SOCIAL
SECURITY ADMINISTRATION
Announces
Contribution and Benefit Base Domestic Employee Coverage Threshold for 2009 (Notice 2008-103)
The Social Security Administration has
announced that the contribution and benefit base for 2009 remuneration and
self-employment income is $106,800. The "old law" contribution and
benefit base is $79,200. The "old
law" base is used by the Railroad Retirement program to determine certain
tax liabilities and tier II benefits, by the Pension Benefit Guaranty
Corporation to determine the maximum amount of pension guaranteed under ERISA,
and by the Social Security Administration to determine a year of coverage in
computing certain benefits. Also, the domestic employee coverage threshold
amount for 2009 has been determined to be $1,700.
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"NEXUS" IN ANOTHER STATE
If
your business has nexus, or "substantial physical presence" in another state,
they will expect you to pay income and sales/use taxes on revenue generated
there.
Definitions
of "substantial" vary, and some states are more aggressive than others to find
and levy taxes on businesses with nexus within their boundaries. Some major considerations are:
1. Do you have a sales office within another
state?
2. Do
you provide service (other than just delivery of product or basic sales
assistance) to customers in another state?
This is only a guide to show how some states have ruled. Call me for more information.
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PROPERTY TAX ASSESSMENTS
Do not assume that your property tax
assessment is correct, especially if your home's assessed value has changed
drastically during an up and down swing in the real estate market.
If home values have decreased substantially since annual values were
established, you may be entitled to abatement. Checking the correctness
of the assessment may be easier than you think and may provide you with a decreased
real estate tax bill. Check the timing allowed to file for abatement
(this should appear on your bill).
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Roger A. Kahan is a Certified Public Accountant, a
Tax and Business Consultant 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 professionals 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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What Will You Do When You
Retire?
Thinking ahead will help you lead
an interesting and rewarding life after retirement. For most people, the key to a happy and fulfilling retirement
is simple: staying busy.
Unfortunately, when planning for
retirement, a lot of folks focus only on finances, and fail to think about, or
plan for, how they will spend their time.
Why worry about retirement
activities now, when retirement is years, or even decades, away? Because, put bluntly, people who
count on developing new interests and involvements after 65 often do not. And that makes for a bored, depressed
old age.
Start Planning Now - It's never too
early to plan for what you will do in your golden years. To start, take a few minutes to write
down the things you expect to be actively involved in. Don't count solo activities such as
reading, watching TV, or jogging. While fine in themselves, they are not likely to keep you energized and
interested for long. Be as
specific as you can. For example,
if you plan to participate in charitable activities aimed at helping to educate
Third World children, who will you work with and what will you do?
Keep in mind that participating in
just a few activities may not keep you interested in life and interesting to
others. So if your list consists
of travel, adult education courses and golf, you may need to do more planning. Here are some other activities to
consider -- and how to plan for them:
Working Part-Time - Many people who
enjoy the hustle bustle and creativity of the workplace find that working at
least part-time after retirement age offers the best opportunity to stay busily
involved in life. And, of course,
working a few extra years can go a long way toward helping solve money
problems.
If you hope to establish a new
career, turn a hobby into a business or find a part-time job more challenging
than flipping burgers, it's important to plan ahead. Investigate whether you'll need more education, experience
or skills in order to execute your plans. Then, take the time before you retire
to develop the tools you'll need. For example, if you'd like to convert your
passion for gardening into a landscaping business, you may need to take courses
in marketing and accounting, learn how and where to buy wholesale plants and
begin developing a customer base. This may mean cutting back on current work
and making some short-term financial sacrifices.
This commentary is brought to you
by your friendly neighborhood CPA.
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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
Charitable contributions made to an organization
cannot be earmarked for the benefit of a particular individual or family.
A common, but technically not allowable practice is for a church or synagogue
to raise money for the benefit of a member who has suffered a tragedy.
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GIFT TAXES
To reduce your estate and ultimately your federal and/or state
estate taxes, you may make annual gifts of a present interest in property up
to a value of $12,000 per donee per year without incurring a federal gift tax. If
you spouse consents, the limit can be increased to $24,000 per year, per donee. This
means, for example, if you make gifts of $24,000 to each of six donees (your
children, daughter- or son-in-law, grandchildren, etc.) you will have removed
as much as $144,000 from your estate without paying any gift tax.
This method of transferring property will not affect the Applicable
Credit (formerly, the Unified Credit) or the Gift Tax Credit. In
an estate with a potential tax bracket of 48%, this can mean an ultimate federal
estate tax savings of $69,120 plus a Massachusetts estate tax. You
have made the gift to those who would probably inherit the property from you
eventually, and this way, you may be able to watch them enjoy it.
In order to take advantage of the annual exclusion (either
$12,000 or $24,000) for 2007, you must COMPLETE the gift on or before December
31. This means you must actually transfer the property by
December 31. An intent or unwritten agreement will not be
sufficient. The check used as a gift must clear your bank
by December 31. Merely adding the doneeís name to the bank
or broker account or Certificate of Deposit is not sufficient to trigger the
transfer. If you gift stocks or bonds, the transfer must
be recorded by December 31. Gifts of $12,000 or more or
more to any one donee must be reported on Form 709 by April 15 of the year
after the year in which the gift is made.
There are some waiting periods in order to escape an add-back
of a gift. Under current law, for Medicare/Medicaid purposes,
a gift within 36-60 months of admittance to a long-term care facility (or entrance
into the Medicaid program) will be added back to your amount of countable assets
that you may need to "spend down" in order to get Medicaid coverage. You
might consider supplementing your gift planning and obtain long-term care insurance
coverage for at least five years. If you are thinking of
purchasing long-term health care coverage, please shop around. There
are some, although not many, policies that will only pay if you conform to
their many limitations and restrictions. Consult with an
insurance or financial professional before you make a deposit or sign an agreement. It
may be well worth the cost or fee.
I am licensed to discuss and sell long-term care insurance
coverage as you may require. Give me a call and arrange
for an appointment to see the many available options and coverage's.
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BENEFICIARY
DESIGNATIONS
You have a company-sponsored 401(k) plan or
retirement plan, or you have at least one TRADITIONAL or ROTH IRA account. Your accounts may be with a bank,
credit union, brokerage house, or another financial institution.
Each plan requires you to designate at least one
beneficiary for payment of benefits in case of your untimely demise. When was the last time you checked to
make sure your beneficiary designations are up to date? When was the last time you checked to
make sure your administrator still has your beneficiary designation on
file? With all of the mergers,
buy-outs, consolidations and changes of personnel and computer systems, do you
know if the records are up to date? The questions are: Who will
get your money? Will it be to whom
you intended? Do you think it might
be worth checking?
If you need help with this, please call me.
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A REAL TAX BENEFIT
If the home tax deductions do provide
you with an income tax refund, you should consider adjusting your income tax
withholding exemptions at work to allow you to bring more money home each pay
period through an increase in your net pay. That additional net payroll can
help you pay the mortgage each month. You can change your payroll withholding
exemptions by visiting your payroll or your human resources department. If
they can’t show you how to do it, we would be happy to assist you.
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REMEMBER:
“It’s
not what you make that COUNTS; it’s
what you keep!”
www.RAK-1.com 
e-mail:
kahan@RAK-1.com