Dear Clients and Friends, 

We hope this edition of "News You Can Use" finds you well, and that you are enjoying your summer so far. 

For those of you who have filed extensions for your tax return, please contact us as soon as you have your information ready so we can prepare those returns for you timely.  

As always, we appreciate your business and your referrals.

Very truly yours,

Suzanne LoBiondo and Christopher Cheeseman 

FUTA Tax Rate Decrease July 1, 2011  

The Federal Unemployment Tax Act (FUTA), along with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both a Federal and a state unemployment tax. 

FUTA-covered employers currently are assessed a tax amounting to 6.2% on the first $7,000 of wages paid to each worker during a calendar year.  After June 30, 2011, the FUTA tax rate is decreasing to 6.0%. The $7,000 is the federal wage base and each state may have a different wage base.

Generally, employers can take a credit against their FUTA tax for amounts paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages.  If an employer is entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.8% (this will decrease to 0.6% after June 30, 2011).

The Internal Revenue Service is revising the optional standard mileage rates for computing the deductible costs of operating an automobile for business, medical, or moving expense purposes and for determining the reimbursed amount of these expenses that is deemed substantiated. This modification results from recent increases in the price of fuel, and is effective as of July 1, 2011.

The revised standard mileage rates are:

(1) Business - 55.5 cents per mile

(2) Medical and moving - 23.5 cents per mile

The mileage rate that applies to the deduction for charitable contributions is fixed under§ 170(i) of the Internal Revenue Code at 14 cents per mile.