EM NARI Newsletter February 2012 : 1

EM NARI News Eastern Massachusetts this issue Tax Tips P.01 Letter From The President P.04 In The Know P.04 Meeting Recap P.06 Member Spotlight P.10 Calendar P.11 Programs P.12 EM NARI News | Issue 07 | February 2012 Tax Tips Andrew T. Kofman, JD, CPA As you prepare to file your 2011 income tax returns be aware that there are still opportunities available to reduce your 2011 tax liability: Home Office Deduction If a portion of your residence is used for business purposes, you may be able to claim a portion of your home expenses against your business income if you meet certain conditions. Domestic Production Activities Deduction for construction/remodeling companies A deduction is permitted (if certain conditions satisfied) equal to the lesser of 9% of taxable income or 50% of W-2 wages paid during the year. Contributions to Retirement Plans In addition to IRAs, there is one other type of retirement plan “Simplified Employee Pension (SEP)” that can be set up to reduce taxable income. Reference the Tax Data Table for 2011 and 2012 for more information. FEDERAL TAX DATA FOR 2012 AND 2011 2011 51.0/55.5 14.0 Under Age 50 $ 5,000 $11,500 $16,500 $49,000 $49,000 Over Age 50 $ 6,000 $14,000 $22,000 $49,000 $49,000 Business Auto Standard Mileage Rates (cents) Business Charitable Retirement Plan Contribution Limits IRA Contributions Simple IRA 401(k)/403(b) SEPs Profit Sharing-per particip. 2012 55.5 14.0 Under Age 50 $ 5,000 $11,500 $17,000 $50,000 $50,000 Over Age 50 $ 6,000 $14,000 $22,500 $50,000 $50,000 Section 179 Deduction Limits On Acquisition Of Depreciable Property 2012 $125,000 (Equipment purchases must be under $500,001) 2011 $500,000 (Equipment purchases must be under $2,000,001) Social Sec. Wage Base Auto Write-Off (1st Yr) 100% Bus. Use (2011) 2011 $106,800 2012 $110,100 Luxury Auto/Light SUV, Vans $3,060/$3,260 SUVS (certain kinds) $25,000

Tax Tips

Andrew T. Kofman, JD, CPA As you prepare to file your 2011 income tax returns be aware that there are still opportunities available to reduce your 2011 tax liability: Home Office Deduction If a portion of your residence is used for business purposes, you may be able to claim a portion of your home expenses against your business income if you meet certain conditions. Domestic Production Activities Deduction for construction/remodeling companies A deduction is permitted (if certain conditions satisfied) equal to the lesser of 9% of taxable income or 50% of W-2 wages paid during the year. Contributions to Retirement Plans In addition to IRAs, there is one other type of retirement plan “Simplified Employee Pension (SEP)” that can be set up to reduce taxable income. Reference the Tax Data Table for 2011 and 2012 for more information. Other Tax Changes for 2011 Landlords - Rules for Tax Year 2011 Individuals receiving rental income from real estate must file Form 1099 if they make payments for services (such as plumbing, painting, accounting etc.) to an individual totaling more than $600. This rule is similar to businesses and the IRS has included questions right on the tax returns inquiring as to if 1099s should be prepared and were they prepared. Retained Worker Credit If employees were hired after 2/4/10 and worked at least 52 consecutive weeks, the company may be eligible for a tax credit (other conditions apply). Health Care Tax Credit If the Company paid more than 50% in total of employee’s health insurance premiums other than owners, the company may be eligible for a tax credit (other conditions apply). Extension for 2 months 2% reduction in employee social security withholding for Tax Year 2012. It may be extended for the entire year. For January and February 2012, employee social security withholding drops from 6.2 % to 4.2%. The Employer’s matching contribution of 6. 2% does not change. Self employed individuals will also benefit from the 2% decline for 2011 only. This article gives general information and not specific advice. Please consult with a qualified professional tax advisor on how this information applies to your specific situation. This information is not intended to be nor can it be used by any taxpayer for the purpose of avoiding tax penalties. Andrew T. Kofman, JD, CPA akofman@akofman-cpalaw.com

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