Category Archives: Tax Planning

American Taxpayer Relief Act Has Extenders


Fiscal Cliff

American Taxpayer Relief Act Has Extenders


This article highlights some interesting parts of the recent legislation. We hope the commentary below


is helpful and easy-to-understand.


Individual Tax Provisions


Exclusion Of Cancellation Of Indebtedness On Principal Residence- Cancellation of indebtedness income


is includible in income, unless a particular exclusion applies. This provision excludes from income


cancellation of mortgage debt on a principal  residence of up $2 million. The American Taxpayer Relief


Act extends the provision for one year, through 2013.




Mortgage Insurance Premiums-This provision treats mortgage insurance premiums as deductible


interest that is qualified residence interest. The American Taxpayer Relief Act extends this provision


through December 31, 2013. The provision originally expired after 2011.  This provision provides an


additional itemized deduction by treating mortgage insurance premiums as deductible qualified


residence interest.




Business Tax Provisions


There are some popular but temporary tax extenders relating to businesses included in the American


Taxpayer Relief Act. Among them are Code Sec. 179 small business expensing and bonus depreciation.




Code Sec. 179 Small Business Expensing- The Act extends through 2013 enhanced Code Sec. 179  small


business expensing. The Code Sec. 179 dollar limit for tax years 2012 and 2013 is $500,000 with a $2


million investment limit. Without the American Taxpayer Relief Act, the Code Sec. 179 dollar


dollar limit for tax years beginning in 2012 would have been $125,000 (subject to  inflation adjustment)


with a $500,000 investment limit (again, subject to inflation adjustment).




Bonus Depreciation- The Act extends 50 percent bonus depreciation through  2013.  Some


transportation and longer period production property is eligible for 50 percent bonus depreciation


through 2014.


Bonus depreciation has been used as an economic stimulus in many tax bills in recent years. One


Hundred percent bonus depreciation generally expired at the end of 2011.


To be eligible for bonus depreciation, qualified property must be “Brand New” or “First Use”




The information in this article is for general information purposes. This does not constitute legal, accounting, tax or other professional advice or services and is presented without any representation or warranty.


Please contact us. We offer affordable tax accounting services.


CPA Deerfield Beach




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1099’s What They Mean To A Small Business Owner



Delegating tasks can be a great way to increase your sales or get more done as a result of hiring other people to sell or do work for you. Increasing sales by letting other people sell for you, how does that sound?

Now your business is running like well tuned race car. Just like driving too fast, be careful, your speedy haste for success might turn into your terrifying encounter with the IRS.

A lot of business owners increase production this way and claim to make these workers independent contractors. This is why owners and managers should be familiar with 1099 filing requirements.

Paying individuals to perform tasks to increase efficiency creates some obligations for you as a tax payer.  Safe Harbor Accounting would like to point out what your obligations are: “It is very important to have all individual vendors complete a W-9 form and keep them on file. Whenever the individual vendor has more than $600 in payments during a calendar year, the company should issue a 1099-MISC form.”

Failure to keep records on file and report this information to the Internal Revenue Service accurately can result in stiff penalties:

  • The penalty for failing to file 1099s can be $30 per missed 1099, up to a maximum of $250,000.


  • The penalty for filing inaccurate 1099s is $250 per 1099, with no maximum penalty.

Additionally, the IRS might determine that the lack of 1099s indicates the parent should have been withholding taxes for the affiliate and could impose a 31% income tax on 1099 amounts. In effect, the parent would be paying the vendor’s income tax.

The trouble with 1099s

Company, “Widget Profits” has experience with delegating tasks, including two programs in two very different niches. However it took some additional expertise for the company to get on track for handling 1099 forms and other tax documentation in a way that keeps the IRS happy.

“For several years, the company never collected W-9s or filed 1099′s for various reasons. They thought they did not t make that much money (or hit the threshold), and their bookkeeper and accountant was the mother of the owner. She was not familiar enough with the process to insist upon it, and didn’t fully understand the implications of not filing.

That all changed when they hired us to represent them in front of the IRS. We were able to hire a new bookkeeper—one who understood both delegating tasks and the IRS’ reporting requirements. This made the auditor happy enough to let this issue go and move onto other areas of the audit.


The thrust of the new 1099 system, a vendor can’t be paid unless there’s a W-9 on file. New vendors are asked to provide W-9s once they’ve earned their first payment. This system should be used by all small businesses.

Happy Ending

“It’s a very easy system for everyone involved,” “Widget Profits” says. Put the right person in charge and contact Safe Harbor Accounting. We know all the ins and outs and duties around delegating tasks. Delegating is not easy, although now we made it easier.

As we closed the case with the IRS, we concluded that the best defense is a good offense. Get ahead of the game and make sure you contact us.

CPA Deerfield Beach

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Solar Energy Credits For Homeowners and Business Owners

Green Energy

Green Energy

Ever thought about using alternative energy technologies to assist you in managing the cost of the energy used in your business? Yes, then you should be aware of a federal income tax benefit (tax credit) that is substantial and that applies to the acquisition of a wide variety of alternative energy property.

The credit is intended primarily for business users of energy. However, the energy credits apply to taxpayers that use alternative energy in their homes and to taxpayers that produce energy for sale.

The business energy credit equals 30% of the cost of the following two types of Solar Equipment placed in service before calendar year 2017:

(1) equipment that uses solar energy to generate electricity for heating and cooling structures, for hot water, or for heat used in industrial or commercial processes.

(2) equipment using solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight.

Another favorable aspect of the credit is the possibility that, for the same property, the credit can sometimes be used in combination with other subsidies—for example, federal income tax expensing, state tax credits or utility rebates.

There are business considerations, unrelated to the availability of tax and non-tax subsidies that can influence your decision whether to use alternative energy. For example, you will want to be satisfied that you have a plan for managing the costs, in time and money, of maintenance and operation of the alternative property.

Also, we are aware that even if you choose to use alternative energy, you might choose to do so without owning the equipment, even though that would mean forgoing the business energy credit. For example, some contractors provide installation of solar equipment for free, keep ownership of the equipment and charge you for energy use in an arrangement that might work better for you than an acquisition subsidized by the tax credit (and, possibly, other benefits).

Then there is the hurricane factor. Have you ever lived through an extended power outage after a hurricanes strikes? Motel and restaurant costs are expensive. This may be able to provide a source of power to run emergency essential electrical loads, making it possible to stay in your home during emergencies.

There are many issues; both tax and non-tax, to consider in deciding whether to use alternative energy and the terms in which it may be chosen. We would be pleased to assist in resolving these alternative energy issues.

The information provided through this article is not a substitute for tax or other professional advice. Each user of this should always consult their own legal or other professional advisors; or call us to discuss the facts and circumstances that apply to the user.

CPA Deerfield Beach


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What The Fiscal Cliff Means For Your Taxes

After tense negotiations—with a lot of publicity and the threat of deadlock and S & P credit downgrades—the terms of a fiscal cliff resolution have finally been successfully negotiated.







The major tax provisions are as follows:

• The income tax rate increases to 39.6% (up from 35%) for individuals making more than $400,000 a year ($450,000 for joint filers; $425,000 for heads of household);

• The two-percentage-point reduction in payroll taxes for Old Age, Survivors and Disability Insurance (OASDI) tax, commonly known as the Social Security tax, will be allowed to expire;

• The higher exemption amounts for alternative minimum tax (AMT)—the so-called “patch”—are made permanent, resulting an estimated 30 million taxpayers escaping being subject to the AMT;

• Dividends and capital gains are taxed at 20% (up from 15%) for individuals making at least $400,000 ($450,000 for joint returns);

• The Personal Exemption Phaseout (PEP), which had previously been suspended, is reinstated with a starting threshold of $300,000 for joint filers and a surviving spouse, $275,000 for heads of household, $250,000 for single filers, and $150,000 (one-half of the otherwise applicable amount for joint filers) for married taxpayers filing separately. Under the phaseout, the total amount of exemptions that can be claimed by a taxpayer subject to the limitation is reduced by 2% for each $2,500 (or portion thereof) by which the taxpayer’s adjusted gross income (AGI) exceeds the applicable threshold;

• The “Pease“ limitation on deductions, which had previously been suspended, is reinstated with a threshold of $300,000 for joint filers and a surviving spouse, $275,000 for heads of household, $250,000 for single filers, and $150,000 (one-half of the otherwise applicable amount for joint filers) for married taxpayers filing separately. Thus, for taxpayers subject to the “Pease” limitation, the total amount of their itemized deductions is reduced by 3% of the amount by which the taxpayer’s AGI exceeds the threshold amount, with the reduction not to exceed 80% of the otherwise allowable itemized deductions;

• For estate, gift, and generation-skipping transfer (GST) tax purposes, for individuals dying and gifts made after 2012, there is a $5 million exemption (adjusted for inflation), and the top estate, gift and GST rate is permanently increased from 35% to 40%;

• Tax credits for businesses, including the Code Sec. 41 research credit and the Code Sec. 199 domestic production activities deduction, are generally extended through the end of 2013;

• A number of individual tax provisions have been retroactively extended through 2013. In addition, there is a five-year extension of credits that were enhanced as part of the stimulus, including the college tuition credit, the Code Sec. 32 earned income tax credit, and the Code Sec. 24 child tax credit;

• Various energy credits are also extended.

• Other nontax provisions in the bill include a “doc fix,” which stops a 27% reduction in payments to Medicare doctors scheduled to go into effect. Spending cuts as offsets to accomplish this. Unemployment benefits, which were set to expire at the end of 2012, are extended for the long-term unemployed through the end of 2013

For more details please contact us. The information contained within this website is provided for informational purposes only and is not intended to substitute for obtaining accounting, tax, or financial advice from a professional accountant.


CPA Deerfield Beach



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Deductions Still Available For 2012

Deductions Still Available  For 2012



Tax Saving Tips // Tax Preparation




Tax Savings Ideas For 2012

There is good news there is still a way to make a deduction for the previous year. The most sensible, legal tax-saving move for anyone that wants deductions for last year is to to fully fund one’s  IRA or SEP.


The funding can be postponed until the due date of the return, so there isn’t a panic to fund those right now.



What is an IRA?



IRA stands for Individual Retirement Account, and it’s basically a savings account with big tax breaks, making it an ideal way to sock away cash for your retirement. A lot of people mistakenly think an IRA itself is an investment – but it’s just the basket in which you keep stocks, bonds, mutual funds and other assets.



What is a SEP?



A SEP is a simplified employee pension plan. A SEP plan provides a way for the self-employed to fund their own retirement.


Frequently a client with a second business will ask, “If I am an employee and participate in my employer’s retirement plan, can I set up a SEP for self-employment income?


Yes. A SEP can be set up for a person’s business even if he or she participates in another employer’s retirement plan.


We are here to accommodate clients with good service that is convenient, and priced fairly. Our office is here to answer any tax questions that you need help with.


CPA Deerfield Beach


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Safe Harbor Accounting celebrates moving to a new location.

CPA Firm moves to a new building with added space to better serve customers.


Lighthouse Point, Florida- Safe Harbor Accounting rejoices as it anticipates moving to a new 4300 square foot building on Federal Highway. Peter Rudolph, CPA has purchased a building.

The move comes after several months of tense conferences with the seller. Mr. Rudolph negotiated an advantageous credit facility with BBT Bank.

We are partnering with a computer consulting company as a vendor and tenant. The company Total Computer Communications Group offers an extensive suite of network engineering and cloud computing services.

The new address is 2670 North Federal Highway Lighthouse Point Florida 33064. Safe Harbor Accounting will begin moving this weekend. The open house will be soon.

Safe Harbor Accounting offers tax planning and preparation, reviews and compilations, estate and trust tax preparation, payroll services, financial planning, financial forecasts and projections.

“We wanted to be on Federal Highway.” said Peter Rudolph, CPA. The new office provides more space and conference rooms. We have a vision of a drive-up window that provides clients with a way to drop-off or pick up paperwork as well as drop box for business after hours.

Safe Harbor Accounting, is a full service CPA firm dedicated to satisfying the needs of businesses and individuals in the South Florida are. We can provide traditional tax, accounting, and audit services as well as financial planning, estate planning, business valuations, and management consulting. For more information, visit


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Healthcare Reform The Truth About The Rumors

Lately we have heard a lot of rumors circulating around making statements about the approaching additions to Medicare Taxes. These tax increases are supposed finance the cost of Health Care Reform. To set the record straight these are some of the issues we think clients should know about.

Rumor: Every American will experience a .9% rise in their Medicare tax starting in 2013

The truth: The employer’s share of Medicare is not changed. The tax stays constant at 1.45%. The employee’s 1.45% share of Medicare taxes may go up .9%. The additional tax for employees starts when compensation is more than $200,000 ($250,000 if married).

Rumor: Gains on the sale of your primary residence owe an additional 3.8% in Medicare Taxes.

The truth: There is an additional 3.8% Medicare tax on earnings from investments when modified gross income is higher than $200,000 ($250,000 if married) starting in 2013. Earnings on investments includes, rent, dividends, capital gains, royalties, and interest. When you sell your primary residence at a gain, the 3.8% Medicare tax may apply only to the taxable portion of the gain. To calculate the gain from the primary residence, add up all of the costs to acquire and improve the home. Then add the fees to sell the home to the purchase price. The fees to sell the house would include real estate broker and filing fees. That will calculate the gain on the sales of the residence. The third step is to apply the home sale gain exclusion to the transaction ($250,000 single or $500,000 married). Should there still be a taxable gain after the home sale exclusion, this gain maybe subject to the Medicare tax increase.

Rumor: Sell your business in 2012 since 4.7% of the business sale will be a Medicare Tax.

The truth: This is partially untrue. The law provides a literal prohibition to the supplementary 3.8% Medicare tax on gains from on the sales assets used in your business. Although, part of the sale maybe considered ordinary income, due to depreciation recapture. This ordinary income may activate the .9% Medicare tax. This extra income may cause you to be subject the additional tax on investment income mentioned above.

Rumor: There is a huge marriage penalty regarding Medicare taxes.

The truth: This Rumor is true. This legislation creates a higher tax burden for married couples. Two singles are exempt from the tax on income up to $400,000 ($200,000 each). Married couples are responsible for this tax when “aggregate” income exceeds $250,000.

We hope this clarifies some of the rumors that have been floating around. The preceding information is not intended to replace the services of a professional. Consult a CPA or an Attorney who can better understand your particular circumstances. Please contact us.

CPA Firm South Florida


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