| To Our Clients, Friends and Business Associates:
We would like to welcome you to the first edition of the DDK Newsletter. The stress of today's world makes it increasingly difficult to keep current in the tax and accounting areas. It is our goal not only to provide you with outstanding service, but to assist you in understanding related tax and accounting issues. We hope you find our articles informative and as always, thank you for your support.
The Partners and Staff of DDK & Company, LLP
|
|
NJ Adopts Nation's Second Highest Tax Rate |
|
On June 29, New Jersey enacted a one-year increase in its top personal income tax rate. The new rate is 10.75% (second only to Hawaii's 11%) effective for 2009. The new rate will apply to taxable income over $1 million. Other brackets for 2009 include 10.25% on income between $500,000 and $1 million, and 8% on income from $400,000 to $500,000. In 2010, the top rate will return to 8.97%, which has applied to NJ income over $500,000 since 2004.
These new rates apply retroactively for all of 2009. Penalties will not be imposed for insufficient payment of estimated tax caused by the new rates until October 1, 2009.
Other changes in the NJ tax law include the extension of the 4% surcharge on corporate income tax and a phase-out of both the real estate tax deduction and the property tax rebate for higher income taxpayers. Additionally, NJ lottery winnings in excess of $10,000, which were previously exempt, will be taxed. |
|
NYC Shared Work Program |
|
State Labor Commissioner M. Patricia Smith urges businesses in NYC struggling with the current economic crisis to use the Department of Labor's Shared Work Program. This program gives employers an alternative to layoffs. Under this program, employee health insurance, retirement benefits, vacation pay, and other benefits are not reduced. The difference will be paid by the Department of Labor via unemployment insurance.
Only full-time employees are eligible. The plan cannot exceed 53 weeks. Employers must be approved for the plan and must submit the application forms SW-2.1 and SW-2.2 at least two weeks prior to the proposed effective date.
New York is one of 17 states currently utilizing this program. Companies can apply by referring to the Department of Labor's website at http://www.labor.state.ny.us.
|
|
NYC Tax Changes Enacted |
|
In mid-July, NYC changed several business taxes to bring the City in closer conformity with NYS law. It also made changes to its sales tax rate. The business tax changes that are retroactive to January 1, 2009, include the following:
Corporations (even those with losses) must pay a minimum tax to the City. Previously, the minimum tax was $300 per corporation per year. This has been replaced with a graduated minimum tax based on gross receipts collected in the City. The rates range from $25 (for corporations with less than $100,000 of City receipts) to $5,000 (for those with receipts over $25 million).
Under previous law, related corporations were permitted or required to file combined City returns if the Department of Finance determined that separate filing would create distortions. The new law makes the filing of combined reports MANDATORY when at least 50% of a corporation's receipts or expenses are from inter-corporate transactions.
Corporations and unincorporated businesses (partnerships, LLCs, and sole proprietorships) doing business both in and out of NYC pay tax on the part of their income allocated to the City. The allocation formula has historically been equally weighted between three factors: the proportion of the business' sales, payroll, and property located inside the City. The City is phasing in a single-factor method based only on sales, by gradually increasing the weighting of the sales factor from 2009 to 2018.
City unincorporated businesses are currently required to file a return when sales exceed $95,000. The previous threshold was for sales in excess of $75,000 or taxable income in excess of $35,000. Additionally, a credit that offsets Unincorporated Business Tax at lower income levels has been increased. This effectively exempts an unincorporated business from tax until it has $100,000 of taxable income (previously $60,000).
Changes to NYC's sales tax went into effect on August 1, 2009. These included a one-half-percent increase in the tax rate. The overall sales tax rate in the five boroughs is now 8.875%. The City's sales tax exemption for purchases of clothing costing $110 or more has also been repealed. The exemption is retained for clothing and footwear costing under $110.
|
HR 436: Estate Tax Relief Act of 2009 |
|
Rep. Earl Pomeroy (D-ND) has introduced a bill (HR 436) that, if enacted, restores the tax on estates and generation-skipping transfers.
The bill amends the Internal Revenue Code as follows:
-
Provide for an increase to $3.5 million of the estate tax exclusion (eliminating the phase-in period);
-
Impose a maximum estate tax rate of 45%;
-
Restore the phase-out of graduated estate tax rates and the unified credit against the estate tax;
-
Set forth estate valuation rules for certain transfers of non-business assets; and
-
Limit estate tax discounts for certain individuals with minority interests in a business acquired from a decedent.
We will provide additional information as more details become available. |
 Introducing DDK IT Solutions Group |
|
You can stop down time before it stops you with DDK IT Managed IT Office Support Services!
We understand that when your IT infrastructure is "down", your business is down which is why we are excited to introduce the launch of DDK IT Office Support Services. We proactively monitor your IT infrastructure to help prevent downtime before it starts.
Whether you have IT staff or do it by yourself, we can help cut the costs and complexity of managing your IT.
Benefits:
-
Less down time with remote monitoring
-
Faster problem solving with remote issue resolution
-
End-user support freeing your time for more important projects
-
Affordable pricing
-
Local support
Let DDK IT simplify your IT so you can focus on running your business.
For a complimentary consultation please contact Raj Katyal at 212.997.0600 x 4352 or email rkatyal@ddkitsg.com
|
|
Tax Calendar
Third Quarter |
September 15:
Individuals
3rd Quarterly Estimated Taxes are due. For those taxpayers whose withholding is not sufficient, please contact us to determine amounts to be paid.
Corporations
Deadline for filing 2008 calendar year income tax returns (Form 1120 or 1120-A) and pay any tax, interest, and penalties due. This due date applies only if you timely requested an automatic 6-month extension.
S Corporations
Deadline for filing 2008 calendar year income tax returns (Form 1120S) and pay any tax due. This due date applies only if you timely requested an automatic 6-month extension. Provide each shareholder with a copy of Schedule K-1 (Form 1120S) or a substitute Schedule K-1.
Corporations
Deposit the third installment of estimated income tax for 2009.
Partnerships
Final deadline for 2008 calendar year returns (Form 1065). This due date applies only if you were given an additional 5-month extension. Provide each partner with a copy of Schedule K-1 (Form 1065) or a substitute Schedule K-1.
| |
|
Please visit our website for more news updates.
|
|
|
|
Sales Tax News |
| Rate Increase:
The NYC sales tax rate is increased to 4.5% (from 4%) effective August 1, 2009. Combined with the 4% state and 0.375% MCDT district taxes, the total sales tax in the five boroughs has become 8.875%.
Partial Repeal of Clothing Exemption:
Effective August 1, 2009, the NYC sales tax exemption for purchases of clothing costing $110 or more was repealed. The exemption is retained for clothing purchases under $110.
| |
|
