Marietta Financial Services | CPA Indianapolis

There have been many changes to the tax laws over the past few years.  To keep you informed, we have summarized some of these changes.  Today, we are covering corporate actions reporting.

As of January 1, 2011, organizations that issue “specified securities” must report actions that affect security basis made within the tax year to the IRS.  In general, the return must be filed within 45 days of the action.  Those affected by the corporate action must be given a written statement showing (1) the name, address, and phone number of a the person filing the form, (2) the information required for the return, and (3) any other info required by the IRS. In general, a specified stock is any share of stock in an entity formed as a foreign or domestic corporation.

If you have any questions regarding this change to the tax laws or tax planning in general, please contact our office.

© 2011 Thomson Reuters/RIA. All rights reserved.

Tags: 2011 tax Changes, specified securities, tax planning, Tax Preparation

Investors have been affected by the recent changes in tax law. The reporting required for brokers transferring covered securities alters the information shared with the IRS.

Effective Jan. 1, 2011, every broker filing an information return reporting the gross proceeds of a “covered security” such as corporate stock, must include in the return the customer’s adjusted basis in the security including any short-term or long-term gain or loss.  A covered security includes all stock acquired beginning in 2011, except stock in certain regulated investment companies (i.e, mutual funds) and stock acquired in connection with a dividend reinvestment plan (both of which are covered securities if acquired beginning in 2012).

We would be happy to answer any questions you may have regarding these changes to the tax code, as well as tax planning in general.

© 2011 Thomson Reuters/RIA. All rights reserved.

Tags: 2011 tax Changes, corporate stock tax reporting, covered securities, tax planning, Tax Preparation

Changes to the tax laws over the past few years will affect many of our clients.  To keep you informed, we have been summarizing some of these changes.  Today, we are covering the retained workers credit.

Claiming “Retained workers” can qualify a business for up to $1000 credit in 2011 – Employers may claim a “retention credit” for retaining qualifying new employees or certain formerly unemployed workers meeting specific requirements. However, the credit applies only for qualifying employees hired after Feb. 3, 2010, and before Jan. 1, 2011.

Please contact our office with any questions regarding tax preparation.

© 2011 Thomson Reuters/RIA. All rights reserved.

Tags: 2011 tax Changes, Employee Taxes, tax planning, Tax Preparation

The new tax rules enacted over the past few years have affected many areas of the tax code.  For your information, we have summarized below the changes related to retirement plans.  Be sure to talk to your accountant about the changes as part of your annual tax planning conversations.

1. Small employers may establish “simple cafeteria plans.” –  In 2011, companies employing under 100 people on business days during either of the past two years, may offer a “simple cafeteria plan,” and will be exempt from nondiscrimination requirements set by these plans.

2.  Election to treat January 2011 charitable distributions as made in 2010 – Individuals over 70 1/2 can make tax-free charitable contributions from an IRA of up to $100,000, for transfers made in fiscal years before 2012.  Also, if the contribution is made in 2011, it can be treated like it was paid out on December 31, 2010.  This allows that contribution to apply to the 2010 exclusion and may apply to the 2010 minimum distribution for an IRA.

If you have any questions on how these changes affect you, please contact our office.

© 2011 Thomson Reuters/RIA. All rights reserved.

Tags: retirement plan, small business retirement plan, small business tax planning, tax changes, tax planning

Over the past few years there have been many changes to the tax code.  To keep you informed, we have provided a summary of these modifications.

Within the personal income tax realm, the following policies are in place for 2011.

1.  Payroll tax holiday – Employees will pay only 4.2% (instead of the usual 6.2%) Social Security tax on payroll income received during 2011 up to the 2011 wage base of  $106,800.  Self-employed persons will pay only 10.4% Social Security self-employment taxes on self-employment income up to $106,800.

2. Stricter rules on energy-saving home improvements – Rules surrounding energy-saving home improvements will be more strict for those done in 2011 than in 2010. Only a 10% credit can be claimed for qualified energy property placed in service in 2011, and a $500 lifetime limit is in place (only up to $200 can be from windows and skylights). Also, there are limits on the amount you can claim based on claims you place in previous years. Finally, limits have been placed on claims for particular equipment.

3.  Changes to how non-retirement plan annuities are taxed – For amounts received from annuity contracts in tax years beginning after Dec. 31, 2010, taxpayers may partially annuitize such an annuity (or endowment, or life insurance) contract. This change allows each annuity payment  to be treated as partially  a tax-free recovery of basis and partially a taxable distribution of earnings.

4.  Stricter definition of “medicine” for health plan reimbursements – New in 2011, payments for over-the-counter medicines cannot be reimbursed through a health flexible spending arrangement (FSA), health reimbursement account (HRA), health savings account (HSA), or Archer MSA (medical savings account), unless the medicine is prescribed by a doctor or is insulin. Also, for distributions starting in 2011, the tax on distributions from an HSA that are not used for qualified medical expenses increases from 10% to 20% of the disbursed amount, and the tax on distributions from an Archer MSA that are not used for qualified medical expenses increases from 15% to 20% of the disbursed amount.

If you’d like to discuss how these changes affect your personal tax situation, or about tax planning in general, please give us a call.

© 2011 Thomson Reuters/RIA. All rights reserved.

Tags: 2011 tax Changes, Annuity Taxes in 2011, Medical Expenses Deductions, Payroll Tax holiday

Many tax breaks for individuals that expired at the end of 2009 will be retroactively reinstated and extended through 2011, including: the $250 above-the-line deduction for certain expenses of elementary and secondary school teachers; the election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes; increased contribution limits and carryforward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes; the above-the-line deduction for qualified tuition and related expenses; the provision that permits tax-free distributions to charity from an Individual Retirement Account (IRA) of up to $100,000 per taxpayer, per tax year (additionally, individuals will be allowed to make charitable transfers during January of 2011 and treat them as if made during 2010); the increase in the monthly exclusion for employer-provided transit and vanpool benefits to that of the exclusion for employer-provided parking benefits. In addition, the bill will extend for an additional year (i.e., through 2011), the rule allowing premiums for mortgage insurance to be deductible as interest that is qualified residence interest.

Please contact us with questions about your tax return or tax planning in general.

© 2010 Thomson Reuters/RIA. All rights reserved.

Tags: Expired tax breaks, Indianapolis CPA, Indianapolis Tax Consulting, indianapolis tax planning, Tax Consultants Indianapolis, tax law, Year-End Tax Planning

Health Savings Accounts provide an opportunity for individuals to reduce their taxable income as they set aside funds to cover medical expenses not covered by insurance, such as deductibles and prescriptions.  There are however some reporting requirements.  As you are finalizing your 2010 tax returns be sure you have the following forms .

• Tax form 5498-SA: This form reports contributions made to an account holder’s Health Savings Account (HSA) by the account holder or by an eligible individual on the account holder’s behalf, as well as contributions made by their employer, if applicable. The IRS requires this form be issued to every account holder who had any contribution activity in their HSA during the previous tax year (2010).
• Tax form 1099-SA: This form reports distributions made from an account holder’s HSA. The IRS requires this form to be issued if you took a distribution from their HSA during the previous tax year (2010).
• IRS form 8889: Account holders must obtain, complete and file IRS Form 8889 as part of the federal tax filing by April 18, 2011. It is downloadable from www.irs.gov or  If both spouses have an HSA, then two forms are required (one for each account)

The Tax Relief Act  created  a payroll cut for 2011. Under current law employees pay a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed individuals pay a 12.4% Social Security self-employment taxes of on all their self-employment income up to the same threshold. The bill provides a payroll/self-employment tax holiday during 2011 of two percentage points. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the threshold.

If you have any questions about calculating employee payroll taxes, or tax planning in general, give us a call.

© 2010 Thomson Reuters/RIA. All rights reserved.

Tags: Employee payroll taxes, Indianapolis CPA, Indianapolis Tax Consulting, indianapolis tax planning, Tax Consultants Indianapolis, tax law, Year-End Tax Planning

Indiana’s employee withholding tax form,  with instructions in Spanish, is now available on our website for printing.  If you have any questions on how to complete the form, please contact our office.

Tags: Indiana tax form WH-4, indiana tax forms, spanish tax form instructions

The Tax Relief Act of 2010 extended many individual and business tax breaks through 2011. The list of energy related provisions that will be extended through 2011 include: the $1.00 per gallon production tax credit for biodiesel, as well as the small agri-biodiesel producer credit of 10 cents per gallon; the $1.00 per gallon production tax credit for diesel fuel created from biomass; the placed-in-service deadline for qualifying refined coal facilities; the credit for manufacturers of energy-efficient residential homes; the $0.50 per gallon alternative fuel tax credit (but the credit will not be extended for any liquid fuel derived from a pulp or paper manufacturing process); the suspension on the taxable income limit for purposes of depleting a marginal oil or gas well; the Code Sec. 45M credit for US-based manufacture of energy-efficient clothes washers, dishwashers and refrigerators (with modified standards); the Code Sec. 25C credit for energy-efficient improvements to existing homes (reinstating the credit as it existed before passage of the American Recovery and Reinvestment Act (standards for property eligible under 25C are updated to reflect improvements in energy efficiency); and the 30% investment tax credit for alternative vehicle refueling property.

Various disaster relief provisions also will be extended through 2011, including: the time for issuing New York Liberty Zone bonds, effective for bonds issued after Dec. 31, 2009; the increased rehabilitation credit for qualified expenditures in the Gulf Opportunity Zone; and the additional depreciation deduction claimed by businesses equal to 50% of the cost of new property investments made in the Gulf Opportunity Zone (expenditures in 2011 will be eligible if the property is placed in service by Dec. 31, 2011).

If you have any questions about how the Tax Relief Act of 2010 affects you, or on tax planning in general, give us a call.

© 2010 Thomson Reuters/RIA. All rights reserved.

Tags: Extended tax breaks, Indianapolis CPA, Indianapolis Tax Consulting, indianapolis tax planning, Tax Consultants Indianapolis, tax law, Year-End Tax Planning