Stortz and Associates
June 2008 Newsletter

minimum wage changes to go into effect in july 2008

For most employers, the minimum wage rate in PA increased to $7.15 per hour in 2007.  The exception was employers who have an employee complement composed of the equivalent of 10 or less full-time employees.  This group of small business owners had been allowed to pay employees at a lower minimum wage ($6.65, eff. 7/01/07).  The exception for these employers is coming to an end.  Effective July 1, 2008, the minimum wage rate for smaller employers will rise to the regular PA minimum wage of $7.15 per hour.

Another change taking place in July 2008 is the “Training Wage” rate for employees under 20 years of age.  The rate will increase to $6.55 per hour, effective July 24, 2008.  (For details on this class of employees and other restrictions, visit the Department of Labor & Industry at www.dli.state.pa.us.)

The next increase employers will see will be effective July 24, 2009 when the federal minimum wage will increase to $7.25 per hour.  This change will be for all PA employers, large and small.  At that time, the lower “Training Wage” will no longer be allowed.

Make sure your labor posters are up-to-date.  For free posters, click here.

For information on the minimum wage around the country, click here.

Source:  PA Department of Labor & Industry, www.dli.state.pa.us

year-end closing procedures

After your corporate year is over, the tax return is completed and you have entered the Year End Adjusting Journal Entries from our office and the Trial Balance reports agree, you then need to close out the year in your accounting software.

To close your fiscal year, please complete the following:

If you are a Peachtree user:

  • For Peachtree, it is imperative that you close your fiscal year, as Peachtree only allows two fiscal years open at the same time.  To perform the year-end close procedures, you will need to make a backup – so have your CD, floppy, or jump drives easily accessible.
  • Complete the following:
  • From the Peachtree main menu, go to Tasks/System/Year End Wizard
  • The year-end wizard will walk you through the process of closing out your earliest open payroll tax year and/or fiscal year.
  • NOTE:  You may be closing BOTH a payroll year and a fiscal year.  At every point in the process, the wizard makes your options clear.  It is important to accept all defaulted information as it appears in the wizard.  DO NOT change any accounting periods.  One exception to this rule is that if the wizard prompts you to print any reports or unprinted items, you can bypass this by removing the selections.  (You do not have to print all these reports, just click on the checkmarks to remove them).  Also, you can bypass the Internal Accounting Review by clicking “next”.    
  • BACKUP:  The wizard forces you to create a backup before continuing.  This backup will become a permanent one.  This means is should be labeled accordingly (i.e. Permanent Backup – Do Not Use) and it should be stored away in a safe place.
  • After the wizard is complete, you will see a Congratulations dialog box.  Click the FINISH box to finalize the process. 

If you are a Quickbooks user:

You will need to set a closing date to close your fiscal year.  To do so, complete the following:

  • Go to Edit/Preferences, choose the accounting option on the left side of the screen and then choose the company preferences.  (You may need to log in as administrator).
  • Click on the SET/DATE password button and change the closing date to your fiscal year (i.e. 12-31-07), click OK, then OK again to save your changes.  Having a password ensures that no data is changed from the closed year.  Please provide Stortz & Associates with the password for safekeeping.

If you have any questions on how to close out your corporate tax year-end, please contact your account executive.

 

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economic stimulus rebate: frequently asked questions

The IRS began distribution of stimulus rebate payments in early May 2008 and the initial round of payments will continue on a weekly basis through mid-July.  (Distribution takes place according to a schedule set by the last two digits of the primary taxpayer’s social security number.  Please refer to our April 2008 newsletter for a detailed schedule of payment dates.)  Many taxpayers have questions regarding their rebate – here are some of the most frequently asked questions. 

Q. I filed after April 15 and the payment date for my Social Security number has passed. How long will it take for me to get my stimulus payment?  It will generally take a minimum of six weeks after you file your return to get your stimulus payment. 

Q. I filed my return on time, but I haven’t received my stimulus payment, even though the payment date listed for my Social Security number has passed. Why?  In general, the payment schedule only applies if your return was received and the IRS finished processing it before April 15. If you filed your return on time, but close to the April 15 deadline, the IRS may not have finished processing it before April 15.  Processing times for tax returns and stimulus payments vary. If you are getting a regular income-tax refund, the IRS will send you that refund first. Normally, your stimulus payment will follow one to two weeks later.  If you are not expecting a regular tax refund, your stimulus payment generally should arrive a minimum of six weeks after you file.  Also, if you had your refund deposited into more than one account, you will receive a paper check based on the distribution schedule for paper checks. 

Q. Will the IRS allow me to provide it with direct deposit information, if I didn’t include that information on my original tax return?  You cannot correct direct deposit information or request a direct deposit after a return has been filed. 

Q. Is there something I can do to prevent my stimulus payment from being automatically deposited into the account that I identified for the direct deposit of my regular refund? Generally, if you designated direct deposit on a tax return, the stimulus payment will go to the account number you designated. If the account number is no longer active, the IRS will send you a paper check. This process may take several weeks. 

Q. I received my stimulus payment, but it was less than what my friends and neighbors received. Why?  Your economic stimulus payment is based on information provided on your 2007 income tax return.  Many but not all taxpayers qualify for the maximum basic payment of $600 for singles or $1,200 for married couples. Many parents are also receiving an additional $300 for each qualifying child born after Dec. 31, 1990. Your payment may be less than the maximum for one or more of the following reasons:

  • You are single and your net income tax liability is less than $600.
  • You are married and your net income tax liability is less than $1,200.
  • You are single and your adjusted gross income (AGI) is more than $75,000.
  • You are married filing a joint return and your AGI is more than $150,000.
  • You owe back taxes that reduced your payment.
  • You have non-tax federal debts such as unpaid student loans or child-support obligations that reduced your payment.

Around the time you receive your payment, you will also receive a notice from the IRS explaining how your payment was calculated. It is important to keep this notice as a record of your economic stimulus payment. In addition, you’ll get a separate notice if you owe back taxes or non-tax debts that were offset or deducted from your stimulus payment. 

Q: I normally don't need to file a tax return. How do I know if I'm one of those people who may be eligible to receive an economic stimulus payment?  This group includes some recipients of Social Security, Railroad Retirement or veterans' benefits as well as taxpayers who do not make enough money to normally have to file a 2007 tax return. For example, this can include low-income workers, those who receive Social Security benefits or those who receive veterans’ disability compensation, pension or survivors’ benefits from the Department of Veterans Affairs. These people will be eligible to receive a payment of $300 ($600 on a joint return), if they had at least $3,000 of qualifying income.  Qualifying income includes Social Security benefits, certain Railroad Retirement benefits, certain veterans’ benefits and earned income, such as income from wages, salaries, tips and self-employment. For people filing joint tax returns, only a total of $3,000 of qualifying income from both spouses is required to be eligible for a payment. For more information on these and other rebate-related questions, log onto the IRS website by clicking here. 

Source:  www.irs.gov

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