GET THE FACTS BEFORE GETTING A REVERSE MORTGAGE

Have you noticed the increasing number of advertisements expounding the merits of reverse mortgages? Smiling celebrities advise seniors that their lives could improve immensely if they simply harvested the available equity in their homes. Take an expensive trip, remodel your home, or just have fun with the extra money. They can make it sound pretty appealing.

DO YOUR BENEFICIARY CHOICES NEED UPDATING?

Are your beneficiary designations up to date? Do you even know which accounts have beneficiaries and who you've designated? It's easy to lose track. But it's important to keep them current. Here's why.

When you designate a beneficiary for an account, that person inherits the assets in the account, regardless of what your will might say. That's why updating your will periodically might not be enough. Typically, you'll have beneficiaries for each of your IRAs, your 401(k) or other retirement plans, annuities, and insurance policies.

Your designations could be out of date just because of life's changes. Since you made your initial choices, you might have married, had children, or divorced. Some of the beneficiaries you chose could have died, divorced, or married. Their circumstances could have changed so you no longer want them to be the beneficiary.

Also, the tax laws change frequently, and they can have an impact on your choices. Choosing the wrong beneficiary, or failing to name a contingent beneficiary, can affect the long-term value of your IRA assets after you die. That's why it's important to review your choices with tax consequences in mind.

Here's how to update your designations. At a minimum, you should have copies of your beneficiary designations in one place. If you don't, call the trustees of your retirement accounts and your insurance agent, and request copies.

Then review the documents and decide what changes you'd like to make. Make an appointment to review your decisions with your tax and estate planning advisor. Discuss matters such as naming secondary beneficiaries and naming your estate as a beneficiary (sometimes not a good idea).

Finally, send your changes to the account trustee, ask for a confirmation, and keep copies in your records.

PUT FINANCIAL GIFTS ON YOUR HOLIDAY SHOPPING LIST

When planning gifts for children on your holiday list, you might want to think beyond the traditional retail offerings. Consider financial gifts that can bestow benefits for many years to come.

Some financial gift options you might consider:

* U.S. savings bonds. Savings bonds are used by many families to introduce children to the savings concept. I bonds are indexed for inflation and can provide relatively attractive rates of return.

* IRAs (regular or Roth). For 2011, you can contribute the lower of $5,000 or the earned income of the child. An early financial start can produce amazing benefits from compounded interest accumulated over several decades.

* Stocks or mutual funds. Equities are a good way to introduce a child to the investment world.

* Collectible stock certificates. Vibrant framed certificates are available for many companies. A Disney, Dream Works, or Coca-Cola stock certificate can provide a colorful reminder of the importance of investing for the future.

* Collectibles. Postage stamps or coin collection kits can provide years of enjoyment and form the basis for some life-long hobbies. An interesting gift idea is an official U.S. mint proof coin set for the year the child was born.

Please call us at (518) 798-3330 if you would like to review the tax issues related to any of these financial gift options, especially if you are considering a larger amount.

PRESIDENT OBAMA SIGNS NEW TAX LAW

On November 21, 2011, President Obama signed the "Three Percent Withholding Repeal and Job Creation Act" into law.

This new law repeals three percent withholding on certain payments to government contractors. The law, H.R. 674, was amended to include the "Vow to Hire Heroes Act" which provides tax credits to employers who hire unemployed veterans.

The law creates the “Returning Heroes Tax Credit” and the “Wounded Warriors Tax Credit.” Employers may qualify for a credit of up to $5,600 for hiring a veteran who has been looking for employment for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks but less than six months. Employers who hire an unemployed veteran with service-connected disabilities who has been looking for work for more than six months may be eligible for a tax credit of up to $9,600.

The credits apply to new hires after November 21, 2011, through December 31, 2012. For more information about the new law, contact our office at (518) 798-3330.

FIVE YEAR-END TAX TIPS

* Early this month check the amount of 2011 tax you have prepaid through withholding and quarterly estimates. If you've underpaid, consider increasing your withholding before year-end. Withholding is considered to have been paid evenly throughout the year. This could prevent your being charged underpayment penalties for 2011.

* Avoid the marriage penalty. If a wedding or divorce is in your plans, be aware that your marital status as of December 31 determines your tax status for the whole year. Changing the dates of a year-end event may save taxes. Even though recent tax laws provided some relief from the marriage penalty, they did not eliminate it.

* Plan for losses. Check your basis in any S corporation in which you are a shareholder and where you expect a loss this year. Be sure you have sufficient basis to enable you to take the loss on your tax return.

* Use this year's annual gift tax exclusion. If you make annual gifts to family members or others, make sure you complete your gifts for 2011 by December 31.

* Squeeze in planned equipment purchases before December 31. Taxpayers must usually deduct the cost of business property over several years. A special election allows taxpayers to expense up to $500,000 of new and used property purchased and put into service in 2011. Also check into the 100% bonus depreciation allowance for new equipment purchases.

Property such as machinery, equipment, and furnishings qualify. Be careful with special rules that apply to automobiles and personal computers.

WATCH OUT FOR "WASH SALES" ON STOCKS

Thinking of selling a security before December 31 to take advantage of a capital loss? To make sure the loss is deductible, refrain from buying a substantially identical security during the 61-day period that begins 30 days before you sell and ends 30 days after. Such a purchase would violate the "wash sale rule" and make your loss nondeductible.

CMJ, LLP VOTED BY THE BUSINESS REVIEW AS THE 2011 BEST PLACES TO WORK

CMJ, LLP
Certified Public Accountants

"We have mutual respect for everyone.  We operate as a team.  We don't, as partners,

expect anyone to do anything we wouldn't do ourselves. We have clear values here, clear

goals and everyone understands them and supports them.  And the No. 1 expectation: 

Always do what's right."

Paul Curtis, Managing Partner, CMJ

"The partners continually strive to be open to recommendations from their

employees for the betterment of the firm."

CMJ employee

"CMJ is a perfect example of a great place to work.  I wake up everyday

 and look forward to going to work.  Our employees all get along very well

 and CMJ works hard to make sure new employees will fit with our goals and

work ethics. This results in a great group of people that have common goals

 and are able to enjoy in the splendors of a job well done."

CMJ employee

  "I've never worked for such a giving, caring, fun employer!"

CMJ employee

"State of the art technology and resources enable the staff to provide

the highest level of client service.  Tremendous importance is placed on

continuing education for all employees and all expenses are paid for by the firm."

CMJ employee

"We are ALL part of a team!  Everyone here goes above and beyond if someone needs

 any extra help or support.  TEAMWORK is truly what we stand for."

CMJ employee



RESIDENTIAL ENERGY CREDIT EXPIRES SOON

Claim the last of the residential energy credit. Install certain energy efficient property in your home by year-end (such as insulation, doors, and windows) and get a federal tax credit of up to $500. That's the aggregate total credit, including amounts you claimed in prior years. The credit is scheduled to expire after December 2011.

NEW LAW PROVIDES TAX CREDITS FOR HIRING VETERANS

A law signed by President Obama on November 21, 2011, creates new tax credits for hiring military veterans. A "Returning Heroes Tax Credit" of up to $5,600 per employee is available to employers who hire veterans who have been looking for work for more than six months. A credit of up to $2,400 applies for veterans who have been unemployed for more than four weeks, but less than six months. A "Wounded Warriors Tax Credit" provides a credit of up to $9,600 for hiring veterans with service-related disabilities who have been looking for work for more than six months. Contact us at (518) 798-3330 if you need more information.

INVESTMENT TAX TIPS

As year-end approaches, take a closer look at your investment portfolio. There may be some tax-saving strategies worth considering.

CONSIDER MAKING GIFTS BEFORE YEAR-END

A lifetime gifting program might trim both your estate and income taxes. First, there's the annual exclusion for gifts. Currently, you can give $13,000 annually to any number of recipients without paying federal gift tax.

CMJ, LLP FOOD DRIVE WAS A GREAT SUCCESS

On behalf of the staff at CMJ, we would like to thank everyone who came through our doors with such generous donations to support the Warren-Hamilton Counties Community Action Agency.  This was a welcome addition to their food pantry during this holiday season.

Again, many thanks for your generosity!

EMPLOYEE THEFT IS A SIGNIFICANT BUSINESS PROBLEM

Employee theft happens more frequently than you hear or read about. It's believed that only a small percentage of cases of employee dishonesty are reported and prosecuted.Too often, the employee is just dismissed and moves on to steal from someone else. In other cases, especially where financial controls are weak, the employee may steal small amounts for years without being detected.

HEED THE RULES FOR DEDUCTING CHARITABLE CONTRIBUTIONS

Sticking to the rules when making charitable contributions can save tax dollars. Here are three tips.

NO MORE PAPER SAVINGS BONDS AFTER 2011

For the past 76 years, investors had the option of buying U.S. savings bonds at a bank or credit union. After December 31, 2011, that will no longer be the case. Savings bonds can then only be purchased electronically through TreasuryDirect, sponsored on the Internet by the Treasury's Bureau of Public Debt.

Bonds have been available through TreasuryDirect since 2002, but investors have been slow to purchase bonds electronically. Only 11% of bonds purchased from October 2010 through June 2011 were bought through TreasuryDirect.

Selling bonds exclusively through electronic means will save the government $70 million over five years. The Treasury points out that investors benefit too: electronic bonds are less likely to be misplaced, and they are automatically redeemed when they mature.

The change won't affect outstanding paper bonds.

SOME TAX FACTS

Some tax facts from National Taxpayer Advocate Nina Olson's annual report to Congress:

* Americans spend 6.1 billion hours preparing their taxes every year.

* There have been 4,428 changes to the tax code over the past ten years.

* Nine out of ten Americans have someone prepare their tax return or use tax software.

* The tax code is so long that no one is certain exactly how long it is.

NEW WORKER CLASSIFICATION PROGRAM ANNOUNCED BY IRS

Companies that have had worker classification issues are being offered a settlement program by the IRS. The program, labeled the "Voluntary Worker Classification Settlement Program," will let employers who previously misclassified employees as independent contractors make a minimal payment to settle the tax dispute. The program will give eligible employers substantial relief from federal payroll taxes they may have owed in the past. Employers must pay just over 1% of wages paid to reclassified workers for the past year, and they must agree to treat these workers as employees going forward.

PAM CLEVELAND ATTENDS NATIONAL FORENSIC ACCOUNTING CONFERENCE

Pamela L. Cleveland, CPA, CFFA, Manager of Accounting, Assurance, and Advisory Services at the Certified Public Accounting firm CMJ, LLP, recently attended the National Forensic Accounting Conference in Chicago sponsored by the American Institute of Certified Public Accountants (AICPA).

The conference offered sessions in fraud investigation, identification, reporting and deterrence, and complex analytical techniques. Speakers included leading experts in fraud and litigation services such as judges, attorneys, corporate executives, and forensic specialists.

CMJ, LLP, located in Queensbury, New York, provides tax, accounting, and management consulting services for corporations, partnerships, and professionals throughout the region.  They also provide business valuation services and merger and acquisition consulting to clients both domestically and globally.  More detailed information regarding the firm’s services is available through its web site: http://www.cmjllp.com.

CHECK YOUR INCOME LEVEL AND TAX BREAKS

Check into all the tax credits and deductions for which you might qualify this year. Because some of these tax breaks are reduced or eliminated entirely once your income reaches certain limits, you need to be aware of the income phase-out thresholds for those credits and deductions. While it doesn't make sense to make less income just to qualify for a tax break, shifting income from one year to another may sometimes be a smart thing to do.

GET THE BEST TAX BANG FOR DEDUCTIONS

Review your tax deductions for 2011. If you're close to the cutoff point between itemizing or taking the standard deduction, consider the advantage of bunching your deductible expenses every other year. You can then alternate between itemizing one year and taking the standard deduction the next, saving tax dollars by doing so. For help in your calculations, contact us at (518) 798-3330.

CMJ, LLP, CERTIFIED PUBLIC ACCOUNTANTS, INVITES YOU TO OUR FOOD DRIVE

CMJ, LLP, Certified Public Accountants, invites you to “Fill our Foyer” from Monday, November 14th to Friday, November 18th to support the Warren-Hamilton Counties Community Action Agency.  Their food pantry has had over 9,000 people come through their doors so far this year, plus provided over 4,000 people with emergency food baskets.

With the holidays approaching, their shelves need to be filled.  Canned foods and soups, boxed dinners, instant potatoes, pasta, beans, cereal, crackers and canned fruit are in great demand. Also in need are hygiene products such as shampoo, individually wrapped bars of soap, deodorant, and individually wrapped toilet tissue.

We have a large foyer and we are confident that you will assist in filling it.  Our office is located at 276 Dix Avenue in Queensbury (near Kmart and across the street from the car wash.)  Call us at (518) 798-3330 if you have any questions.  Thank you for your generosity!

GUIDANCE ON EMPLOYEE USE OF CELL PHONES

The Internal Revenue Service has issued guidance designed to clarify the tax treatment of employer-provided cell phones.The guidance, issued as an IRS Notice, relates to a provision in the Small Business Jobs Act of 2010, enacted last fall, that removed cell phones from the definition of listed property, a category under tax law that normally requires additional recordkeeping by taxpayers.

ACT SOON TO BENEFIT FROM EXPIRING TAX BREAKS

A number of tax breaks are due to expire at the end of this year. Though Congress may renew some or all of them, there is no way of knowing if or when they will.

As part of your year-end 2011 tax review, consider whether any of these opportunities to cut your tax bill fit your situation.

* The option for deducting state and local sales taxes in lieu of deducting state and local income taxes.

* The above-the-line deduction for up to $4,000 of higher education expenses.

* The above-the-line deduction of up to $250 for classroom supplies purchased by teachers.

* The tax-free charitable contribution from an IRA of up to $100,000 allowed for taxpayers 70½ or older.

* 100% bonus depreciation on new equipment purchased by business.

* $500 energy credit for energy-saving expenditures for your personal residence.

* Section 179 expensing election on up to $500,000 of new or used business equipment purchases.

SOME BUSINESS MEALS ARE 100% DEDUCTIBLE

Are you watching what you eat at work? Though that may not seem like a tax question, how you account for meals can affect your business tax return.

IRS ISSUES GUIDANCE ON BONUS DEPRECIATION

Under the "Tax Relief Act of 2010," you may be able to write off the entire cost of business property placed in service this year, thanks to 100% "bonus depreciation.

REVIEW YOUR 2011 TAX PAYMENTS

Don't let penalties for underpaid taxes increase your tax bill next April. Check the total you've paid in for 2011 through withholding and/or estimated taxes. If you've underpaid, consider adjusting your withholding for the final pay periods of 2011 or increasing your remaining quarterly estimate. If you employ household workers, be sure your calculations include the payroll taxes you'll owe for them.

SHOULD YOU UNDO A ROTH TO SAVE TAXES?

Yes, 2010 was the year of the Roth, and you may have converted your traditional IRA to take advantage of the one-time option to postpone recognizing the income. As you know, half of the related tax bill will be due with your 2011 tax return.

End of story? Not exactly. You can still take advantage of a planning window that may save you money. Under the rules, you have until October 17, 2011, to change your mind about the original conversion.

The tax term for the "do-over" election is recharacterization. It works like this: Say the value of the assets you converted to a Roth during 2010 has declined. That means if you had waited until now to convert, you would have ended up paying less tax. Reversing your 2010 decision puts you back in the position you were in before the Roth conversion and wipes out your original tax liability.

Even better, you can still do another traditional-to-Roth IRA conversion after recharacterizing. While the option of splitting the income over future years is no longer available, you can achieve the same effect by reconverting over a multi-year period. Just be aware that time restrictions may apply on this strategy. For details or assistance, give us a call at (518) 798-3330.

IRS DROPS INTEREST RATES FOR FOURTH QUARTER

The IRS will pay 1% less on tax overpayments and charge 1% less on tax underpayments during the fourth quarter of 2011. For the calendar quarter beginning October 1, 2011, and ending December 31, 2011, IRS interest rates will be 3% on individual overpayments and 2% on corporate overpayments, 3% on individual and corporate underpayments, 5% on large corporate underpayments, and .5% (1/2 a percent) on corporate overpayments exceeding $10,000.

FILE BY OCTOBER 17 TO AVOID PENALTIES

Tick-tock. Time is almost up on that six-month extension you filed back in April to give yourself more time to complete your 2010 individual income tax return.

What happens if you fail to file your return by the extended due date?

One consequence: Unless a disaster-relief exception applies or you have a valid reason, you may be charged penalties and interest.

For example, the penalty for filing your return after October 17, 2011, is 5% of the amount of your unpaid tax, per month, up to a maximum of 25%. After 60 days, a minimum penalty of the smaller of $135 or 100% of the tax due applies.

In addition, a late payment penalty of ½ of 1% of the tax due may apply for each month or part of a month that you fail to pay the tax due until you reach the full 25%. The two penalties interact and can be combined.

You'll also have to pay interest on the tax due. During 2011, the rate on underpayment of tax was 3% in the first quarter, 4% in the second and third quarters, and back to 3% in the fourth quarter. The interest is compounded daily and can be charged on penalties.

Since the penalty and interest are based on unpaid tax, neither applies when your return shows zero tax due. Filing a return is still a good idea, however. Why? The general rule limiting the IRS to a three-year period for assessing tax begins when you file. No return means no triggering of the statute of limitations.

Give us a call at (518) 798-3330 if you think you may miss a deadline. We can help keep penalties to a minimum.

IRS PROVIDES TAX RELIEF FOR DISASTER VICTIMS

If you used Form 4868 to request a six-month extension to file your 2010 income tax return, be aware that your return must be filed by October 17, 2011. Generally, the IRS does not provide filing extensions beyond that date; however, victims of recent natural disasters have been given more time to file returns and pay taxes. This tax relief is part of the federal response to recent hurricanes on the East coast, wildfires in Texas, and severe storms and flooding in other parts of the country.

For updates on relief and areas covered, go to "Tax Relief in Disaster Situations" on the IRS website (www.irs.gov).

LOOK INTO THE BENEFITS OF A SOLO 401(K) PLAN

Have you heard about solo 401(k) plans? The traditional type of 401(k) retirement plan is now available for self-employed individuals. And it lets you save more than other types of plans.

SHOULD YOU "ROBS" YOUR 401(K) TO START A NEW BUSINESS?

ROBS is an acronym for a relatively new financing arrangement known as a "rollover as business startup" being touted on the Internet and arranged by some investment firms. Is it a good option for your new business?

DO YOU OWE TAXES WHEN YOU GIVE A GIFT?

Some gifts are big, others are small, and the Internal Revenue Service expects you to report them all.
Or do they? Gift giving can be an important tax planning strategy. This year, a slowing economy might lead you to help family members with upcoming fall college bills or unexpected expenses. Now, before you write the checks, is a great opportunity to get a handle on the rules.

WHEN IS INCOME TAXABLE, AND WHEN IS IT NOT?

You only have to examine your paycheck to realize certain income is tax-free. For example, health insurance premiums paid by your employer are generally not includible in your income.

Do you know the tax status of other types of income? Here's a quiz to test your knowledge.

TAX TIPS FOR INDIVIDUALS SELLING THEIR HOME

The Internal Revenue Service has some important information to share with individuals who have sold or are about to sell their home. If you have a gain from the sale of your main home, you may qualify to exclude all or part of that gain from your income. Here are ten tips from the IRS to keep in mind when selling your home.

TAX-SAVING TIP: PUT YOUR INVESTMENTS IN THE RIGHT PLACE

To take best advantage of the lower long-term capital gains tax rates, investments that produce capital gains should be held in taxable accounts and those that produce interest income should be held in tax-deferred accounts (like your IRA or 401(k) plan). If you put capital gain investments in tax-deferred retirement accounts, you could turn income that would be taxed at lower rates into ordinary income taxed at higher rates.

USE TAX BREAKS TO CUT EDUCATION COSTS

As schools get back in session, it's a good time to check the education tax breaks for which you might qualify. First, there's the American Opportunity Tax Credit (formerly called the Hope credit) for a percentage of qualified expenses paid during the first four years of higher education. Second, the Lifetime Learning Credit allows a deduction for a percentage of qualified expenses paid for any year the American Opportunity Credit isn't claimed, and it even applies to job-related classes. Third, you may qualify for a deduction for interest paid on student loans. Fourth, education savings accounts allow annual nondeductible contributions for children under 18, with tax-free withdrawals for qualifying education expenses. Section 529 plans for college expenses should also be investigated.

TAX-SAVING TIP: WATCH PHASE-OUT LEVELS

Are you familiar with income phase-out levels for those tax credits and deductions you hope to take advantage of on your 2011 tax return? While it doesn't make sense to make less income just to qualify for a tax break, shifting income from one year to another may sometimes be a smart move.

Learn about the tax credits and deductions for which you might qualify. Then estimate your income for this year, and if it will be just beyond qualification range, look for opportunities to defer income until a later year. Investment income can often be shifted, or you might delay the exercise of stock options or the receipt of a bonus.

YOUR BUSINESS SUCCESSION PLAN MUST ANSWER THREE KEY QUESTIONS

Succession planning is very important for a family owned business. Before you sit down with your tax and legal advisors to draw up a succession plan, you should think through three key issues: who do you want to succeed you, when do you want the transition to take place, and how do you want to structure the transition? 

SEPTEMBER 15TH IS A MAJOR TAX DAY

Important tax deadlines fall on September 15th. Check this list to see if any apply to you or your business:

* The third quarter installment of 2011 estimated income tax is due for individuals.

* September 15th is the filing deadline for 2010 tax returns for calendar-year corporations that received an extension of the March 15th filing deadline.

* September 15th is the filing deadline for 2010 partnership tax returns that had an extension of the April 18th filing deadline.

* The third installment of 2011 estimated tax is due for calendar-year trusts and estates.

Contact our office at (518) 798-3330 if you need more information or filing assistance.

TWO FROM CMJ, LLP ATTEND AICPA TRAINING

Sarah B. Lindsell, CPA, Tax Supervisor, and Sean E. Corlew, Senior Tax Associate, of the certified public accounting firm, CMJ, LLP, recently attended a week long tax training program offered by the American Institute of Certified Public Accountants (AIPCA) in Chicago, IL.  As the premier tax training school for tax practitioners, highly-focused, intensive training is provided by nationally renowned tax experts.  Programs focused on Partnerships, LLCs and LLPs, taxation of estates, trusts, and gifts, buying and selling corporations, and consolidated income tax returns.