Social Security Tax Withholding Stays The Same for 2010

Kristie S. Galati, Accounting Services Manager 

With all the talk about rising rates and changing brackets, it is important to note that for 2010, the maximum wage base for social security tax will be unchanged. Here are some important facts and figures to take into consideration when planning for your 2010 taxes: 

The Social Security tax wage base for employees will remain at $106,800.00.  The combined Social Security and Medicare Hospital Insurance tax rate of 7.65% will still apply. The additional Medicare Hospital Insurance tax will apply on all wages in excess of $106,800.00 and will be imposed at a rate of 1.45%.  The same rates will apply for employers. 

The earnings base for self-employment tax will also remain at $106,800.00 with an effective rate of 15.3%.  The additional Medicare Hospital Insurance tax will apply on all self-employment income in excess of $106,800.00 at an effective rate of 2.9% in 2010.  No tax is payable if annual net earnings are less than $400.00.  Read more

Missouri Minimum Wage Stays Steady for 2010; Illinois on the Rise

Kristie S. Galati, Accounting Services Manager 

What’s the minimum wage and exactly who does it apply to?

The Missouri minimum wage will remain at $7.25 per hour which was effective July 24, 2009.  The Illinois minimum wage will remain at $8.00 per hour through June 30, 2010, then increase to $8.25 per hour effective July 1, 2010.  Employees under the age of 20 can continue to be paid $4.25 per hour during their first 90 consecutive calendar days of employment with an employer.  Employers of “tipped employees” must comply with minimum wage laws, but can claim a tip credit against their minimum wage obligation.

Purchased A New Vehicle Before Year-end?

Brent Robbs, Tax Associate

If you like so many Americans, rushed to car dealers to take advantage of the year end deals, you may be in luck to take advantage of some tax savings, too. Be sure to tell your tax advisor about your purchase so you can claim the 50% bonus depreciation and Section 179 deductions for luxury autos, light pickups and vans, and “heavy” SUVs, pickups, and vans.

2009 depreciation rules increase the first year depreciation deduction ordinarily allowed on luxury autos and light pickups and vans by $8,000.  The catch is that these vehicles must have been purchased new, not used, and placed in service before January 1, 2010.  So, hopefully you didn’t wait because rules are changed for 2010. 

The IRS defines a vehicle as a “heavy” SUV if it weighs between 6,000 and 14,000 pounds.  By making a Section 179 election on these purchases, taxpayers can deduct $25,000 per vehicle in 2009 (limited to $250,000 total). This election is available when purchasing new or used vehicles, but cannot be applied to the portion of the vehicle paid for by trade-in and depreciation must be recaptured from previous years if business use falls under 50% at any point. 

If you purchased a new or used luxury auto, light pickup or van, or “heavy” SUV, pickup, or van prior to the year-end, for business or personal use, most, if not all, of the vehicle’s cost should be able to be written off on your 2009 tax return.

Tips to Save Tax Dollars Before the “Sunset”

Brian M. McCook, CPA 

The past year has had several tax bills that will impact your 2009 tax return(s).  Additionally, there are many tax provisions that are set to expire and “sunset” back to previous tax limits and standards.  The following are a few of the tips to consider before filing in 2009: 

• Self-employed Pensions (SEP) - If you are considered self-employed, you can establish and contribute to a SEP retirement plan. This plan must be established and funded by the due date of your tax return, including extensions. For tax year 2009, you can possibly contribute up to $49,000 (and even more if you are age 50 or older).  
• Section 179 Expensing - Businesses should consider this option which allows the entire cost of the asset to be expensed in the year of purchase rather than capitalizing and claiming deductions over a period of future years. For 2009 a maximum election of $250,000 can be made as long as all qualifying conditions are satisfied. 
• Bonus Depreciation - Businesses should consider claiming bonus depreciation on assets purchased during 2009. This election allows you to write-off 50% of the cost of the asset rather than capitalizing and claiming deductions over a period of future years. This is an alternative to not claiming the section 179 election (see above). 
• Energy Tax Credits - If you are a homeowner and made energy saving improvements to the residence, you are eligible for a tax credit. Some common examples include extra insulation or energy saving windows. This credit is limited to $1,500.  
• Roth IRA Conversion - In 2010, the opportunity to contribute and covert any IRA into a Roth IRA without the $100,000 income restriction is available. The tax triggered can potentially be paid in tax years 2011 and 2012.  

These are just a few of the tax opportunities available to you and your business for the upcoming tax filing system.  Please give us a call if you would like to discuss any of these “tips” and their applicability to your situation.

Making the Jump to the Real World

Brent Robbs, Tax Associate

I’ve spent the first 20 plus years of my life going to school.  From Edwardsville High School to the University of Illinois and on October 19^th, 2009, everything changed and I officially entered the “real world” starting as a Tax Associate at AMD.  No more class and no more exams, but still lots of learning.  Here are some thoughts about my first 90 days as an accountant.

My first day at AMD I found out I had plenty of learning to do.  Employee names, office layout, firm policies, procedures, software, and so much more.  I didn’t learn any of this in college.  What now? 

Orientation helped quite a bit.  It definitely kept me busy.  In and out of meetings all day learning about different firm departments and software, meeting employees, and trying to find my way around the office.   After two weeks of orientation it was still easy to see I didn’t know near enough.

After orientation came the case write-up and some billable work, but mostly just miscellaneous non-chargeable work.  The write-up project definitely helped me learn the software and with each project I’m given I learn more and more.  November was a tough month to get through. 

With December came projections and BNA, which means more chargeable work, but at what cost?  I know I will understand that program some day.  Now my first busy season is rapidly approaching. Long hours, number crunching, lots of directions and all I can do is wonder, what will I learn next?

It’s Summertime Somewhere: Policies Help with Vacation Woes

Kris L. Pearce, CPA

It may be snowing outside but everyone is thinking ahead to summertime and that coveted vacation time.  I know I’m ready! 

For many businesses, professional services firms, physician offices and not-for-profits, this can create issues when several staff members want to take vacations at the same time.  By taking a few simple steps, many of these problems can be alleviated.

First and foremost, institute a standardized policy that describes the steps to take when requesting vacation.  Make sure the policy is specific such as “request must be received at least two week in advance”.  It can also state that requests are honored on a first come first serve basis.

If requests are received that don’t follow the stated policy, it is important to decide how to handle them.  If you do decide to override the written policy, be aware of the consequences this will have on other employees.  In essence, you are setting the expectation.

Another item that can be used to alleviate problems is a calendar in the employee lounge or other accessible area.  Post on this calendar all vacation days once they have been approved.  Employees will already know if they will be able to take off certain days before they fill out a request form. 

The easiest way to avoid pitfalls with vacation scheduling is to have a published policy that is followed on a consistent basis.  Make sure the policy is stated clearly in the employee manual.  Most importantly, communicate the policy to all members of the practice so the expectation is set.  After all this work, you deserve a vacation!

Hidden Assets in Divorce

Thomas E. Hilton, MS, CPA/ABV/CFF, ASA, CVA

There are a number of ways that one spouse may try to undervalue or hide assets from another spouse during a divorce, such as: 

• Collusion with an employer to delay the payment of bonuses, commissions, stock options, or annual raises to salary;
• Failure to disclose retirement accounts;
• Undervaluing personal items, such as artwork, antiques, collections (coins, guns, sports memorabilia, etc…), and hobby equipment;
• Opening custodial accounts in the name of a child;
• Moving assets to an offshore account,
• Skimming cash from a business and/or other unreported income, and
• Placing assets in a safe deposit box.

In order to locate these assets, it is usually necessary to hire a forensic accountant who can gather and review evidence and present his or her findings to the court. Contact me today for more information, 314.655.5500.

So Many States. So Little Time.

Katie M. King, CPA

Gone are the days when companies conducted business only in their home state.  Doing business in multiple states is a common occurrence today. So, it is important to keep in mind that doing business in more than one state will more than likely trigger tax consequences for each of those states. 

There are three factors that can trigger multi-state tax consequences: 

• 1) You hold property in that state,
• 2) You have employees in that state, or
• 3) You make or approve sales in that state 

The rules are different for each state. Anytime you have one of these three situations arise in a new state, it is important for you to keep your Tax Advisor informed.  This will help them ensure you are meeting the filing requirement of each state, which could include registering the business with the state as well as various tax obligations including: 

• Income
• Sales and Use Tax
• Payroll Tax 

As important as it is to keep up on new states you may be required to file in, it is also important to keep an eye on states you may no longer need to file in.  If the property you have previously held in a state has been sold or moved, or has become obsolete, you may no longer be required to file in that state.  The same is true if you no longer have employees or sales in that state.  This is an important point because some states have minimum amounts due, so even if you aren’t reporting any income, you could still be paying simply because you filed in that state. And you definitely don’t want that!

Billing Service or Billing In-House?

Jerrie K. Weith, FHFMA, Director of Health Care Services

In any business, including medical practices, the billing for services provided can be performed by employees in-house or can be outsourced to external experts.  Each alternative has its own pros and cons.  A primary upside to a billing service is that the service has experts who do nothing but manage and process accounts receivable.  A major downside is the loss of daily control over how the accounts are managed.  To decide which way you should go, consider these ideas: 

Billing Service

• Agreement is on a contingency basis - a percentage of the net collections to your A/R (collections less refunds). The net collections are all collections, including those you collect in your office.
• There may also be “user” fees that allow your employees to access the system the billing company uses. Some billing services also pass through the clearinghouse fees to the practices they serve.
• You don’t worry about staffing. When someone is on vacation at the billing service, your accounts should still be worked.
• Experts are handling your accounts. The staff is specifically trained in billing, claims filing, posting, account follow-up, payer requirements.
• There is little practice investment required. All of the software and hardware is owned by the billing service and it’s their responsibility to maintain it.
• While you won’t have daily responsibility for your A/R, you are still responsible as the practice owner to monitor the results as if your own staff were performing the tasks. Work with your billing service to develop a useful dashboard that helps you check results at-a-glance. 

In-House Read more