In the news... Current Tax Tidbits... Estate Taxes The Estate Tax has been eliminated for one year in 2010 unless Congress takes action this year to reinstate it (which is very likely). For decedents dying in 2010, there currently is no estate tax. However, the step-up in basis in the estates assets is limited to $1.3 million. For large estates, the limited step-up in basis could trigger future capital gains for the heirs when the inherited property is sold. Required Minimum Distributions - IRA's and Pensions Although Congress waived the minimum distribution requirements for 2009, they did not revive that waiver for 2010. Therefore, minimum distributions are required again for those aged 70 1/2 or older. Social Security Payments in 2010 Senior citizens will see a reduction in their social security checks because there is no cost-of-living increase for 2010, and there was an increase in the Medicare Part D premium. Recipients with higher adjusted gross incomes may also pay an additional premium for Medicare Part B. Cobra Health Coverage Subsidy Extended Congress extended the COBRA subsidy law to workers that are terminated through February 28, 2010. The subsidy allows eligible individuals to receive a subsidy of 65% of the cost of COBRA insurance for 15 months. Net Operating Loss Carrybacks A new law allows any size business to carry back a 2008 or 2009 loss for up to 5 years. Any loss carried back to the 5th year can only offset 50% of the taxable income for that year. An election must be made by the due date of the 2009 return, plus extensions. Refunds should be received within 90 days of the filing request. Reconsider Your Form of Business As the likelihood of tax increases looms for high income taxpayers, thought should be given whether to operate as a regular C corporation or some other entity. The top rate for individuals may exceed 40% after 2010 while the top rate for corporations is 35%. Health Care Reform (Pending) Smaller firms with less than 25 workers will get a credit for covering their employees. That means no tax increase for small firms! Middle class taxpayers whose employers do not provide coverage may pay more out of pocket due to the income phase-out of the credit (proposed phase out for singles at $43,000 and families of four at $88,200). Broker deadline for issuing 2009 statements Brokers have an extended period of time until February 16, 2010 to issue 2009 statements such as 1099-B, 1099-S, and certain 1099-Misc. IRS Payroll Tax Exams Random audits will begin February 2010. The IRS expects to audit 6,000 businesses over the next three years. All types of entities and business enterprises are subject to these examinations. Agents will be looking at worker classification rules and rules regarding fringe benefits and executive compensation. State Taxing Authorities on Facebook!! Many state taxing authorities are utilizing Facebook and MySpace to track down tax evaders!! IRS may join the party soon!! Click for previous articles including: What does the FDIC cover? Do I Owe Use Taxes? New tax breaks for 2009!! 
| 1. Employee reimbursement plans EMPLOYEE REIMBURSEMENT PLANS CAN SAVE YOU MONEY AND PROVIDE A BENEFIT TO YOUR EMPLOYEES! Expense reimbursement for employees remains a great tax savings vehicle for both employers and employees. Here is how it works:
IRS and State regulation require that taxes be withheld from expense allowances. Remember employees cannot receive both a 1099 and a W-2 form from the same employer for the same time period. All employees and employers must pay payroll taxes on auto or expense allowances. The expense allowance amount would be included in wages and taxes withheld. However, if you set up a qualified reimbursement plan, none of the reimbursed expenses are reported on the employee’s or officer’s W-2 or 1099 form as income. The employee/officer will receive the total amount of the reimbursement for auto, travel or other expenses tax-free! In addition, the company will be able to deduct the amount of the reimbursement from taxable income. If you would like information on how employee reimbursement plans can save you taxes, please call our office at 951-681-2784.
2. Flex Plan or Section 125 Benefit Package BOTH THE EMPLOYEES AND THE EMPLOYER KEEP MORE MONEY! Increases Employees’ Benefits and Take Home Pay Employees who are participants in the Flexible Compensation Plan are reimbursed for eligible expenses with pre-taxed dollars. The tax savings provide increased benefits and the employee takes home a larger paycheck. It’s a great employee benefit.
CONTINUED »
Some Transactions Deserve Special Treatment
Passage of the Tax Reform Act of 1997 is cause to look closer at your tax returns
It’s a good idea to invest a little extra time if you have had the following transactions: Sales of stock and other property »
Gifted or inherited property »
Reinvested dividends »
Sale of home or property »
Car expenses »
Charitable donations »
Estimated tax payments »
Other general suggestions to consider for your appointment »
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