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Volume 3, Issue 6, September 2005

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Hurricane Relief Contributions

As you rally to make charitable contributions in the aftermath of Hurricane Katrina, it is important to note that both the IRS and the Federal Trade Commission (FTC) are trying to warn consumers to use caution as they make financial contributions. Numerous charities have been introduced in order to help those affected by Hurricane Katrina, and many are lending a hand in big ways. Unfortunately, some phony charities have also been created to take advantage of the generosity, and while the IRS and FTC do not want to deter consumers from making donations, both advise dealing with well-known charities like the Red Cross and checking into a charity before donating. The IRS offers an online search feature for consumers to research individual charities. IRS Publication 526 provides information about tax deductions for charitable contributions.

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Hiring Household Employees

Generally speaking, anyone who you hire to do work in or around your home is considered a household employee if you control what work is done, and how it is done; however, individuals working for you as independent contractors are not considered household employees. Examples of domestic workers that may be an employee of the homeowner are babysitters, nannies, maids, and health care providers. You are responsible for paying federal unemployment, Social Security, and Medicare taxes for your household employees. You must also report these taxes with your individual income tax return at the end of the year by filing a Schedule H with your Form 1040.

If, in 2005, you pay a household employee $1,400 or more in cash wages, you are responsible for paying or withholding Social Security and Medicare taxes from all of that household employee’s wages. You may choose to pay both the employer and employee’s share of Social Security and Medicare taxes, or withhold the employee’s share from his or her pay and send it to the IRS with your matching share. Exclusions for certain family members and individuals under age 18 may apply.

Although you are not required to withhold federal income tax, your employee may request that you do so. If you withhold federal income tax for your employee, you will need to complete Form W-4. Publication 15, Employers Tax Guide, includes withholding tables.

As an employer, you will need to file Form W-2, Wage and Tax Statement, if you withhold or pay Social Security and Medicare taxes or if you withhold Federal income taxes. You will also need to fill out Form W-3, Transmittal of Wage and Tax Statement. Additionally, you will need to secure an employer identification number (EIN) from the IRS. To do so, you may either submit Form SS-4, Application for Employer Identification Number, or request one via the IRS website.

If the wages you pay to a household employee total $1,000 or more in any calendar quarter of 2005, you must pay federal unemployment tax on the first $7,000 of cash wages you pay to each of your employees in 2005.

If you have any questions about calculating or paying employment taxes for your household employees, contact the professionals at Kemper CPA Group LLP today.

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Goodwill: Naming the Intangible

What does the business term “goodwill” mean? As it pertains to the business world, goodwill is generally understood as the value of a business not directly reflected by the sum of its tangible assets and liabilities. In other words, it is the intangible value of the company’s strong brand name or reputation, its customer relations, its location, its intellectual property, its talented employees, and other factors that set the company apart and have the potential to contribute to better-than-typical future profits.

The goodwill of your company becomes a very important factor when circumstances necessitate the sale of your business. Goodwill can play a pivotal role in determining your business’ valuation, and because a number of complicated factors contribute to the value reflected in your company’s goodwill, utilizing the skills of an experienced business valuation professional is a must.

Like other areas of business valuation, determining your company’s goodwill requires knowledge and experience in accounting, tax, finance, and economics. Trust the professionals at Kemper CPA Group LLP for help in determining the goodwill of your company and for all of your business valuation needs – contact us today!

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How Much Tax Do You Pay Per Gallon of Gas?

There are a number of taxes included in the cost of a gallon of gas, such as state sales tax, federal tax and state excise tax. The state of New York is one that adds additional taxes, including a Petroleum Business Tax of 15.2 cents per gallon, a spill tax of 0.3 cents per gallon, and a petroleum testing fee of 0.05 cents per gallon. Because of these additional taxes, New York is the highest in the country for the total gas-tax cost per gallon, at 62.9 cents per gallon.

When we fill up our cars, trucks and SUVs these days, we wonder why it costs so much, and what can be done to help us manage the cost of commuting to work, running errands, going to sporting events, etc. Some states are considering temporarily suspending their state gas taxes to help ease the burden on consumers, most of whom are paying $3.00 and above for a gallon of gas. Below is a listing of each state’s total gas tax cost per gallon, courtesy of the American Petroleum Institute.

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Loose Change

The September/October 2005 issue of the "Loose Change" Newsletter includes the following articles:

Contact us today for all of your investing needs.

Investment advisory services offered by KCPAG Financial Advisors LLC, a registered investment advisor. Securities offered through CapPro Brokerage Services, Inc., member NASD & SIPC. Insurance services offered through KCPAG Insurance Services LLC.

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Client Solutions - Regional Health Care Provider

Problem

The client, a regional healthcare provider, needed assistance with their network and support software. They also wanted to link to a satellite office. In addition, network security was a major concern. They contacted Kemper Technology Consulting for a solution.

Solution

Kemper Technology Consulting was able to provide a variety of technology services not typically provided by networking service companies. We were able to implement a VPN (Virtual Private Network) to save on software costs and increase employee communication.

Some of the other services provided included network infrastructure administration, network security administration, disaster recovery support, accounting software support, hardware support along with other software training and support. In addition, Kemper Technology's consultants were able to provide clear communications on a variety of issues and provide timely service.

Benefit

The VPN allows for users to access scheduling information so they know who is available and when. The increased networking services and accounting software support allow the employee's to have a central point for consultation and support.

The network security that Kemper Technology Consulting provided was the answer to management's security concerns. With the latest in Internet protection, the client can effectively monitor its network to prevent unauthorized or inappropriate access.

For more information on what Kemper Technology Consulting can do for your business, contact us today.

Kemper Technology Consulting
Robinson, IL
618-546-5633
www.kempertc.com
Evansville, IN  •  Indianapolis, IN  •  Paducah, KY

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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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