Logo
Tax Tips Newsletter
Serving you since 1993
March 2010 - Vol 5, Issue 3
In This Issue
Sign Up
Quick Links
Greetings!
LH head shot Orange

The deadline for getting your individual income tax information to me has just passed, but if you can get your information to me soon we still may be able to get your returns done by April 15th.

A reminder for California businesses that need to file a use tax return. The return is due APRIL 15th. There is not an extension to file a use tax return at this time. If you are required to file a separate use tax return, you have already been notified by the State Board of Equalization. If you would like me to prepare the return for you, please get me the information as soon as possible.

California has also announced that refunds may be delayed. If you have not yet received your refund, you may want to check the Franchise Tax Board website for further information.

Thank you for your referrals. I appreciate your confidence in me and my firm.

Man buried with papers
The IRS is launching a three-year auditing project that will examine about 6,000 U.S. companies for compliance with employment tax obligations. The project is the first of its kind in 25 years, and its primary objective is to collect data to identify areas of noncompliance across all industry sizes and sectors, including nonprofit and governmental entities. This data will be used by the IRS to update its audit selection formulas in an area where noncompliance is considered a serious drain on the U.S. Treasury.

Among the issues the audits will look at:
* Classification of workers as employees or independent contractors, including executives rehired as consultants, dual status employees, and employee leasing arrangements.
* Fringe benefits, including expense reimbursement arrangements and noncash benefits.
* Executive compensation and fringe benefits, executive retirement contracts, golden parachutes, and stock options.

Employers can take some steps to prepare for these payroll tax audits. For example, conduct a mock audit to check how your company handles the three focus areas -classification of workers as employees or independent contractors, fringe benefits, and executive compensation.

Your company may not be selected for the research audit program, but you also need to be ready to face an audit following the three-year project.

For more information or assistance, give our office a call.
Financial Goal in Color
There is still time for a 2009 IRA. If you didn't make contributions to an IRA in 2009, you can still set up and contribute to an IRA for 2009. The deadline for doing so is April 15, 2010. An IRA is a great way to save for your retirement, and with a deductible IRA, you also cut your current tax bill.

If your 2009 deductible IRA wasn't fully funded by December 31, 2009, and you make any IRA contributions prior to April 15, 2010, designate to the bank or trustee that these 2010 contributions are for 2009 (up to the maximum allowed). You can then deduct these amounts on your 2009 income tax return for a quicker tax benefit.

Make your 2010 IRA contributions as early this year as possible to maximize the time you have for tax-deferred growth in the fund.

Consider converting a traditional IRA to a Roth IRA this year. The previous rule that excluded taxpayers with incomes over $100,000 from doing a conversion to a Roth is eliminated as of January 1, 2010. You'll have to pay tax on the amount converted, but qualifying distributions from the Roth IRA are tax-free thereafter. Furthermore, you won't have to take annual distributions from your Roth IRA when you reach age 70½ if you don't want to.

Note that while converting a traditional IRA to a Roth IRA is now open to everyone, regardless of income, contributing to a Roth IRA is still not allowed for higher-income taxpayers. For 2010, Roth IRA eligibility phases out for singles once income reaches $105,000 and for joint filers once income reaches $167,000.

For 2010, annual minimum distributions from most retirement plans are once again required for those aged 70½ and older. In 2009, these required minimum distributions (RMDs) were suspended. 2010 required distributions must be taken by December 31, 2010. Taxpayers who turn 70½ in 2010 may choose to delay taking their first distribution until April 1, 2011.

For additional information or assistance with IRA decisions, give us a call.
Windfall
The Tax Tip of the week deals with tax breaks to homeowners including 2 new breaks. One is for property taxes for those taxpayers who would normally take the standard deduction. The other is for PMI that was paid in 2009, There is also information regarding energy credits.

The Business Tip of the Month gives you 5 good tips for keeping your customers happy. Remember "word of mouth" is your best advertising!

The Financial Tip of the Month deals with American's habitual spending on credit and the disaster that we get ourselves into when we live accumulating mountains of debt.

The Fraud Alert gives you some tips and reasons why you really don't need to rush to buy from those late night "infomercials." If it sounds too good to be true... you know the rest!!

Photos © Bigstockphotos.com, istockphoto.com, Felix Orona

Sincerely,
Linda Heineman
Linda L. Heineman, CPA, CITP

phone: 626-577-0979
Email Marketing by