Flexible Spending Accounts

     Your flexible spending account must be emptied by December 31st unless your employer has adopted the 2 ½ month grace period now permitted by the IRS. If you do not empty your account, any remaining money in the account will be forfeited.

Retirement Plans, IRAs, and Coverdells

     There are various deadlines for retirement plans, IRAs, and Coverdells that should be noted. As a general rule, employer plans must be established by December 31st to get a 2011 deduction. This includes Keogh plan. For Simplified Employee Pension Plans (SEPs) you have until the due for filing your return plus any extension. This means that if you are self-employed and miss the Keogh setup deadline, you have more time to open SEP-IRAs. Contributions for 2011 are due by October 17, 2012. Keogh plans and SEPs both have the same cap - 20% of net self-employment earnings. The net profit is shown on your Schedule C, less than one-half of your Self Employed Contribution Act (SECA) tax liability.

     Regular IRAs must be established by April 16, 2012 for 2011 deductions. Pay-ins are due by then as well. A filing extension will not buy you additional time. Non-deductible pay-ins to IRAs and Roth IRAs are also due by April 16. This is also the same for contributions made to Coverdell education savings accounts.

Gifts

     If you are making a gift by check make sure that the recipient deposits the check in 2011 if you want the money to count as a 2011 gift for gift tax purposes. You can also make the gift by certified check, which will ensure that the donation will count as a 2011 gift no matter when the recipient deposits it. The total possible exclusion amount for this year is $13,000 per recipient. The amount has to be given in the current year.

     If you're making a gift of securities, endorse them over to the recipient and deliver them by year end for the gift to count for 2011. Companies might not be able to re-title the certificates in the recipients name by December 31st if the gift is made too late in the year.

Deductible Items

     Checks for deductible items should be mailed before the end of the year to ensure a 2011 write-off. Even if the checks don't clear until January, you can still claim the deduction for 2011.

     Be mindful of the tax rules if you are going to be charging deductible items. If you make a charge on a retail store credit card, the deduction for the item can only be claimed in the tax year in which you pay the bill. If you make the transaction on a bank credit card, the deduction is taken in the year that you charged the goods even if the bill is paid in the next calendar year.

If you have any questions or would like more information, please contact Fred Schutz at 856-722-5300 ext. 201 or Dave Gill at ext. 210.