Tag Archives: South Florida CPA

Safe Harbor Accounting celebrates moving to a new location.

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

Image

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 http://www.safeharboraccounting.com

Advertisements

Leave a comment

Filed under Tax Planning

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

Leave a comment

Filed under Healthcare Reform, Tax Planning

Avoiding the 10% Early Withdrawal Penalty – What every Traditional IRA owner should know

  1. Medical Insurance Premiums if Unemployed. If you have been receiving federal or state unemployment for 12 or more consecutive weeks, you may pay for medical insurance premiums from your Traditional IRA without paying the 10% early withdrawal penalty. The premiums may cover yourself, your spouse, and your dependents’ medical insurance premium.
  2. Qualified Higher Education Expenses. You may pay for tuition, books, fees, supplies, and equipment at a qualified post-secondary institution for yourself, your spouse, your child or grandchild from your Traditional IRA without paying the 10% penalty.
  3. Medical Expenses. If you need to withdraw from your IRA to fund medical expenses in excess of 7.5% of your Adjusted Gross Income you may do so penalty-free.
  4. First-Time Homebuyer Expenses. IRA distributions of up to $10,000 to help pay for the qualified acquisition costs of a first-time home avoid the early withdrawal penalty too. This is a lifetime limit per individual. A first-time homebuyer is defined by the IRS as not having an ownership interest in a principal residence for two years prior to your new home acquisition date. Even better, to qualify the home can be for you, your spouse, your child, your grandchild, your parent or even other ancestors.
  5. Conversions of Traditional IRAs to Roth IRAs. Want to convert your Traditional IRA into a Roth IRA to avoid paying taxes on future account earnings? No problem, this too is considered a qualified event to avoid the 10% penalty.
  6. You’re the Beneficiary. If you are the beneficiary of someone else’s IRA and they die, there is usually an opportunity to withdraw funds without the penalty. Plenty of caution is required in this case, because if treated incorrectly the penalty might apply.
  7. Qualified Reservist. If you were called to active duty after 9/11/2001 for more than 179 days, amounts withdrawn from your IRA during your active duty can also avoid the 10% penalty.

Annuity Distributions. There is also a way to avoid the 10% early withdrawal penalty if the distributions “are part of a series of substantially equal payments over your life (or your life expectancy)”. This option is complicated and must use an IRS-approved distribution method to qualify.

Some Final Thoughts.

  • Remember, the above ideas help you avoid an early withdrawal penalty for funds taken out of your Traditional IRA prior to reaching the age of 59 ½. After this age, there is no early-withdrawal penalty. The penalty is also waived if you become permanently or totally disabled or use the funds to pay an IRS tax levy.
  • While the above events allow you to avoid the 10% early withdrawal penalty you will still need to pay the income tax due on the withdrawn funds.
  • While generally the same, the 10% early withdrawal penalty rules are slightly different for defined contribution plans like 401(k)s and other types of IRAs.
  • Before taking any action, call to have your situation reviewed. It is almost always better to keep funding your Traditional IRA until you retire.

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.

South Florida CPA Firm

Leave a comment

Filed under Retirement Planning, South Florida CPA

Summer “Tax School” is in Session. Concepts for Parents of Children Getting a Job This Summer

Summer break is here and there are no more classes. The kids still have one more class, Tax Education. Now you can play teacher and educate your children that taxes are deducted from their paychecks.

Here are a few tips.

· Government regulations require employees that start a new job to complete a Form W-4, Employee’s Withholding Allowance Certificate. Employers use the W-4 form to calculate the amount of Federal Tax to deduct from an employee’s salary. Generally, if the child is your dependent and expects to earn less than $3,700 this year there will be no Federal Tax Liability only Social Security should be deducted. To be exempt from having Federal Taxes deducted there are two conditions. First there was no tax due last year and all Federal Tax was refunded. Second this year the child expects a full refund of all federal income tax withheld because they expect to have no tax liability.

· The work may be as a valet, waitress, or a bellhop. Tip income is taxable for Social Security and Federal Taxes.

· Some young people take work doing errands, lawn cutting, babysitting, and etc. The IRS considers this Self Employment. When someone works for themselves, and no taxes are deducted by the employer they are considered the employer and employee for Social Security purposes. The tax term is Self-Employed. This form of income can cause higher than expected tax bills.

· The employment taxes from being self employed start when the net profit is more than $400, which is a very low number. Self-employment taxes are currently 13.3% of profits.

For example your child earns $3,700 doing paper delivery.

End of year Federal Tax – $0 – Self-Employment Tax – $492

Form 1040, Schedule SE, is the form the Self-Employment Tax is calculated on.

There are unique rules for children under 18 who deliver newspapers. Newspaper delivery is automatically considered self-employed by the IRS not considering age; if the following conditions are present:

You are in the business of delivering newspapers.

Compensation is associated to sales different from the number of hours worked.

There is a written contract that has language the worker is not considered an employee for taxes.

Children under 18 that deliver newspapers are generally exempt from Self Employment Taxes.

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.

South Florida CPA Firm

Leave a comment

Filed under Child Tax Credit, Education Tax Credit, Tax Planning

Pension Plans-Some Basic Selections for Smaller Companies

Starting and managing a company has its difficulties, plus in spite of the fact you are devoted to the company, the business cannot run indefinitely.Ultimately, every owner stops working; your employees will stop working and retire too. As a company owner here are some basic options to help plan for the golden years.

§401(k) – Most owners consider a §401(k) plan an option for larger companies, however this kind of retirement plan can be set up for a one owner/employee business. This is known as a Solo §401(k). A lot of clients think the company has to match employee contributions, this is not true. Matching is typical however the plan’s founders can arrange the plan to not match employee contributions. The companies that have enough money to match employee contributions usually see employee morale go higher. Participants usually elect to have a set percentage or dollar amount deducted from their paycheck. The employee limits on contributions to a retirement plan for 2012 is $17,000 for those under 50 years, and $22,500 for those over 50. §401(k)s are available in Traditional and Roth versions. A Roth or Traditional plan version permits the employee to choose between, paying taxes in the beginning or paying taxes when money is withdrawn from the account. Roth §401(k) account owners pay taxes in the beginning. Traditional §401(k) account owners pay taxes when money is withdrawn. 401(k) regulations also permit loans if the plan is setup with that option.

SEP- SEP (Simplified Employee Pensions) IRAs are an easy option for many small companies. These plans are comparatively undemanding to administrate. Participants generally cannot defer salary to the account. The company makes contributions based on a percentage of salary. Some participants in a SEP-IRA plan start additional IRAs to plan for the future. One major benefit to this plan is that a SEP-IRA can be set up after the tax year is closed. The employer contribution can be made as late as the due date (including extensions) of the company’s tax return for that year. IRS regulations do not permit loans, early withdrawals, or catch up contributions.

SIMPLE IRA – means for Savings Incentive Match for Employees. Relative to other kinds of pension plans the name “simple” is true. One downside is that the company is obligated to match employee contributions. Another thing to consider is the max contribution allowed to this type of plan is $11,500. The reporting requirements for this kind of plan are minimal.

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

Leave a comment

Filed under Deductions, Payroll, Retirement Planning, Tax Planning

Remember the Child and Dependent Care Tax Credit When Making Summer Plans

During the summer many parents may be planning the time between school years for their children while they work or look for work. Safe Harbor Accounting wants to remind taxpayers that are considering their summer agenda to keep in mind a tax credit that can help them offset some day camp expenses.

  • Your child or dependent must meet certain qualifications,
  • Your daycare provider must meet certain qualifications,
  • You must have earned income,
  • The care provided must enable you to work or to look for work, and
  • You must reduce your eligible daycare expenses by any amounts provided by a dependent care benefits plan through your employer.

The Child and Dependent Care Tax Credit is available for expenses incurred during the summer and throughout the rest of the year. Here are some facts the we want you to know about the credit:

1. Children must be under age 13 in order to qualify.

2. Taxpayers may qualify for the credit, whether the childcare provider is a sitter at home or a daycare facility outside the home.

3. You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.

4. The credit is on a sliding scale in accordance with wages. The child and dependent care tax credit is worth 20% to 35% of your day care expenses. The credit is phased out to 20% as income goes higher.

5. Expenses for overnight camps or summer school/tutoring do not qualify.

6. Save receipts and paperwork as a reminder when filing your 2012 tax return. Remember to note the Employee Identification Number (EIN) of the camp as well as its location and the dates attended.

7. The cost of sending your child to an overnight camp is not considered a work-related expense.

8. A daycare program can include a wide variety of activities geared to children’s needs and interests. The cost of sending your child to a day camp may be a work-related expense, even if the camp specializes in a particular activity, such as computers or soccer.

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

Leave a comment

Filed under Child Tax Credit, Tax Planning

Business website costs

The business use of websites is widespread, but IRS has not yet issued formal guidance on when Internet website costs can be deducted.

Fortunately, established rules that apply to the deductibility of business costs in general, and formal IRS guidance that applies to software costs in particular (the “software guidelines”), provide a taxpayer launching a business website with some guidance as to the proper treatment of the costs. Here is a brief discussion of some relevant principles:


The time for deducting website design costs (i.e., costs of the website’s overall structure, functionality and appearance) depends on whether the costs are costs of “software” within the meaning of the “software guidelines.” Generally, the portions of the website’s design that are produced from sophisticated programming languages (for example, the “C++” language widely used in website design) will qualify as “software.” On the other hand, there is some doubt as to the extent to which the portions of a design produced from HTML (hypertext markup language) will qualify as “software.”


Website design costs that are “software” costs are deductible under “safe-harbor” rules. The deductibility of website design costs that are “software” costs is governed by the following “safe-harbor” rules.

Generally, if the individual or company launching the website “purchases” the design (i.e., acquires the design from a contractor who is at economic risk should the software not perform), the design costs are amortized (ratably deducted) by that individual or company over the three-year period beginning with the month in which the website is placed in service. Also, non-customized computer software placed in service in tax years beginning before 2013 qualifies as “section 179 property,” and is thus eligible for the Code Sec. 179 elective expensing deduction that is generally available only for machinery and equipment. For tax years beginning in 2011, the deduction is limited to $500,000. For tax years beginning in 2012, the deduction is limited to $139,000. The limits are reduced by the cost of other section 179 property for which the election is made. Also, the election is phased out for taxpayers placing more than $2,000,000 of section 179 property into service during a tax year beginning in 2011 (more than $560,000 for a tax year beginning in 2012). Non-customized software acquired and placed in service in calendar year 2011 is, alternatively, eligible for a 100%-of-cost depreciation deduction (100% bonus depreciation) unlimited by any dollar amount. For software placed in service in calendar year 2012, the bonus depreciation deduction is 50% of cost. The bonus depreciation for an item of software is reduced to take into account any portion of the item’s cost for which a Code Sec. 179 election is made, and regular depreciation deductions are reduced to take into account both the bonus depreciation and any Code Sec. 179 election.

If, instead of being purchased, the website design is “developed” (designed in-house by the individual or company launching the website or designed by an independent contractor who is not at risk should the software not perform), the individual or company launching the website can choose among alternative treatments, including, but not limited to, “currently deducting” the costs (deducting the costs in the year that the costs are paid, or accrued, depending on the taxpayer’s overall accounting method) or amortizing the costs under the three-year rule, discussed above, for a “purchased” design.


Website design costs that aren’t costs of “software” are deductible in accordance with useful life. The time for deducting website design costs that are costs of portions of the design that aren’t “software” depends on the expected “useful life” of these non-software portions of the design. Thus, these costs must be amortized over the number of years that it is expected that the non-software portions of the design will be used in the business (except if it is expected that these non-software portions of the design will have a useful life of no more than a year, in which case the costs can be currently deducted.)


Website content that is advertising is generally currently deductible; the treatment of other content costs will vary. Advertising costs are, generally, currently deductible. Thus, the costs of website content that is advertising are, generally, currently deductible. Website content that isn’t advertising will be currently deductible, or amortized over a multi-tax year period, depending on its useful life.

The deductibility of some website costs that are business start-up costs is limited. Where website costs that would otherwise be currently deductible are paid or accrued before a business begins, the costs are deductible only upon the termination or disposition of the business, unless the taxpayer elects to (1) deduct up to $5,000 of the costs in the year that the business starts and/or (2) amortize the costs over a period of 60 months or more beginning with the month that the business starts.

The above principles, and others that effect the deductibility of website costs, suggest ways in which the individual or company launching the website can “take charge” of the treatment of website costs. For instance, an individual or company who contracts for a website design that qualifies as software, and who seeks the favorable tax treatment that applies to the costs of “developed” software, can, if acceptable as a business matter, include, in its written agreement with the developer/contractor, terms that will put the risk that the software won’t perform on the individual or company. Another example of a way to manage the tax treatment of website costs is detailed, descriptive allocations of costs, both in contracts and in internal records.

If you are considering launching a business website, I will be pleased to discuss with you further, and help you implement, the above planning steps or others that will help you manage the tax treatment of your website costs.

Deerfield Beach CPA

Leave a comment

Filed under Amortization, Deductions, Deerfield Beach CPA, Depreciation, Tax Planning