 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
 |
Free eNewsletter & Special Promotions
Volume 5, Issue 1, January 2007
If the images in this newsletter don't appear, make sure you are connected
to the Internet and click here.
|
The Tax Relief and Health Care Act of 2006, which contains a number of extended deductions and other beneficial provisions, was passed into law in late 2006. Within the law are several “extenders,” which preserve until 2007 provisions that had expired in 2005 or were set to expire at the end of 2006.
Among the provisions extended by the new law are the following:
State and Local Sales Tax Deduction – The provision that allows taxpayers to elect to take an itemized deduction for state and local general sales tax instead of the itemized deduction for state and local income taxes is extended until 2007. If you elect to claim the deduction for sales tax, you can either calculate actual sales tax paid based upon retained receipts or approximate the sales tax paid by using the tables provided by the Secretary of the Treasury and then adding the sales tax paid on any “big ticket” items.
Higher Education Tuition and Fees Deduction – Also extended through 2007 is the tax deduction for qualified higher education expenses. A deduction of up to $4,000 (depending on adjusted gross income) of the cost of higher education expenses is available for taxpayers who elect not to claim the Hope or Lifetime Learning tax credits. All eligible taxpayers can claim this deduction, regardless of whether deductions are itemized.
Educator Expense Adjustment – Educators in elementary and secondary schools can deduct up to $250 of out-of-pocket expenses for certain classroom books, supplies, or equipment. The law extends this provision until 2007, and this deduction is also available to all taxpayers, not just to those who itemize.
Additionally, the Tax Relief and Health Care Act of 2006 provides for the following:
Extension of energy provisions – Several provisions designed to reward taxpayers for making energy-efficient improvements to homes and businesses had been set to expire in 2007 but were extended until 2008 by the new law. Included are the deduction for energy-efficient commercial buildings, business credit for energy-efficient homes, and the credit for installation of alternative energy equipment in a primary residence, among others.
A new itemized deduction for the cost of mortgage insurance premiums – For 2007 only, if you paid mortgage insurance, you may claim a deduction for premiums paid on a qualified residence; the deduction begins to phase out after your adjusted gross income reaches $100,000.
A variety of changes for health savings accounts (HSAs) – Several enhancements were designed to make the use of HSAs more attractive. Beginning after 2006, a one-time rollover from health flexible spending accounts and health reimbursement arrangements can be made into an HSA; the rollover must occur after the enactment date and before 2012. Also after 2006, one-time rollovers from an IRA to an HSA are allowed. Additionally, the annual plan deductible limit on HSA contributions has been repealed, and contribution limits for partial year coverage have been expanded for tax years after 2006.
A word of caution: Because the law was passed with little time left in 2006, the IRS will not be able to process a small number of returns until February 1, 2007. Taxpayers who claim the state and local sales taxes deduction, higher education tuition and fees deduction, or educator expense deduction are affected by this delay. Taxpayers using paper versions of Form 1040 must carefully follow the IRS’s directions in Publication 600 when claiming these three deductions, as the form was printed prior to the passing of the law. To help minimize confusion, the IRS recommends that you use e-file instead of filing a paper form, as there will be less chance of errors related to claiming these deductions.
A number of provisions not addressed above were also included in the Tax Relief and Health Care Act of 2006. The certified public accountants and consultants at Kemper CPA Group LLP can provide additional details about specific provisions that affect your tax situation. Contact an office near you to set up an appointment today!
New Law Affects Indiana Business Owners with a Registered Retail Merchant Certificate
If you are a business owner in Indiana and your business collects sales-and-use taxes, as of January 1, 2007, a new state tax law (Senate Enrolled Act 362) requires that you renew your Registered Retail Merchant Certificate (RRMC) on a biennial basis.
Rather than having an RRMC for life, as was the case prior to the passage of Senate Enrolled Act 362, businesses now must renew their certificates every two years. The renewals will be phased in over a two-year period. If you are unsure as to when your RRMC will expire, you may view an expiration date schedule on the Indiana General Assembly website.
If your business has stayed current with Indiana sales-and-use tax filings and collections, the renewal of your RRMC will be automatic, and your business will incur no cost.
However, if your business has delinquent sales-and-use taxes due, and no payment plan is established or the taxes are not paid in full prior to the expiration date of your RRMC, you will not be able to renew your certificate. All delinquent taxes, as well as a $25 renewal fee, must be paid in order to receive a renewed certificate. If your business has multiple locations, the $25 fee must be paid for each location.
There are significant fines and penalties for operating a business without a valid Indiana RRMC. For assistance with your business’ sales-and-use tax filings and collections, contact your local Kemper office today.
If you conduct online auction sales, the IRS reminds you to be aware of the tax implications. Depending upon the items you sell and the nature of your business, you may be subject to income tax, self-employment tax, employment tax, or excise tax. You also need to be aware of the impact of your online auction sales on capital gains, nondeductible personal losses, and business income.
A major determining factor in the tax treatment of your online auction sales is whether your sales are the online equivalent of a garage sale, where you sold used household items for less than you paid for them, in which case the sales are generally not reportable. If, however, you are running an online business, where you have recurring sales and are purchasing items so that you can make a profit on their resale, you may have tax responsibilities – income taxes, self-employment taxes, employment taxes, and/or excise taxes.
Sellers whose online auction sales are categorized as an online auction business may be able to deduct business expenses. In order for a business expense to be deductible, it must be ordinary (common and accepted in the trade or business) and necessary (helpful and appropriate in the trade or business).
Additionally, if you sold appreciable assets such as art and antiques, you will likely have reportable gain in the form of business income or capital gains.
If you have any questions about the tax treatment of your online auction sales, the certified public accountants at Kemper CPA Group LLP can help. Contact us today for all of your accounting needs.
Effective January 1, 2007, a new law in Indiana provides relief for businesses and individuals whose fax machines are overrun with unsolicited faxes. Under the Indiana law, businesses that send faxes promoting commercial products or services to consumers with whom they do not have an established business relationship can be fined up to $1,500 for each fax.
Consumers who wish to file a complaint should retain a copy of the fax and fill out a complaint form. Faxes from political or religious organizations that do not advertise a service or product and faxes from businesses with which there is an established business relationship are not subject to the law.
Additional information about the Do Not Fax law is available on the Indiana Attorney General’s website.
The January/February 2007 issue of the “Loose Change” Newsletter includes the following articles:
| • | Saving and Investing – They're Not the Same |
| • | A Better Mortgage |
| • | Prepare for the Taxman |
| • | College Financing at a Glance |
| • | HSA Basics |
| • | Retirement Investing – We May Be Alike but We're All Different |
| • | What's Age Got To Do with It? |
| • | Work at Home? |
| • | Gift an IRA? Sir, Yes Sir! |
| • | Cash Cache |
| • | Raising the Roof on Roth Conversions |
| • | What's in Your Budget? |
| • | Buyout Offer – More Than Money To Think About |
| • | Investor Dilemma |
| • | REITs – You Too Can Be a Land Baron |
| • | A New Cyberscam |
| • | Decisions, Decisions |
| • | CRT: Does It Stand for "Can Reduce Taxes"? |
| • | Quiz Yourself |
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.
Sage Accpac has many powerful products available to improve your business accounting functions, and the 5.4 release of Accpac delivers many new features to improve upon those products. Below we have briefly highlighted some of the new features for the Accounts Receivable, Accounts Payable and Order Entry modules of Sage Accpac Release 5.4.
| Accounts Receivable | Accounts Payable | Order Entry | ||
| Process a refund for customers using the Customer Refunds feature and specifiy the payment method – check, cash, or credit card. | Enter an invoice (with taxes) and apply a payment at the same time for on-the-spot settlement of an invoice. | Copy orders from one customer to another using the Copy Orders form. | ||
| For fixed price projects, capture cost details needed to support summary or item billing in Accounts Receivable. | For fixed price projects, capture cost details needed to support summary or item billing in Accounts Receivable. | Drill down at every level of the order, shipment, and invoice process. | ||
| Specify if you want to automatically post General Ledger journal entry batches created from Accounts Receivable. | Specify the method of payment for documents within Payment Entry. | Inquire on sales orders by customer, based on order status. | ||
| Update Bank Services with deposit and receipt information. | Set up your own payment codes to define the payment method you use – credit card, cash, check, and more. | Automatically post General Ledger journal entry batches created from Order Entry. | ||
| Automatically calculate taxes on miscellaneous receipts and update the Tax Tracking report. | Automatically post General Ledger journal entry batches created from Accounts Payable. | Specify a discount for the entire order as well as detail lines. | ||
| Automatically carry forward descriptions and comments from invoice detail lines using the quick entry mode. | Automatically calculate taxes on miscellaneous payments and update the Tax Tracking Report. | Inquire on invoices posted for a specified item number. | ||
| Assign a single deposit slip to multiple receipt batches. | Automatically carry forward descriptions and comments from invoice detail lines in quick entry mode. | Check a customer’s credit based on pending transactions in both Accounts Receivable and Order Entry in addition to their aged transactions. | ||
| Post multiple invoice, adjustment, receipt, and refund batches simultaneously. | Automatically prohibit a vendor from being deleted or set to inactive if documents exist that have not been posted. | Receive a warning if a credit note has been previously posted for an invoice. |
There are many more useful features available in the new 5.4 release of Sage Accpac, and the Sage Accpac certified professionals at Kemper Technology Consulting can assist you with choosing the right Sage Accpac product to meet your unique needs. Contact us today for assistance with your business accounting needs. We can help!
Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com
Evansville, IN • Indianapolis, IN • Paducah, KY • Effingham, IL
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.
You are currently subscribed as: EMAIL_ADDRESS
email us at info-administrative@kcpag.com.
521 North 6th Street, P.O. Box 297, Vincennes, IN 47591
