CLIENT NEWSLETTER



[pic] CLIENT NEWSLETTER

Vol. 12 No. 1 January 2012

HAPPY NEW YEAR!!

Winifred W. Stowe, E.A.

2861 Executive Drive, Suite 110

Clearwater, FL 33762-2264

Phone: (727) 576-2131 wini@ Fax: (727) 576-2130

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You Call This a Recovery?

Reviewing all of the inflation adjusted payments going in to effect for 2012, the feds seem to be insisting that the economy is picking up some credible steam. Social Security payments and the social security wage base have both increased due to cost-of-living increases for the year 2011. Financial aid costs for the subsidized Stafford loans are doubling, as the interest rates jump from 3.4% to 6.8% for the fall of 2012.

Despite the Federal Reserve Board pledge to keep the borrowing rate near zero (and prime at 3.25%) to help businesses make solid decisions on reliable information, the ‘trickle down’ seems bottle-necked at the top. Businesses serving a population demographic at the bottom of the economic ladder are still feeling the pinch of lower sales volume as their customers suffer through employment furloughs and shortened hours. We can all see how that spiral feeds on itself.

So how is the small business owner to cope and be the engine of the economy that we are touted to be? Serve your customer. Remember how they alone are the key to your success. Even though the money they are paying you is for a good or a service, do what you can to make their whole experience a pleasurable one. Your customer’s loyalty paves the way to their referral and their referral brings you more to do. If you’re busy, you’ll probably have to hire, and if you do, this engine builds momentum. If we truly are the key, because we have a necessary and useful good or service, we need to step up and take charge. We can be the change we want to see in the world.

$ $ $ FULLY FUND YOUR PLANS $ $ $

If you are born in 1962 or earlier, and participate in IRA, 401(k), 403(b) or SIMPLE plans, you are entitled to make additional “catch up” contributions. The additional contribution is not limited to just one plan. If you have a 401(k) and an IRA, you may ‘catch up’ in both. For 2012, limits are as follows:

|PLAN TYPE |MAX. CONT. |CATCH-UP |

|IRA |$ 5,000 |$1,000 |

|401(K) |17,000 |5,500 |

|403(B) |17,000 |5,500 |

|SIMPLE | 11,500 |2,500 |

| | | |

HIGHER FLORIDA MIN WAGE

Effective January 1, 2012, the Florida Minimum Wage increased to $7.67/hr. This wage supercedes the current federal guideline of $7.25/hr. Several states do not have a mandatory minimum wage, and therefore default to the federal standard. Looking at a jump like that over the federal standard ($0.42 higher), the difference seems very significant, although economists widely agree that the increase in the minimum wage causes no undue burden on business for those specific workers. Despite what appears to be a sizeable increase, the math does not support a real impact. A full time worker making Florida’s minimum wage will make $15,953.60 annually. It is the pressure to include increases up the wage scale for tenured hourly employees that drives up costs for employers who are committed to maintaining their trained employees.

DATELINE: IRS

The Internal Revenue Service Commissioner has introduced an initiative to help people get a fresh start with their tax liabilities. The initiative centers on changes to IRS collection practices that will lessen the negative impact on taxpayers. The changes include:

• Adjustments to IRS Lien Policies

o Significantly increasing the dollar threshold when liens are generally issued, resulting in fewer tax liens

o Making it easier for taxpayers to obtain lien withdrawals after paying a tax bill

o Withdrawing liens in most cases where a taxpayer enters into a Direct Debit Installment Agreement

• Creating easier access to Installment Agreements for more struggling small businesses

• Expanding the streamlined Offer in Compromise program to cover more taxpayers

Paying more now

Soon you will be receiving your payroll tax returns for 2011. On the surface everything will look the same. However, this year the federal government has ‘built in’ the interest assessment that we were charged at the beginning of 2011 as an “interest payment” on the loan the state of Florida was advanced from the Feds to cover the unemployment benefits paid out to Floridians. There is a new page three for the form 940, Federal Unemployment Tax Return which was previously for filers who paid wages in more than one state, but is now used to report our “credit reduction.” The additional assessment for 2011 is tacked on to the 940 payment due.

To help mitigate this payment increase, Congress declined to renew the existing additional unemployment surcharge (0.2%, or 0.002) so the annual federal unemployment tax assessment rate is 0.6% (0.006) on the first $7,000 in wages; down from 0.8% where it has been for the last 40 years.

On the flip side, Florida has increased the state unemployment taxable wage base from $7,000 to $8,500; as well as increasing the calculation of the state unemployment tax rate.

Welcome Lisa York!

With great enthusiasm, I am pleased to tell you that Lisa York has joined my staff. On November 1, a colleague took a medical retirement and needed someone to step up and handle their tax and accounting clients. Lisa has been working in that practice for four years and has, happily, agreed to stay on and continue to serve the clients she knows so well. She will be a great help to me, for sure.

Lisa has a wonderful telephone presence and a willingness to work through the questions and problems that you need assistance with. I find her very easy to work with and I know that you will too.

OFFICE NEWS

IT’S TAX SEASON!! For just this one tax season I am working out of two locations: my original St. Pete office and the Clearwater practice office. My office doesn’t accommodate three people so we will be exploring other options after tax season.

All three of us will be attending an all-day 1040 seminar on Friday, January 20, 2012.

You’ll have any payroll tax returns due in your hands by January 31, 2012. As a brief break, I’ll be out of the office FEB 3 – FEB 5, 2012.

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