YES, WE ARE BACK!
We are now located at 500 North
Main Street in Randolph at the corners of North Main and Grove Streets.
Thank you for welcoming us back to Randolph. Your
telephone calls and good wishes have been appreciated.
Thank you
for making 2007 the BEST tax season ever. The influx of new and returning
clients has caused us to add more time to our working schedule. There
were many nights when our office was open while you slept.
TOPICS COVERED IN
THIS ISSUE:
Meals and entertainment expenses
Your first business tax return
Key persons
No longer tax
havens
Pension Protection Act
Life insurance
Deductible
losse
Cover your assets
Rule of 72
Charitable contributions
Installment user fees
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MEALS
AND ENTERTAINMENT EXPENSES
Generally, 50% of business related meals and entertainment expenses
are tax deductible by the payer.
If the related expenditure covers a majority of your employees or
staff of the company, the amount paid may be considered as a Staff
Meeting expense and should be fully deductible.
Related entertainment should be associated with a business meeting,
occurring just before, during, or just after the meeting.
Meals solely for yourself (no business related person is accompanying
you), other than when you are away traveling overnight, are usually
not deductible.
These types of expenses must be substantiated with the dates, places,
times, and names of the participants along with an explanation of
the business purpose. An invoice must also support meals and entertainment
of $75 or more.
You should share this information with your
acquaintances and family. It may provide some "small talk" for
your conversation.
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YOUR
FIRST BUSINESS TAX RETURN
The first tax reporting of your business is critical.
Many elections have to be made (depreciation basis and methods, method
of accounting, write-off of goodwill and other intangibles, etc,
etc, etc), and those elections can only be made on a timely filed
income tax return. If you are not sure what elections are available
or what elections you should request on your first income tax return,
call us and be confident you have what we feel are the best tax benefits
for your new business.
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KEY
PERSONS
When a key person dies, problems develop. As the
company searches for a replacement, it might experience a financial
slump. Its competitors take advantage of its lost momentum, and its
customers might lose their confidence in it. Creditors demand immediate
payment, employees search for other jobs, and debtors delay their
payments. The company's valuable assets - it's key person - is gone,
and unless the firm has been wise enough to purchase key-person life
insurance, it won't be compensated for the loss of this asset. All
of these problems can be solved by cash - in other words, by life
insurance.
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NO LONGER TAX
HAVENS
For many years gone by, many people thought it was good to move
to sunny states to escape the dreaded state income tax in retirement
years.
Two thoughts should be considered.
1. Some states, Florida for example, enjoy a
reputation as being tax friendly. While they do not have an income
tax, they do have an intangibles tax (on the market value of investment
property), a sales tax, and a hefty local real estate tax.
2. Some states (Massachusetts is one of them) are reaching out to
retired taxpayers by calling pensions earned from employment or businesses
located in their state to be taxable and subject to a non-resident
income tax, gaining much needed revenue to help balance budgets.
According to a recent survey, popular retiree states such as Texas
and Florida averaged in the middle of the 50 states for tax burden.
The survey included, in addition to a state's income tax, whether
Social Security benefits, or military and public pensions are taxable.
If you are considering a move to another
state for retirement, you should consider all the taxes before
making that move. Change your residence because you want to be
in a sunny climate, not to beat the "tax man."
THE
PENSION PROTECTION ACT
Although some people may find the NINE HUNDRED or so pages of the
Pension Protection Act fascinating reading, we think you have better
things to do.
Well, we decided to boil it down to the bare minimum and provide
you with just a few important changes that you might need to know.
If you want to know more, feel free to give us a call.
* Increased contribution and deduction limits for Defined Benefit
Plans.
* Increased contribution limits for combined Defined Benefit and
Defined Contribution plans.
* The allowance of contributions to a Roth 401(k) plan is not permanent.
* The requirement to file Form 5500-EZ for single-participant plans
has been raised to plans with assets of at least $250,000.
* Beneficiaries other than Spouse of a decedent's account in a qualified
plan can roll over their balance tax-free into their own IRA.
* Participants in Defined Benefit plans can take an in-service distribution
if they are at least age 62. This might be a LARGE planning event
for many taxpayers. We have more information on this great tax benefit.
Call us.
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LIFE
INSURANCE
Did you know that most Americans do not have enough
life insurance to take care of their family if they died today?
Some experts say you should have at least 10 times your annual
income to protect your family. Shop hundreds of Life Insurance
companies with one call to me.
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A required disclosure:
Pursuant to requirements related to practice before the Internal
Revenue Service, any tax advice contained in this communication (including
any attachments) is not intended to be used, and cannot be used,
for purposes of (i) avoiding penalties imposed under the United States
Internal Revenue Code or (ii) promoting, marketing or recommending
to another person any tax-related matter. This information is restricted
only to use by you.
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Roger A. Kahan is a Certified Public
Accountant, a Tax, Business and Financial Advisor serving the tax
and financial needs of individuals and small to medium sized businesses
primarily in eastern Massachusetts (as well as almost anywhere in
the United States). Roger is always seeking additional clients and
other professional’s clients to advise and improve their personal
or business life. Do you know of someone that could use our professional
services? Please let us know if we can use your name in an introductory
letter or phone call. We do offer a referral fee to those that join
our ever-increasing list of tax clients. Call for more details. Thank
you.
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DEDUCTIBLE LOSSES
If you leave a deposit or pay for something in advance and the party
holding your money goes defunct before you get anything in return,
you may be able to deduct a non-business bad debt. This loss is treated
as a short-term capital loss, deductible to the extent of capital
gains plus the lesser of $3,000 or the excess of capital losses over
capital gains. Any remaining loss can be carried over.
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COVER YOUR ASSETS
If you died tomorrow, would the "taxman" be
your biggest beneficiary? For many entrepreneurs, that question and
its answer may be shocking. That's because those who postpone the
task of estate planning may expose their families and their company
to enormous financial risks. Estate taxes, which can reach up to
48% (or higher if state estate taxes are applicable), can kill even
the most promising of fast-growing businesses by forcing heirs to
sell prematurely to meet tax liabilities.
You say you don't have
time to worry about that now? Then you may well be missing out on
some important estate-planning strategies, which often need to be
set in place early to work effectively. When you clarify your estate-planning
goals, you protect your family in the event of your death. You may
find ways to reduce the estate-tax bite while allowing the family
to retain control of the company.
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RULE OF 72
The Rule of 72 is a saving rule of thumb that says
your savings will double, approximately, in the number of years you
determine by doing the following.
1. Start with
the number 72.
2. Divide by the interest rate you earn on your
deposits.
For
example, if the interest rate you receive on your deposits is 7.2
percent, you would double your money in about 10 years:
1. Start with
the number 72.
2. Divide by 7.2 to get a result of 10.
Keep in
mind that the Rule of 72 does not include taxes or inflation. Also,
the rule assumes that you compound your interest yearly at a fixed
rate of return over a long period of time. If you compound more frequently,
you could save more or double your money sooner.
Investments
generate fluctuating returns so the period of time in which an investment
can double, cannot be determined with certainty. This is a hypothetical
example and is not intended to represent a real investment. Both
principal and returns of investments vary over time
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The Massachusetts
Society of CPAs represents over 8,800 Certified Public Accountants
working in public accounting, industry and business, or in government
and education.
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CHARITABLE CONTRIBUTIONS
I know that I have mentioned this subject to clients
during their annual tax interview, but it is important to remember
that you must have a receipt in order to claim a charitable deduction
starting January 1, 2007. Checks, credit card slips, payroll deductions
and signed letters and receipts for clothing, etc from the charity
constitute a receipt. Remember: NO RECEIPT, NO DEDUCTION!
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INSTALLMENT AGREEMENT FEES TO GO UP
User fees for installment agreements are going up --the first increase
since fees were implemented in 1995. The IRS explains the increase
by pointing to the rise in labor and other costs of processing the
various applications.
Effective January 1, 2007:
- The fee for new direct debit installment agreements, where payments
are deducted directly from a taxpayer's bank account, will increase
from $43 to $52.
- The fee for other new installment agreements will increase from
$43 to $105.
- The fee to restructure an existing or reinstate a defaulted installment
agreement will increase from $24 to $45.
The new fees will also apply to installment agreements made using
the Online Payment Agreement application on www.IRS.gov, which became
available on October 16.
To be eligible for an installment agreement, a taxpayer must first
file all required tax returns and be current with any estimated tax
payments. In the fiscal year 2006, nearly 2.8 million taxpayers established
installment agreements to pay their tax bills.
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Did you know
I do more than just prepare, compile and crunch numbers? I am not
just a “bean-counter.” I can also advise you on estate and business
planning and offer financial strategies to meet your goals. As your
TRUSTED ADVISOR, I know your financial needs better than many other
professional you may be working with.
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No one is required to pay
more in taxes than the law demands. If you pay too much, you have
fewer resources to meet your other financial goals. I can help
find tax deductions and credits, and help you plan so your taxes
can be as low as possible. I can also assist you with business
and estate tax planning.
The information contained
in this publication has been obtained from sources I believed to
be reliable at the time of writing, but are not guaranteed as to
their accuracy or completeness. This material, or any portions
thereof, may not be reproduced without prior written permission
of Roger A. Kahan, CPA.
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“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.”
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Roger A. Kahan is a Certified
Public Accountant, Business Advisor, and Wealth Care Professional
with an office in Stoughton, Massachusetts, serving the tax and
financial needs of individuals and small to medium sized businesses
almost anywhere in the United States. And with the advent of the
Internet, his professional tax consultation extends into several
other countries. Roger is always seeking additional clients and
professionals wishing to save or invest money and better manage
their own life; or a friend, a relative, or a client's personal
or business life.
Do you know of someone that
could use our professional services? Please let us know if we can
use your name in an introductory letter or phone call.
Thank
you.
A
member of: |
Massachusetts
Society of Certified Public Accountants |
Massachusetts
Association of Public Accountants |
Randolph
Business and Industrial Commission |
Computer
Organizations of New England, Inc. |
Randolph
Chamber of Commerce, Inc. |
National
Society of Tax Professionals |
Neponset
Valley Chamber of Commerce |
Stoughton
Chamber of Commerce |
Knights
of Pythias International |
Bay
Financial Services, LLC |
National
Notary Association |
New England Sinai Hospital and
Rehabilitation Center |
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