2009 standard mileage rates

• Business mileage:  55 cents per mile
• Medical/moving mileage:  24 cents per mile
• Charitable mileage:  14 cents per mile

These rates take affect on January 1, 2009.

Source:  www.irs.gov

QUICK FIND FOR GENERAL LEDGER ACCOUNT NUMBERS

When entering transactions into your accounting system, it is cumbersome to scroll through your chart of accounts to find the general ledger account you are looking for.  Here is a quick tip to be able to see your account numbers a little more easily.

If you are a Peachtree user (version 2007 or higher): 

Instructions may vary depending on your specific version

• Go to OPTIONS and select GLOBAL
• Click on the General tab
• Find the section “Smart Data Entry”
• Put a check mark in the box titled “Drop-down lists displays automatically”
• Click OK when you are finished
• The change will take effect instantly.  Now when you are entering transactions the chart of accounts list will drop down automatically, making it easier to find which general ledger account you wish to use.

If you are a Quickbooks user (version 2007 or higher):

Instructions may vary depending on your specific version

• Go to EDIT and select PREFERENCES
• Select GENERAL on the left side of the screen
• Click on the “My Preferences” tab
• Put a check mark in the box titled “Automatically open drop-down lists when typing”
• Click OK when you are finished
• The change will take effect instantly.  Now when you are entering transactions the chart of accounts list will drop down automatically, making it easier to find which general ledger account you wish to use.

Please contact our office if you have any questions or need any further assistance in changing your preferences.

ATTENTION ALLENTOWN EMPLOYERS

Effective January 1, 2009 the City of Allentown has contracted with Keystone Collections Group to be the collector of earned income tax (EIT) and local services tax (LST).

You should continue remitting any payments to the City of Allentown for the remainder of 2008 (including 4th quarter and annual reconciliation).  Keystone Collections Group will begin collecting for EIT and LST with the 1st quarter of 2009.

Please visit www.allentownpa.gov for more information or to download necessary forms.

Source:  City of Allentown, Tax & Utility Systems

10 IMPORTANT ITEMS FOR AN EMPLOYER'S YEAR-END "TO DO" LIST

1. Review and update employee policies.  Now is the time to review company and employee policies and update them accordingly to ensure they are still meeting your needs and are in compliance wit current labor and employment laws.

2. Update your labor posters.  Failure to post required labor notices could result in fines of up to $7,500 per incident.

3. Conduct performance reviews.  As the year-end approaches, make sure you are maximizing your available resources by letting employees know exactly where they stand.

4. Audit your employment practices.  Failure to comply with state & federal labor laws can result in hefty government fines, court fees, and a tarnished reputation.

5. Develop a hiring strategy.  With the market and economy in flux you need a plan to be sure staff levels are optimal and you’re maximizing opportunities for profits.

6. Review your employment screening practices.  If you are not already doing so, it would be wise to start running background checks on all applicants you intend to hire in 2009.

7. Improve teamwork & communication.  Now more than ever, having all employees on the “same page” is essential.  Make it your resolution for the New Year to improve communication and teamwork within your company.

8. Review employee records.  Proper record keeping practices can be a powerful administrative tool for protecting your business from legal liability and helping you to operate more efficiently.  Now is the perfect opportunity to ensure records are organized correctly and that you are retaining the documents that are required by law.

9. Review and update/create job descriptions.  Make sure you have job descriptions for every position within your company.  The benefits are too many to list!

10. Celebrate success with your employees.  Be sure you recognize employee achievements and let them know their hard work hasn’t gone unnoticed.

Source:  “The Peachtree Insider”, Sage Software

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Weekly Tax Tips

September 6, 2010
August 30, 2010
August 23, 2010
August 16, 2010

Monthly Tips

Business September 2010
Financial September 2010

JANUARY OFFICE HOURS

• Monday:  9am – 5pm
• Tuesday – Friday:  8am – 5pm

Closed daily for lunch 12:00 – 1:00 PM

4th quarter and year-end payroll information due

Please remember to submit your 4th Quarter 2008 and Year-End 2008 payroll information (including W-2 and 1099 info) to our office no later than January 19, 2009.  Any information received after that date will incur a $100 surcharge.

cancellation of debt

The 2008 National Taxpayer Advocate Report finds that many taxpayers may be paying taxes they don’t owe because IRS instructions do no adequately explain exceptions to “cancellation of indebtedness” income.  If a taxpayer borrows money and the debt is canceled, the taxpayer generally must include the amount of debt cancellation in gross income.  While Congress passed legislation granting temporary relief relating to mortgages, taxpayers received abut two million Forms 1099-C reporting canceled debts last year, many relating to defaults on automobiles and credit card bills.

There are several exceptions to the general rule that these amounts are taxable, including an exception that applies to the extent a taxpayer is insolvent (meaning the taxpayer’s liabilities exceed the taxpayer’s assets).  In many if not most cases, the insolvency exception will shield canceled debts from gross income because affected taxpayers, almost by definition, are taxpayers who lack sufficient assets to cover their liabilities.  However, IRS instructions do not explain the exceptions clearly.  For example, the instructions to Form 1040 list canceled debts under the heading of “Examples of income to report” and make no mention of exceptions.

Exclusion from Income (§108)

However, cancellation of debt is excludable from income if it occurs:

Cancellation of Acquisition Indebtedness on Principal Residences Excluded from Gross Income (Mortgage Forgiveness Debt Relief Act of 2007)

The sub-prime mortgage crisis is expected to cause 2.5 million home foreclosures in the next few years.  A taxpayer subject to foreclosure might end up homeless and still face a nasty tax bill from Uncle Sam for cancellation of debt income.  To address this looming tax dilemma, Congress retroactively added a new §108 exclusion to cancellation of debt income. 

Effective for discharges of indebtedness on or after January 1, 2007 and before December 31, 2009, the Mortgage Forgiveness Debt Relief Act of 2007 excludes from a taxpayer’s gross income any discharge (in whole or in part) of qualified principal residence indebtedness.

Qualified principal residence indebtedness means acquisition indebtedness.  Qualified principal residence indebtedness does not include home equity indebtedness.  Acquisition indebtedness with respect to a principal residence generally means indebtedness which is incurred in the acquisition, construction, or substantial improvement of the principal residence of the individual and is secured by the residence.  It also includes refinancing of such indebtedness to the extent the amount of the refinancing does not exceed the amount of the refinanced indebtedness.

Note:  For these purposes, the term “principal residence” does not include the taxpayer’s vacation home, rental or investment property.

When a portion of the mortgage is acquisition indebtedness:  If, immediately before the discharge, only a portion of a discharged indebtedness is qualified principal residence indebtedness, the exclusion applies only to so much of the amount discharged as exceeds the portion of the debt which is not qualified principal residence indebtedness.

Example:  Assume Sharon’s principal residence is secured by an indebtedness of $1 million, of which $800,000 is qualified principal residence indebtedness.  If the residence is sold for $700,000 and $300,000 of the debt is discharged, then only $100,000 of the amount discharged may be excluded from Sharon’s gross income under this provision.

WARNING:  Homeowners who refinanced their principal residence mortgage to pay off personal credit card debts, car loans or for other personal uses are not entitled to this new exclusion and will have cancellation of debt income.

Basis reduction:  The basis of the individual’s principal residence is reduced by the amount excluded from income.

Bankrupt or insolvent taxpayers:  The exclusion does not apply to a taxpayer in a Title 11 bankruptcy case; instead the present-law exclusion at §108(a)(1)(A) applies.  In the case of an insolvent taxpayer not in bankruptcy, the exclusion under the bill applies unless the taxpayer elects to have the present-law exclusion at §108(a)(1)(B) apply.

Source:  2008 Individual Tax Update