SOME QUICK POINTERS FOR YOU:
The annual exclusion amount for the gift tax has
increased this year from $11,000 to $12,000 per person/per year.
The
exclusion equivalent for estate tax and the generation skipping tax
has increased from $1.5 million to $2 million per person.
Contribution
limits for Individual Retirement Accounts in 2006 is $4,000 for those
under 50 years of age. Those age 50 or over are entitled to an additional
$1,000 “catch-up” contribution limit.
401(k) and 403(b) employee deferral
plan limits are now $15,000 (under age 50) and $20,000 for those age
50 or over.
Planning for the
future is a lot like planting a tree. You've got to do it today
if you want your family to enjoy it tomorrow.
ARE YOU EXEMPT FROM SOME SALES TAXES?:
Sales of gas, steam, electricity or heating fuel
to any business which has five or fewer employees ARE
EXEMPT FROM SALES TAX ON THOSE ITEMS.
For purposes of this paragraph, employees shall
include partners, owners, officers and any other individuals who work
for the business but shall not include any employee who normally works
for fewer than thirty hours per week or who is hired for a period of
less than five months. For purposes of this paragraph, a business shall
include all members of an affiliated group, as defined by section 1504
of the Internal Revenue Code, and any other combination of related
parties as the commissioner may define by regulation; provided, however,
that the commissioner may by regulation require that such business
shall have first obtained a certification from the commissioner stating
that it is entitled to such exemption and shall maintain such employment
and other records indicating its continuing eligibility for such exemption;
that the vendor keep a record of the sales price of each such separate
sale, and the number of such certificate; and any other conditions
and requirements under which a business may qualify for this exemption;
provided, further, that the burden of proving that such business qualifies
shall be upon the vendor unless he takes in good faith from the purchaser
such certificate to the effect that the business qualifies for this
exemption and such certificate is received and made available to the
commissioner not later than sixty days from the date of the notice
from the commissioner to produce such certificate.
Did you know we do more than just
prepare, compile, and crunch numbers? We are not just bean-counters.
We can also advise you on estate and business planning and offer
financial strategies to meet your goals. As your CPA, we know your
needs better than many other professionals.
T.I.P.R.A
Tax Increase Prevention and Reconciliation Act of
2005, “T.I.P.R.A.”, signed into law on May 17, 2006.
Here are some
of the provisions of this tax act:
Stock investors are the broadest group of beneficiaries
of the Act.
The 15% favorable tax rate on long-term capital gains
and qualifying dividends is extended through 2010.
TIPRA raises the
amount of income exempted from the Alternative Minimum Tax (AMT).
Taxpayers
who would appear to benefit from this provision are those with incomes
in the $100,000 to $500,000 range.
This provision is only good for
2006.
The amount of income exempted from the AMT is increased
to $62,500 for married couples filing jointly up from $58,000 in 2005.
Without the tax measure, the exempted amount was scheduled to decrease
to $45,000 in 2006.
The exemption for single filers will be raised
to $42,500 for 2006 up from $40,250 in 2005.
TIPRA continues the special
small business expensing under Code Section 179.
The enhanced small
business thresholds contained in the American Jobs Creation Act of
2004 are extended through 2009.
The maximum amount that may be expensed
is $100,000 of qualifying property, reduced by the amount by which
the cost of qualifying property exceeds $400,000. The $100,000 and
$400,000 amounts are indexed for inflation after 2003 and before 2010.
For 2006, the amounts are $108,000 and $430,000, respectively. Without
the extension in the TIPRA, the amounts would have dropped to $25,000
on a $200,000 cap after 2007.
The TIPRA provides for increasing the
age limit of the “kiddie-tax” to children under 18 years of age which
is up from the previous under age 14. If a child under 18 has investment
income, the first $850 is tax-free and the next $850 is typically taxed
at the child’s tax rate. “Unearned” income above $1,700 is taxable
at the parents’ top tax rate. This change in the law is effective for
2006. Estimated tax payments for 2006 may need to be adjusted for this
provision.
The maximum IRA contribution for 2006 remains at
$4,000 however the “catch up” amount for taxpayers age 50 and older
has increased from $500 to $1,000, making the maximum contribution
for a taxpayer age 50 and older to be $5,000. For 2006, taxpayers who
are participants in 401(k) plans may now have an opportunity to participate
in a ROTH 401(k), if the employers plan so allows. 401(k) limits are
$15,000 with an additional $5,000 “catch up” contribution for taxpayers
age 50 and older. Unlike the ROTH IRA there is no income limitation
on the ROTH 401(k).
Energy credits are available for homeowners for
2006 and 2007. A $500 lifetime credit is available for certain energy-saving
expenditures for your personal residence.
Although not in a tax act,
you have undoubtedly heard of the decision by the Department of the
Treasury to rebate Federal Excise Taxes charged on long-distance telephone
service. Not only will taxpayers receive a credit for the Federal Excise
Tax paid for three years they will also receive interest on their money.
IRS is working with the Treasury Department to offer taxpayers a “standard
credit” rather than put taxpayers through the rigorous exercise of
compiling the taxes paid.
And finally, for taxpayers making too much
in income and loosing the deductibility of their itemized deductions
and personal exemptions, known as the phase out, 2006 will see the
beginning of the phase out of the phase out. Taxpayers in 2006 will
loose only 2/3 of the deductions and exemptions they lost in 2005.
In 2007 they will only loose 1/3 and in 2008 they will loose nothing.
The phase out will no longer exist after 2007.
BANKS WANT TO LOAN MONEY!
Call Absolute Business Connection and speak
to Arnie Rosenthal or Roger A. Kahan to find out how we have helped
many businesses to obtain a loan.
Call 781.341.1004
SOCIAL SECURITY RECORDS MAY NOT BE CORRECT
When was the last time you checked your Social Security
earnings records? Did you know that the Social Security Administration
records are not correct? Over the years, millions of dollars have not
made it to the right accounts. It seems that the Internal Revenue Service
and the Social Security Administration do not have corresponding records.
Do you know if your account is correct? We recommend checking SSA records
at least every three years. To check your file and obtain a summary
of your earnings, call your local Social Security office.
Here we are with are our grandchildren. |
|
Top
row: Leah (David and Lois) with her son William (our great
grandson); Roger and Evelyn; Jenni (David and Lois); Rachael
(Michael and Jessica). Lower
row: Erika (Michael and Jessica); Tyler (Julie and Mark); Zachary (Julie and
Mark)
|
FEATURES WANTED:
We want to feature our clients in future editions
of TAX TIPS AND FACTS. If you would like a FREE spot to sell us on
your company, its products or services, send us a brief story about
your company, an overview of company's products and future plans. We
may edit the information and include it in a future edition. Send the
information to Roger A. Kahan, CPA via mail, e-mail or FAX it.
NEGOTIATE WITH YOUR SUPPLIERS
By negotiating special terms with suppliers, you
can improve your company's cash flow. For instance, if you turn over
your inventory every month, pay for it every two months. In return,
do more business with those suppliers willing to accept your terms
for better profits all around.
The Massachusetts Society
of CPAs represents over 8,800 certified public accountants working
in public accounting, industry & business, government and
education.
