cfo2go

IRS: Tax Law Changes for 2011 Federal Tax Returns (09.02.2012)

John W. Mohr — Sat, 18 Feb 2012 09:12:41 +0000

IRS: Five Tips for Recently Married or Divorced Taxpayers with a Name Change (03.02.2012)

John W. Mohr — Sat, 18 Feb 2012 09:10:11 +0000

IRS: Get Your Prior Years Tax Information from the IRS (27.01.2012)

John W. Mohr — Sat, 18 Feb 2012 09:07:21 +0000

IRS: Bartering Tax Center (17.02.2012)

John W. Mohr — Sat, 18 Feb 2012 05:45:19 +0000

IRS: Pub 972 Child Tax Credit (13.02.2012)

John W. Mohr — Mon, 13 Feb 2012 16:12:42 +0000

The purpose of this publication is:
This credit is for people who have a qualifying child as defined later. It is in addition to the credit for child and dependent care expenses (on Form 1040, line 48; Form 1040A, line 29; or Form 1040NR, line 46) and the earned income credit (on Form 1040, line 64a; or Form 1040A, line 38a).

The maximum amount you can claim for the credit is $1,000 for each qualifying child.

Click here to go to the publication at the IRS website.

Directors: Hopefully you are not working on an employment contract

John W. Mohr — Sun, 05 Feb 2012 08:59:15 +0000

Companies that currently employ directors on parallel or employment-only contracts should contract their managing directors on a statutory management contracts only to avoid costly audit and tax costs.
On 09 December 2010 the Czech Supreme Administrative Court (NSS) entered yet an additional opinion (nr. 3 Ads 119/2010-58 ) addressing the standing of directors and board members in commercial companies vis a vis disability payments and income tax. This opinion resolved that:
1. A single manager may not be engaged to the firm as an employee if the manager’s duties include responsibilities reserved to the director under §134 and §135 of the Commercial Law. (These speak to the responsibility of the director for the commercial, accounting and statutory management of the company.) The opinion specifically precluded the existence of a parallel employment and director’s relationship.2. The preclusion of an employment relationship also precludes the manager’s the right to receive state disability benefits – a benefit reserved to employees since 01.01.2009. (The manager does remain covered under the pension insurance plan in those months where s/he earns in excess of the statutory minimum – 6.300 Kc in 2011.)3. In the case that a manager-employee exercises activities reserved to the director, the employee contract risks being voided and related expenses (disability withholding, wages) being deemed tax non-deductible(!)4. Parallel contracts are possible only insofar as the employment contract does not extend into areas of responsibility reserved to statutory management. For practical purposes, this is a non-starter. (Imagine: Director with a janitorial employment agreement ….?)
Small companies: A practical problem demands a practical solutionThe problem here is one of both regulatory compliance and profitability. We seek to maximize the value of our company’s assets by shrewdly reducing or eradicating uncompensated risk and avoiding disruptions to our carefully-planned operations. We seek to avoid tax-nondeductible expenses unless they achieve comparatively higher revenues.
Most small companies with whom I work have a single manager who carries out the functions of the statutory executive as well as a host of additional employment activities. Often, this person is the sole shareholder. Sometimes the subsidiary of a small multinational corporation with a limited budget appoints a manager to fulfill both statutory and other management activities. In both cases I have encountered parallel contracts (statutory plus employment) and employment-only contracts where the manager has also been appointed director. This is not optimum.
Small companies need simple solutions. The only reasonably simple solution is a statutory management contract, only, approved by the shareholder meeting (or sole shareholder decision in the capacity of same). The director should countersign all manager-employee contracts and contracts negotiated by them, in writing.
If the company is not managed by a single sole shareholder/director, then the company should split the functions of director and manager-employee into the hands of 2 or more persons in written contracts. Manager-employee contracts in particular should specifically exclude the responsibilities of directors listed in §134 and §135 of the Commercial Law, except perhaps insofar as their role is merely to carry out the decisions of the director. In such a case, the company should also establish internal procedures to ensure that this division of responsibility is sufficiently documented. It might be practical and cost-effective to appoint the local manager-employee’s boss at the foreign parent as the director, to sign or co-sign all key decisions and contracts and use the local management to carry out their decisions. What does HQ think?
Whatever the case, it is important to establish the director of the company as the primary decision-maker in corporate management. To the extent we can do this we avoid disruptions to business and maximize our opportunities to succeed. If these issues affect your situation, consider engaging advisors that can help you put in place a practical solution that addresses the legal, tax and operational questions in play. John W. Mohr is director of CFO2GO entrepreneurial advisory, delivering online and outsourced accounting, domiciliary and financial advisory services to internationally-financed businesses and expats in the Czech Republic. www.cfo2go.eu john.mohr@cfo2go.eu

Own or control a foreign company? IRS is expecting a tax return …

John W. Mohr — Sat, 04 Feb 2012 16:09:02 +0000

Most Americans do not realize that if they own or control more than 10% of a foreign company they may need to file a detailed information return on the company with the IRS every single year as part of their US1040. Failure to file – even if the company earns no profits – can result in $10.000-50.000 penalties per year. Read more here in the article by Vernon K Jacobs, “Tips for Preparing the Form 5471 for Controlled Foreign Corporations,” published in the February 2009 issue of The Tax Advisor.

2011/2012 Recent Changes at CFO2GO

John W. Mohr — Sat, 04 Feb 2012 10:26:18 +0000

CFO2GO continues to grow to accomodate the needs of its international clientele for comprehensive accounting, tax reporting and related services connected to their personal and business activities in the Czech Republic and around the world. You may not know this, but our activities today cover:

* Domiciliary services: company, partnership, sole proprietorship, nonprofits formation, reorganization, liquidation, registered address, databox, consulting

* Accounting and reporting: company, partnership, sole proprietorship, nonprofits in Czech Republic/United States

* Accounting software for businesses and sole-proprietors: Software-as-a-Service, hosted online, Win/Mac/Lin, multilingual, secure, in/out-sourced

* Management: Financial and statutory management and consultancy services on a part-time and interim basis

* Expat tax reporting: citizens of all countries doing business in Czech Republic/United States

* Czech residence visas / work permits: Czech Republic

In the recent several months CFO2GO has:

Implemented a blog-based, communication-oriented web presentation featuring frequent and relevant articles, news, tax calendar, secure tax document upload portal
Added resources in the area of international retirement planning
Upgraded all U.S. tax returns to Intuit’s Proseries professional tax software
Added Czech Visa application and renewal services
Added US Expatriation services (by dual-nationals no longer desiring to retain US citizenship)
Added a third accountant to the staff, focusing primarily on Czech accounting and tax reporting issues
Expanded our online Czech business accounting software platform, FlexiBee, to include a wider range of businesses, iPhone and Eshop integration
Opened up U.S. bank account to receive payments in U.S. Dollars
Launched electronic monthly newsletters for Expats and investors in the Czech Republic and worldwide; one is optimized for US expats while the other is more general.

We are currently seeking to build our roster of more than 150 individual US tax return clients with an exciting offer guaranteeing 25% off prior year fees charged by the new client’s old tax preparer. We are currently contemplating accepting credit card payments into our new U.S. account … if this is a service that would interest you, please let us know.

In fact, I would be pleased to hear from you at any time about services and resources that you need and want but cannot find on our pages. Our new website is optimized to facilitate Skype, telephone and email contact.

Thank you for your patronage!

John W. Mohr
Director, CFO2GO entrepreneurial advisory
04.02.2012

BitCoin: The best financial privacy is here probably (17.01.2012)

John W. Mohr — Tue, 31 Jan 2012 14:48:08 +0000

2012 Changes in Czech tax and reporting

John W. Mohr — Sun, 15 Jan 2012 16:39:14 +0000

Tax year 2012 ushered in a number of changes in the area of compensation for employees and self-employed alike. Because you might want to know what way the fiscal winds are blowing this year, we discuss briefly many of them here. Feel free to ask as for more detailed information.

Employed

Agreements on the execution of work (Dohody o prevedení práce) have changed significantly. Key changes include:

Maximum 300 hours/year
Maximum 10.000 Kc/month.
- Less than 10.000 Kc/mo, employee must apply for state health insurance
- More than 10.000 Kc/mo, employer withholds from employee’s paycheck and pays health and social insurance as well

Travel per diem increases for trips
See below.

Compensation for use of vehicle per km increases in 2012:
See below.

Individual tax credit is increased in 2012 to 24.840 Kc annually.
The child tax credit is increased in 2012 to 13.404 Kc annually.

Self-Employed

Social insurance remains the same in 2012 at 29.2% of the measurement base (or 14.6% of the taxable base), although the minimum monthly advance amount increases for both part-time and full-time self-employed in April. If you are starting out in 2012 for the first time, you will pay the minimum advance amount. No social insurance advance payments are due if total income in the prior year was equal or less than 5.027 Kc/ mo.

New minimum advances from 2012/04:

part-time – Until March: 723 from April: 735
full-time – Until March: 1807 from April: 1836

Health insurance remains the same in 2012 at 13.5% of the measurement base (or 6.75% of the taxable base), although the minimum monthly advance amount increases for both full-time self-employed in January to 1697 Kc/mo. If you are starting out in 2012 for the first time, you will pay the minimum advance amount.

Income tax remains the same at 15% of the taxable base. The taxable base is either the accrual-based accounting profit, the cash-based simple accounting profit, or the % of income accounting profit – generally 40% of gross cash revenue received.

Compensation for use of vehicle per km increases in 2012:

Benzin 95:                        34.90 Kc/liter
Benzin 98-100:               36.80 Kc/liter
Diesel/nafta:                   34.70 Kc/liter
…and 3.70 Kc/km (same as 2011)

Travel per diem increases for trips

lasting up to 12 hours/day: CR 96-116 Kc/day, International: according to city
lasting longer than 12 hours/day: CR151-181 Kc/day, International: according to city

Value Added Tax (VAT) rates change. The reduced rate rises from 10% to 14% in 2012 and is planned to rise again to 17.5% in 2013. The basic rate remains at 20% during 2012, but is planned to fall to 17.5% in 2013