Graffin Associates, P.C.

IRS Releases 2012 Tax Numbers

admin — Mon, 06 Feb 2012 20:51:21 +0000

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2012 tax planning.

* STANDARD MILEAGE RATE for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.

* SECTION 179 maximum deduction decreases to $139,000, with a phase-out threshold of $560,000.

* TRANSPORTATION FRINGE BENEFIT limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking.

* SOCIAL SECURITY taxable wage limit increases to $110,100. Retirees under full retirement age can earn up to $14,640 without losing benefits.

* KIDDIE TAX threshold remains at $1,900 and applies up to age 19 (up to age 24 for full-time students).

* NANNY TAX threshold increases to $1,800.

* HSA CONTRIBUTION limit increases to $3,100 for individuals and to $6,250 for families. An additional $1,000 may be contributed by those 55 or older.

* 401(k) maximum salary deferral increases to $17,000 ($22,500 for 50 and older).

* SIMPLE maximum salary deferral remains at $11,500 ($14,000 for 50 and older).

* IRA contribution limit remains at $5,000 ($6,000 for 50 and older).

* ESTATE TAX top rate remains at 35%, and the exemption amount increases to $5,120,000.

* The ANNUAL GIFT TAX EXCLUSION remains at $13,000.

* ADOPTION TAX CREDIT decreases to $12,650 for adoption of an eligible child.

New Mandatory NLRA Posters

admin — Thu, 19 Jan 2012 21:00:03 +0000

*Deadline Extended to April 30, 2012

Effective April 30, 2012, a new MANDATORY notice must be posted by all employers covering an employee’s rights under the National Labor Relations Act.

Due to the size of the new poster, you are no longer able to have a combined Federal and State poster. Keep in mind, you can always download ALL of the required postings from each government agency which requires the poster, however we have found that purchasing a combined poster from a reliable source provides you the assurance that you have all the posters necessary to be in full compliance.

We have no affiliation with the following company but have found them to be the most cost effective source of employment posters – both Federal and State. You should be sure to purchase a NEW Federal Combination Poster with 2012 NLRA content as well as a relevant State poster for each of your physical locations.

All in One Posters Federal with NLRA

All in One Posters – PA State

Withholding requirement for government contractors repealed

admin — Thu, 19 Jan 2012 18:42:56 +0000

A law enacted in 2005 was to have required the Federal government and the government of every state, political subdivision of a state, and instrumentality of a state or state subdivision (including multi-state agencies) making certain payments to a person providing any property or services (e.g., payments to a government contractor) to deduct and withhold 3% from that payment. Although the withholding requirement was originally set to apply to payments made after 2010, it was subsequently deferred to apply to payments made after 2012. A law enacted in November 2011 repealed the government contractor withholding requirement.

New rules for deducting or capitalizing tangible property costs

admin — Thu, 19 Jan 2012 18:38:13 +0000

The IRS has issued new regulations for determining whether amounts paid to acquire, produce, or improve tangible property may be currently deducted as business expenses or must be capitalized. The regulations will affect virtually all taxpayers that acquire, produce, or improve tangible property. They are comprehensive, voluminous and virtually rewrite the rules in this area. For example, they provide detailed definitions of “materials and supplies” and “rotable and temporary spare parts” and prescribe new rules and elective de minimis and optional methods for handling their cost. They also have rules for differentiating between deductible repairs and capitalizable improvements, among many other items. The regulations generally are effective in tax years beginning after Dec. 31, 2011. However, to add to their complexity, some of the new rules in the regulations do not supersede prior IRS guidance.

Payroll Tax Cut Extended For Two Months

admin — Thu, 19 Jan 2012 18:37:02 +0000

After weeks of partisan bickering, Congress finally approved a two-month extension of the payroll tax cut for American workers. President Obama signed the “Temporary Payroll Tax Cut Continuation Act” on December 23, 2011. Though both Democrats and Republicans wanted a one-year extension of the tax cut, they could not agree on how to pay for a year-long extension and settled on a paid-for two-month extension.

The new law extends the 4.2% social security tax on wages through February 29, 2012. Without this extension, the employee tax rate would have gone to 6.2% on the first $110,100 of wages earned in 2012.

The law also extends benefits for the long-term unemployed for two months and prevents a scheduled cut in fees paid to Medicare providers from taking effect January 1, 2012.

These extensions will be paid for by an increase in fees charged by government-backed mortgage companies (Fannie Mae and Freddie Mac) for new home loans.

Included in the agreement is a requirement that President Obama make a decision within 60 days on the construction of the 1,700 mile Keystone oil pipeline.

Finally, the law calls for a House-Senate conference committee to negotiate an agreement that would extend the payroll tax cut through the end of 2012, extend unemployment benefits, and prevent cuts in payments to Medicare doctors.

If you have any questions on this extension or have general questions about your taxes, please don’t hesitate to contact us!

Credit for hiring veterans extended and enhanced

admin — Thu, 19 Jan 2012 18:36:41 +0000

A law enacted last November extended and enhanced a credit for hiring qualified veterans. Before the law was passed, the credit would have been available only if the qualified veteran were hired before Jan. 1, 2012, and only certain veterans were considered qualified veterans. The new law extends the credit for hiring qualified veterans, adds two new classes of veterans who are considered qualified veterans, increases the credit for hiring certain qualified veterans, “fast-tracks” the process for certifying that an individual is a qualified veteran, and provides tax-exempt employers with a credit against payroll tax for hiring qualified veterans. The credit amount varies depending on a number of factors. It can be as high as $9,600 for hiring a qualified disabled veteran. For an employer to qualify for the credit, the qualified veteran must begin work for the employer before Jan. 1, 2013 and other requirements must be met.

New foreign asset reporting guidance and form

admin — Thu, 19 Jan 2012 18:31:27 +0000

The IRS issued detailed guidance on the new law requiring individuals with an interest in a “specified foreign financial asset” during the tax year to attach a disclosure statement to their income tax return for any year in which the aggregate value of all such assets is greater than $50,000 (or a dollar amount higher than $50,000 as the IRS may prescribe). In addition, the IRS issued Form 8938 (Statement of Specified Foreign Financial Assets), which individual taxpayers will use starting in the 2012 tax filing season to report specified foreign financial assets for tax year 2011. The guidance consists of detailed temporary regulations. They define terms that apply for purposes of the reporting requirement; provide rules to determine if a specified individual must file a Form 8938 with their annual return; define what are specified foreign financial assets; detail what information needs to be reported; provide guidelines for valuing specified foreign financial assets; list exceptions to the reporting requirements; and describe the penalties that apply for failure to comply with the reporting requirements.

Payroll tax cut temporarily extended

admin — Thu, 19 Jan 2012 18:28:12 +0000

The Temporary Payroll Tax Cut Continuation Act of 2011 was enacted late last year. It temporarily extends the two percentage point payroll tax cut for employees, continuing the reduction of their Social Security tax withholding rate from 6.2% to 4.2% of wages paid through Feb. 29, 2012. Shortly after its passage, the IRS instructed employers to implement the new payroll tax rate as soon as possible in 2012 but not later than Jan. 31, 2012. The law also includes a “recapture” provision, which applies only to those employees who receive more than $18,350 in wages during the two-month period (i.e., two-twelfths of the 2012 wage base of $110,100). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2% of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100). In addition, under the new law, the social security tax rate for a self-employed individual remains at 10.4%, for self-employment income of up to $18,350 (reduced by wages subject to the lower rate for 2012). Congress is going to try to negotiate a deal to extend the payroll tax cut for all of 2012. If a deal is struck to extend it for the full year, the recapture provision for employees would not apply.

Business Standard Mileage Rate is Unchanged for 2012

admin — Wed, 21 Dec 2011 21:46:00 +0000

IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) will remain at 55.5¢ per mile for business travel after 2011-that is, unchanged from the July 1, 2011 mid-year adjustment. This rate can also be used by employers to reimburse tax-free under an accountable plan employees who supply their own autos for business use, and to value personal use of certain low-cost employer-provided vehicles. The rate for using a car to get medical care or in connection with a move that qualifies for the moving expense will decrease by .5¢ from the July 1, 2011 mid-year adjustment to 23¢ per mile.

Feel free to contact us with any questions!

Feeling Charitable? Review the Tax Rules

admin — Wed, 21 Dec 2011 21:44:47 +0000

As the holidays approach, you’re probably going to give a little extra to your favorite charity. If you itemize
deductions, your kindness may bring you an extra reward in the form of a tax deduction.

Here’s a short list of tax reminders for this year’s charitable deductions:

* Make sure the organization qualifies for a deduction. Remember that contributions to civic groups, unions, chambers of commerce, and political candidates usually don’t qualify. If in doubt, check IRS Publication 78 which lists all qualified organizations. It’s available online or at many libraries.

* The law has strict recordkeeping requirements for deducting charitable contributions. For cash contributions under $250, you must have a bank record such as a cancelled check, credit card record, or receipt from the charity. For donations of $250 or more, a receipt from the charity must be obtained before filing your return.

* If you donate property, make sure you claim a realistic value. Used clothing and household items donated to charity must be “in good condition or better.” A written receipt from the charity is necessary for a deduction. You’ll need an independent appraisal for any donated item valued above $5,000.

* Don’t forget to deduct your mileage and other out-of-pocket expenses for charitable work. Track your mileage and claim 14 cents a mile in 2011.

If you have any questions concerning your charitable donations, contact our office.