Category

2011

Who Really Pays the Tax?

By 2011, Tax Tips

We see many ads and much talk on TV regarding who pays how much tax – here are the FACTS as published by the IRS for the tax year 2009:

  • The top 1% of all filers paid 36.7% of all Federal income taxes – AGI of over $343,927.
  • The top 5% of all filers paid 58.7% of all Federal income taxes – AGI of over $154,653.
  • The top 10% of all filers paid 70.5% of all Federal income taxes – AGI of over $112,124.
  • The bottom 50% of all filers paid 2.25% of all Federal income taxes.

Not a political comment – just the FACTS!

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Social Security Wage Base

By 2011, Tax Tips

The Social Security Wage Base for 2012 will jump to $110,000, a $3,300 increase over this year’s figure and the first increase since 2009.

For 2011, the rate on employees was reduced to 4.2% from 6.2%. We think that Congress will extend this break for 2012 and possibly expand the reduction to 3.1% for employees AND employers; however, this is still up in the air.

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Retirement and Contributions for 2012

By 2011, Tax Tips

Benefit Plans: Several key ceilings on retirement plans will be higher next year: The maximum 401(k) contribution rises to $17,000 in 2012, up $500 over this year. Individuals born before 1963 can put in as much as $22,500. The contribution limits apply to 403(b) and 457 plans as well. The ceiling on SIMPLEs will remain $11,500. Folks age 50 or older in 2012 can put in an additional $2,500.

Plan contributions can be based on up to $250,000 of salary next year. The payin limitation for defined contribution plans increases to $50,000 in 2012. That’s a $1,000 increase for Keogh plans, profit sharing plans and the like.

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Reporting Capital Gains for 2011 is going to be More Complicated

By 2011, Tax Tips

Capital Gains: Reporting your capital gains for 2011 is going to be more complicated. You will have to use two forms. Form 8949 and Schedule D. The reason? Basis reporting rules that went into effect for securities bought after 2010 and sold in 2011 and later. All sales will be listed on the 8949, and the totals will be carried to Schedule D. Separate 8949s must be filed for sales where the basis is reported by the broker, for sales where the tax basis isn’t reported and for any disposition where no 1099-B is received reporting the gross proceeds. This way, the Service will be able to cross-check the basis information it receives with the sellers’ returns.

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News for Our Business Clients

By 2011, Tax Tips

1. New 1099-K reporting form for 2011 
All businesses accepting credit cards will receive a form 1099-K from their credit card processor in January of 2012. There will be a separate line on your business tax return (Schedule C, 1065, or 1120) to report credit card sales. Therefore, we will need this 1099 Form as soon as you receive the form in order to properly complete your 2011 business tax return.

2. FUTA tax rate change
The FUTA tax rate was reduced from .008 to .006 effective July 1, 2011. This rate change will be reflected when we prepare your Form 940 for 2011.

3. HIRE Credit 
Just a reminder that there is a $1,000 tax credit for any employee hired between February 3, 2010 and December 31, 2010, who qualified for the HIRE credit and remained employed by the employer for 52 consecutive weeks. This credit will be taken on the 2011 tax return for the business.

4. NEW – Workers Compensation Deductible
Colorado law now permits an employer to buy Workers’ Compensation Insurance with a deductible ranging from $500-$5,000. We suggest that you contact your Workers’ Comp carrier and discuss these options to see if the reduction in premium at the various deductible levels makes sense for your company.

5. S-Corp Health Insurance
Just an early reminder that health insurance premiums for more than a 2% shareholder in an S-Corp must be reported on Lines 1, 14, and 16 on the W-2 Forms. Those of you using a payroll service bureau, remember to provide this information to your payroll company prior to December 31, 2011.

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News for Individual and Business Clients

By 2011, Tax Tips

1. A reminder that the filing extension deadline for individuals on extension for 2010 is October 17th !! Please have your information to us NO LATER than October 10th to be certain that we may meet this filing deadline.

2. The Colorado Department of Revenue has announced a Tax Amnesty Program from October 1 – November 15, 2011. For more information on this program, please see: Colorado Tax Amnesty Program

3. The City and County of Denver has announced a Tax Amnesty Program from October 1 – December 31. For more information on this program, please see: Denver Tax Amnesty Program

4. Please contact us if we may help with either of these tax amnesty programs, or with any other tax questions you may have.

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Colorado Tax Amnesty Program

By 2011, Tax Tips

The Colorado Department of Revenue will allow certain taxpayers to pay the full amount of overdue taxes, including one-half of any interest due, without being subject to any other civil or criminal penalties.

The Colorado Tax Amnesty Program will run from October 1 through November 15, 2011 and applies to taxes that were due on or before December 31, 2010. The amnesty DOES NOT include 2010 Colorado income tax, which was due April 18, 2011.

Other exclusions are:

  • Tax delinquency. If the taxpayer receives a delinquency notice on for before Oct. 1, 2011 for a particular tax and filing period, that amount is not eligible for tax amnesty.
  • Criminal investigation. Taxpayers facing criminal investigation are not eligible for tax amnesty.

The Colorado tax amnesty program applies to the following types of taxes:

  • Personal, corporate, partnership and fiduciary income taxes
  • State sales and use tax and the following taxes collected by the Department of Revenue on behalf of counties and municipalities: county or city taxes; local marketing and promotion taxes; county lodging taxes; county rental taxes; local improvement district sales taxes; regional transportation authority sales and use tax; Denver metropolitan scientific and cultural facilities district sales and use taxes, metropolitan football stadium district sales and use tax, and regional transportation district sales and use tax.
  • Gasoline and special fuel taxes
  • Cigarette and tobacco products taxes
  • Severance taxes

NOTE: International Fuel Tax Agreement (IFTA) taxes are NOT eligible for amnesty.

If a taxpayer has an eligible tax return, a payment plan may be set up. However, the full amount of the tax and half of any interest due must be paid no later than Dec. 31, 2011.

No supplemental application or documentation is required to be considered for amnesty. The department will consider for amnesty any eligible return filed during the amnesty period.

Any AMENDED Colorado tax return will require a special application in order to be considered for amnesty.

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Denver Tax Amnesty Program

By 2011, Tax Tips

Announcing 
(For a Limited Time Only)

DENVER TAX AMNESTY PROGRAM

WHO: Licensed and unlicensed businesses and individuals, who have unreported taxes due to the City and County of Denver.
WHAT: Sales Tax, Use Tax, and Occupational Privilege Tax for any period ending on or before June 30, 2011.
WHEN: October 1, 2011 through December 30, 2011.
WHY: To HELP!

  • Businesses can save penalty and half the interest costs on unreported or underpaid Denver taxes.
  • Denver can speed up collections and add previously unlicensed businesses to the tax rolls.
  • Other businesses will benefit from the “level playing field” of competitors paying their fair share of taxes due.
HOW: Submit a completed Application for Tax Amnesty with payment of the tax due plus one-half the normal interest due.
WHERE: To get complete information and an application go to: www.denvergov.org/treasury

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The IRS Increases Mileage Rate to 55.5 Cents per Mile

By 2011, Tax Tips

The Internal Revenue Service today announced an increase in the optional standard mileage rates for the final six months of 2011 . Taxpayers may use the optional standard rates to calculate the deductible costs of operating an automobile for business and other purposes.

The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011 through Dec. 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011, as set forth in Revenue Procedure 2010-51.

In recognition of recent gasoline price increases, the IRS made this special adjustment for the final months of 2011. The IRS normally updates the mileage rates once a year in the fall for the next calendar year.

“This year’s increased gas prices are having a major impact on individual Americans. The IRS is adjusting the standard mileage rates to better reflect the recent increase in gas prices,” said IRS Commissioner Doug Shulman. “We are taking this step so the reimbursement rate will be fair to taxpayers.”

While gasoline is a significant factor in the mileage figure, other items enter into the calculation of mileage rates, such as depreciation and insurance and other fixed and variable costs.

The optional business standard mileage rate is used to compute the deductible costs of operating an automobile for business use in lieu of tracking actual costs. This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.

The new six-month rate for computing deductible medical or moving expenses will also increase by 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

The new rates are contained in Announcement 2011 40 on the optional standard mileage rates.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

Mileage Rate Changes

Purpose Rates 1/1 through 6/30/11 Rates 7/1 through 12/31/11
Business 51 55.5
Medical/Moving 19 23.5
Charitable 14 14

READ the IRS Notice:
IRS Increases Mileage Rate to 55.5 Cents per Mile

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