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Posted in General on Jan 04, 2011

Just 14 days before the Bush tax cuts were due to expire, President Obama signed the $859 billion tax-cut-and-stimulus package that cleared the House the day before and the Senate earlier in the week. The law includes provisions to:   

• extend the current tax law on income, capital gains and dividends for two years (until 2012)
• reinstate and extend a number of business tax breaks for one year (through 2011), including real estate-backed provisions to provide for 15-year depreciation of leasehold improvements
• provide immediate expensing of 100 percent of the costs of business assets whose depreciable life is less than 20 years (eligible assets include leasehold improvements); the provision applies to businesses of all sizes and to costs incurred after Sept. 8, 2010 and through Dec. 31, 2011
• reduce Social Security payroll taxes by 2 percent for workers in 2011
• protect millions of Americans from getting hit by the alternative minimum tax (AMT)
• extend unemployment benefits for one year  

The provision I find particularly interesting is the 2% reduction in the withholding of social security taxes from employee payrolls from 6.2% down to 4.2%.  Employers are still required to ?match? at the previous rate of 6.2%.  Theoretically, this 2% tax break  increases the net take-home pay for most workers, thereby stimulating the economy.  However, I have heard some talk about this particular incentive stimulating employers to reduce their already-pared payrolls down by another 2%, in fact intercepting the benefits of the provision.  From the perspective of the working class, this strategy may seem as if their stimulus rug is being pulled out from under them.  However, if one looks at the bigger picture, this strategy actually increases overall economic benefits of the provision. Here's how it works.  The employee takes a 2% pay cut, but because of the 2% reduction in their withholding, their net pay remains unchanged.  On the other side, the employer realizes not only the 2% salary and wage cost reduction, but also a reduction in the employer's social security ?match? as well as savings on both general liability and workers comp premiums.  The net effect is a magnification of stimulus impact on the corporate level.  The employer, who may have been considering closing his doors, may now be able to stay afloat, avoid further layoffs, or even be able to afford new hires. What your thoughts?

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Last Updated by Cyndi Peters on 2011-01-05 15:38:06

Posted in General on Dec 13, 2010

Wow! I can't believe that 2010 is so close to coming to an end.  With the holidays quickly approaching, now is the perfect time to gather your tax information and prepare for your upcoming tax appointment. You can conveniently upload your files to our secure electronic safe deposit box at http://www.cmpfinancial.net/Client-Accounts.  Contact us and we will set up your account. Below I have provided two checklists: one for your business and one for your individual tax returns. Feel free to share them with friends and colleagues.

BUSINESS CHECKLIST

• 12/31/2010 statements and reconciliation reports for all bank accounts, lines of credit, credit cards and long term loans
• Any credit card statements with closing dates in January in which there are December charges and or payments
• Need a backup (portable backup ok) of the QuickBooks Data File
• Need documents for the acquisition or disposal of any equipment, vehicles or other assets
• 12/31/2010 Physical inventory count and value
• Signed Engagement Agreement

PERSONAL CHECKLIST

• Personal Information:
  • Legal name
  • Address
  • Phone number
• Income Information
  • W-2 for wage earners
  • 1099-INT             Interest Income
  • 1099-DIV             Dividend Income
  • 1099-B  Proceeds from sale of stocks, bonds, etc.
  • 1099-G  State refunds or Unemployment Compensation
  • 1099-R  IRA or retirement plan payment
  • SSA-1099            Social Security Benefits
  • Schedule K-1       Investment in partnership or S-Corp
  • Alimony received (not child support)
  • Business Income (may be reported on 1099-Misc.)
• Principal Residence Information    
  • Form 1098           Mortgage interest and points paid
  • Form 1099-S       Proceeds from Real Estate Transaction
  • Real Estate Taxes
• Additional Deductible Expenses
  • Child care expenses include payee information and amount paid
  • Unreimbursed job-related expenses or job-hunting expenses
  • Job-related moving expenses
  • Higher education expenses
  • Gifts to Charity
  • Adoption Expenses
  • Gifts to Charity
  • Alimony paid (not child support)
  • Estimated tax payments
  • Rental Real Estate Information
  • Refer to Schedule E, Supplemental Income & Loss  http://www.irs.gov/pub/irs-pdf/f1040se.pdf

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Last Updated by Admin on 2010-12-13 17:31:13