Tag Tax Savings Planning

Are You Taking Advantage of These New Hiring Incentives?

0 comments By TRMoore Filed in General, Tax Tagged with , , , January 30th, 2012 @ 5:05 pm

In an effort to get unemployed veterans working, two new credits were included in the American Jobs Act, signed into law by President Obama in November 2011. The Returning War Heroes Act provides businesses with a maximum tax credit of $5,600 per hired veteran, while the Wounded Warriors Tax Credit offers a maximum credit of $9,600 per veteran with service-related disabilities.

Read the CCH tax update below for more information, and contact us for assistance in making these credits part of your tax savings strategy:

The Three Percent Withholding Repeal & Job Creation Act (2011 Heroes Act) expands tax incentives that encourage employers to hire military veterans. The 2011 Heroes Act enhances the Work Opportunity Tax Credit (WOTC) by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit.

In general, the WOTC rewards employers with a tax credit for hiring individuals from targeted groups. The WOTC was extended by the Tax Relief, Unemployment Insurance Reauthorization & Job Creation Act of 2010 (2010 Tax Relief Act) through the end of 2011. The targeted groups eligible for the WOTC as extended by the 2010 Tax Relief Act are:

  • Families receiving Temporary Assistance for Needy Families (TANF)
  • Qualified veterans (certain veterans receiving food stamps and certain veterans with service-connected disabilities)
  • Qualified ex-felons 
  • Designated community residents
  • Vocational rehabilitation referrals
  • Qualified summer youth employees
  • Qualified food stamp recipients
  • Qualified Supplemental Security Income recipients 
  • Long-term family assistance (TANF) recipients

However, the 2011 Heroes Act expands the WOTC to include:

  • Employers that hire veterans who have been looking for employment for more than six months may be eligible for a Returning Heroes Tax Credit of up to $5,600 per employee; employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400 per employee.
  • Employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a Wounded Warriors Tax Credit of up to $9,600 per employee.

The Returning Heroes and Wounded Warriors credits apply to individuals who begin work after Nov. 21, 2011, and on or before Dec. 31, 2012. However, the 2011 Heroes Act does not extend the Dec. 31, 2011, sunset date on the WOTC provided by the 2010 Tax Relief Act for any targeted group except for qualified veterans.

Exempt Organizations. The 2011 Heroes Act also makes the Returning Heroes Tax and Wounded Warriors Tax credits, as well as the credit for veterans receiving food stamps and veterans with service-connected disabilities who do not meet the criteria for the Wounded Warrior Credit, available to tax-exempt employees. A tax exempt employer for purposes of this extension is an organization described in Code Sec. 501(c) and exempt from taxation under Code Sec. 501(a).

Contact us for assistance in making these credits part of your tax savings strategy.

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4 Credits to Consider in Your Tax Planning Strategy

0 comments By TRMoore Filed in General, Tax Tagged with , , , , , , October 18th, 2011 @ 3:39 pm

by Mary Torres, Tax Manager, TR Moore & Company, A Doeren Mayhew Firm

Tax credits reduce your business’s tax liability dollar-for-dollar, making them particularly valuable as part of your tax savings planning strategy. Numerous types of credits are available to businesses. Consider these four that have been extended or created by recent legislation, and download our 2011-2012 Tax Planning Guide for more savings strategies:

  1. R&D credit. The 2010 Tax Relief Act extended the research and development credit through 2011, and there’s been much discussion about making it permanent. The credit generally is equal to a portion of qualified research expenses. It’s complicated to calculate, but savings can be substantial, so consult your tax advisor.
  2. Work Opportunity credit. The act also extended the Work Opportunity credit through Dec. 31, 2011. It benefits businesses hiring employees from certain disadvantaged groups, such as ex-felons, food stamp recipients and disabled veterans. (Note that the provision expanding the eligible groups to include unemployed veterans and disconnected youth was not extended.) The credit equals 40 percent of the first $6,000 of wages paid to qualifying employees ($12,000 for wages paid to qualified veterans).
  3. Health care coverage credit for small businesses. For tax years 2010 to 2013, the maximum small business health care credit is 35 percent of group health coverage premiums paid by the employer. To get the credit, you must contribute at least 50 percent of the total premium or of a benchmark premium. The full credit is available for employers with 10 or fewer full-time equivalent employees (FTEs) and average annual wages of less than $25,000 per employee. Partial credits are available on a sliding scale to businesses with fewer than 25 FTEs and average annual wages of less than $50,000.
  4. Retention credit. If you hired workers in 2010, you may be eligible for a retention credit. It generally applies to workers who qualified for payroll tax forgiveness under the Hiring Incentives to Restore Employment (HIRE) Act of 2010 and are retained for 52 consecutive weeks. The tax savings per qualified retained worker are equal to the lesser of 6.2 percent of wages paid to the worker during the 52-week retention period or $1,000.

Download our 2011-2012 Tax Planning Guide for more savings strategies.

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It’s Tax Planning Time: Depreciation Strategies

0 comments By TRMoore Filed in General, Tax Tagged with , , , October 5th, 2011 @ 3:11 pm

by Richard Beutelschies, CPA, Tax Partner, TR Moore & Company, A Doeren Mayhew Firm

Careful planning during the year can help you maximize depreciation deductions in the year of purchase, and it’s especially important to consider purchases that could be made before year-end.

 For business assets with a useful life of more than one year, you generally must depreciate the cost over a period of years. In most cases, the Modified Accelerated Cost Recovery System (MACRS) will be preferable to the straightline method because you’ll get a larger deduction in the early years of an asset’s life. But if you make more than 40 percent of the year’s asset purchases in the last quarter, you could be subject to the typically less favorable mid-quarter convention.

Consider these depreciation-related breaks, and download our 2011-2012 Tax Planning Guide for more savings strategies:

100 percent bonus depreciation. The 2010 Tax Relief Act significantly enhances bonus depreciation by temporarily increasing this additional first-year depreciation allowance to 100 percent and providing a 50 percent allowance for 2012. Qualified assets include new tangible property with a recovery period of 20 years or less (such as office furniture, equipment and company-owned vehicles), off-the-shelf computer software, water utility property and qualified leasehold-improvement property.

The act also extends the provision allowing corporations to accelerate certain credits in lieu of claiming bonus depreciation for qualified assets acquired and placed in service through Dec. 31, 2012 (Dec. 31, 2013, for certain long-lived and transportation property).

Bonus depreciation will benefit more taxpayers than Section 179 expensing (see next bullet), because it isn’t subject to any asset purchase limits. However, unlike Sec. 179 expensing, bonus depreciation isn’t available for used property. If you’re anticipating major purchases of assets in the next year or two that would qualify, you may want to time them so you can benefit from 100 percent bonus depreciation.

Section 179 expensing election. Business owners can use this election to deduct (rather than depreciate over a number of years) the cost of purchasing such assets as equipment, furniture and off-the-shelf computer software. For 2011, the expensing limit is $500,000, and up to $250,000 of that amount can be for qualified leasehold-improvement, restaurant and retail-improvement property. (Heating and air conditioning units aren’t eligible for the $250,000 amount.)

The break begins to phase out dollar for dollar when total asset acquisitions for the tax year exceed $2 million. You can claim the election only to offset net income, not to reduce it below zero.Sec. 179 may be less important while 100 percent bonus depreciation is available.  Depending on the type of asset, 100 percent bonus depreciation may provide the same tax savings — without any net income requirement or limit on asset purchases. But only Sec. 179 expensing can be applied to used assets, and you’ll also want to consider state tax consequences.

Accelerated depreciation. This allows a shortened recovery period of 15 years — rather than 39 years — for qualified leasehold-improvement, restaurant and retail-improvement property, but, as of this writing, only through 2011. If you’re considering making such investments, you may want to do so this year to ensure you can take advantage of this break. But you’ll also need to consider how this fits in with bonus depreciation and Sec. 179 expensing opportunities, which will provide a greater benefit if the property is eligible.

Cost segregation study. If you’ve recently purchased or built a building or are remodeling existing space, consider a cost segregation study. It identifies property components and related costs that can be depreciated much faster, dramatically increasing your current deductions. Typical assets that qualify include decorative fixtures, security equipment, parking lots, landscaping and architectural fees allocated to qualifying property.

The benefit of a cost segregation study may be limited in certain circumstances —for example, if the business is subject to the AMT or is located in a state that doesn’t follow federal depreciation rules.

Download our 2011-2012 Tax Planning Guide for more savings strategies.

As Tax Partner, Richard Beutelschies leverages more than 30 years experience to lead tax services at the Houston location of top 100 U.S. firm Doeren Mayhew, assisting business owners in areas such as compliance, tax savings planning, estate planning and corporate tax structuring. For more information, contact us.

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2011-2012 Tax Savings Planning Guide is Here!

0 comments By TRMoore Filed in General, Tax Tagged with , , , August 25th, 2011 @ 3:08 pm

Download our 2011-2012 Tax Planning Guide

The Tax Relief Act of 2010 extended some expiring tax breaks and expanded others. Perhaps most notably, it extended the lower income and capital gains tax rates. So, you’ll owe less tax this year than if the law hadn’t been passed.

But some provisions of the law are set to expire at the end of 2011, while others will expire after 2012 unless Congress extends them again. In light of this uncertainty, minimizing your taxes over the next few years will require careful planning and timely action, as well as a thorough understanding of tax-saving strategies both new and old.

To help, our 2011 – 2012 Tax Planning Guide offers an overview of ways to reduce your burden for the upcoming tax season. Read more about what the guide offers below, and access it from our complimentary downloads here.

  • Business Tax Breaks – This year offers some new tax breaks, such as 100 percent bonus depreciation and the retained worker credit. It also offers another chance to take advantage of some breaks that have been extended through 2011.
  • Deductions & the AMT – Deductions can be powerful tax-saving tools because they reduce the amount of your income that’s taxed. And through 2012, the income-based phaseouts that limited the benefit of many deductions have been lifted.
  • Estate Planning – There’s good news and bad news this year when it comes to estate planning. On the positive side, the 2010 Tax Relief act prevents pre-2001 tax act law (lower exemptions and higher rates) from going into effect in 2011 as originally scheduled. But, on the negative side, these provisions apply only through 2012. Thus, much uncertainty remains, making estate planning an ongoing challenge.
  • Family & Education – Whether you’re the parent of a newborn or a college student — or your children are somewhere in between —there are numerous tax breaks you and your family may benefit from.
  • Investing – Last year, the biggest tax planning concern related to your investments likely was the return of higher long-term capital gains and dividend rates scheduled for 2011. Fortunately, in December Congress extended the 15 percent rate — but only through 2012. You may want to take steps this year and next to lock in lower rates while they’re still available.
  • Retirement – Tax-advantaged retirement plans offer valuable opportunities to save taxes now (or later, in the case of Roth accounts) and build up significant funds to help ensure you can live the lifestyle you desire during retirement.

At TR Moore & Company, we conduct tax savings planning for our clients on an annual basis. Start by downloading our 2011 – 2012 Tax Planning Guide, and contact Melinda Genitempo or Geoff Gallo via email or at 713.789.7077 to schedule your tax planning evaluation today.

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IRS Targeting Real Estate Gift Reporting – Have You Filed Your Form 709?

0 comments By TRMoore Filed in General, Tax Tagged with , , , August 23rd, 2011 @ 2:34 pm

by Richard Beutelschies, CPA, Tax Partner, TR Moore & Company, A Doeren Mayhew Firm

As more taxpayers take advantage of favorable rates and exemptions on gifts for 2011 and 2012 as a result of the Tax Relief Act of 2010, the IRS is cracking down on those who fail to report real estate gifts.

Signed into law in December 2010, the act increased the exemption amount on gifts from $1 million to $5 million, and reduced the rate from 55 percent to 35 percent. What the act did not change is that taxpayers are required to file form 709 to report any gift exceeding $13,000, and face penalties for not reporting or undervaluing gifts.

Not since 1931 has the estate tax rate fallen below 45 percent, making it a popular time for gifting. And the IRS has taken note, launching an initiative to identify taxpayers making real estate gifts. Since launch of the initiative, reporting noncompliance has proven high, with rates ranging from 60 percent to 100 percent noncompliance across various states, according to The Wall Street Journal.

The IRS has been quiet about the initiative, but a recent California federal court decision made it public, reports tax attorney Shawn O’Brien of Jackson Walker in the firm’s Tax e-Alert newsletter. The decision, O’Brien says, refused to force the California taxing authority to release its land-transfer records to the IRS. Texas is among 16 states that have released land-transfer records to the IRS, he reports.

If you’ve made a real estate gift, you should contact a tax professional to ensure you’re in compliance.

As Tax Partner, Richard Beutelschies leverages more than 30 years experience to lead tax services at the Houston location of top 100 U.S. firm Doeren Mayhew, assisting business owners in areas such as compliance, tax savings planning, estate planning and corporate tax structuring. For more information, contact us.

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