Small Business Saturday, November 24th 2012. Visit: https://www.americanexpress.com/us/small-business/Shop-Small/
2. Shop Small Map – Visit American Express’ Small Business site for a map that allows you to search for qualifying small businesses by name and location. Visit: https://www.americanexpress.com/us/small-business/Shop-Small/
3. Small Business Promotion – Get the word out if you’re a local store owner! Remind potential and existing customers (via Facebook and Twitter) the importance of supporting their local businesses. It’s a perfect opportunity to email your customers and let them know of Saturday-Only offers.
4. Tweet for Feet – Send out targeted “Twitter – Only Discounts” tweets to your followers and encourage them to retweet them. Share your admiration for your favorite store with your followers! If you’re the store owner, ask your customers to be brand ambassadors.
Reach out to me at firstname.lastname@example.org and visit EbongEka.com if you have any questions, thoughts or comments! I’m always looking for new ideas so let me know if you have an interesting story that needs to be told! I’ll feature it on HuffingtonPost.com/ebong-eka and EbongEka.com.
Brown Thursday + Black Friday Equals Black & Blue Monday!
There was Black Friday and after the ecommerce explosion came Cyber Monday! Now there’s Brown Thursday which I believe is lazy advertising executive’s attempt to create yet another shopping day! Brown Thursday already has its own day called Thanksgiving Day!
Several years ago after a hearty Thanksgiving Dinner, I stood in line at a Best Buy at 3:00am to buy a 24 inch flat screen TV for $240! I fought 20 degree weather, biological calls for sleep, throngs of competing deal seekers and limited customer service to buy a crappy-brand name flat screen TV. (It was 2005 and the prices of flat screens had yet to come down as much).
I Will Never Do That Again!
According to a survey by the National Retail Federation, up to 147 million people plan to shop Black Friday weekend (Friday, Saturday and Sunday), a slight decrease from the 152 million who planned to do so last year. In other words, more people are becoming wiser by avoiding the nonsense associated with lining up outside your favorite retail store in the middle of the night like iPhone 5 seekers.
There are better ways to get great deals before the holiday season! I appeared on CNN / Headline News with Mike Galanos’ two years ago to share tips on how to avoid the Black Friday Mayhem yet still find deals! Here are several other tips to use for Black Friday Weekend!
1. Make a List! – If you make a list of what you plan to buy as well as which stores you can buy them from, you’ll be less likely to over spend.
2. Sign Up for Email Alerts – I’m normally against giving out my email address unless there is a future benefit for doing so. Your favorite stores tend to send out special deals for customers on their email lists. You may find specials that have not been advertised yet.
3. Patience is a Virtue – Most shoppers dive into the Black Friday mayhem to find deeply discounted electronics. You may also find deeply discounted electronics from Thursday until Monday which is now known as Cyber Monday. “Don’t wait until Cyber Monday. Online deals are beginning on Thanksgiving, too” says Susan Tompor of the Detroit Free Press.
4. Ask for Gift Receipts – Teresa Britton from MomsWhoSave.com says asking for a gift receipt is imperative in the event you need to return or exchange the Black Friday item.
5. Bring Black Friday Circulars With You – “If a store is out of an advertised item, another store may match their price, but you will have to show the advertisement” says Teresa Britton.
6. Be Safe! – Teresa also says that safety is important because crooks tend to target shoppers during this time. Keep your purchases in the trunk of your car, not the inside of your car where they can be seen by potential thieves.
The sense of retail urgency appears to have subsided as a result of the current state of the economy and better educated shoppers! That TV I bought seven years ago after standing in line for four hours lasted less than a year! Never again…but if you are much braver than I am, use the above tips!
We’ve all moved one time or another and had to hire a moving company to help. Unfortunately, not all moving companies are legitimate and scams are prevalent in shaky economic times. Thanks to a new law signed by President Obama, the Transportation Department now has the power to help victims of moving companies that are illegally holding people’s property.
Beginning in October 2014, the Federal Motor Carrier Safety Administration (FMCSA) will be able to:
a. Order moving companies to return property they are illegally holding;
b. Fine moving companies $10,000 per day;
c. Require new moving companies to pass tests on estimating and consumer protection.
Over 45 million Americans moved in 2010, some of which have probably hired a moving company. Moving can be a headache, but here are three stress relieving tips when picking a moving company:
1. Check that your moving company is state & FMCSA licensed. You can quickly search on your state and FMCSA websites.
2. Avoid movers that do not show U.S. DOT numbers and brokers that do not show Motor Carrier (MC) numbers in their advertisements.
3. Do not sign blank or incomplete documents.
If a moving company is holding your property hostage, contact/visit Move Rescue! Mayflower, United Van Lines and FMCSA run Move Rescue which is the first industry-endorsed consumer assistance service aimed at stopping disreputable and unscrupulous interstate movers.
These tips can apply to you regardless of where you move to and can be the key to saving money and mental aggravation!
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Olympic Athletes should pay taxes on their medals and prize money!
Senator Marco Rubio (R-FL) doesn’t agree with me and recently introduced a bill that would exempt Olympic medals and prize money from being taxed.
“Our tax code is a complicated and burdensome mess that too often punishes success, and the tax imposed on Olympic medal winners is a classic example of this madness,” Rubio said in a paper statement today announcing his legislation. (Source: ABC News – Sunlen Miller – Follow: @sunlenmiller)
Rubio continues, “Athletes representing our nation overseas in the Olympics shouldn’t have to worry about an extra tax bill waiting for them back home.”
For some Olympians, the tax rate can be as much as 35% of their haul!
Americans for Tax Reform (ATR) determined that US Olympic medal winners will owe up to $9,000 to the IRS!
US Olympians will have to pay tax on the values of the medals they’ve won in addition to the prize money received for those medals. According to Americans for Tax Reform’s Hugh Johnson:
“At today’s commodity prices, the value of a gold medal is about $675. A silver medal is worth about $385 while a bronze medal is worth under $5. There are also prizes that accompany each medal: $25,000 for gold, $15,000 for silver, and $10,000 for bronze.”
So how much will U.S. Olympic medal winners have to pay in taxes to the IRS?
|Medal Tax||Prize Tax||Total Tax Burden|
American gold medal winners will pay the IRS up to $8,986. Silver medal winners will pay up to $5,385. Bronze medal winners will pay up to $3,502.
Medal and prize money are defined as earned income. Taxable earned income is defined by the US Internal Revenue Code as:
a. Wages, salaries, tips, and other taxable employee pay;
b. Union strike benefits;
c. Long-term disability benefits received prior to minimum retirement age;
d. Net earnings from self-employment if you own or operate a business,
Here are some current tips for US Olympians to lower their tax bill:
1. US Olympians (and other Americans) can generally offset their earned income with non-reimbursable expenses incurred while earning the medal. This includes any business related out of pocket expenses. It can drastically reduce the tax you owe!
2. You also have the ability to itemize your tax deductions to reduce your earned income. Examples of itemized deductions are:
i. Mortgage Interest Deduction
ii. State income taxes PAID
iii. Certain medical expenses (if 7.5% above adjusted gross income)
iv. Gifts of cash or property to charity
3. Standard deduction of $5,800, $8,500 or $11,600 exist depending on how you file your tax return and if you didn’t itemize your deductions.
4. Standard exemption of $3,700 or more if you have dependents.
5. Applicable tax credits if you are eligible (Earned income etc.)
(Consult your CPA or tax advisor before implementing any tax strategies)
Generally, paying taxes isn’t a punishment or penalty (Healthcare debate aside – which is why I said generally). In reality, paying taxes is a necessary by-product of an economically driven society. As Certified Public Accountant and fiscal conservative, I’m baffled by my stance on this point but it’s true.
Should we also allow the US Men’s Basketball team paying taxes on their NBA salaries? Dedicating your time and life to athletic endeavors shouldn’t preclude or exempt you from paying taxes on your winnings.
The start-up entrepreneur does the same thing. He or she dedicates their time, energy and resources to build a business. Some fortunate ones exceed expectations and exit to multi-million dollar deals. Many go out of business while plenty stay in the middle. Should we provide a tax exemption for the business owner who earns about $100,000+ a year which is the equivalent of four (4) Olympic Gold Medals?
I agree with Senator Rubio that the current tax code requires an overhaul. There are a lot more pressing issues to address within the tax code like preserving the mortgage interest deduction. Another important tax issue is preserving the capital gains rate on dividends. The pending Capital gains tax increase will not only affect the billionaire Warren Buffet but it will also affect the millions of retiring baby boomers on fixed income!
Let’s celebrate and congratulate our Olympic athletes! We should tweet them! We should shower them with praises, Subway endorsements and book deals. We shouldn’t; however, give them a tax break!
Please @tout your comments above and tweet/retweet this article!
Family cookouts and poolside parties are customary for Memorial Day weekend. Facebook has also made it customary to share these experiences through status updates.
So what’s Facebook’s Status Update for today?
Facebook stock has lost approximately 21% of its value since the social network joined the public network (IPO) on May 18th, 2012 on the NASDAQ. Many investors seeking short term gains and quick riches lost their shirts during the subsequent days of trading.
So the obvious question is: What the Heck Happened?
In Steven Russolillo’s Wall Street Journal article, Walter Zimmerman, senior technical analyst at United-ICAP succinctly explains:
“What happened to the Facebook IPO? Human nature happened, Crowd behavior can be ugly and dangerous…I would like to suggest that Facebook may be a great signpost, but not a great stock to own.”
I can’t help you with past mistakes nor am I quick to say that buying Facebook is a mistake. However, here are some important tips the average investor has to know BEFORE investing in the market.
Personal Investing Tips –
1. It’s About Style – You’re investment style is important. Determine if you’re a long term investor or going after a quick buck. Many investors lost money on Facebook because they wanted the quick buck. Institutional investors made money…regular people didn’t!
2. Buy what you know – Invest in companies that you can understand. Learn and understand:
a) what they sell,
b) who they sell it to,
c) what their cash flows are,
d) what their debt (debt to income ratio) is.
3. Revenues – The stock price is generally based on future earnings of the company. So you need a track record of earnings trending upwards not downwards.
4. Sheeps Get Sheared – Don’t follow the sheep! Like the dot-com bubble or housing market; people like to follow the hot stock of the week. Important to analyze the stock or funds track record! Don’t follow a “hot tip”! By the time you hear about it, it’s no longer a hot tip.
5. The Pro’s Know – Hire a professional to analyze your portfolio periodically. You wouldn’t hire a dentist to fix your car or a mechanic to fix your teeth. Investing is a full time job. If you don’t invest for a living; a professional is imperative.
Find a financial advisor at The National Association of Personal Financial Advisors: http://www.napfa.org/ to find a licensed professional.
Regular Investors lost their shirts because they bought Facebook shares at the start of the IPO. Lack of information is another reason for the losses. Following the hype like sheep gets you sheared. Investing for the long term gets you rich!
If you live on the east coast, the last two weeks have been an experience to say the least. High winds and copious amounts of water inadvertently created moats around and throughout many homes. As the victims of Hurricane Irene dry out their basements, the IRS recently announced tax relief for the victims of Hurricane Irene.
For those who are unaware, corporations and partnerships that extended the due date of their tax return filings from March 15th & April 17th to September 15th have been given more time to file their tax returns.
Here’s an overview:
1. Certain taxpayers in North Carolina, New Jersey, New York, Vermont and Puerto Rico will receive tax relief, and other locations added by FEMA.
2. The IRS postponed certain tax filings and payment deadlines to Oct. 31, 2011, instead of September 15th.
3. The relief is for corporations and businesses that previously extended the due date of their 2010 tax returns until Sept. 15, 2011, in addition to individuals and businesses that received a similar extension until Oct. 17.
Tax Relief Disaster Situations –
The relief is great but the IRS should consider going one step further by allowing the victims of Hurricane Irene the ability to increase the casualty losses as a result of the hurricane. Individuals are generally limited to a loss of $3,000…and in most cases, that could only be the cost of an appliance!
Regardless, we’ll be busy preparing corporate and partnership tax returns but send us an email if you have any questions, thoughts or comments!
Comedian Seth Myers recently said “(The) Debt Showdown is like a chess match where both sides think the goal is to throw the most chess pieces out the window”. The debt ceiling debate has some obvious ramifications. For one, the debt limit uncertainty is handcuffing the financial markets, as investors and small business owners stand on the sideline waiting for the inevitable. State and Local governments will also suffer from the debt ceiling uncertainty due to a potential downgrade on credit ratings.
Here’s how a credit downgrade affects state and local governments:
State and local governments that are planning to finance public works projects are afraid that a US Government default will greatly affect those projects. If the federal rating is downgraded, credit rating agencies (like Moody’s) will assess whether the state and local jurisdictions under review deserve better credit than the US government does. Downgrades on state and local jurisdictions could cost state and local jurisdictions hundreds of millions of dollars in higher interest rates and expensive financing options.
Problems with financing of Public works projects can lead to:
a. Higher unemployment due to public works projects stopping,
b. Higher state and local taxes to make up the shortfall,
c. Lower levels of adequate government services.
The debt crisis is debilitating and not only affects small business, but can also have a direct effect on your county or city’s ability to build that new road, fix your existing highway and create new jobs!
Let’s hope they get their act together!