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Saturday, September 10, 2011

Richard Raby CPA, P.A.
  •  Jose and Rosana Gardin of Lighthouse Trading Inc. (Import/Export) 954 450-5900
  •  Rosalie  Suarez and Leo of Nonnas Adult Day Care Center (Not for Profit) 305 632-0275
  •  Julia Arrendell of Arrendells Training and Consultants 786 443-3999
  •  Errol Chung of C&H Machine Shop 305 467-6144

    Saturday, December 18, 2010

    “Tax Planning & Account Organization for the New Year”

    Here we are again, time to elect a new President to run our country and make important decisions that may and can affect each and every one of us.  If taxes are an issue in determining your decision to vote for Hillary Clinton (Democratic) or Donald Trump (Republican), than you may want to read further.

    Hillary Clinton's tax plan is is likely the most explicit and ambitious plan to tax the rich ever laid out by a major-party presidential nominee. The independent Tax Policy Center estimates that 90 percent of Clinton’s tax increases would fall on the top 1 percent of earners and that those earners would see their incomes fall by an average of 7 percent as a result. The capital gains rate will be increased, estate taxes will be increased, a 4 percent additional tax on the less than 1 percent of individuals who earn $2.5 million or more per year and a new minimum effective tax rate of 30 percent, modeled  for individuals earning $1 million or more. You will benefit greatly under her plan if you have children under 5 years of age as she plans to increase the child tax credit from $1,000 to $2,000.  In terms of your tax bill, a median-income household would, on average, get about $110 a year from Clinton’s tax proposals, the Tax Policy Center estimates.

    Under Trump's plan,  which is the most Oprah-esque tax proposal since Ronald Reagan in 1980: You get a tax cut! You get a tax cut! You get a tax cut.  The Tax Policy Center estimates the median household would see its income grow by $1,010 under Trump’s proposals, on average.  the very highest earners, the top 0.1 percent, who would see their incomes rise by 14 percent mainly due to the top personal rate will drop from the current 39.6 % to 33% and the the top corporate tax rate will drop from 35 percent to 15 percent.  Another big change under his plan is  to collapse the current income tax code from seven rates to three and cut rates on most taxpayers and in the process by increasing the standard deduction; something that is more in line with a flat tax.

    If health insurance is a primary concern to you and you like the current system under Obama Care, then you will most likely be voting for Hillary as she will keep the system in tact and according to her, fix what is broken.  But Donald Trump on the other hand will repeal the Health Care under Obama Care which will leave many of us un-insured.  Remember under Obama Care,  if you do not carry health insurance,  you may be subject to a penalty of up to $895.

    Good Accounting records, knowledge of the tax rules and regulations and proper tax planning can help us achieve financial growth and success in our endeavors.  Now is the time to do some tax planning including electing the "right" president that will lead us to growth, prosperity and worldwide peace.

    While every personal situation is different, in general the following guidance should be taken:


    ·         Llook to accelerate business deductions  by paying expenses prior to December 31, and defer income by  invoicing in  January. 
    ·         Overall long term capital gains (assets held one year or more) are taxed at the 15% tax rate 
    ·         Tuition tax credits
    o   American opportunity tax credit;  can be claimed for the first four years of post secondary education, maximum credit is $2,500 of which $1,000 is refundable (no tax liability is necessary to benefit from this credit),  form 1098-T from your educational institution will provide you the information to take this credit. 
    o   Lifetime learning credit; is a credit for any level of college classes, is 20% of tuition expenses with a maximum credit of up to $2,000.
    o  Coverall educational account - You can make a contribution of $2,000 per year per child towards their education.
    ·         The IRA contribution limit is $5,500 and $,6,500 for people 50 years old or older
    ·         New form 1099-K payments made with a credit card must now be reported on form 1099-K by the payment settlement entity under section 6050W.

    ACCOUNTING (What you should be asking yourself)

    ·         Are all W-9/W-4/I-9’s on file so that your deductions will be allowed for independent contract labor and wages paid?
    ·         Are you in compliance with Florida sales and use tax rules and regulations?
    ·         Are you in compliance with business tax receipts (licensing)  required by the County/City?
    ·         Are your invoices organized, scanned and readable available if needed?
    ·         Are your accounting records up to date and reviewed (have you downloaded the bank activity into a PC file)? Do you have accounting records that clearly reflect the income/loss you made during the year?
    ·         If applicable, are your inventory records up to date?
    ·         If newly incorporated, have you applied for S status with the IRS?
    ·         If self employed, have you made your estimated tax payments?
    ·         Do you have an estate plan to minimize estate taxes and probate costs?