EMPLOYERS HIRING VETERANS BY YEAR'S END MAY GET EXPANDED TAX CREDIT

Employers planning to claim an expanded tax credit for hiring certain veterans should act soon, according to the IRS. Many businesses may qualify to receive thousands of dollars through the Work Opportunity Tax Credit, but only if the veteran begins work before the new year.

Here are six key facts about the WOTC as expanded by VOW to Hire Heroes Act of 2011.

1. Hiring Deadline: Employers may be able to claim the expanded WOTC for qualified veterans who begin work on or after Nov. 22, 2011 but before Jan. 1, 2013.

2. Maximum Credit: The maximum tax credit is $9,600 per worker for employers that operate for-profit businesses, or $6,240 per worker for tax-exempt organizations.

3. Credit Factors: The amount of credit will depend on a number of factors. Such factors include the length of the veteran’s unemployment before being hired, the number of hours the veteran works and the amount of the wages the veteran receives during the first-year of employment.

4. Disabled Veterans: Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.

5. State Certification: Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. The form must be filed within 28 days after the qualified veteran starts work. For additional information about your SWA visit the U.S. Department of Labor’s WOTC website.

6. E-file: Some states accept Form 8850 electronically.

I CAN JUST ABOUT GUARANTEE A TAX INCREASE OF 2% NEXT YEAR

If you are an employee or if you are self employed, the 2% reduction of Social Security tax is phased out at the end of 2012 and it is doubtful that it will be reinstated. What does this mean to you. For every $100 that you earn from wages or self employment your tax will increase by $2.00. So, for example if your gross earnings before withholding is $1,500 for your first paycheck in 2013 your net pay will be $30.00 less than the same paycheck in 2012.

Here is a chart:
Wages            More Tax
$30,000              $ 600
$40,000              $ 800
$50,000            $1,000
$80,000            $1,600
$100,000          $2,000

Here is more information from an Associated Press article:

Report: Employee payroll tax reduction likely to go away as Social Security takes hit'

(AP) -- The AP reports that "come January, 163 million U.S. workers can expect to feel the pinch" of a return to a 6.2% Social Security tax rate for employees, "regardless of who wins the election." The end to the temporary reduction in Social Security payroll taxes "will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500," the story notes. The Social Security payroll tax break for employees was offered by President Obama two years ago, but now "politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security."

NEW GIFT TAX AMOUNT

In 2013, the amount that you can gift without filing a gift tax return has increased from $13,000 to $14,000. If you give more than this amount, you are required to file a return; however, in most cases, this gift will still be free from gift taxes. Although this amount is adjusted for inflation, it does not change until the amount increases by more than $1,000. Therefore, the next increase will be to $15,000 and this will probably take three or more years assuming current inflation rates.

AREN'T YOU GLAD YOU DON'T LIVE IN OHIO?

More than 58,000 television ads on the presidential race were broadcast over the last month in Ohio. To view them all, you’d have to watch ads 24 hours a day for 80 days.  Bloomberg.com

LAST WEEK’S BLOG

Last week I decided that I was going to tell people who I was supporting for president and why. I knew there would be some ramifications for this and I was right.

I was called a “Right Ring Radical”, a “stooge for the Republican Party” and some other names that I probably shouldn’t say. . I was disappointed that none of the people that criticized my blog told me what was wrong with my rationale.  They just called me names.  People, the countries deficit problem is huge and it needs to be dealt with. We can’t close our eyes and leave things as they are. I looked forward to receiving some comments of people telling me why I was wrong which I did not get.

I think that everybody should be able to have their opinion. That’s why we have a free country.  Because of my comments, we had several people unsubscribe to my blog. It’s interesting. I try to give information that hopefully can help people in their business but, apparently, the information I give is not enough to offset the anger they felt because I dare to express my opinion.

I apologize if I offended you.

WHAT I’VE BEEN UP TO

On October 31, I was honored to make a presentation to the Nebraska CPA Annual Meeting on income tax updates.  As part of my presentation I reviewed all the cases, rulings and the future of income taxes with the 190 CPA’s that were in attendance.

It is always an honor to make this presentation but it is also stressful.  This is not only stressful on me; it is stressful to the firm.   It takes me a considerable amount of time to put the Tax Update together and our staff does a terrific job of making sure everything gets done while I am engrossed in putting this project.

The good thing about the program is that it does make me look at all the court cases, revenue rulings, procedures and happenings over the last twelve months so that I am completely up to date.

Knowledge is Power!

TAX BREAKS AFTER HURRICANE SANDY

 

While many of us have been consumed by news of the 2012 election, we're all sobered by the devastation of Hurricane Sandy. If you plan to help out, keep in mind some of these tips for making the most of your storm relief donations.

~You can deduct up to 50% of your adjusted gross income for cash gifts to "501(c)(3) organizations" or public charities working on behalf of storm victims.

~If you give more than $250, you'll need a written receipt dated no later than the filing date of your return.

~Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. Consider buying software, available at any office-supply store, for tracking your gifts and their value. You might be surprised how much you save!

~Congress and the IRS have cracked down on inflated car and truck deductions. If you give away a vehicle, you can deduct its fair market value only if the charity uses it for "exempt" purposes (such as a church using a van to drive parishioners). If the charity sells the vehicle, your deduction is limited to the charity's actual proceeds. If you claim more than $500, you'll generally have to attach a certification to your return that states the vehicle was sold in an arm's-length sale and includes the gross proceeds from the sale.

The IRS cautions all of us to seek out qualified charities, and warns of unscrupulous operators looking to take advantage of our generosity during a time of crisis. The IRS has also issued Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, for those who want to contribute or form a new charity.