2009 Winter Newsletter

Tax Planning

Year end tax planning is an important step for all individuals. It does not matter how  much money you make or do not make. It does not matter whether you are single or  married. Year end tax planning is a critical part of your financial planning success. Call   today for an appointment.

 “Want to setup an IRA? Call Kinner & Company today.”

Reminder for Estimated Payments

Don’t forget to make estimated tax payments for 2009. The next estimated tax due date is January 15, 2010.  

Should I withhold more or less?

#1 If you get a big refund each year, you're having too much withheld from your paycheck.

 In effect, you're giving the government an interest-free loan.

 #2 If you have too little withheld, you may be charged an underpayment penalty.

 You must pay 90% of what you owe for the tax year by the end of that year or an amount equal to 100% of your tax liability for the previous tax year, whichever is smaller.

 “Need tax planning? Call Kinner & Company today.”

Economic Recovery Payment

 This one-time payment of $250  allocated to individuals who receive Social Security, Tier 1 railroad retirement benefits, SSI, or VA pension or disability benefits. For most individuals, the government has automatically sent them checks sometime during 2009. Government retirees who receive a pension for work not covered by social security will claim a $250 refundable credit when they file their 2009 tax returns.

Unemployment Compensation

  Those receiving unemployment compensation will not be taxed on the first $2,400 of unemployment benefits. Check with your local unemployment office regarding availability of these benefits or call us with any questions.

“Thinking about incorporating? Call Kinner & Company today.”

Making Work Pay Credit

Workers and the self employed are getting a payroll tax credit for 2009 and 2010 up to $400 a year for single taxpayers and up to $800 for couples filing jointly.  This lead to a bigger take home check with the revised withholding tables last spring. 

First-time Homebuyer Credit Expanded

 Congress has passed new legislation to expand first time home buyer credit to current homeowner’s purchasing a new or existing home between November 7, 2009 and April 30, 2010. First time home buyers will still qualify for up to an $8,000 refund and long-time homeowners (someone who has owned and lived in the same house house for 5 out of the last 8 years) will qualify for up to a $6,500 refund.  If you have additional questions please give us a call.

 “Want to be a millionaire when you retire? Why not? Call Kinner & Company Ltd”

 Nonbusiness Energy Credit

Taxpayers who invest in energy improvements to their homes can claim a tax credit of up to $1,500 for their 2009 and 2010 tax returns. Such improvements include energy efficient windows and doors, high efficiency heating and air conditioning systems, water heaters, qualifying insulation and certain roofs.  Installation costs do not qualify.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can get as much as a $1,500 credit for 2009. 

Residential Energy Efficient Property Credit

Thinking about going green? You need to check out revised energy credit extended through 2010.  The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.

However, not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit  certification statement before purchasing or installing any of these improvements.

“Want to set up a flex plan and save employer taxes? Call Kinner & Company Ltd today.”

New American Opportunity Tax Credit

The Hope credit has been renamed the American Opportunity Tax Credit and applies for 2009 and 2010 tax years. The credit has increased to $2,500 per student per year – 100% of the first $2,000 and 25% of the next $2,000 of eligible expenses.  Up to 40% of the credit is also now refundable.  The credit can be only claimed for four years and eligible expenses include course material (books) as well as tuitions and fees.   

“Call Kinner & Company Ltd for your unlimited investment options.”

Expanded 529 Education Plan Benefit Payouts

Contributing to a 529 Plan may seem quite simple — you write the check or get the money automatically withdrawn from your checking account, and those funds get deposited into the 529 Plan. Anyone can set up a Section 529 Plan. Just make sure that you have a designated beneficiary (who already must have a Social Security number) in mind. Qualified higher education expenses include tuition, fees, books and supplies and equipment required for enrollment at a higher education institution.  For 2009 and 2010 only, qualified expenses also include purchase of computer technology or equipment, internet access and related services if used by the beneficiary and the beneficiary’s family. 

 “Need assistance with QuickBooks? Call Kinner & Company today.”

Vehicle Purchase

If you buy a new vehicle after Feb. 16, 2009, and before 2010, you can get a tax deduction for the state and local sales tax. The vehicle needs to weigh <8,500 lbs.  Motorcycles meeting the same weight restrictions and motor homes also qualify.  The deduction is limited to the first $49,500 of the purchase price, and the benefit begins to phase out for individuals with modified adjusted income of $125,000 ($250,000 if Married Filing Jointly). You may claim this benefit on your 2009 tax return even if you don't itemize.

  “Need audited financial statements prepared? Call Kinner & Company Ltd today.”

 Scam e-mails to Recipients Computers.

Recently a phony e-mail claiming to come from the IRS has been circulating.  The subject line often states that the e-mail is a notice of under reported income.  This e-mail may have with it an attachment or link to a bogus Web page directing taxpayers to their “tax statement”.  When the recipient opens the attachment it downloads a Trojan horse-type virus to their computers.  This virus has the ability to take over the victim’s computer hard drive, giving someone remote access to the computer, then sending them to the scammer.  The scammer will then use whatever information they gather to commit identity theft, gain access to bank accounts and more.  Beware, the IRS does not send unsolicited e-mails to taxpayers about their tax accounts.  Therefore, anyone who receives an unsolicited e-mail claiming to come from the IRS should avoid opening any attachments or clicking on any links.  It is advised to report suspicious e-mails to phishing@irs.gov.  This is a mailbox set up for just this purpose.   

“Buy low/sell high investing. Call Kinner & Company Ltd on how.

Section 179 Expensing

Section 179 allows for expensing of depreciable property. A business with less than $800,000 of capital purchases may choose to expense the cost of the property.  For 2009 the maximum Section 179 expense deduction is $250,000. 

 50% Bonus Depreciation

The American Recovery and Reinvestment Act also extends the 50% bonus depreciation for new property acquired and placed in service during 2009. 

 S Corp Compensation

S Corporation audits have become a priority of the IRS.   The IRS can collect payroll taxes on officer compensation, and the penalty for failing to pay payroll taxes is 100% of the taxes owed. S-Corporations will avoid this payroll tax penalty by paying shareholder-employees a reasonable compensation.   

The owner-employee of the S-Corporation must be paid a salary, and pay payroll taxes on their salary, even if the business is losing money. 

                   Gambling losses to the extent of your gambling winnings

 Nobody wins all the time at gaming. You must pay taxes on your winnings, but be sure to deduct your yearly losses as well. Deduction is limited to the winnings.

 “The point to remember is that what the government gives it must first take away.”

John S. Coleman

 Earned Income Credit

 For 2009 and 2010, the earned income credit has been increased for families with 3 or more children.   There is also additional marriage penalty relief for married couples filing joint returns.   

Additional Child Tax Credit

 Lower income families with children will receive increased eligibility for the refundable portion of the child tax credit when they file their 2009 and 2010 tax returns.   

 “Call Kinner & Company Ltd for your 401(k) and IRA rollover planning.”

2010 Roth IRA Conversion Opportunity

 Anyone with a traditional IRA will be allowed to convert to Roth IRA’s beginning in 2010 without regard to income limitations and income tax filing status.  If you want to begin call us today.  Some considerations you should think about:

 ·        If the conversion takes place in 2010, taxes owed for the conversion are paid ½ in 2011 and ½ in 2012.

·        You are not required to do a full conversion

·        Conversions to a Roth IRA are generally fully taxable.  Before you convert to a Roth IRA, consider how your tax bracket will affect the overall benefit of the conversion.

“I am proud to be paying taxes in the United States. The only thing is I could be just as proud for half of the money.”

 Arthur Godfrey.

Cash Charitable Contributions

Just a reminder to be able to deduct any charitable donation of money, you must have a bank record, credit card statement or a written communication from the recipient showing the name of the organization and the date and amount of the contribution. 

 “Call Kinner & Company for any payroll tax questions.”

Flex System

Employers – save an average of $300 per employee and give your employees an average of $900 raise in take home pay.  FlexSystem, also known as a Section 125 Cafeteria Plan, is now easier than ever.  There are now debit cards which you can use to pay for your flex expenses such as dental, vision, medications and over the counter drugs.

FlexSystem enables employers to offer employee benefits for healthcare and dependent care on a pretax basis, while controlling benefit costs and saving payroll tax dollars.  With FlexSystem, both employees and employers save lots of tax dollars.  Give us a call if you have additional questions.

Self-employment Strategies

If you're self-employed and use the cash method of accounting, you can decrease your taxable income by delaying your December billings until January. You can also buy supplies and equipment at the end of one year instead of the coming year. You can also set up a SEP-IRA and make contributions by the due date of your return (including extensions) and deduct your contributions on the current-year return. 

If you have any questions, please feel free to give us a call.

In the meantime …..

                     …Have a great day from Kinner & Company Ltd!

1-800-858-5410    Wabasso          507-342-5126

1-800-692-2515    Brookings       605-692-2515

1-877-537-2711    Marshall         507-537-0681

1-877-542-2711    Pipestone        507-825-5274

1-800-858-5410    Tracy               507-629-3662

1-877-542-2711    Elkton             605-542-2711

1-877-542-2711    Flandreau       605-997-3797

1-877-542-2711    Lake Benton    507-368-2711

email:  kkinner@itctel.com

Visit our website www.kinner.ws

Keith Kinner, CPA

Nicole Larson, CPA

Dave Nester, CPA

Results Accountants

Jennifer Nordmeyer         Darci Anderson

Tracey Zmuda                    Cindy Foerster

Mary Lebert                       Deborah Kinner

Diana Kocourek                Dianne Foster

Carla VanDewiele            Charity Kuehl

Donna Geringer                Carley Osland

Diane Anderson                Ann Fodness

Kendra Bebensee              Ashley Koehne

CPA’s…Making sense out of a changing and complex world.

Keeping Records

Here is a list detailing which records must be kept permanently and which can be discarded after a period of time. 

Permanent Records

Annual Financial Statements

Articles of Incorporation

Pension Records

Company Stocks and Bonds

Property Records (including appraisals, plans and sales)

Tax Returns (estate, gift and income)

Title Papers and Deeds

Contracts, Changes and Specifications

Minutes of Meetings

Ten Years

Check Registers

Corporate Contracts

Sales and Use Tax Returns

Franchise Agreements

Workers’ Compensation Reports

Seven Years

Accident Reports

Bank Statements and Checks

Options

Correspondences

Property Damage Reports

Depreciation Schedules

Payroll Tax Returns

Five Years

Bills of Lading

Fire Damage Reports

Expense Reports

Three Years

Bank Deposit Slips and Reconciliations

Insurance Policies (after expiration)

Surety Bonds

Garnishments