TRY A DIFFERENT GIFT IDEA THIS YEAR

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.

TAX BREAKS ARE AVAILABLE FOR DISASTER VICTIMS

When natural disasters occur, they often leave many people with severely damaged or destroyed homes and businesses. Some lose everything they own. If you are affected by a disaster that is declared by the President to qualify for federal assistance, there are several provisions in the tax law that may provide relief.

DO A YEAR-END BUSINESS REVIEW

Business owners and managers spend most of their time monitoring operations and dealing with everyday problems. But just as an annual checkup from your physician helps to monitor and manage your personal health, an annual checkup can do the same for your business. The benefits of such a review are holding your company accountable and evaluating current performance to better plan and execute future operations.

GET ORGANIZED FOR 1099 FILING

January is always a busy month for companies. You're trying to get business off to a good start in the new year, you're trying to close the books on last year, and there's 1099 reporting to complete by month-end.

WHAT'S AHEAD? TAX CHANGES SCHEDULED FOR 2013

Unless Congress acts by year-end, these are the changes you'll see in the tax rules effective January 1, 2013.

DON'T FALL FOR A CHARITY SCAM

The IRS is warning people to be aware of fraud connected with Hurricane Sandy. As is usually the case following a natural disaster, scam artists are impersonating charities to get money or financial information from those wanting to help victims of the storm. The scammers contact people by phone, social media, e-mail, or in person. To avoid falling for a scam, donate only to recognized charities, and avoid those with names that are similar to real charities. Do not give personal information to those seeking contributions, and don't give cash donations. Contributions by check or credit card provide greater security as well as a record for tax purposes.

CREDIT FOR HIRING A VET WILL EXPIRE SOON

The IRS reminds businesses that the special credit for hiring veterans will expire soon. Companies that hire unemployed military veterans may qualify for a tax credit of up to $5,600 ($9,600 for vets with service-related disabilities). The credit is available for vets hired before January 1, 2013. The amount of the credit depends on the length of unemployment before being hired and the wages paid during the first year of work. For more information, contact our office at (518) 798-3330.

IRS INCREASES MILEAGE RATES FOR 2013

The IRS has increased the standard mileage rates to be used in computing the deductible costs of operating a vehicle for business or when driving for medical or moving reasons. The new rates will apply to vehicle mileage starting January 1, 2013.

The revised rates are 56.5 cents per mile for business driving and 24 cents for medical and moving driving. The rate for charitable driving is fixed by law and remains at 14 cents per mile.

Instead of using standard mileage rates, you have the option of calculating the actual costs of using a vehicle for business, medical, or moving purposes.

RETHINK YOUR CAPITAL GAINS STRATEGY THIS YEAR

The typical investment advice at year-end is to sell losing stocks to offset gains you have taken for the year. This year that strategy may just be the wrong way to go. Here's why.

ANALYZE YOUR CUSTOMERS FOR A BETTER BUSINESS

If your business is like most, you put a lot of effort into attracting new customers. After all, that's an essential part of growing the business. But sometimes it's more productive to step back and review your existing customers, and perhaps even get rid of a few.

GIVE YOUR CHILDREN SOME LESSONS ABOUT MONEY

There's one important subject that your children may not learn in school: personal finance. If you want your kids to pick up good money skills and become financially responsible adults, you should give them some training yourself.

BEWARE OF TAX SCAMS

It's likely to be a daily occurrence: Your e-mail inbox contains at least one message touting a too-good-to-be-true offer. 

DECIDE WHEN TO PAY TAX ON U.S. SAVINGS BONDS

When you own Series EE or Series I savings bonds, you have a tax decision to make.

IDENTIFY SHARES YOU'RE SELLING

You can often manage the size of your gain or loss when you decide to sell some, but not all, of a particular stock or mutual fund. To do this, you must have kept good records of the date and the price for each share purchase. By selling the highest cost shares first, you'll minimize your taxable gain or maximize your loss. You must specify the particular shares you are selling at the time you sell.

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DON'T BE TRIPPED UP BY THE WASH SALE RULES

If you sell a security before the end of 2012 to take advantage of a capital loss, be aware of the wash sale rules. To make sure the loss is deductible, refrain from buying the same security or a substantially identical security during the 61-day period that begins 30 days before you sell and ends 30 days after.

BASIS REPORTING REQUIREMENT DELAYED

A law passed in 2008 requires brokers to report an investor's basis in stocks and mutual fund shares when these investments are sold. The final step in these new reporting requirements was to become effective for debt instruments and options on January 1, 2013.

The IRS has announced a delay in the effective date, moving it to January 1, 2014. This one-year delay is in response to complaints that the earlier deadline did not give brokers and other financial institutions time to build and test systems to handle the complicated basis reporting requirements.

ROTH CONVERSIONS ARE TAXABLE

If you convert a traditional IRA to a Roth, there's a price to pay. Converted amounts attributable to tax-deductible contributions, plus all of the earnings, are taxable at ordinary income rates. To lessen the tax hit, you may choose to convert only a part of your IRA to a Roth. You can convert as much as you like, or you can convert some each year if that seems advisable.

THE ALTERNATIVE MINIMUM TAX: WILL IT AFFECT YOU?

In your tax planning, don't overlook how your tax-saving strategies might be affected by the alternative minimum tax.

FORGIVEN DEBT CAN BE TAXED AS INCOME

With the recent economic downturn experienced by many taxpayers, there is a tax concept that is very important: cancellation of debt. You would think that the cancellation of debt by a credit card company or mortgage company would be a good thing for the taxpayer. And it can be, but it can also be considered taxable income by the IRS.

IS ALL MY INCOME TAXABLE?

Generally, all sources of income are subject to income tax unless specifically excluded. Here are some sources of money that are not taxable.

BUSINESS TIP

If your business is incorporated, it is often a good idea for you to personally own the business real estate and lease it to your corporation. There are a number of tax and nontax concerns relating to real estate ownership. For the income tax considerations, see us before you acquire new business property or before you change the ownership of property you already have.

PLAN FOR LOSSES

Review your S corporation basis before year-end. 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.

CONSIDER YOUR MARITAL STATUS

If you're planning a wedding or divorce soon, be aware that your marital status as of December 31 determines your tax status for the whole year. Changing the date of a year-end or new-year event could save taxes.

AVOID UNDERPAYMENT PENALTIES

Don't let penalties for underpaid taxes increase your tax bill next April. Check the total tax you've paid in for 2012 through withholding and/or quarterly estimated payments. If you've underpaid, consider adjusting your withholding for the final pay periods of 2012. Withheld taxes are considered paid in equal amounts during the year regardless of when the tax is withheld. Therefore, a year-end adjustment to your withholding could help you avoid a penalty.

RECORDKEEPING TIPS FROM THE PROS

If you want to give your tax recordkeeping skills a performance boost, do what accounting professionals do.

ACT SOON TO CUT YOUR 2012 TAXES

Time is running out to make tax-saving moves for 2012. Here's a sampling of ideas to consider.

HAVE YOU CONSIDERED A SIMPLE PLAN FOR YOUR BUSINESS?

Many sole proprietors and small business owners agree on the following two issues: they pay too much in taxes and they have difficulty attracting and retaining good employees. One way to address both of these issues is to set up a SIMPLE.

HOW TO SUCCEED IN A NEW BUSINESS

If the current job market has you thinking about starting a business of your own, take some steps to increase the odds that your business will succeed.

CHANGES SCHEDULED FOR FLEXIBLE SPENDING ACCOUNTS

Flexible spending accounts (FSAs) are popular with employees because they permit the use of pretax dollars for payment of medical expenses and dependent care costs.

If you use an FSA, be aware that changes are scheduled beginning next year. As part of the health care reform law passed in 2010, there will be a dollar limit on the amount that can be set aside for medical expenses. Effective for plan years starting in 2013, the maximum set-aside for medical expenses will be $2,500.

The limit on what can be set aside for dependent care costs will not change; it remains at $5,000.

Keep an eye on any upcoming legislation that could change these rules again.

IRS EASES REPORTING REQUIREMENT FOR SMALL BUSINESSES

The “Affordable Care Act of 2010” requires employers to report the cost of coverage under an employer-sponsored group health plan on the employee's W-2 for 2012.

The IRS is easing this requirement for small companies. Employers issuing fewer than 250 W-2s will not need to include the cost of health care on W-2s for 2012. For these employers, the 2012 reporting is optional. And such reporting will not apply for future years until the IRS publishes guidance giving at least six months of advance notice of any change in the filing requirement.

INVESTMENT TAX TIP

Consider tax-exempt investments as a means of cutting your income tax. There is an easy way to compare the yield on tax-exempt investments (such as municipal bonds) with the after-tax yield from taxable investments. Subtract your top tax bracket from 100 and divide the tax-exempt interest rate by that number. The result is the equivalent taxable return.

RETIREMENT TAX TIP

Consider a Roth IRA if you qualify for one. The beauty of a Roth is that your investment grows tax-free, and qualified withdrawals from a Roth will be completely tax-free. Contact our office at (518) 798-3330 for more information.

TWO FROM CMJ, LLP ATTEND HUMAN RESOURCES CONFERENCES

Lisa Boucher, SPHR, Senior Associate, with the certified public accounting firm, CMJ, LLP, recently attended the National Conference offered by the Society of Human Resource Management (SHRM) in Atlanta, GA.  Over 200 sessions were offered in the areas of benefits and compensation, business management and strategy, employment law and legislation, international HR, personal and leadership development, and talent management.  Keynote speakers included Tom Brokaw and Condoleezza Rice.

Patricia McCabe, PHR, Controller of CMJ, LLP, attended the annual New York State SHRM Conference in Saratoga Springs, NY.  The state conference is open to HR professionals, executives, small business owners, trainers and business leaders interested in maximizing human capital and personal performance.

The Society for Human Resource Management is the world’s largest association devoted to human resource management. Representing more than 250,000 members in over 140 countries, the Society serves the needs of HR professionals and advances the interests of the HR profession. Founded in 1948, SHRM has more than 575 affiliated chapters within the United States and subsidiary offices in China and India.

CMJ, LLP, located in Queensbury, New York, provides tax, accounting, management consulting, and business valuation services to corporations, partnerships, and professionals throughout the region.  They also provide merger and acquisition consulting services to clients both domestically and globally. 

CAPITAL GAINS AND LOSSES: NEW TWISTS FOR 2012

The end of the year is the traditional time for securities investors to "harvest" capital losses for federal income tax purposes. But there's an added wrinkle in 2012: Due to pending tax law changes, you might try to reap more capital gains than losses. Thus, the usual strategy of harvesting losses could be turned upside down.

LINDSELL FROM CMJ, LLP ATTENDS ADVANCED TAX TRAINING

Sarah B. Lindsell, CPA, Tax Supervisor, 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 St. Louis, MO.  As the premier tax training school for tax practitioners, highly-focused, intensive training is provided by nationally renowned tax experts.  Programs focused on complex issues of corporations, buying and selling of corporations, consolidated income tax returns, and other advanced tax topics.

CMJ, LLP, located in Queensbury, New York, provides tax, accounting, management consulting, and business valuation services to corporations, partnerships, and professionals throughout the region.  They also provide merger and acquisition consulting services to clients both domestically and globally.

WHAT'S YOUR COMPANY'S BREAKEVEN POINT?

The figures on an income statement report the sales, expenses, and net profit or loss of a business. But these figures can be helpful in another way. They can be used to compute the breakeven point for the business. Knowing your breakeven point can help you run your operations more efficiently and profitably.

BATTISTE RECEIVES CPA DESIGNATION

The Certified Public Accounting firm CMJ, LLP is pleased to announce that Frank Battiste received his CPA designation.  CPAs in New York State are licensed by the New York State Department of Education after passing four rigorous exams and completing two years of accounting experience.

Mr. Battiste joined CMJ in 2010 and is an Associate in Accounting, Assurance and Advisory services. He received a B.B.A. degree in Accounting from Siena College.  He currently resides in Glens Falls, NY and is a native of Queensbury, NY.

CMJ, LLP, located in Queensbury, New York, provides tax, accounting, management consulting, and business valuation services to corporations, partnerships, and professionals throughout the region.  They also provide merger and acquisition consulting services to clients both domestically and globally. 

CMJ, LLP ACHIEVES HIGHEST PEER REVIEW

Paul Curtis, CPA, CVA, CMAP, and Bill Jeffreys, CPA, CVA, partners in the Certified Public Accounting Firm of CMJ, LLP, are pleased to announce the firm has successfully completed an independent peer review of its accounting and auditing practice. The reviewer concluded that the firm’s system of quality control for the accounting and auditing practice has been suitably designed and complied with to provide the firm with reasonable assurance of performing and reporting in conformity with applicable professionals standards in all material respects.

SHOULD A FRESHMAN IN COLLEGE HAVE A CREDIT CARD?

Should you send your child off to college with a credit card? Opinions are divided, both among parents and financial advisors. It's a situation that can work out really well or really badly, depending on the student and the parents.

WHAT'S MORE IMPORTANT - SAVING FOR CHILDREN'S COLLEGE OR YOUR RETIREMENT?

A college education. Retirement. What do these major life events have in common?

One shared characteristic is that each comes with a price tag. Here's another: If you have school-age kids, you might be facing the challenge of having to decide which goal to save for. They're both important. So how do you make the choice?

KNOW THE FACTS ABOUT IPOs

Do you know anybody who's tripled his money investing in the IPO (initial public offering) of a hotshot new company? It can happen. And many investors thought the recent Facebook IPO was a way to quick riches.

Yet the truth is, most investors don't make money playing IPOs. It's just that no one brags when they lose money. Nonetheless, investors of all kinds are lined up for a shot at the next IPO. So it pays to know the facts before diving in.

First bit of advice: Don't bet the farm. The problem is that generally IPOs are issued by companies with no track record, inexperienced management, and few assets. And, unfortunately, the underwriters for these IPOs are motivated to complete the transaction, collect their fees, and move on. Their compensation is linked not to the quality of the firms they take public, but rather to the number of deals they sell to the public.

To protect yourself, you must do your homework, as you would for any investment. A company planning an IPO writes a prospectus that describes the business and details management's plans for what they intend to do with the money, how fast they intend the company to grow, and what profits they expect. The prospectus also discusses the competition and markets, and, most importantly, describes the risks of investing in the IPO.

Do the necessary research, and be sure you understand the risks before you make an investment in an IPO.

TAXES ARE DUE ON SELF-EMPLOYMENT INCOME

There is no income tax withholding on self-employment income, but that doesn't mean you're not required to pay taxes during the year. Self-employed individuals generally must make quarterly estimated tax payments due April 15, June 15, September 15, and January 15 of the following year.

BUSINESS TAX TIP

Summer is a good time to do business entertaining – an outdoor barbecue at your home for business clients, for example. Keep records of the cost, the date, the attendees, and the business purpose. Your tax deduction is limited to 50% of the cost.

COMBINE BUSINESS AND PLEASURE

Check the tax savings of combining business and pleasure on the same trip this summer. Within the U.S., if the primary purpose of the trip is business and you add on a side trip or an extra few days for pleasure, you can deduct all the travel costs to and from your business destination and all other business-related costs. You can't deduct costs related to the pleasure portion.

SUMMER TAX TIP

Do you own a boat or recreation vehicle? Are you thinking about buying one? As long as the vehicle has sleeping space, a bathroom, and cooking facilities, you may be able to claim it as a second home and deduct the interest payments on your loan.

WATCH OUT FOR SCAMS IF YOU INVEST IN COINS

Buying rare and precious coins can be an exciting hobby and, for some, a lucrative investment. Unfortunately, it's also a business that's rife with potential for con artists. As always, it's wise to proceed with caution. Following a few simple guidelines can offer protection from unethical sellers.

IRS REPORTING REQUIREMENTS AND DUE DATES FOR FORM 1099

For tax year 2011, the IRS surprised all of us with the following questions on business tax returns, including Schedule C and Schedule E:

·         Did you make any payments in 2011 that would require you to file Form(s) 1099?

·         If “Yes”, did you or will you file all required Forms 1099?

In the past, many businesses ignored the rules, or were complacent regarding accurate and timely filing of these informational reports.  However, penalties for failing to comply with the reporting requirements have increased significantly. 

HOW TO GET SLOW-PAYING CUSTOMERS TO PAY UP

You’ve done your part. The job is complete, your customer is satisfied -- but a month has gone by, and your invoice is still outstanding. You’d like to work with the customer in the future. So how do you get your money without losing the customer?

TAX RULES APPLY TO FAMILY LOANS

There are many worthwhile reasons to lend money to a relative. For example, you may want to help a child or sibling continue their education or start their own business. But lending money to relatives can have tax consequences.

WHAT TO CONSIDER BEFORE LENDING MONEY TO FAMILY AND FRIENDS

When your best friend views your nest egg as a source of start-up funds for his latest business venture, or your nephew hits you up for a car loan, your first impulse may be to reach into your bank account to help. But it's a fact that loans to family and friends often end up straining both finances and relationships.

CAN YOU QUALIFY FOR THE HOME OFFICE DEDUCTION?

The home office deduction is available when you use part of your home regularly and exclusively as your primary place of business, or for meeting clients.

If you're an employee who works from home, there's an additional rule: The exclusive use must be for the convenience of your employer.

In either case, "exclusive" is defined as "all or nothing." Conduct any personal activities in the space you've designated as your office and the deduction is lost.

But satisfy the requirements and you can write off part of the expenses of running your home, including utilities, interest, and property taxes, as a business deduction. That means those costs can directly reduce business income, saving you income tax. If you're a sole proprietor, the deduction may also reduce self-employment tax. Though the amount you can claim is generally limited to business income, disallowed expenses can be carried forward to future years.

What are the drawbacks? One drawback to taking a home office deduction is the potential for depreciation "recapture" that may apply when you sell your home, potentially reducing the amount of gain you can exclude from income.

Give us a call at (518) 798-3330. We can answer your questions about the tax requirements of a home office deduction in your particular situation.

BUSINESS TAX TIP

Keep repairs separate from major improvements. Ordinary repairs and maintenance on business equipment and buildings are deductible business expenses. Improvements which materially add to the value of the property or significantly prolong its useful life must be depreciated over a period of years. To avoid losing tax deductions for repairs and maintenance, make major improvements completely apart from repairs and maintenance.

CHECK YOUR 2012 WITHHOLDING

Withholding too much tax from your wages isn't a smart financial move. Match your withholding as closely as possible to your actual tax liability for the year, and invest the extra money for yourself, not the IRS.

TAX TIP FOR WORKING PARENTS

If you work and pay for child care, you may be eligible for the child care credit. Also, your employer may allow you to set aside part of your salary tax-free to pay for child care expenses. You may even be eligible for the earned income credit. And don't overlook the child tax credit for children under age 17.

SUPREME COURT RULES ON HEALTH CARE LAW

On June 28, the Supreme Court ruled that the "Patient Protection and Affordable Care Act of 2010" was constitutional, including the provision in the law requiring individuals to have health insurance coverage starting in 2014.

DON'T LET THE TAX TAIL WAG THE ECONOMIC DOG

Some tax-cutting strategies make good financial sense. Other tax strategies are simply bad ideas, often because tax considerations are allowed to override basic economics.

TIPS FOR STARTING A HOME BUSINESS

In these tough economic times, many people are taking a hard look at employment alternatives -- some, because they've lost their seemingly stable jobs in the corporate world; others, because they dream of striking out on their own.

WATCH OUT FOR BOGUS E-MAILS

The e-mail from your bank gets your attention right away. It says you need to log into your account in the next 48 hours to continue your online privileges. Something about a system upgrade. You wonder, is it legitimate? How can you know for sure?

PARTNERS NEED A WRITTEN PARTNERSHIP AGREEMENT

If you are operating your business as a partnership, you should have a written partnership agreement. This is true for family partnerships as well.

WHO NEEDS TO MAKE QUARTERLY INCOME TAX PAYMENTS?

Any taxpayer that has income that is not subject to withholding may need to make quarterly estimated income tax payments.

HIRING FAMILY CAN CUT TAXES

As a boss, you may hire family members and pay reasonable salaries for the work they do in your business.

For example, you could hire your son or daughter to perform routine clerical or cleanup tasks. Your child’s salary would be a tax-deductible business expense, and your child’s income would be tax-free up to that year’s standard deduction amount for a single taxpayer ($5,950 for 2012). Wages in excess of that amount would be taxed at your child’s rates, which are probably lower than yours.

You can compound the benefits of this strategy by having your child contribute to an IRA, which is likely to enjoy many years of tax-deferred growth.

Wages paid to a spouse by a sole proprietor are subject to payroll taxes; those paid to your children who are under the age of 18 are not. Compensation paid has to be reasonable for the services performed.

TAKE CASH DISCOUNTS IN YOUR BUSINESS

Don’t miss the cash discounts offered by your suppliers. A 2% discount for payment in ten days, versus net payment in 30 days, computes to an annual rate of return of 36%. If you can get a 10% discount for paying twelve months of payments in advance, you will earn 23% on your prepayment.

MIDYEAR PLANNING IS A MUST THIS YEAR

Major tax change is just months away: the Bush-era tax cuts are scheduled to expire at the end of this year, and the payroll tax cut ends after December 2012. The general expectation is that tax rates will go higher in 2013, at least for wealthier taxpayers. Whenever major tax change is about to occur, the opportunities for tax-cutting multiply. That makes midyear planning critical this year if you want to keep your 2012 and 2013 taxes as low as the law allows. Contact our office at (518) 798-3330 for your midyear review.

REPORT FOREIGN INVESTMENTS BY JUNE 30

If you have foreign bank, savings, or investment accounts that exceeded $10,000 in 2011, you are required to file "Treasury Department Form 90-22.1" by June 30, 2012. This is not a form that you file with your income tax return. Rather, it is a separate form filed with the Treasury Department in Detroit. The report must be received by the Treasury Department, not postmarked, by the June 30 due date. Penalties for failing to meet this filing requirement are severe and can include jail time. Contact our office at (518) 798-3330 for details or filing assistance.

NEW BUSINESSES HAVE TAX FILING REQUIREMENTS

The IRS wants to educate new small business owners about their federal tax responsibilities. "Understanding and meeting their tax filing requirements is one of the biggest challenges faced by people starting out in business," says the head of the IRS Small Business Division.

HEALTH CARE LAW SCHEDULED TO BRING THREE KEY TAX CHANGES

The U.S. Supreme Court will soon issue its ruling on the health care legislation -- the "Patient Protection and Affordable Care Act" -- passed in 2010. Over half the individual states have challenged the constitutionality of the law that requires individuals to obtain minimum health insurance coverage and penalizes those who don't comply. The law could be upheld or overturned, or the court might strike down select provisions.

BEFORE THE WEDDING, TALK ABOUT YOUR FINANCES

Spring and summer -- the wedding season is upon us. Before walking down the aisle, take a minute to consider a serious matter.Couples often enter into marriage without ever having had a discussion about financial issues. As a result, they find themselves frequently arguing about money. If you are planning a wedding, here are some steps you can take to get your marriage off to a good financial start.

TAX QUESTIONS AFTER YOU FILE YOUR TAX RETURN

Once you have filed your 2011 tax return, you may still have a few tax questions. The IRS provides these answers to commonly asked questions.

IRS GIVES EMPLOYERS THREE TIPS ON PAYROLL OBLIGATIONS

If your business uses a third-party service provider to handle payroll tax duties, the IRS has three tips for you.

1. Remember that you, the employer, are ultimately the responsible party for the deposit and payment of federal tax liabilities. You may transfer tax payments to the service provider to make the deposits, but you bear the final responsibility for payment.

If the third party fails to make the tax payments, the IRS will look to you for the taxes, plus any penalties and interest due.

2. The IRS will use the address of record for any correspondence related to your account. The IRS strongly suggests you do not change the address of record to that of the payroll service provider. Using your business address will enable you to stay informed of tax matters relating to your business.

3. Choose a payroll service provider that uses the Electronic Federal Tax Payment System (EFTPS). You can register with the EFTPS system to get your own ID number to verify payments.

IRS ANNOUNCES BUSINESS VEHICLE DEDUCTION LIMITS FOR 2012

The IRS has published depreciation limits for business vehicles first placed in service this year. Because 50% bonus depreciation is allowed only for new vehicles, these limits are different for new and used vehicles.

* For new business cars, the first-year limit is $11,160; for used cars, it's $3,160. After year one, the limits are the same for both new and used cars: $5,100 in year two, $3,050 in year three, and $1,875 in all following years.

* The 2012 first-year depreciation limit for trucks and vans is $11,360 for new vehicles and $3,360 for used vehicles. Limits for both new and used vehicles in year two are $5,300, in year three $3,150, and in each succeeding year $1,875.

For details relating to your 2012 business vehicle purchases, contact us at (518) 798-3330.

2012 TAX FREEDOM DAY IS APRIL 17

According to the Tax Foundation, April 17, 2012, was not only the day 2011 tax returns were due, it also was Tax Freedom Day for 2012. That means Americans worked 107 days, from January 1 to April 17 to earn enough money to pay their federal, state, and local taxes for 2012.

If the federal government collected enough taxes to meet 2012 federal spending, Tax Freedom Day would have come 27 days later -- on May 14, 2012. And unless Congress acts to prevent tax increases scheduled for 2013, next year's Tax Freedom Day will be eleven days later than in 2012, and the average American household will pay $3,800 more in taxes.

DON'T FORGET THE PAPERWORK

If spring cleaning has left you with items that you want to donate to charity, remember that donations of used clothing and household items must generally meet certain requirements to be tax-deductible. First, such items must be in "good used condition or better." Second, a receipt from the charity is required. If the property is valued under $250 and a receipt is not available, such as at unattended drop-off locations, reliable written records are still required.

SOME TAX FACTS...

* The Obama's 2011 tax return reported adjusted gross income of $789,674. Their tax liability was $162,074, giving them an effective tax rate of 20.5%.

* The average tax refund on returns filed for 2011 was $2,983.

* For this tax filing season, the IRS had 5,000 fewer employees than it had a year ago.

* In 1995, 114,000 IRS employees processed 205 million tax returns. This year, 91,000 employees will process 236 million returns.

* The IRS must update its computers with each tax law change. Between 2000 and 2010, Congress made 4,428 changes to the tax code.

WHAT TO DO IF YOU MISSED THE APRIL TAX FILING DEADLINE

If you missed the April 17 tax filing deadline for your 2011 return, the IRS has some advice for you.

UNDERSTAND THE TIME VALUE OF MONEY

When making financial decisions, do you consider the time value of money? If you have a basic understanding of time-value concepts, you’ll be able to make better choices in many business and personal financial situations.

BUSINESS ALERT: BARTERING HAS TAX CONSEQUENCES

Did you know there's a way to get goods and services you need for your business without using up your company's cash?

IRS OFFERS PENALTY RELIEF IN "FRESH START" INITIATIVE

Taxpayers who are struggling to pay their taxes may get some relief from the IRS’s expansion of its "Fresh Start" initiative, a program started back in 2008. The new Fresh Start provisions provide penalty relief to the unemployed and make installment agreements on taxes owed available to more people.

IS YOUR BUSINESS DUE FOR A CHANGE?

The business entity your company operates under can have a significant effect on the taxes you pay and your costs of doing business. As your company grows or changes, it may be a good idea to switch to a different entity. Among the main entity choices: sole proprietor, partnership, C or S corporation, and LLC. For guidance in analyzing the entity issue for your company, contact us at (518) 798-3330.

HSA LIMITS INCREASE FOR 2012

The amount you can set aside in a health savings account (HSA) in 2012 increased to $3,100 for an individual and to $6,250 for a family. If you’re 55 or older, you’re allowed an additional $1,000 contribution. HSAs permit taxpayers who have high deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay medical expenses not reimbursed by insurance.

IRS HAS $1 BILLION OF UNCLAIMED REFUNDS

The IRS has just announced that more than $1 billion in tax refunds for the year 2008 remain unclaimed by a million taxpayers who failed to file a return for that year. The tax law provides a three-year period for claiming a refund when no return is filed. That means these individuals must file a tax return for 2008 no later than Tuesday, April 17, 2012, or their refunds will be lost.

IRS REOPENS OFFSHORE VOLUNTARY DISCLOSURE INITIATIVE

To encourage taxpayers with assets in offshore accounts to bring their tax filing obligations current, the IRS has reopened its "offshore voluntary disclosure program."

Similar programs in 2009 and 2011 resulted in the collection of more than $4.4 billion of taxes owed.

The new program has a few key differences from the previous two, including no deadline for applying and a top penalty increase from 25% to 27.5%. The IRS warns that the terms of the current program could be changed at any time.

If you have foreign accounts and need details or filing assistance, contact our office at (518) 798-3330.

DOES THIS APRIL 2 DEADLINE APPLY TO YOU?

If you reached age 70½ last year, April 2, 2012, could be an important deadline. That's the last day you can take your required minimum distribution (RMD) for 2011 from your traditional IRAs. If you miss that deadline, the penalty could be a 50% excise tax on the amount you should have withdrawn.

IT'S TAX PAYBACK TIME

If you took certain actions in a prior year, you may now have additional taxes due on your 2011 tax return. Here are the details.

HOME BUYER CREDIT: If you bought a home in 2008 and took the first-time home buyer credit, you have another repayment installment due with your 2011 tax return. The 2008 tax credit was just an interest-free loan that you have to pay back over a 15-year period.

ROTH CONVERSIONS: If you converted a traditional IRA to a Roth IRA in 2010 and opted to split the tax due from the conversion between 2011 and 2012, your first half of the tax` is due on your 2011 tax return.

THERE'S STILL TIME TO CUT YOUR 2011 TAX BILL

Are you still dealing with your 2011 tax return? Do you owe a bigger tax bill than you expected? Are you missing a tax break because your adjusted gross income is too high? Would you like a bigger refund? Don't despair. You might still have time to make some changes.

UPCOMING TAX DEADLINES

March 15 - 2011 calendar-year corporation income tax returns are due. Extensions may be filed to give until September 17, 2012, to file.

March 15 - Deadline for calendar-year corporations to elect S corporation status for 2012.

April 2 - Deadline for payers who file electronically to send copies of 2011 W-2s to the Social Security Administration.

April 2 - Deadline for payers who file electronically to file 2011 information returns (such as 1099s) with the IRS.

DEADLINE FOR ELECTING S CORPORATION STATUS IS MARCH 15

If you own a small corporation, you have until March 15, 2012, to choose S corporation status for this year. In order to become an S corporation, you'll need the unanimous approval of all shareholders.

USE IT OR LOSE IT - DEADLINE APPROACHING

If your flex plan at work allows a 2½ month grace period for using the pre-tax dollars you set aside for 2011, be aware that a final deadline is approaching. You have until March 15, 2012, to use the funds you set aside for 2011 or you forfeit any leftover dollars.

PAYROLL TAX CUT IS EXTENDED THROUGH 2012

Congress passed an extension of the 2% payroll tax cut that had been scheduled to expire at the end of February. The extension means 160 million working Americans will continue to pay social security tax on their wages at a 4.2% rate for the rest of 2012, rather than at a 6.2% rate.

BE DILIGENT ABOUT SAVING YOUR TAX RECORDS

You're probably getting ready to sort out last year's financial records and prepare for this year's recordkeeping. But what should you keep and what can you throw away? Here are some suggestions.

SOME DEDUCTIONS ARE AVAILABLE EVEN IF YOU DON’T ITEMIZE

If you’ve given up itemizing deductions, you’re not alone. These days over half of all taxpayers find they’re better off using the standard deduction. But even if you take the standard deduction, you can also deduct some individual expenses on your 2011 tax return, including the following:

DEPRECIATION RULES CHANGE FOR 2012

If you're planning to buy equipment or other business assets this year, you need to be aware of the changes in how much of the cost you can deduct in 2012.

IF YOU HAVE FOREIGN INVESTMENTS, YOU MAY HAVE A NEW FILING OBLIGATION

If you own foreign investments, you may have an additional federal tax filing requirement this year.

ARE YOU IGNORING THIS NEW TAX CREDIT?

Health care legislation passed in 2010 included a tax credit for small businesses that provided health care coverage for their employees. Recent surveys have shown that the majority of small companies that could qualify for the credit have failed to take it. The reasons given for ignoring the credit ranged from being unaware of it to finding the credit too complicated to compute.

MEETINGS UNDERWAY ON PAYROLL TAX CUT EXTENSION

Last December, the 4.2% social security tax rate that workers pay on wages was extended through February 29, 2012.

IRS PLANS RANDOM SMALL BUSINESS AUDITS

The IRS plans to conduct random audits of 2,500 returns from 2010 filed by corporations with less than $250,000 in assets. The results will be used to update the IRS formulas for selecting returns for audit.

The IRS is also trying to improve tax compliance among sole proprietors. According to a Treasury report, sole proprietors accounted for 20% of the $345 billion tax gap calculated for 2001.

USE ADJUSTED TAX NUMBERS FOR 2012 PLANNING

The IRS is required by law to adjust certain tax numbers each year. Here are some of the adjusted numbers you'll need for your 2012 tax planning.

BASIS REPORTING EXPANDS THIS YEAR

Your broker statement for 2011 reported the basis in the stocks you acquired last year. This basis reporting requirement expands this year to include mutual fund shares and stock acquired in a dividend reinvestment plan. The cost basis for these investments is included in reports that brokers send to the IRS. The IRS will compare this information with the basis you report on your tax return when you sell the investment.

BRING YOUR CORPORATE MINUTES UP TO DATE

Writing up the minutes of board of directors' meetings is not exactly a high priority for most business owners. Yet well-documented corporate minutes can provide valuable supporting evidence if your tax positions are ever questioned.

MORE TAX DEADLINES AHEAD

Don't miss these deadlines if they apply to your business:

February 15 - Brokers must provide 2011 Forms 1099-B and 1099-S to customers.

February 28 - Send Forms 1099 with Form 1096 to the IRS. If you file these forms electronically, you have until April 2 to file with the IRS.

February 29 - Send Copy A of employee W-2s for 2011, along with Form W-3, to the Social Security Administration. If you file electronically, you have until April 2 to file.

March 1 - Farmers and fishermen who did not make 2011 estimated tax payments must file 2011 tax returns and pay taxes in full.

For more information or filing assistance contact our office at (518) 798-3330.

TAX TIME IS THE RIGHT TIME FOR A FINANCIAL REVIEW

Now is an ideal time to review your financial affairs. You have to gather information to prepare your tax return at this time. Why not take one more step and do something positive for your financial well-being?

CMJ, LLP HIRES TWO

CMJ, LLP is pleased to announce two additions to their staff.

Brian J. Stidd, CPA, is a Senior Associate in the firm’s Accounting, Assurance, and Advisory department. He holds a BBA in Accounting from Siena College in Loudonville, NY, and is a member of the American Institute of Certified Public Accountants and the New York State Society of CPAs. Brian is a native of West Babylon, NY and lives in South Glens Falls.

    

Amy L. Blaszkow joined the firm as an Associate in the firm’s Accounting, Assurance, and Advisory department. She holds a BS and MS in Accounting from Wagner College in Staten Island, NY and is pursuing her CPA designation.  She is a native of Whitesboro, NY and lives in Lake Luzerne.

CMJ, LLP provides financial, tax, and management advisory services for commercial enterprises. They offer specialized services in business valuations, mergers and acquisitions, estate planning, QuickBooks assistance, and retirement plan administration. For more information about CMJ, LLP, contact the firm at (518) 798-3330.

IRS ANNOUNCES BUSINESS MILEAGE RATE FOR 2012

The IRS recently announced that the mileage rate for business driving in 2012 will be 55.5¢ a mile. The rate can be used for cars, vans, pickups, and panel trucks.

RECORDKEEPING IS REQUIRED FOR CHARITABLE DEDUCTIONS

Get the documentation you'll need for all your 2011 charitable contributions, or you risk losing your deduction. Even gifts under $250 require a bank record or a receipt from the charity.

GATHER DOCUMENTS FOR YOUR 2011 TAX RETURN

Gather the items you need to file your 2011 tax return: W-2s, 1099's, and other forms you receive from your employer, broker, bank, etc. If you detect errors, contact the sender immediately for a corrected copy.

DO YOUR CHILDREN NEED TO FILE A 2011 TAX RETURN?

Check your children's need to file a 2011 tax return. A return is needed if wages exceeded $5,800, the child had self-employment income over $400, or investment income exceeded $950. If the child had both wages and investment income, other thresholds apply.

DON'T FORGET THE "NANNY TAX"

If you paid a household worker, such as a gardener, housekeeper, or nanny, more than $1,700 in 2011 (or will pay more than $1,800 in 2012), you may be liable for payroll taxes on the wages paid. For details or filing assistance in meeting your nanny tax obligations, give us a call at (518) 798-3330.

WHY EVERY CHILD SHOULD HAVE A ROTH IRA

What if your child could invest tax-free money today, and in 40-50 years take the proceeds out tax-free? Would you be interested? Almost anyone who receives compensation can open up a Roth IRA account. 

2012 TAX LAW CHANGES IN BRIEF

* PAYROLL TAX CUT for employees extended through February
  29, 2012. (Social security tax rate on wages up to
  $110,100 will be 4.2% rather than 6.2%.)
* ADOPTION TAX CREDIT decreases to $12,650 for adoption
  of an eligible child.
* SECTION 179 maximum deduction decreases to $139,000,
  with a phase-out threshold of $560,000.
* STANDARD MILEAGE RATE for business driving remains at
  55.5¢ a mile. Rate for medical and moving mileage
  decreases to 23¢ a mile. Rate for charitable driving
  remains at 14¢ a mile.
* ESTATE TAX top rate remains at 35%, and the exemption
  amount increases to $5,120,000. The ANNUAL GIFT
  TAX EXCLUSION remains at $13,000.
* 401(k) maximum salary deferral increases to $17,000
  ($22,500 for 50 and older).
* SIMPLE maximum salary deferral remains at $11,500
  ($14,000 for 50 and older).
* IRA CONTRIBUTION LIMIT remains at $5,000 ($6,000 for
  50 and older).
* KIDDIE TAX threshold remains at $1,900 and applies up
  to age 19 (up to age 24 for full-time students).
* NANNY TAX threshold increases to $1,800.
* TRANSPORTATION FRINGE BENEFIT limit decreases to $125
  for vehicle/transit passes and increases to $240 for
  qualified parking.
* SOCIAL SECURITY taxable wage limit increases to
  $110,100. Retirees under full retirement age can earn
  up to $14,640 without losing benefits.
* HSA CONTRIBUTION limit increases to $3,100 for
  individuals and to $6,250 for families. An additional
  $1,000 may be contributed by those 55 or older.

HIGHLIGHT JANUARY TAX DEADLINES ON YOUR CALENDAR

* January 17 - Final 2011 individual estimated tax payment is due, unless your 2011 tax return is filed and taxes are paid in full by January 31, 2012.

* January 17 - Due date for calendar-year trusts and estates to pay final installment of 2011 estimated tax.

* January 31 - Employers must furnish employees with W-2 statements for 2011. 1099 information statements for 2011 must be furnished by payers. (Deadline for 1099-B and consolidated statements is February 15.)

* January 31 - Employers must generally file 2011 federal unemployment tax returns and pay any tax due.

LAST-MINUTE 2011 DEAL REACHED ON PAYROLL TAX CUT

On December 23, 2011, Congress finally approved a two-month extension of the payroll tax cut for American workers.

TO SUCCEED IN BUSINESS, HAVE A PLAN

Taking a trip without a map may get you lost, and trying to run a business without a plan is likely to have the same result.

A business plan is a map, your company's written guide into the future. Not only does a good plan let you know where you are and where you're headed, it provides potential lenders and investors with a portrait of your company.  Each plan will differ, but certain items are essential.