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HARDING, SHYMANSKI & COMPANY eNEWSLETTER |
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| Inflation Having Little Effect on Tax Rates and Benefits in 2010
WASHINGTON - The Internal Revenue Service announced tax rate brackets and various tax benefits will remain unchanged or change only slightly in 2010 due to inflation.
By law, the dollar amounts for a variety of tax provisions must be revised each year to keep pace with inflation. As a result, more than three dozen tax benefits are subject to inflation adjustments each year, but because recent inflation factors have been minimal, many of these benefits will remain unchanged or change only slightly for 2010.
Key provisions affecting 2010 returns, filed by most taxpayers in early 2011, include the following:
*The value of each personal and dependency exemption available to most taxpayers is $3,650, unchanged from 2009.
*The new standard deduction for heads of household is $8,400, up from $8,350 in 2009. For other taxpayers, the standard deduction remains unchanged at $11,400 for married couples filing a joint return and $5,700 for singles and married individuals filing separately. Nearly two out of three taxpayers take the standard deduction rather than itemizing deductions, such as mortgage interest, charitable contributions, and state and local taxes.
*Various tax bracket thresholds will see minor adjustments. For example, for a married couple filing a joint return the taxable income threshold separating the 15 percent bracket from the 25 percent bracket is $68,000, up from $67,900 in 2009.
*The annual gift tax exclusion remains unchanged at $13,000.
Details on these and other inflation adjusted items for 2010 can be found in Revenue Procedure 2009-50.
Contact Kathy Ettensohn, CPA, at (812) 491-1384 with questions. |
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IRS provides guidance for retirement plan administrators, plan participants and retirees regarding the waiver under the Worker, Retiree, and Employer Recovery Act of 2008 for required minimum distributions for 2009 from certain retirement plans.
Generally, a required minimum distribution is the smallest annual amount that must be withdrawn from an IRA or an employer's plan beginning with the year the account owner reaches age 70½.
The 2008 Worker, Retiree, and Employer Recovery Act law waives required minimum distributions for 2009 for IRAs and defined contribution plans (such as 401(k)s) and allows certain amounts distributed as 2009 required minimum distributions to be rolled over into an IRA or another retirement plan.
IRS Notice 2009-82 provides relief for people who have already received a 2009 required minimum distribution this year. Individuals generally have until the later of Nov. 30, 2009, or 60 days after the date the distribution was received, to roll over the distribution.
Notice 2009-82 also provides guidance for retirement plan sponsors. It contains two sample plan amendments that plan sponsors may adopt or use to amend their plans to either stop or continue 2009 required minimum distributions. Both sample amendments provide that participants and beneficiaries can choose to receive or not to receive 2009 required minimum distributions.
Also, both sample amendments allow the employer to offer direct rollover options of certain 2009 required minimum distributions.
Contact Mike Vogel, CPA, at (812) 491-1358 with questions. |
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Maine, Oregon and Virginia Offering Tax Amnesty
Maine's Revenue Services department has been authorized to conduct the Tax Receivables Reduction Initiative (TRRI). This program will allow taxpayers with tax liabilities that were assessed as of September 1, 2009 to resolve those liabilities with payment of the tax, the interest and 10% of the penalty. By making the payment and signing the TRRI application, the remaining 90% of the penalties will be waived. Maine is not currently offering amnesty for any unfiled taxes. The program will end on November 30, 2009.
The Oregon Tax Amnesty Program runs from Oct. 1 to Nov. 19. The amnesty will waive all penalties and half of interest for non-filers and under-reporters. It is not open to taxpayers who have already received a notice of deficiency. There will be a new penalty of 25 percent placed on liabilities for taxpayers who could have paid an eligible liability during the amnesty but did not do so.
Virginia's "Get Square" program runs from October 7 to December 5, 2009. The amnesty will waive all penalties and half of interest for non-filers and under-reporters. After December 5, an additional penalty of 20 percent will be imposed on unpaid liabilities covered under the amnesty program.
Contact John Rittichier, CPA, at (812) 491-1307 for additional information. |
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Manufacturing and Wholesale Distributors
Is today's business environment presenting unique opportunities and issues for your manufacturing operation? How are you addressing the push from your customers for continuous quality improvement? Are you having difficulty finding and retaining quality employees? Add to these issues declining profit margins and strained resources due to rapid growth and you have major challenges facing you day in and day out.
At Harding, Shymanski & Company, P.S.C. we have a dedicated team ready to assist you with those unique challenges and issues facing your industry.
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A New Reason to Take Advantage of an Old Program - SBA 504 Small Business Loan Interest Rate Drops to 5.14%
Business owners considering the purchase of real estate may be able to take advantage of record low interest rates on the purchase, build or expansion of their own facilities. One possible way to finance this purchase may be with an SBA 504 Loan.
Key facts and advantages of the SBA 504 Loan Program:
Owners are allowed to invest as little as 10% of the project cost compared to 20% to 30% for traditional bank financing.
- SBA will loan 40% of the project costs taking a secondary position to the bank financing.
- The bank finances 50% of the project allowing the bank to offer its best interest rate due to the low collateral loan to value.
- Current SBA 20-year fixed rate is near 5% with significantly reduced fees through the end of the year.
- SBA will allow interest to be capitalized during the construction period as project cost.
- SBA will allow certain expenditures and equipment to be included in the project cost.
If you would like to discuss the SBA 504 Loan Program in more detail, please contact Scott Olinger, CPA at (502) 584-4142 or Kyle Wininger, CPA at (800) 880-7800. |
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New IRS Employment Audits Targeted for Late 2009
The IRS is launching a new compliance examination program focused on employment taxes. Beginning in late 2009, the agency will randomly select businesses and conduct a series of audits to determine if they are properly following a host of payroll tax and compensation-related rules.
The program is part of the IRS National Research Program (NRP), an initiative to improve its compliance programs and better use its resources, and will involve the examination of approximately 6,000 businesses over three years.
Four primary areas the IRS will examine:
- Worker classification: Are you properly classifying workers as employees versus independent contractors?
- Fringe benefits: Are you making the proper adjustment for the personal use of business vehicles and complying with discrimination standards for the various fringe benefits?
- Officer compensation: The IRS is likely pursuing unreasonably low compensation paid by closely held S corporations or excessively high compensation paid by closely held C corporations.
- Reimbursed expenses: The IRS is testing the "accountable plan" rules to determine if actual, documented expenses are being reimbursed versus impermissible flat dollar or percentage allowances.
How to prepare
Businesses should review their compliance before these exams begin. Those with potential issues can shore things up in advance of these audits.
Ask yourself, do you have workers receiving 1099s as independent contractors who regularly perform services under their direction and control? That may raise a question about employee status. And, as a result, some fringe benefits may be discriminatory, because not all employees were properly covered.
"The 'accountable plan' rules will also be addressed. There are some IRS allowances that do permit flat dollar reimbursements, such as the out-of-town meals or lodging per diems. But in most areas, tax-free reimbursements can only occur if there is specific documentation of the business expense by the employee.
How we can help
If you have concerns about your compliance in these areas, we can assist you in a review of your procedures and compliance in these areas.
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| RSM McGladrey Perspective Newsletter now available in PDF format.
As a member of the RSM McGladrey Network, Harding, Shymanski & Company, P.S.C. is able to offer you access to the latest hot topics and practical ideas for manufacturers and distributors.
Perspective Publication - third quarter 2009 issue includes:
- How SMB Supply Chains Are Changing
- Managing Compensation and Human Capital Investments in an Uncertain Economy
- Reading the Fine Print: What Borrowers Need to Know About Loan Agreements in the New Recession
- RSM McGladrey 2009 Manufacturing and Wholesale Distribution Survey - Interim Report
Click here to read the latest issue.
Information provided in this publication has been obtained from sources believed to be reliable. However, RSM McGladrey guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions or for results obtained by others as a result of reliance upon such information. This publication does not, and is not intended to, provide legal, tax or accounting advice. |
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Harding, Shymanski & Company, P.S.C. provides accounting, tax and consulting services to clients from offices in Evansville, Indiana and Louisville, Kentucky.
We are committed to quality. Adding value to the services we provide is our most important goal. Our unwavering dedication and commitment to quality resonate throughout every aspect of our work.
Call us today! (800) 880-7800 in Evansville and (502) 584-4142 in Louisville |
| Disclaimer |
The information contained in this email is for general guidance on matters of interest only. This publication does not, and is not intended to, provide legal, tax, or accounting advice. |
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