G.R. Reid Associates, LLP
631.425.1800
Standard Mileage Rates for 2012
The IRS recently released standard mileage rates for use in 2012 (Notice 2012-1). Taxpayers can use the optional standard mileage rates to calculate the deductible costs of operating an automobile. For business use of an automobile remains at 55½ cents per mile. For medical or moving expenses, it is 23 cents per mile (a half-cent decrease from the second half of 2011). For services to charitable organizations, the rate (which is set by statute) is 14 cents per mile.
Rather than using the standard mileage rates, taxpayers may instead use their actual costs if they maintain adequate records and can substantiate their expenses. The rules for substantiating these amounts appear in Rev. Proc. 2010-51. For automobiles a taxpayer uses for business purposes, the portion of the business standard mileage rate treated as depreciation is 23 cents per mile for 2012 (it was 22 cents per mile for 2011).
Tuesday, December 20, 2011
Health Benefit Services News
: : Julie Seiden, Managing Director,
Health Benefits Services |
Health Benefits Services |
631.923.1595 ext. 310
G.R. Reid Healthcare & Benefit Services, LLC2012 HSA & FSA Changes to Know About
Health savings accounts and flexible spending accounts are growing in popularity. Many people aren't aware of the changes that take place in these plans from year to year. It's important to discuss account details with an agent each year to be fully aware of the current rules or upcoming changes.
Flexible Spending Accounts
These accounts are sometimes called flexible spending arrangements. They are tax-advantaged accounts that let employees automatically deposit a specific amount of each paycheck into them. After funds accumulate, they can be used to pay for qualified medical expenses. These accounts are different from HSAs and HRAs in the respect that they are usually offered with traditional medical plans. They also differ from HSAs in the respect that the unused funds in the account may not be carried over to the next year. Debit cards or forms are used to access funds from the account if money is needed. Flexible spending accounts allow account holders to contribute to the FSA for any costs that aren't covered by insurance. Some examples of such expenses include coinsurance, copay amounts and deductibles. If a health insurance won't cover a treatment or related health expense, FSA funds can be used to pay for it. The specified limits saw some changes from 2011 to 2012.
Contribution Limits
It was decided that 2012 would be the last year for no limits on FSA contributions. While there may not be limits in place, plans must specify a maximum percentage of compensation to be contributed to the FSA or a maximum dollar amount. The changes from 2010 to 2011 included over-the-counter medicines being eliminated from coverage if they weren't prescribed by a doctor. The year 2013 will likely see one of the biggest changes: FSA contribution limits of $2,500 annually with yearly inflation increases.
Health Savings Accounts
HSAs are medical savings accounts that also have tax advantages. Taxpayers who are enrolled in HSA-qualified health plans with high deductibles are able to obtain them. At the time of deposit, the funds contributed to these accounts are not subject to federal income tax. Any unused funds that remain in the account at the end of the year are carried over to the next year and added to further contribution amounts. Since contribution also change with these plans each year, it's important to be aware of the changes. The changes from 2011 to 2012 include an increase in out-of-pocket HDHP maximums and HSA contribution limits. However, there are no changes with the HDHP required minimum deductibles.
HSA Contribution Limits
Family: $6,250
Individual: $3,100
Catch-Up Contributions: $1,000
The individual amount of $3,100 reflects an increase of $50 from 2011s limit.
The $6,250 limit for families is an increase of $100 from 2011.
Catch-up contribution limits, which are for people over the age of 55, remain the same between 2011 and 2012.
HDHP Minimum Required Deductibles
Self: $1,200
Family: $2,400
HDHP Out-Of-Pocket Maximum - Family: $12,100
HDHP Out-Of-Pocket Maximum - Self: $6,050
The HDHP limit increased by $100 between 2011 and 2012 for singles and by $200 for families.
Another change between 2011 and 2012 is eligibility of over-the-counter medicines. Insulin is the only OTC medicine approved for reimbursement in 2012 under a health FSA, HSA or HRA without a prescription. In addition to this, it was decided that the penalty of 10 percent for ineligible expenses paid for using HSA funds would increase to 20 percent in 2012.
Tuesday, December 13, 2011
Accounting & Tax News
Tax Breaks Soon To Expire
:: Jonathan Cohen, CPA, Partner
631.425.1800 ext. 308
G.R. Reid Associates, LLP
Business owners currently face many uncertainties regarding present and future economic conditions. While certain soon-to-expire tax provisions may be extended for another year or so in an effort to kick start the economy, there is no guarantee that will be the case. Prudent business planning entails taking advantage of any available tax breaks while they are still "on the table." Following are some of the major business tax breaks that are slated to expire December 31, 2011.
100% Bonus Depreciation
Generally, a 100% bonus depreciation allowance may be claimed for qualified property acquired and placed in service after September 8, 2010, and before January 1, 2012. For qualified property acquired and placed in service in 2012, a 50% bonus depreciation allowance is generally scheduled to apply.
Section 179 Expensing Allowance
For 2011, the maximum allowable amount of a qualifying asset purchase that may be expensed in full by a business is $500,000. (This amount is scheduled to be reduced to $125,000 after 2011). The maximum annual expensing amount for 2011 is reduced dollar for dollar by the amount of qualifying property placed in service in excess of $2,000,000 ($500,000 for 2012). For 2011, up to $250,000 of qualified real property (that is, qualified leasehold-improvement, restaurant, or retail-improvement property) may be expensed under IRC Sec. 179.
Note that the bonus depreciation and section 179 expensing rules together offer significant tax-planning opportunities for business taxpayers.
Research Tax Credit
Generally, this credit applies to amounts paid or accrued before January 1, 2012, and is equal to 20% of the excess of qualified research expenses for the tax year over a base amount.
Work Opportunity Tax Credit
Employers who hire individuals from certain targeted groups are allowed to claim a credit against income tax in an amount equal to a percentage of first-year wages of up to $6,000 per employee ($12,000 for qualified veterans). Generally, the percentage of qualifying wages is 40% of qualifying first year wages (25% for employees who have completed at least 120 hours of service, but less than 400 hours of service for the employer).
Differential Wage Payment Credit
Eligible small business employers who pay differential pay may claim a credit equal to 20% of up to $20,000 of differential pay made to an employee during the tax year. Differential pay is generally defined as payments made to employees for periods during which they are called to active service in the U.S. uniformed services for more than 30 days. Such payments represent all or part of the wages that they would have otherwise received from the employer. An eligible small business employer is one who, on average, employs fewer than 50 employees and provides eligible differential wage payments to each of its qualified employees under a written plan.
Charitable Contribution Deductions
Through December 31, 2011, a regular "C" corporation's so-called enhanced charitable contribution deduction is equal to the lesser of:
:: Jonathan Cohen, CPA, Partner
631.425.1800 ext. 308
G.R. Reid Associates, LLP
Business owners currently face many uncertainties regarding present and future economic conditions. While certain soon-to-expire tax provisions may be extended for another year or so in an effort to kick start the economy, there is no guarantee that will be the case. Prudent business planning entails taking advantage of any available tax breaks while they are still "on the table." Following are some of the major business tax breaks that are slated to expire December 31, 2011.
100% Bonus Depreciation
Generally, a 100% bonus depreciation allowance may be claimed for qualified property acquired and placed in service after September 8, 2010, and before January 1, 2012. For qualified property acquired and placed in service in 2012, a 50% bonus depreciation allowance is generally scheduled to apply.
Section 179 Expensing Allowance
For 2011, the maximum allowable amount of a qualifying asset purchase that may be expensed in full by a business is $500,000. (This amount is scheduled to be reduced to $125,000 after 2011). The maximum annual expensing amount for 2011 is reduced dollar for dollar by the amount of qualifying property placed in service in excess of $2,000,000 ($500,000 for 2012). For 2011, up to $250,000 of qualified real property (that is, qualified leasehold-improvement, restaurant, or retail-improvement property) may be expensed under IRC Sec. 179.
Note that the bonus depreciation and section 179 expensing rules together offer significant tax-planning opportunities for business taxpayers.
Research Tax Credit
Generally, this credit applies to amounts paid or accrued before January 1, 2012, and is equal to 20% of the excess of qualified research expenses for the tax year over a base amount.
Work Opportunity Tax Credit
Employers who hire individuals from certain targeted groups are allowed to claim a credit against income tax in an amount equal to a percentage of first-year wages of up to $6,000 per employee ($12,000 for qualified veterans). Generally, the percentage of qualifying wages is 40% of qualifying first year wages (25% for employees who have completed at least 120 hours of service, but less than 400 hours of service for the employer).
Differential Wage Payment Credit
Eligible small business employers who pay differential pay may claim a credit equal to 20% of up to $20,000 of differential pay made to an employee during the tax year. Differential pay is generally defined as payments made to employees for periods during which they are called to active service in the U.S. uniformed services for more than 30 days. Such payments represent all or part of the wages that they would have otherwise received from the employer. An eligible small business employer is one who, on average, employs fewer than 50 employees and provides eligible differential wage payments to each of its qualified employees under a written plan.
Charitable Contribution Deductions
Through December 31, 2011, a regular "C" corporation's so-called enhanced charitable contribution deduction is equal to the lesser of:
- The property's tax basis, plus half of the property’s appreciation, or
- Twice the property's tax basis for contributions of food inventory that is "apparently wholesome food."
Wednesday, November 30, 2011
Commercial Insurance Services
631.923.1595 ext. 330
G.R. Reid Insurance Services, LLC
Never Cut Corners When it Comes to Safety in The Workplace
Some employees are happy to take chances when it comes to safety. They take needless risks in an effort to save time or cut their work load. In reality, all they're doing is subjecting themselves and others to hazards that could cause a serious injury. Workers form bad habits when they repeatedly perform their jobs in an unsafe way and don't get injured. They become convinced that because of their skills they are incapable of being hurt. It's this attitude that usually ends up doing them in, because they take even more chances until eventually a serious accident does occur. Unfortunately, that one accident can turn out to be fatal.
Most of a chance-taker's careless acts can be broken down into one of the following categories:
- Failing to follow proper job procedure
- Cleaning, oiling, adjusting, or repairing equipment that is moving, electrically energized, or pressurized
- Failing to use available personal protective equipment such as gloves, goggles, and hard hats
- Failing to wear safe personal attire
- Failing to secure or warn about hazards
- Using equipment improperly
- Making safety devices inoperable
- Operating or working at unsafe speeds
- Taking an unsafe position or posture
- Placing, mixing, or combining tools and materials unsafely
- Using tools or equipment known to be unsafe
- Engaging in horseplay
Although OSHA does not cite employees for safety violations, each employee is obliged to comply with all applicable OSHA standards, rules, regulations, and orders. Employee responsibilities and rights in states with their own occupational safety and health programs are generally the same as for workers in states covered by Federal OSHA.
Employees should follow these guidelines:
- Read OSHA notices at the jobsite
- Comply with all applicable OSHA standards
- Follow all lawful employer health and safety rules and regulations, and wear or use prescribed protective equipment while working
- Report hazardous conditions to a supervisor
- Report any job-related injury or illness to the employer, and seek treatment promptly
- Exercise these rights in a responsible manner
If you are working with a risk-taker, ask him to stop and consider what jeopardy he is putting himself and others in. Then buddy up with him to find a safer way to perform the task. Remember, unsafe actions don't result in saving time if a worker gets injured in the process.
Financial Services News
G.R. Reid Consulting Services, LLC
Retirement
A Recent Survey Revealed That Many Affluent Retirees Would Go About Saving for Retirement Differently If They Had To Do It Again.
Most notably, these wealthy retirees expressed a desire for more professional help in preparing for retirement. In fact, 55% of survey respondents regretted that they didn’t start talking to a financial professional earlier.1 Savvy investors can learn from the mistakes of others. With the uncertainty surrounding income taxes, capital gains taxes, and the estate tax, the value of a professional opinion may be more important now than ever.
Retirement Wake-Up Call
According to the survey, the most recent recession gave many affluent retirees pause to reconsider their approach to retirement. About half of the retired respondents wish they had spent more time thinking specifically about the lifestyle they wanted in retirement. Furthermore, they recommended that those nearing retirement take the time to consider exactly how they would like to live out their later years. 2
Have You Thought About Your Ideal Retirement Lifestyle?
Think about the specifics. Will it be in the same house and town? What activities will fill your days? Golf? Travel? Now consider what it’s going to take financially to get you there. A review of your situation can help connect the dots between your current situation and the retirement lifestyle you desire. About half of the retirees surveyed said they wish they had concentrated more on “the numbers.” 3 A focus on the details of preparing for retirement can be an eye-opening exercise.
Remember also that retirement planning is not a fix-it-and-forget-it proposition. It might be appropriate to take a second look periodically as life changes could necessitate modifications to a retirement strategy. How has your vision of retirement changed over the years? Is it time to run “the numbers” again?
You’ve Already Gone Pro
What’s the takeaway from all of this, given that you are already working with a financial professional? There is no assurance that working with a professional will improve your investment results. But by focusing on your overall objectives, a financial professional can provide education, identify strategies for taking control of many situations, and help you consider options that could have a substantial effect on your long-term financial goals.
Please call G.R. Reid Consulting LLC for a retirement evaluation, 631-923-1595.
The above information was supplied by Emerald Connect, Inc. All rights reserved © 2011. This material may not be reproduced without permission.
1–2 Investment News, January 18, 2010 3 The Wall Street Journal, January 15, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Unless specifically stated otherwise, the written advice in this memorandum or its attachments is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Information is time sensitive, educational in nature, and not intended as investment advice or solicitation of any security. The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal income tax penalty. You are encouraged to seek tax or legal advice from an independent professional advisor. G.R. Reid Consulting Services, LLC is not a registered investment advisor and is independent of American Portfolios Financial Services Inc. and American Portfolios Advisors Inc.
Retirement
A Recent Survey Revealed That Many Affluent Retirees Would Go About Saving for Retirement Differently If They Had To Do It Again.
Most notably, these wealthy retirees expressed a desire for more professional help in preparing for retirement. In fact, 55% of survey respondents regretted that they didn’t start talking to a financial professional earlier.1 Savvy investors can learn from the mistakes of others. With the uncertainty surrounding income taxes, capital gains taxes, and the estate tax, the value of a professional opinion may be more important now than ever.
Retirement Wake-Up Call
According to the survey, the most recent recession gave many affluent retirees pause to reconsider their approach to retirement. About half of the retired respondents wish they had spent more time thinking specifically about the lifestyle they wanted in retirement. Furthermore, they recommended that those nearing retirement take the time to consider exactly how they would like to live out their later years. 2
Have You Thought About Your Ideal Retirement Lifestyle?
Think about the specifics. Will it be in the same house and town? What activities will fill your days? Golf? Travel? Now consider what it’s going to take financially to get you there. A review of your situation can help connect the dots between your current situation and the retirement lifestyle you desire. About half of the retirees surveyed said they wish they had concentrated more on “the numbers.” 3 A focus on the details of preparing for retirement can be an eye-opening exercise.
Remember also that retirement planning is not a fix-it-and-forget-it proposition. It might be appropriate to take a second look periodically as life changes could necessitate modifications to a retirement strategy. How has your vision of retirement changed over the years? Is it time to run “the numbers” again?
You’ve Already Gone Pro
What’s the takeaway from all of this, given that you are already working with a financial professional? There is no assurance that working with a professional will improve your investment results. But by focusing on your overall objectives, a financial professional can provide education, identify strategies for taking control of many situations, and help you consider options that could have a substantial effect on your long-term financial goals.
Please call G.R. Reid Consulting LLC for a retirement evaluation, 631-923-1595.
The above information was supplied by Emerald Connect, Inc. All rights reserved © 2011. This material may not be reproduced without permission.
1–2 Investment News, January 18, 2010 3 The Wall Street Journal, January 15, 2010
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Unless specifically stated otherwise, the written advice in this memorandum or its attachments is not intended or written to be used for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code. Information is time sensitive, educational in nature, and not intended as investment advice or solicitation of any security. The information in this article is not intended to be tax or legal advice, and it may not be relied on for the purpose of avoiding any federal income tax penalty. You are encouraged to seek tax or legal advice from an independent professional advisor. G.R. Reid Consulting Services, LLC is not a registered investment advisor and is independent of American Portfolios Financial Services Inc. and American Portfolios Advisors Inc.
Accounting & Tax News
:: Jason Saladino, CPA, PFS, Partner
631.425.1800 ext. 309
G.R. Reid Associates, LLP
The Benefits of Cost Segregation
Increase Your Return On Investment
Over 300 rulings, letters and IRS Memoranda have provided documentation and significant case law for the support of Cost Segregation Studies. Hospital Corporation of America vs. The Commissioner is one of the landmark decisions which gave support to the way we review and analyze properties to determine the tangible personal property that may qualify for depreciated lives of 5, 7, or 15 years rather than 39 years (if non-residential real property) or 27.5 years (if residential real property).
Even If You Are Presently Depreciating Certain Property In An Accelerated Manner, You May Still Be Leaving Money On The Table.
A cost segregation study is a federal income tax tool that increases your near term cash flow, in the form of a deferral, by utilizing shorter recovery periods to accelerate the return on capital from your investment in property. Whether newly constructed, purchased or renovated, the components of your building may be properly reclassified, through a cost segregation study, into shorter recovery periods for computing depreciation deductions.
Engineering-Based Report
G. R. Reid is aligned with a professionally licensed engineering firm with experience in engineering-related tax services. We meet all of the criteria and qualifications required by the IRS. We are confident in our understanding of the tax ramifications that must be considered when performing cost segregation or energy tax studies as they relate to the issues of recapture, passive activity limitations and the intricate steps involved in 1031 exchanges. We provide the highest quality cost segregation studies, with full audit defense, professional insurance and comprehensive reporting and full warranty of all reports in the event of an IRS audit.
631.425.1800 ext. 309
G.R. Reid Associates, LLP
The Benefits of Cost Segregation
Increase Your Return On Investment
Over 300 rulings, letters and IRS Memoranda have provided documentation and significant case law for the support of Cost Segregation Studies. Hospital Corporation of America vs. The Commissioner is one of the landmark decisions which gave support to the way we review and analyze properties to determine the tangible personal property that may qualify for depreciated lives of 5, 7, or 15 years rather than 39 years (if non-residential real property) or 27.5 years (if residential real property).
Even If You Are Presently Depreciating Certain Property In An Accelerated Manner, You May Still Be Leaving Money On The Table.
A cost segregation study is a federal income tax tool that increases your near term cash flow, in the form of a deferral, by utilizing shorter recovery periods to accelerate the return on capital from your investment in property. Whether newly constructed, purchased or renovated, the components of your building may be properly reclassified, through a cost segregation study, into shorter recovery periods for computing depreciation deductions.
Engineering-Based Report
G. R. Reid is aligned with a professionally licensed engineering firm with experience in engineering-related tax services. We meet all of the criteria and qualifications required by the IRS. We are confident in our understanding of the tax ramifications that must be considered when performing cost segregation or energy tax studies as they relate to the issues of recapture, passive activity limitations and the intricate steps involved in 1031 exchanges. We provide the highest quality cost segregation studies, with full audit defense, professional insurance and comprehensive reporting and full warranty of all reports in the event of an IRS audit.
Personal Insurance Services
: : Neal B. Patel, Managing Director,
Personal Insurance Services | G.R. Reid Agency, LLC
631.923.1595 ext. 303
Keep Your Home Safe During Holiday Travel Time
Whether you're planning a Caribbean vacation getaway, or a trip to visit relatives for the holidays, keep in mind that an empty house is a tempting target for a burglar. But with a little common sense and some careful planning, you can reduce the possibility that your home will be broken into while you're gone.
Prepare your first line of defense:
Personal Insurance Services | G.R. Reid Agency, LLC
631.923.1595 ext. 303
Whether you're planning a Caribbean vacation getaway, or a trip to visit relatives for the holidays, keep in mind that an empty house is a tempting target for a burglar. But with a little common sense and some careful planning, you can reduce the possibility that your home will be broken into while you're gone.
Prepare your first line of defense:
- Use sturdy locks on all doors and windows and secure before you leave
Repair any broken windows or locks. Never operate under the assumption that a burglar won't find the one that's faulty.
- Enlist the help of a trusted neighbor
Tell one neighbor your itinerary and your estimated time of arrival and return. That person should have a key to your front door to periodically check on the house, and a telephone number where you can be reached in an emergency.
- Don't broadcast your plans
Especially in the era of social media, never post your travel plans on Facebook or Twitter. According to a recent article in the New York Times, tech-savvy thieves are taking advantage of the detailed information provided by unsuspecting social media users.
- Never let the house appear empty from the street
Stop your newspaper delivery, and have your neighbor pick up your mail and any packages left on the front porch. Arrange for someone to mow the lawn, rake leaves and clean the yard if you'll be away for an extended period. Ask your neighbor to place garbage cans at the curb on normal pickup days and put them back after the garbage pickup. If you leave your car at home, park it where you normally would. However, be sure your neighbor moves it occasionally so that it appears the car is being driven. If you're driving your car, have your neighbor periodically park in your driveway or in front of your house.
- Your home shouldn't seem empty on the inside either
Plug in timers to turn lights and even a television on and off at appropriate times. Turn the ringer on your telephone down. If a burglar is around, and hears a call that goes unanswered, they'll know you're away. Don't leave a message on your answering machine notifying everyone you're on vacation. Leave your blinds, shades and curtains in a normal position. Don't close them unless you would normally do so while at home.
- Don't give thieves alternate ways to enter your home
Lock garage doors and windows. You should also secure storage sheds, attic entrances and yard gates.
- Don't leave valuables in plain sight
Consider locking valuables in a bank safety deposit box. If you do leave valuables at home, make sure they are engraved. This simple precaution will allow stolen property to be easily identified and returned to you if recovered later.
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