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Volume 5, Issue 2, February 2007

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It Pays to Give: Save Taxes on Charitable Distributions from Your IRA

By William L. McKinney, Partner

William L. McKinney, CPA is a partner in the Greenfield and Indianapolis, Indiana offices of Kemper CPA Group LLP. William graduated from Eastern Illinois University with distinction and honors in accounting in 1983 and joined Kemper CPA Group LLP the same year. He is a member of the American Institute of Certified Public Accountants, the Indiana CPA Society, and the Illinois CPA Society.

The Pension Protection Act of 2006 (PPA) was introduced August 17, 2006 as the first pension reform in over 30 years. While the act contains numerous changes to the pension tax provisions for large corporate businesses, there are also several provisions concerning charitable contributions for individuals.

Tax-free distributions from IRAs for charitable purposes

Individuals aged 70 ½ or older can distribute up to $100,000 of their IRA balances to charitable organizations in 2006 and in 2007 without recognizing income and without taking a charitable deduction. The distribution also counts towards the required minimum distribution.

While the deduction is available for a limited group of individuals, it could result in a large windfall for elderly individuals who have not itemized in previous years but have been required to take a minimum distribution. The approximately two thirds of taxpayers who take the standard deduction – and thus cannot deduct charitable gifts – can now get the equivalent of a deduction by making gifts directly from their IRAs to qualified charities.

By making a distribution directly to a favorite charity, individuals can also eliminate taxable income that could cause Social Security benefits to be taxable. In addition, a direct, tax-free distribution will eliminate the two percent (formerly three percent) “haircut” rule in 2006 and 2007. Thus, a donor with adjusted gross income above $150,500 ($75,250 if married filing separately) who elects to make a qualified charitable deduction from an IRA will not have the tax benefit of the gifts whittled down as it would have been if he made a “traditional” gift directly to the charity.

To read this article in its entirety, click here to view the full article.

The certified public accountants and consultants at  Kemper CPA Group LLP can provide additional details about specific provisions of the Pension Protection Act of 2006 that affect your individual tax situation. Contact an office near you to set up an appointment today!

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Tax Information You Can Use

Whether you are preparing to file your 2006 taxes or have filed for 2006 and are planning for 2007, Kemper CPA Group LLP has information you can use. The 2007 Tax Pocket Guide, a brochure that details important tax figures for both 2006 and 2007, is available for download on our website.

The brochure contains, for the current and past tax year:

The certified public accountants and consultants at Kemper CPA Group LLP have been preparing tax returns for individuals and businesses since we opened our doors in 1958. In addition to personal and business accounting services, our professionals provide a variety of specialized services, including:

Contact us to set up an appointment with your trusted Kemper CPA Group LLP tax advisor today.

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Deadline for 2006 Taxes: April 17

Because April 15th falls on a Sunday, and April 16th is Emancipation Day, a holiday in the District of Columbia, you will have until April 17, 2007 to file your 2006 tax returns.

The April 17 deadline is applicable where the April 15 deadline normally applies, including:

The list above is not a complete list; other requirements affected by the April 17 deadline are discussed in IRS Publication 509, Tax Calendars for 2007.

As always, you can avoid the stress of last minute filing by filing early and using electronic filing and direct deposit. Count on Kemper CPA Group LLP for all of your tax needs. We can help – contact us today!

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The Multi-Generational Workforce

Increasingly, businesses are becoming aware of noticeable generation gaps within their workforces, gaps which can hinder communications, cause decreased productivity, and even result in increased employee turn-around. Presently, the workforce is comprised of individuals from up to four different generations – the World War II Generation (a.k.a., the Mature Generation or the Veteran Generation), the Baby Boomer Generation, Generation X, and the Millennial Generation (a.k.a., Generation Y) – each of which brings distinct beliefs, values, priorities, and expectations to the workforce.

While both the names and birthdates used to distinguish one generation from the next vary, research has shown that there are marked differences in the ways that the generations, as a whole, communicate. For example, members of the older generations are generally more comfortable with face-to-face communication or via telephone, while their younger peers prefer electronic means of communication, such as text and e-mail messages. Similarly, there are notable differences in priorities among the generations – those in older generations generally place a greater emphasis on work than on family, while those in younger generations place a greater emphasis on family than work, or are equally committed to both family and work responsibilities.

Employees should be educated about the differences between generations in order to build rapport. When employees understand the values and beliefs of other generations, they are more prone to accept the strengths of those in other generations, instead of clinging to generational stereotypes that can divide the workforce.

Key to building and maintaining a cohesive workforce, then, is learning to meld the weaknesses of one generation with the strengths of the others and adjusting recruiting and retainment practices to sustain a balanced workforce. By considering the current generational make-up of their organizations, employers can seek to recruit employees who fill generational voids and complete a well-rounded workforce. It is also imperative that employers consider the generational make-up of their clients and hire employees who can best serve their clients. As always, employers should be mindful of the laws concerning disparate treatment in order to avoid potential litigation.

Flexibility with training and mentoring programs and with work arrangements is necessary to keep employees from all generations happy. Additionally, employees from all generations should be encouraged to develop their own talents and be respectful of the talents of others.

By understanding the differences among generations, employers can implement policies and procedures that foster the development of a cohesive workforce – one in which members of all generations can thrive.

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Loose Change

The January/February 2007 issue of the “Loose Change” Newsletter includes the following articles:

Contact Kemper Capital Management LLC for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities officered through Securities America, Inc., a registered broker/dealer. Member NASD/SIPC. Thomas A. Moore, John D. Porter, Polly Reynolds, Shawna D. Horne, Jeffery C. Holt, CA insurance Lic. #0E38034, Jessica Daugherty, Joseph M. Mendes, CA Insurance Lic. #0C62535, Regina S. Hughes, Gregory Meador, Marcia Elder, Registered Representatives. Insurance services offered through KCPAG Insurance Services LLC. Kemper Capital Management LLC and its subsidiaries are not affiliated with Securities America.

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Would You Like to Try Sage Accpac Free for
Thirty Days?

If you own a business and:

you may have a lot of questions and are just not sure where to turn. Sage Accpac can help you with a free trial of the Sage Accpac business accounting software for thirty days!

Some of the modules in the Sage Accpac product include general ledger, accounts receivable, accounts payable, inventory control, order entry, and many more! To find out more about the Sage Accpac product and request a free test drive of this powerful software, click here to access the free trial information and request form.

The Accpac Certified Consultants at  Kemper Technology Consulting can assist you with planning, purchasing, implementation and support of the Sage Accpac product for your business. We can also help you with installation of your free trial, and help answer any questions you might have about the system and the existing technology infrastructure at your business.

We can help! Contact us today!

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com

Evansville, IN  •  Indianapolis, IN  •  Paducah, KY  •  Effingham, IL

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Please be advised that, based upon current Internal Revenue Service (IRS) rules and standards, the advice herein is not intended to be used, nor can it be used, as the sole basis for decisions. Additional issues may exist that could affect the treatment of the individual transactions, and this narrative does not provide a conclusion with respect to all such issues.

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