IRA CONTRIBUTION

Larry, I am 63 and plan on retiring at the end of the year. Can I still make an IRA contribution for 2008? Henry

Henry, the answer is yes. For the 2008 tax year you can contribute $5,000...that is assuming that you have earned $5,000. In addition, since you are over age 50 you can add an additional $1,000 for a $6,000 total. It does not matter when during the year you retire so long as you meet the compensation requirement. But you can no longer contribute to an IRA after you reach age 70 ½.

It is a pleasure serving you.

Larry Kopsa CPA

CLIENT GIFTS

This may be a little late for this year, but keep it in mind for the future. It is customary to thank customers this time of year with a gift. As you might guess, once again the IRS has to stick its nose into our business. They have rules on how much you can give and still deduct. The biggest problem is that there is a $25 limit per client per year. This amount has not been changed since the 1970’s.

The downside is a dollar limit that makes the IRS look suspiciously like Ebenezer Scrooge. 25 bucks per person, max. (Bah, humbug!) Husband and wife count as one person. (Humbug again!)

How can you get around that limit? Consider these strategies:

Consider giving to groups of people, like "the Kopsa family" (Larry and Maggie ((husband and wife so 1)), Ryan ((son 1)), and Tony((son 1)), for a $75 total) or "the folks at Kopsa Otte CPA’s" (There are 25 of us, for a $625 deduction).

Consider giving a gift of entertainment, which you can treat as a gift (subject to the $25 limit) or an entertainment expense (subject to the 50% limit). For example, tickets to a ball game sell for up to $110 each. If I give two tickets, I can deduct them as a $50 gift or a $110 entertainment expense. That's an easy call. (Almost as easy as giving the tickets away instead of attending the game!)

Ad specialties with a value up to $4 each are deductible as advertising and don't count against the $25 per person annual limit for business gifts. Contest prizes you give to customers (but not employees) also qualify.

I know, I said it's better to give than receive. But why not receive that tax break for your holiday gift if it's out there?

FIVE REASONS WHY THE ECONOMY MIGHT RECOVER FASTER THAN YOU THINK IN 2009

Here is Some Optimistic News

(U.S. News & World Report) -- There are a number of reasons to think that the economy might, just might, shift back into gear faster than most of us think or hope. One is plunging oil prices. Now they're below $40 thanks to slowing global demand. At the same time, gas prices have plunged from over $4 a gallon to around $1.67 nationally. (And some analysts think they're heading to a buck a gallon.) JP Morgan Chase economist James Glassman estimates that the drop in oil prices represents "a boost equivalent to a $350 billion stimulus." Another reason is falling mortgage rates. Rates for a 30-year, fixed-rate mortgage fell to a low, low 5.19% last week. That should help housing affordability and the ability of current homeowners to refinance their mortgages. Other reasons are the actions by the Federal Reserve, which has made it clear that the Fed will buy various debt securities to unfreeze the credit markets, and President-elect Obama's stimulus plan, as the new Democrat-controlled Congress will likely spend somewhere between $750 billion and $1 trillion over the next two years to boost the economy. The final reason is America's deep fundamentals. Overall, the core U.S. economy is in far better shape than it was in the 1970s, with a higher productivity and a better tax and regulatory system. Even though the U.S. economy finally succumbed to the oil shock and the credit crisis in 2008, it held up longer than many predicted thanks to its deep strengths. Who knows, maybe it will surprise the bears again in 2009.

TEST TIME

This Math test can predict who can give you the best information to help you to be more profitable. Try it without looking at the answers...No cheating!

Ok get your fingers at the ready.....Pick a number from 1-9.....times this number by 3.....then add 3.....then times by 3 again.....You should have a two digit number.....Add these two numbers together.....You then should be left with a single digit number which will tell you who your best business advisor is.

1. The IRS
2. Your banker
3. Your neighbor
4. Your bartender
5. The federal government
6. Your brother in law that has made every mistake imaginable
7. Oprah
8. Your insurance guy
9. Kopsa Otte CPA’s and Advisors :>)
10. Your momma

DEAR PRESIDENT ELECT OBAMA,

Taxing small business will not fix the healthcare crisis.

When it comes to addressing the nation's healthcare crisis, there is a right way and a wrong way to implement change. Unfortunately, many public officials think the easiest way to reduce the number of uninsured Americans is to require employers to contribute toward their employees' healthcare costs. These types of proposals are often referred to as employer-responsibility initiatives or "pay or play" legislation.

As small business owners struggle to stay afloat during difficult economic times, it's unfortunate that some elected officials choose to burden our nation's job creators with more costs they likely can't afford. The reality is that these types of proposals, which set a dangerous example are gaining support in statehouses, cities and courthouses across the country.

HERE IS WHAT'S HAPPENED IN SAN FRANCISCO

Recently, the 9th Circuit Court of Appeals ruled in favor of San Francisco's healthcare security ordinance, which requires employers with 20-99 employees to pay $1.17 per hour per employee for healthcare costs. Employers with 100 or more employees must pay $1.76 per hour per employee. These rates will increase in January 2009 to $1.23 and $1.85 respectively, and will continue to increase annually.

Employer healthcare payments can be made either to the employee through at traditional employer-sponsored plan, directly to employees as reimbursements for healthcare costs or to the city to fund its Health Access Program.

TAX REMINDERS

Here are our final tax reminders for this year to help you avoid problems:

• If you have a flexible spending account balance you must clean it out by Dec. 31 if your employer still has not adopted the 2½-month grace period which is now permitted by the IRS. If your employer has not made the change, any money left in your flex spending account is forfeited.


• Mail checks for deductible items before year end to ensure a 2008 write-off. You get to claim the deduction this year even if the checks do not clear until January.


• Make sure you know the rules if you are charging deductible items.


• For charges that you make with a retail store credit card, you are allowed to claim the deduction for the item only in the tax year in which you pay the bill.


• For transactions made with a bank credit card, you take the deduction in the tax year that you charged the goods, even though you pay the bill next year.

And our final suggestion for this year:

• Have a happy holiday season!

The income tax forms will start to arrive in mailboxes in less than three weeks.

JOE THE PLUMBER

I don’t know how I could have possibly missed the following joke during the election season, but thought that you might enjoy. It is about applying the tax policy change philosophy to plumbing bills.

Barack Obama discovers a leak under his sink and calls Joe the plumber to come and fix it.

Joe drives to Obama’s house, which is in a very nice neighborhood where it’s clear that all the residents make more than $250,000 per year (or $200,000 per year or $150,000 per year, depending on who’s speaking and when).

Joe arrives and takes his tools into the house. He’s shown the room that contains the leaky pipe under the sink. Joe figures it’s an easy job that will take less than ten minutes. Obama is standing near the door and asks Joe how much it will cost.

Joe immediately says, “$9,500.”

“$9,500?” Obama replies stunned. “But you said it’s an easy job!”

“Yeah, but what I do is charge a lot more to my clients who make more than $250,000 per year so I can fix the plumbing of everybody who makes less than that for free,” responds Joe.

Obama tells Joe there’s no way he’s paying that much, so Joe leaves.

A week later the leak gets so bad that the Obamas have had to put a bucket under the sink, and it fills up every two hours, so they call Joe back. Joe goes back to the Obamas’, looks at the leaky pipe, and says, “It’ll cost you about $21,000.”

Obama exclaims, “A few days ago you told me it would cost only $9,500!”

Joe explains, “Well, a lot of rich people are learning how to fix their own plumbing, so there are fewer of you paying for all the free plumbing we’re doing for the people who make less than $250,000 - and I refuse to charge the lesser income people for plumbing work.”

Obama tries to straighten out Joe. “But don’t you get it? If all the rich people learn how to do their own plumbing and you won’t charge the poor people, what will you do for money?”

Joe immediately replies, “I guess I’ll run for President.”

YEAR-END TAX TIPS

Here are some year-end tax tips from the IRS. Check out the IRS summary at FS-2008-26.

If you are making year-end contributions to charity, keep in mind several important tax law provisions that have taken effect in recent years. Another good summary is in the IRS release IR-2008-138. Remember that Dec. 31 is the last day for most of these actions to occur.

LOOKING FOR WAYS TO CUT BACK?

I have received several emails lately from clients and non-clients asking for ways to cut back due to the slow economy. Every situation is different, but here are a few things clients are doing that seem to work.

1. Add a new service related to your current offerings.


2. Entice customers with a discount or promotion.


3. Ramp up customer service. Be extra attentive to existing customers, but court new ones, too.


4. Advertise. If everyone else is cutting back on advertising and marketing, this is your chance to be more visible.


5. Split advertising costs with neighboring, non-competitive businesses.


6. Trim your mailing list.


7. Set up a blog to drive traffic to your Web site.


8. Reduce your inventory to only what you need.


9. Hire an intern, who will work with you to earn college credit.


10. Renegotiate a deal with a supplier.


11. Cut back on overtime.


12. Institute a hiring freeze or use more part-time workers. This will not only save money, but also help keep you from having to lay off employees.


13. Trim the cost of benefits. Some decisions might be tough for employees, but it's better to scale back on benefits than to discontinue them entirely.


14. Use free software through Google or other Web-based programs.


15. Learn the ropes of tax deductions.


16. Send reminder letters to your past-due accounts.


17. Make a mistake on a letter? Flip it over and use the other side for future drafts and other documents.


18. Decrease postage costs by starting an e-newsletter.


19. Turn down the thermostat in the winter.


20. Turn off lights when you leave a room and shut down office equipment at night.


21. When not in use, turn off electronics chargers, which draw power even when not charging.


22. Have everyone bring in their own coffee mugs instead of going through hundreds of disposable cups each month.


23. If your business required travel, drive instead of fly. Or instead of renting a car while you're gone, take public transportation.


24. Be honest with employees about how the economy is affecting your business.


25. Offer low- or no-cost rewards (like an afternoon off) to employees who come up with other cost-cutting measures you can implement.

WALL STREET JOURNAL EDITORIAL: Labor Union Chief: Let's Share the Wealth

(The Wall Street Journal) -- In the Dec. 6 edition of The Wall Street Journal, WSJ editorial board member Matthew Kaminski writes that "America's most powerful union boss says Europe offers a good economic model." Andy Stern, head of the fastest growing trade group in America, the Service Employees International Union, is one of labor's most powerful figures today. From his SEIU headquarters in Washington, DC, Stern says his group will demand universal health care and quick adoption of the Employee Free Choice Act, commonly known as "card check," which would end secret ballots in union elections.

All the political signs are favorable for a "universal," government-run health-care system. Mr. Stern hails the appointment of Tom Daschle to lead the push from the Department of Health and Human Services.

On the issue of the 'card check' proposal, Mr. Stern keeps the pressure on, saying card check ought to come up in the first hundred days. Under the legislation passed by the House last year, if a majority of employees sign authorization forms, or cards, a union would be formed and employers would have 120 days to reach a contract. Failing that, the government would appoint an arbitrator to decide on the terms. This "minimum binding arbitration" provision worries employers as much as card check itself. But Mr. Stern rules out a compromise that would keep it out of the bill.

The Democratic left frames the argument for increasing union membership in terms of closing the gap between the rich and poor. Universal health care, widespread unionization, stronger regulations on business, profit-sharing for employees, higher taxes -- all that sounds like Western Europe. Mr. Stern considers that a worthy model. "I think Western Europe, as much as we used to make fun of it, has made different trade-offs which may have ended up with a little more unemployment but a lot more equality." Andy Stern's ambition would seem to be nothing less than to remake American capitalism from the ground up. His union, and the labor movement, hasn't had this good a chance to do so in a very long time.

POLITICALLY CORRECT GREETING

For those of you so inclined, here’s a Christmas greeting that will offend no one whatsoever. Well, let me re-phrase that…it might very well offend Christians but no one else.

A Politically Correct Holiday Greeting

Best wishes for an environmentally conscious, socially responsible, low-stress, non-addictive, gender-neutral, winter solstice holiday, practiced within the joyous traditions of the religious persuasion of your particular choice, but with respect for the religious persuasion of others who choose to practice their own religion, as well as those who choose to not practice any religion at all. Additionally, a fiscally successful, personally fulfilling, and medically uncomplicated recognition of the generally accepted calendar of 2009, but not without due respect for the calendars of choice of other cultures, whose contributions have helped make our society great, without regard to race, creed, color, religion or sexual orientation.

(Disclaimer: This greeting is subject to clarification or withdrawal. It implies no promise by the wisher to actually implement any of the wishes for him/herself or others, and no responsibility for any unintended emotional stress these greetings may bring to those not caught up in the holiday spirit.)

The American Legion Magazine, December 2008

WATCH OUT FOR THESE NEW PHONE AND EMAIL SCAMS

Just another reminder to not give out private information to anyone that calls you on the phone.

The latest one is a Jury Duty Scam. I have personally gone out to the FBI website to verify this report.

This scam appears to be spreading fast so be prepared should you get this call. Most of us take those summonses for jury duty seriously, but enough people skip out on their civic duty that a new and ominous kind of fraud has surfaced. The caller claims to be a jury coordinator. If you protest that you never received a summons for jury duty, the scammer asks you for your Social Security number and date of birth so he or she can verify the information and cancel the arrest warrant. Give out any of this information and bingo; your identity was just stolen. The fraud has been reported so far in 11 states, including Oklahoma, Illinois, and Colorado. This swindle is particularly insidious because they use intimidation over the phone to try to bully people into giving information by pretending they are with the court system. The FBI and the federal court system have issued nationwide alerts on their web sites, warning consumers about the fraud.

Don't believe me, check it out here:

http://www.fbi.gov/page2/june06/jury_scams060206.htm http://www.snopes.com/crime/fraud/juryduty.asp

http://www.truthorfiction.com/

FRAUDULENT GRAND JURY SUMMONS CONTAINING MALWARE

04/17/08—The IC3 warns consumers of recently reported spam e-mail containing a fraudulent subpoena notifying recipients they are commanded to appear and testify before a Grand Jury. The e-mail attempts to appear authentic by containing a court case number, federal code, name and address of a California federal court, court room number, issuing officers’ names, and a court seal. Recipients are directed to click the link provided in the e-mail in order to download and print associated information for their records. If the recipient clicks the link, malicious code is downloaded onto their computer.

The e-mail also contains language threatening recipients with contempt of court charges if they fail to appear. Recipients are also told the subpoena will remain in effect until the court grants a release. As with most spam, the content contains multiple spelling errors.

If you receive this type of notification and are unsure of its authenticity, you should contact the issuing court for validation.

Be aware; if you receive an unsolicited e-mail, especially from an unknown sender, it is recommended you do not open it. If you do open the e-mail, do not click any embedded links, as they may contain a virus or malware.

If you have received an e-mail similar to this, please file a complaint at www.ic3.gov.

IMPORTANT PENSION INFORMATION

IF YOU ARE OVER 70 ½ AND HAVE NOT TAKEN YOUR REQUIRED MINIMUM DISTRIBUTION FROM YOUR PENSION, THIS IS IMPORTANT

Required payouts from IRAs and plans may yet be waived for 2008, even though Congress decided not to do anything for this year. In light of the stock market’s decline this year, lawmakers considered not requiring folks who are at least 70½ to take payouts for 2008. That way, they wouldn’t be forced to sell investments in their plans with the market near the bottom. New legislation that may be taken up in Dec. would waive payouts for ’09. That’s no help for 2008. Treasury is still seriously considering providing relief for 2008 payouts. Our advice is to delay withdrawals to late Dec. if you don’t need the money. That way, you can take out less if Treasury decides that it can ease the payout rules.

HITLER ON YOU TUBE

How would Adolf have handled the current financial crisis? Click on Zer Dunkoff to find out.

NEW MILEAGE RATES ISSUED

The Internal Revenue Service has issued the 2009 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2009, the standard mileage rates for the use of a car (also vans, pickups, or panel trucks) will be:

· 55 cents per mile for business miles driven
· 24 cents per mile driven for medical or moving purposes
· 14 cents per mile driven in service of charitable organizations

The new rates for business, medical and moving purposes are slightly lower than rates for the second half of 2008 that were raised by a special adjustment mid-year in response to a spike in gasoline prices. The rate for charitable purposes is set by law and is unchanged from 2008.

The business mileage rate was 50.5 cents in the first half of 2008 and 58.5 cents in the second half. The medical and moving rate was 19 cents in the first half and 27 cents in the second half.

The mileage rates for 2009 reflect generally higher transportation costs compared to a year ago, but the rates also factor in the recent reversal of rising gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, enter the calculation.

BE ON THE LOOKOUT FOR THESE ERRORS

Watch out for an error in the instructions for Forms 1099, 1098 and W-2G, and similar information returns. The correct due date for businesses to give a copy of the form to taxpayers is Feb. 17, 2009; not March 2 as the instructions state. The IRS can slap penalties on late issuers. The earlier date was OK’d by Congress in Oct.

HERE IS A GIFT IDEA FOR CHILDREN OR GRANDCHILDREN

If your child or grandchild worked this year and had wages or other earned income, funding a Roth is a great gift. You can give $5,000 or what the child earned, whichever is less. But keep in mind that the gift does count toward the $12,000 annual gift tax exclusion. This does not create a tax deduction but a Roth can grow into a nice nest egg, especially if you keep making pay-ins each year.

NEBRASKA CONTRACTORS MUST REGISTER WITH STATE - IF NOT SUBJECT TO WITHHOLDING

(AP) -- All construction contractors need to make sure they are registered with the Nebraska Department of Revenue, so they won't have part of their payments withheld next year. A new rule requiring contractors to register with the department takes effect Jan. 1. The law requires contractors to withhold 5% of the payment owed to any subcontractor if the subcontractor is not part of the Revenue Department's database. The money withheld will go to the state and be treated as income tax withholding. If the subcontractor doesn't end up owing the full 5% in income taxes, it can recover money, but not until it files its tax return for the year. For more information, go to www.revenue.ne.gov.

EFFORTS TO EXPAND UNIONS

I am honored to be a board member of the Nebraska State Chamber of Commerce and serve as the chairperson of the Small Business Council. Since the presidential election we have heard about several changes that may be coming out of the new administration and congress. One of the issues that businesses are concerned about is the Employee Free Choice Act, otherwise known as the Card Check legislation. If this should pass, it could have an impact on business.

Below is information that was prepared by the Nebraska State Chamber of Commerce that clarifies some of the questions, and expresses some of the concerns about this possible legislation.

“CARD CHECK” FEDERAL LEGISLATION
(a.k.a. “Employee Free Choice Act”)

Background:

· Back in the 1950s, roughly one-third of the workforce was unionized. Today, that number has declined to 12.1 percent, with just 7.5 percent of the private sector workforce belonging to a union and the rest working in government jobs—the only segment where the unions’ market share is growing.

· Card Check has the potential to completely reverse this trend, and open up wide swaths of the economy to union organizing.

ELIMINATING SECRET BALLOTS

Current Union Organizing Law

· Under the secret ballot process, union organizers ask workers at a facility to sign cards indicating an interest in an election. Once 30% have signed cards, the union can petition the Federal National Labor Relations Board to hold a secret ballot election.

· Both the union and the employer are given the opportunity to make their case, after which workers cast their votes in a federally-supervised election. If the union gets more than 50% of the votes, they are certified by the National Labor Relations Board and the employer must begin collective bargaining.

How Card Check Would Change Union Organizing

· Card Check essentially abolishes secret ballot elections and replaces them with a process that requires only signature cards.

· The bill would affect businesses of any size, regardless of the number of employees.

· Card Check allows unions to skip the time, expense — and potential risk of losing — that comes with secret ballot elections. Under Card Check, if union organizers can persuade more than 50% of workers at a facility to sign cards, they win.

· Workers could be asked to sign a card almost anywhere, including at their homes at night. Union organizers could go back to any worker who declines to sign over and over again until they get the desired result. And once the union hits that 50% threshold, the National Labor Relations Board would have to certify the union and would be prohibited from holding a secret ballot election — even if many workers want one.

· Under Card Check, a union has no obligation to tell an employer it is launching an organization drive. An employer may not find out an organizing campaign is underway until ordered by the Federal government to start collective bargaining.

Other Provisions of the Bill – Binding Arbitration

· Under Section Three, an employer must start collective bargaining with a newly formed union within 10 days. Within 90 days, the parties are expected to have completed a first contract. If not, either side may refer the matter to the National Mediation and Conciliation Service. NMCS has exactly 30 days from the date of the request to strike a deal.

· Should this fail, either side can refer the matter to a federal arbitration panel. The arbitration panel will hand down a contract that is binding on both sides for two years.

· Section Three has the obvious flaw of forcing the complex negotiation of a contract into a compressed time frame. But it also brings the federal government into contract talks, which was never intended under the National Labor Relations Act.

· Moreover, the legislation does not specify who will sit on the arbitration panel, how they will be appointed, how many panels there should be and what, if any, appeal rights will be established.

· Far from leading to productive bargaining, as unions claim, binding arbitration is likely to cause just the opposite. If a union feels it’s losing the edge in contract talks, it has every incentive to stonewall and wait for an arbitration panel to hand down a contract.

· Binding arbitration would mean that both parties are likely to get stuck with a contract they don’t like. From the union perspective, that’s fine, they would prefer a bad contract to no contract. But for an employer, you could be stuck with a contract that it completely incompatible with your cost structure and your business model—and you would have to live with that contract for two years.

· From a worker’s perspective, binding arbitration would deny them the ability to vote on the pay, benefits and working conditions in their new contract. Since the contract handed down by the arbitrator is binding, workers would lose the opportunity to change provisions they thought were unfair.

New Penalties

· Section four of the legislation also includes hefty new penalties — on employers only — during the negotiation of a first contract.

· Penalties on employers for back-pay violations are raised to back-pay plus two times that amount as liquidated damages. Penalties for violating the National Labor Relations Act, not particularly difficult for the uninitiated, are raised to as much as $20,000 per violation, in addition to any make-whole remedy.

Card Check is Just the Beginning: The Union Agenda

· Unions see Card Check as a means of rapidly expanding their ranks. But it goes beyond just adding members. With an increase in membership comes expanding revenue in the form of dues, an exponential increase in the resources unions can put into politics, and a much larger and more robust influence on Capitol Hill.

· And unions have an ambitious legislative agenda. This includes:

o Broad expansion of Family Medical Leave Act rights, including paid time off, paid sick leave and the application of FMLA even to the smallest employers.

o Petitioning the National Labor Relations Board to allow the creation of “mini-unions” – small cells of organized employees within workplaces that don’t represent a majority of workers, but which can force employers to bargain with them on pay and benefits.

o Added mandates and funding to encourage aggressive enforcement by federal regulatory agencies such as OSHA and the EPA.

o Repeal of the existing caps on punitive and compensatory damages for most employment discrimination lawsuits.

o Passage of the Paycheck Fairness Act, legislation that would greatly expand the Equal Pay Act, promoting further class-action litigation against employers.

o Passing legislation to resurrect the Clinton administration’s rejected ergonomics regulation — imposing billions of dollars of new costs on businesses.

o Dramatically expanding plant closing notification requirements for even small employers — giving workers private rights of action, and forcing companies to disclose confidential, strategic business plans.

o Imposing heavy financial penalties on employers that switch from defined benefit to defined contribution retirement plans.

o Killing of the trade agenda that has opened up new export markets to American businesses.

IF YOU ARE A SINGLE MEMBER LLC, TAKE NOTE

If you have a single member LLC and you pay wages, you will need to have an ID number starting January 1, 2009. Per new IRS rules, single member/single owner limited liability companies are required to change how they report wages and pay federal employment taxes in 2009.