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Posted in Business Succession on Jan 25, 2012

Succession planning is very important for a family owned business. Before you sit down with your tax and legal advisors to draw up a succession plan, you should think through three key issues: who do you want to succeed you, when do you want the transition to take place, and how do you want to structure the transition? 

* WHO? The question of who will succeed you in the business can be the toughest of all, largely because there is so much emotion involved. Most owners want to pass the business on to the family. But are your children willing to take on the business, and if so, are they capable of running it? Will it cause a family squabble if one or two children want to run the business, but others are not interested? Resolving these issues may take a lot of honest, open discussion with family members to discover their true feelings. If there is not an obvious family successor, other alternatives include selling the business to an outsider, promoting an existing employee to head the business while you retain ownership, or even selling the business to the employees. 

* WHEN? When you make the transition depends on a number of factors, such as your age, health, retirement goals, and the readiness of a successor. Consider whether you want to maintain some involvement with the business or make a clean break. Remember, though, you should always have a contingency succession plan in case of sudden death or disability. 

* HOW? How you structure the transition depends partly on the answers to the earlier questions and partly on financial considerations. Think through issues such as whether you need retirement income from the business or whether you primarily want to minimize estate taxes. Knowing your goals for the transition will make it much easier to tailor a succession plan that fits your specific situation. 

For guidance in your business succession planning, give us a call.

Last Updated by Kurt Siegenthaler on 2012-01-25 21:36:16

Posted in Business Plan on Jan 23, 2012

Taking a trip without a map may get you lost, and trying to run a business without a plan is likely to have the same result.

A business plan is a map, your company's written guide into the future. Not only does a good plan let you know where you are and where you're headed, it provides potential lenders and investors with a portrait of your company.

Each plan will differ, but certain items are essential.

* First, you must define your market niche and identify the competition. How does your product or service differ from theirs?

* Next, determine your product and delivery costs; then look at your product pricing.

* Do you need new equipment or skills to compete now and in the future?

* What is your marketing scheme?

* How will you get the capital you need for your plans?

* Examine your key operating ratios, and determine projected profits for years covered by the plan.

Most business plans fail because they lack detail. A well-developed plan gives a new company immediate respect in the eyes of lenders, not only because it shows you to be thorough and far-sighted, but because lenders rarely see good business plans.

Wayne Gretzky, when asked the reason for his success said, "Some people skate to where the puck is. I skate to where the puck is going to be." A good plan should help you do the same for your business.

Last Updated by Kurt Siegenthaler on 2012-01-23 20:22:28

Posted in Tax Law Changes on Jan 19, 2012

On November 21, 2011, President Obama signed the "Three Percent Withholding Repeal and Job Creation Act" into law. This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the "Vow to Hire Heroes Act" which provides tax credits to employers who hire unemployed veterans.

The law creates the ?Returning Heroes Tax Credit? and the ?Wounded Warriors Tax Credit.? Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. Employers who hire an unemployed veteran with service-connected disabilities who has been looking for work for more than six months may be eligible for a tax credit of up to $9,600.

The credits apply to new hires after November 21, 2011, through December 31, 2012. For more information about the new law, contact our office.

Last Updated by Kurt Siegenthaler on 2012-01-19 23:42:42

Posted in Tax Credits on Jan 15, 2012

A law signed by President Obama on November 21, 2011, creates new tax credits for hiring military veterans. A "Returning Heroes Tax Credit" of up to $5,600 per employee is available to employers who hire veterans who have been looking for work for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks, but less than six months. A "Wounded Warriors Tax Credit" provides a credit of up to $9,600 for hiring veterans with service-related disabilities who have been looking for work for more than six months. Contact us if you need more information.

Last Updated by Kurt Siegenthaler on 2012-01-15 23:29:01

Posted in General on Mar 02, 2011

Corporate filing deadline is March 15

The deadline for calendar-year corporations to file 2010 tax returns is March 15, 2011. Is that date arriving faster than you expected? If you're not ready to file your corporate tax return for calendar year 2010 - and in some cases, even if you are - you may want to request a six-month extension of time.

Here are four tips.

1. File the extension by the due date of your return. You can mail Form 7004 to the IRS or file it electronically. Either way, be sure to submit it before this year's due date of Tuesday, March 15 (for calendar-year corporations). Remember to send in a separate form for each corporation you own.

2. The extension is for filing only. That means you'll have to estimate and pay any tax due by March 15 in order to avoid penalty and interest charges.

3. The six-month extension is automatic. An approved extension postpones your filing due date to September 15, 2011. You don't have to sign Form 7004, and the IRS no longer sends approval notifications.

4. Check your state requirements. Some states recognize an approved federal extension of time to file; some grant extensions automatically and some require separate forms. In most cases, to avoid penalties and interest, you'll need to estimate and pay the state tax by the original due date of your return.

Besides giving you additional time to gather your records, a corporate filing extension can offer other benefits. For example, you may be able to delay making contributions to your retirement plan. Certain elections can also be extended. Contact our office if you need more information.

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Don't overlook tax-saving deductions

If you itemize deductions on your tax return, every additional deduction you find will save you money. In the past, higher-income taxpayers had their itemized deductions limited. Effective for 2010, 2011, and 2012 tax returns, there is no income-based reduction in total itemized deductions. That may give higher-income taxpayers another reason to track their deductions carefully.

Here's a sampling of often-missed deductions.

* Disaster losses not reimbursed by insurance.

* Job-hunting travel and telephone expenses.

* Employment agency and job counseling fees.

* Costs for resume preparation.

* Union or professional association dues.

* Specialized work clothing or small tools used at work.

* Points paid by you on a new home loan.

* Home mortgage points paid by a seller on your behalf.

* Points paid on refinancing your home mortgage (deductible pro rata over the life of the loan).

* Remaining undeducted points on a prior refinancing when you refinance again.

* Your actual expenses or 14¢ a mile for driving in doing charitable work.

* Gambling losses, but only to the extent of your winnings.

* Fees paid for the preparation of your tax return.

For assistance in identifying all the deductions to which you are entitled, contact our office. We are here to help you pay the lowest tax allowed under the law.

Kurt A. Siegenthaler, CPA

3209 South Cherokee Lane #530

Woodstock, GA  30188

(770) 874-5500 Office

(678) 516-4046 Cell

kurt@npfkascpa.com

www.npfkascpa.com

Last Updated by Admin on 2011-03-02 21:31:13

Posted in General on Feb 15, 2011

Kurt A. Siegenthaler, CPA

IRS announces more savings bond options for your tax refund

Last year, you could use your tax refund to purchase U.S. Series I Savings Bonds in your name. This year, there are some new options for purchasing savings bonds with your income tax refund.

You can buy savings bonds for yourself and up to two other individuals. Form 8888 is used to designate the person or persons in whose name the bonds are to be issued. The savings bonds will then be mailed to those individuals.

Up to $5,000 in bonds can be purchased, and they must be bought in $50 increments. This year, you no longer need to use direct deposit for any remaining refund amount; you may request a paper check for the balance if you prefer.

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IRS raises nonprofit filing threshold

Tax-exempt organizations are required to file annual reports with the IRS. Those with gross receipts below a certain threshold amount can file an E-postcard rather than a longer version of Form 990. The IRS has just raised that threshold amount to $50,000, an increase over the previous filing threshold of $25,000. The deadline for nonprofit filings is the 15th day of the fifth month after their year-end. For calendar-year organizations, that filing deadline for 2010 reports is May 16, 2011.

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Choose the right filing status

While gathering information to complete your income tax return, you may give little thought to your filing status. But there's a reason "filing status" choices appear at the beginning of tax forms: They're important.

Why? Because filing status can impact exemptions, reportable income, deductions, credits, tax rates, liability, the type of form you file, and whether you need to file at all. In addition, some states require that you use the status reported on your federal return, which can affect the amount of state tax you pay.

Here are facts to consider when determining filing status.

1. Your status generally depends on whether you're married or single on the last day of your taxable year (typically December 31). In cases of divorce or separate maintenance decrees, the laws of your state determine whether you're considered married or single. Same-sex marriages are not recognized for federal income tax purposes.

2. As a married couple, you can choose joint or separate returns. When you file separately, you can change your mind later and amend your return to file jointly. However, you can't switch from joint status to married filing separately after the due date of the original return.

3. If you were widowed during the year and have not remarried, you have the option of filing jointly with your late spouse. When you're widowed and have dependent children, you can continue to use joint tax rates for two additional years following the year your spouse died.

4. Head of household status is intended for single taxpayers with dependent children. It may also be available when you're single and maintaining a separate household for a parent - including one living in a nursing home.

Questions about your filing status? Please contact us if you need more information.

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 It's time to pay back the first-time homebuyer credit

Did you buy your current home between April and December of 2008 and claim the then-new federal tax credit for first-time homebuyers?

If so, repayment of the credit begins this year, and the first installment is due with your 2010 tax return.

You might already have received a letter from the IRS summarizing how much you received and what amount you need to repay. Generally, your installments will be spread in equal amounts over the next fifteen years.

Example: Say you received the maximum credit of $7,500. Since $7,500 divided by 15 is $500, that's how much you'd add to your tax liability, beginning with your 2010 return.

In some cases - such as if you sell your home or convert it to a rental - you may have to pay back some or all of the credit before the end of the 15-year "recapture" period. The repayment is due in the tax year that the ownership or use of your home changes.

In other situations, including when you move due to military or certain other government service orders, your repayment could be reduced or eliminated.

Other exceptions may apply. Please call if you have questions about how the payback requirements affect you.

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Last Updated by Kurt Siegenthaler on 2011-02-15 22:01:30

Posted in General on Feb 01, 2011

Delayed tax returns can be filed starting February 14

Taxpayers who itemize deductions, claim the educator expense deduction, or claim a deduction for tuition and fees were told by the IRS not to file their 2010 returns until the IRS had reprogrammed its computers to handle these late-2010 changes.

The IRS has just announced the filing start date for these returns: February 14, 2011. On that date, the IRS will begin processing paper and e-filed returns claiming any of these deductions.

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 Who qualifies as your dependent? Here's the tax answer

Who depends on you? When the people counting on you for support are qualifying children or relatives, you may be eligible for a dependency exemption of $3,650 on your 2010 federal income tax return ($3,700 on 2011 returns).

Not sure who meets the definition? Consider these facts.

* Dependents cannot have dependents. The "dependent taxpayer" test prevents you from claiming a dependent when someone else claims you on their return. Put another way, you can only claim a dependent if you yourself are not one.

* The tax code gives a definition of a qualifying child. Generally, a qualifying child must not have filed a joint return. In addition, the child must be younger than you are.

* Divorced or separated parents need a signed release to claim an exemption. If you're a noncustodial parent who wants to claim a dependency deduction for your child in 2010, you must attach Form 8332 to your federal income tax return. As a general rule, copies of divorce decrees or separation agreements are no longer acceptable.

* Qualifying relatives can include family members who do not live with you. Do you support a parent in a nursing home or another state? You may be able to claim a dependency exemption as long as your loved one's gross income is less than $3,650 for 2010 ($3,700 for 2011), and you provide more than half the total support.

If other family members pitch in to help but no one individually furnishes more than half of your loved one's total support, you can still benefit. A "Multiple Support Declaration" (Form 2120) lets you decide who claims the exemption.

Contact us if you need more information.

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Don't overlook these deductions; they're available even if you don't itemize

You're probably familiar with the deduction choice you must make when you file your tax return. You either have enough deductions (such as mortgage interest, charitable contributions, and medical expenses) to itemize, or you take the standard deduction, a set amount that doesn't require you to list specific deductible items.

What you may not be as familiar with are those deductions that you are allowed to take "above the line"; that is, deductions that you can take in addition to your itemized deductions or the standard deduction.

Here's a quick rundown of above-the-line deductions you shouldn't overlook when you prepare your 2010 tax return.

* A deduction of up to $250 for classroom supplies purchased by teachers for use in their classrooms.

* A deduction of up to $5,000 for individual retirement account contributions if you're under age 50. If you're 50 or older, you can deduct up to $6,000.

* A deduction of up to $2,500 for interest paid on student loans.

* A deduction of up to $2,000 or $4,000 for college tuition and fees, depending on your income level.

* A deduction for the expenses connected with a job-related move.

* A deduction for 50% of the self-employment tax paid if you are self-employed.

* A deduction for alimony paid. (Note that child support is not deductible.)

* A deduction for contributions to health savings accounts.

Most of these deductions have qualification requirements or income limitations. Don't overlook above-the-line tax deductions. An added benefit: These deductions decrease your "adjusted gross income," an important number on your tax return. The lower your adjusted gross income, the more likely you are to qualify for credits and deductions subject to income thresholds. For details or assistance in finding all the deductions you're entitled to, give us a call.

Kurt A. Siegenthaler, CPA

3209 South Cherokee Lane

Suite 530

Woodstock, GA  30188

(770) 874-5500

www.npfkascpa.com

kurt@npfkascpa.com

Last Updated by Kurt Siegenthaler on 2011-02-01 17:18:30

Posted in General on Jan 19, 2011

You can still make charitable donations from your IRA 

The option to make a qualified charitable distribution from your Roth or traditional IRA is once again available for 2010 and 2011. And even though 2010 is officially over, you can take advantage of a special rule that treats a distribution taken in January 2011 as if you made it in 2010. 

Here's a refresher on how the IRA charitable distribution works. 

* You must be age 70½ or older at the time of the distribution. 

* The distribution can come from your traditional and Roth IRAs, but not from SEP or SIMPLE retirement plans. 

* The distribution must be made directly from your IRA to an eligible charity. Donor advised funds are not eligible recipients. 

* The distribution will count as part of your required minimum distribution. You can elect to have a distribution made in January 2011 applied to your 2010 RMD. 

* You can exclude the contribution from your taxable income, though you won't be able to take an itemized deduction for it. 

* The maximum amount you can exclude from income as a qualified charitable distribution is $100,000. When you're married filing jointly, the limit applies to each of you separately.

Please call if you're thinking of donating money from your IRA to charity. We'll be happy to help you make sure the transfer stays within the rules. 

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2011 tax numbers are adjusted for inflation

Adjusting numbers in the federal income tax code to account for inflation, known as indexing, is an annual event. Indexing affects deductions, exemptions, exclusions, tax brackets - and your tax planning.

Here are selected changes to keep in mind as you review tax strategies for 2011.

* Personal exemptions will increase by $50 to $3,700. You can subtract that amount from your adjusted gross income for yourself, your spouse, and any dependents. In addition, there is no phase-out or reduction in personal exemptions for 2011, no matter how much income you have.

* The basic standard deduction is $11,600 when you're married and file a joint return. If you're single or married filing separately, the standard deduction is $5,800. Additional standard deductions are available for age and/or blindness. Note: The extra standard deduction for real estate taxes is not available for 2011.

* The kiddie tax threshold for 2011 is $1,900. That's how much investment income your child under age 19 (under age 24 for students) can earn before the income is taxed at your highest rate.

* The traditional and Roth IRA contribution limit is $5,000. You can contribute an additional $1,000 if you'll be age 50 or older by the end of the year.

* The annual gift tax exclusion is $13,000 ($26,000 when you elect to split gifts with your spouse).

* Standard mileage rates go up slightly. You can deduct 51¢ for each mile you drive your car for business purposes. The per-mile rate for calculating a charitable deduction is 14¢, and medical and moving mileage is deductible at a rate of 19¢.

Many other items are subject to indexing. In addition, some important figures, such as the alternative minimum tax exemption, are adjusted by Congress. Please contact us for additional information.

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IRS eliminates paper coupons for tax deposits

In December 2010, the IRS announced new regulations that effective January 1, 2011, all Federal Tax Deposits must be made using the Electronic Federal Tax Payment System (EFTPS). 

The paper coupon system will no longer be available. However, taxpayers who owe minimal amounts may still send their payment along with their tax return. For example, a Form 941 filer that owes less than $2,500 can submit payment with the return or choose to use EFTPS. The minimal amount that permits payment with a return varies with the type of tax. Please contact our office if you need assistance.

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Last Updated by Admin on 2011-01-19 20:05:52

Posted in General on Jan 11, 2011

New reporting rules may apply to your stock sales

Effective this year, new reporting rules could make it easier for you to report the tax consequences of selling a stock. Thanks to a 2008 law, responsibility for establishing your "basis" is being shifted to brokers and other financial institutions. But don't discard your records just yet; the new rules are being phased in gradually and don't apply to any securities acquired before 2011.

Form 1099-B (Proceeds from Broker and Barter Exchange Transactions) will be expanded to include the cost or other basis of stock sold during 2011. The form must also report whether the gain or loss on the stock sale is short-term or long-term. The expanded Form 1099-B will be used to report calendar-year 2011 sales and must be filed with the IRS and furnished to investors in early 2012.

The new reporting rules were passed by Congress not only to make it easier for investors to calculate capital gains taxes, but also to make it harder for investors to underreport capital gains.

For details or assistance with the new reporting rules, contact our office.

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New law includes a payroll tax cut

There's a new tax break this year, and you'll want to update your budget to accommodate it. The compromise tax legislation passed in December included a payroll tax cut for 2011.

* How it works when you're an employee: Your employer will deduct less social security tax from your wages during 2011. Prior to the change, your employer was required to withhold social security tax from your paycheck at a rate of 6.2% of the first $106,800 of your wages. That rate was reduced to 4.2% for 2011, meaning your take-home pay will go up - with no impact on your eventual social security benefits and no payback required.

The Medicare tax rate remains unchanged at 1.45%, which your employer will continue to deduct from your check.

* How it works when you're self-employed: You'll pay less self-employment tax. In the past, you calculated self-employment tax using a 12.4% rate for the social security portion. For 2011, the rate you'll use is 10.4%. Your income tax deduction - that is, the amount of self-employment tax you subtract from ordinary income - will not be affected.

* How it works when you're an employer: The reduced rate only applies to the social security tax you deduct from employee wages in 2011. To calculate your expense, you'll continue to use the 6.2% rate for social security tax, plus Medicare tax of 1.45%, for a total of 7.65%.

You have until January 31 to implement the change, and until March 31 to refund any overwithheld social security tax to employees.

Please contact us if you have any questions.

Kurt A. Siegenthaler, CPA

770-874-5500

kurt@npfkascpa.com

Last Updated by Kurt Siegenthaler on 2011-01-11 21:39:37

Posted in General on Jan 05, 2011

Last Updated by Admin on 2011-01-05 22:38:32

Posted in General on Jan 04, 2011

After weeks of wrangling over the details, both the Senate and the House passed a bill that will extend the tax rates in effect in 2010 for another two years, through December 31, 2012. President Obama signed the "2010 Tax Relief Act" into law on December 17, 2010.

Here's an overview of the key provisions in the law.

* Tax rates. The existing tax rates established in the 2001 and 2003 tax laws will continue for all taxpayers through 2012. This means the top tax rate for 2011 and 2012 will remain at 35% instead of reverting to 39.6% as it would have done had the "2010 Tax Relief Act" not passed.

* Capital gains and dividends. The top rate for long-term capital gains will remain at 15% for taxpayers in all but the two lowest ordinary income brackets; those taxpayers will continue to have a 0% rate on capital gains. Dividends will continue to be taxed at the 15% and 0% rates instead of reverting to ordinary income rates as high as 39.6%.

* Itemized deductions and personal exemptions. Higher-income taxpayers will not have their itemized deductions limited and their personal exemptions phased out.

* Education tax breaks. The law extends the American Opportunity Tax Credit through 2012. The income exclusion for up to $5,250 of employer-provided education assistance to employees is continued for two years. The higher contribution limit of $2,000 and other enhancements to Coverdell Education Savings Accounts were extended for two years.

* Alternative minimum tax (AMT). The AMT was given another "patch" for 2010 and 2011, a move that will keep the tax from hitting millions more taxpayers. For 2010, the exemption amount is $47,450 for individuals and $72,450 for married couples filing joint returns. For 2011, the exemption is $48,450 for singles and $74,450 for couples. Without this adjustment, the exemption amounts for 2010 and 2011 would have been $33,750 for singles and $45,000 for couples.

* Payroll tax. A new tax break is created for workers who pay social security taxes. For 2011, the employee rate for social security tax is cut from 6.2% to 4.2% on wages up to $106,800. Self-employed individuals will pay 10.4% on self-employment income up to $106,800. Employers will continue to pay 6.2% on employee wages. This payroll tax rate cut does not affect the Medicare portion of payroll taxes for either employees or employers.

* Extenders. Tax breaks that have come to be called "extenders" because they're typically extended retroactively every year, but just for a year, are again extended by the new law.

Effective for 2010 and 2011 returns, taxpayers have the option of deducting state and local sales taxes instead of state and local income taxes. The deduction for up to $4,000 of higher education expenses and the deduction for teachers who buy classroom supplies are extended. Those age 70½ or older may again contribute up to $100,000 tax-free from an IRA to charity. Note that the deduction for real estate taxes paid by nonitemizers was not extended.

* Business provisions. The law extends the research tax credit for 2010 and 2011, and it extends the work opportunity tax credit through 2011. Bonus depreciation is increased from 50% to 100% for qualified business purchases made from September 9, 2010, through December 31, 2011. 50% bonus depreciation will be available in 2012.

* Estate tax. The estate tax was perhaps the most contentious issue in the law, and it came close to unraveling the deal. The compromise that was agreed upon restores the estate tax retroactive to January 1, 2010, and continues it through December 31, 2012. It establishes a top rate of 35% and an exclusion amount of $5 million ($10 million for married couples). Estates of persons who died in 2010 have the option of applying the estate tax and receiving a step-up in basis on property passing to heirs or having no estate tax but using a carryover of the decedent's basis in property.

The "Tax Relief Act of 2010" also provides an additional 13 months of benefits to the unemployed.

Most of the provisions in the new law will probably go unnoticed by the majority of taxpayers since the law basically keeps things as they were for another two years. However, there are several significant changes that are likely to affect you or your business. For more information and planning guidance as you begin sorting out your tax situation for 2011, contact our office.

Last Updated by Admin on 2011-01-04 13:03:22

Posted in General on Jan 03, 2011

ü      If IRS Form  tax equals more than $2500 in a quarter, you must pay online at eftps.gov

ü      You can no longer use IRS Form 8109 coupon at the bank to make a deposit. You must pay ONLINE

ü      Georgia Department of Revenue ? Sales and Use Tax ? if any single monthly return is greater than $500, you must pay online at gataxinfo.org

ü    nbsp;  Georgia Department of Revenue ? GA Withholding ? if any single monthly return is greater than $500, you must pay online at gataxinfo.org

As your tax/accounting partner we strongly recommend that everyone set up an online account at eftps.gov and gataxinfo.org. We have never had an issue with security or identity theft that and we feel that both of these sites are very secure. If you need any help setting up an online account with Georgia Department of Revenue or EFTPS.gov, please contact us and we will gladly assist you.

Additionally, we want to also remind our clients that are required to file a personal property tax return to,please let us know if you sold or disposed of an asset that may have been on a previous year's returns. You are required to file a personal property tax return in the county you do business for any assets that the business owns, not including registered vehicles, boats and trailers.  Many counties have cross-checked business license holders with property tax returns, so these returns must be filed, especially if the county sends you a form or if you have filed in the past

Contact us at kurt@npfkascpa.com with any questions.

Last Updated by Admin on 2011-01-03 18:15:08