New Accounting & Tax Software

 David M. Hippchen, CPA, PC has converted their accounting and tax software to CCH ProSystem fx — a dynamic, centralized platform that enables our firm become efficient through enhanced integration, centralized management and simplified maintenance. The next generation of ProSystem fx is built on the strength of a common client database, shared by all its applications. ProSystem is the same software used by 75 of the top 100 CPA firms in the United States.  Commerce Clearing House (CCH) is the leading provider of information services, software and workflow tools for tax, accounting, legal and business professionals.

Part of this new software includes the ProSystem fx Portal.  A Portal hosted by CCH will give us a reliable, secure space where we and our clients can exchange information. With ProSystem fx Portal, our clients will experience unmatched convenience through instant access to their documents — including tax returns, financial statements and source documents.  We will now be able to send and receive these important documents back and forth over the internet in a secure portal!
 

Expired Tax Credits You Need To Be Aware Of

Prepare Now for Expiring Tax Benefits

The recently passed Emergency Economic Stabilization Act extended more than 30 tax provisions that were set to expire and also created a series of new tax breaks with expiration dates. Additionally, many of the tax laws signed by ex-President Bush also included expiration dates. While an ever evolving tax code does not create simplicity, it does create the opportunity to reduce your tax burden.

In order to minimize your taxes in future years, you should be aware of the various provisions that are set to expire and take advantage as best you can. In 2009 and 2010 there are at least 113 tax provisions that are set to expire. While many of these provisions get extended by Congress year after year, next year may be different. There is no doubt the US Treasury needs additional revenue and Congress may let many of these provisions expire. Here is a list of some of the more significant provisions for businesses and individuals that are set to expire over the next two years:

Reduced capital gains rate – The current long term capital gains rates are capped out at 15 percent. These rates are set to expire at the end of 2010, at which time the maximum rate will increase to 20 percent. The President has stated that he does not intend to extend this tax provision after it is set to expire (or at least reduce the impact of the provision), so do not expect much relief in the way of capital gains.

Reduced dividend rate – Dividends are currently taxed at capital gains rates (currently maxed out at 15 percent). This provision is set to expire at the end of 2010, at which time dividends will be taxed as ordinary income. Ordinary income currently has a maximum tax rate of 35%. I expect some relief on dividends for lower income persons, but those with higher incomes will likely be paying additional taxes on their dividends in 2011.

Estate tax exemption The estate tax is set to disappear in 2010 and then to reappear in 2011 with an estate exemption of $1,000,000. Receiving the full benefit of this provision in 2010 is a bit difficult to plan for, unless you yourself are planning on expiring.

Bonus depreciation and expensing of assets – Small businesses can receive 50% bonus depreciation for qualified purchases of capital assets. Additionally, they can elect to expense up to $250,000 of newly purchased capital assets. Bonus depreciation is set to expire at the end of 2009, while expensing of acquired capital assets will be cut in half that year to $125,000.

AMT exemption – The AMT exemption amount has been increased for 2009 to $46,700 for individuals and $70,950 for couples. In 2010 the exemption amounts will decline to $33,750 and $45,000 for singles and couples, respectively.  I think that Congress will pass a modest level of AMT relief in 2010, but not as significant as the past. Consequently, I believe 2010 will be the year the AMT finally catches up with a lot of people. The US Treasury needs the money and the AMT can generate a lot.

Unemployment compensation – Unemployment compensation is typically taxable income to the recipient. In 2009, $2,400 of this income will not be subject to federal income taxes. This provision expired at the end of 2009. I would expect that this provision will be extended if the economy remains in the doldrums. If some recovery is in place, I would not expect an extension of this provision.

Deduction for school teachers – Teachers that purchase supplies for their classroom can receive a deduction of up to $250. This expired at the end of 2009 but is expected to be continued. The teachers union obviously has significant clout with the current Administration and Congress.

Making work pay tax credit – Working individuals will receive a tax credit in 2009 and 2010 up to $400. Couples will receive up to $800. This law is set to expire after 2010.

The $4,000 deduction for college tuition;

COBRA. Workers who lose their jobs between Sept. 1, 2008, and May 31, 2010, may qualify for reduced COBRA health insurance premiums for up to 15 months.

Education benefits. The American opportunity credit and enhanced benefits for 529 college savings plans help families and students find ways to pay higher education expenses.

Home energy efficiency and renewable energy incentives.

Earned Income Tax Credit. The EITC is bigger in  2010.

Additional child tax credit. More families will qualify for the ACTC in 2010.

 WASHINGTON ― Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.

Included in the health care reform legislation, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.

The maximum credit goes to smaller employers — those with 10 or fewer FTEs — paying annual average wages of $25,000 or less.