PAYROLL CHANGE FOR 2010

As a reminder, the 2010 Tax Relief Act reduces the employees portion of the Social Security Tax. The following copy of the letter that we are sending to all of the clients that we assist with payroll reports.



RE: Payroll Change

By now you’ve probably heard we have a new tax law. One of the things that is included in that tax law affects your payroll. Effective January 1, 2011, the employee side of FICA tax is reduced by 2%. Therefore, the 6.2% of normal payroll is reduced to 4.2%.

You will want to be sure to download any updates on your payroll computer software as they come out or if you are manually calculating payroll, you will want to make this adjustment on the employee side of FICA tax. This does not affect the employer side of FICA.

As always, we are here to assist you. Please call our office if you have questions as you make this change. IRS has given us until January 31, 2011, to actually implement this change however, the sooner you can get it into your system the better.

It is a pleasure serving you.



Kopsa Otte CPA’s + Advisors

DID YOU MISS OUR WEBINAR?

On the evening of Tuesday December 27th I skipped all the football games that were on TV and presented a one hour free webinar on the new 2010 Tax Relief Act. We discussed how the tax act will impact us and some steps to take or not to take before the end of the year.

If have any topics that you would like us to cover in a webinar let us know. It is a pleasure serving you.

NEW TAX LAW LETTER

You probably had to have been stuck in you car in a snowbank without cell service or a radio to not know that Congress passed the 2010 Tax Relief Act which will help keep our taxes down for a couple of years. The following is a letter that we sent out to all of our clients.


December 28, 2010

Client

Washington Finally Acts on Tax Cuts

By now you've heard that Washington finally extended the Bush tax cuts that were scheduled to expire on December 31. This means the top rate stays at 35% (rather than 39.6%) and the rate on capital gains and qualified corporate dividends stays capped at 15% (rather than 20%). But the new law keeps taxes down for everyone, not just the highest earners. If those Bush cuts hadn't been extended, the 10% rate would have disappeared, and tax brackets would have increased faster for everyone. So don't think that you get no benefit just because you aren't in those top brackets!

There's more good news, too. The law also cuts the employee portion of Social Security and self-employment taxes by 2% (for 2011 only), and, restores the estate tax, but with only a 35% rate applying on estates over $5.0 million. Finally, it extends a list of popular tax breaks that were scheduled to expire: (1) it "patches" the Alternative Minimum Tax for two more years, thus protecting millions of Americans from the AMT, (2) it extends the Child Tax Credit and American Opportunity Tax Credit (for college tuition), (3) it expands the Earned Income Tax Credit, (4) it extends bonus depreciation and first-year expensing for businesses, and, (5) it extends miscellaneous tax breaks for expenses like educator expenses, state and local sales taxes, and IRA distributions given directly to charity.

Now let's talk about what it all means. The reality is the law's provisions will last for two years at most. That means Washington will have to fight it out all over again -- with a divided Congress, in a Presidential election year -- with another $2 trillion or so added to the national debt (on top of the $13.9 trillion that's already there)! If the economy continues to pick up over the next two years, there may be enormous pressure to increase taxes. This will make tax planning even more important over this period. So if you don't yet have a plan, take action now! Call us, at 402.362.6636 or toll free at 800.975.4829

It is a pleasure serving you.



Kopsa Otte CPA's + Advisors

Join us for a Free Webinar on December 28

7:00pm CST

(5:00pm PST/6:00pm MST/8:00pm EST)

You have heard about the new tax law, now you can find out what it means for you. Larry Kopsa CPA will take you through the synopsis of the various components that are in the new tax laws. December 31st is right around the corner and you may need to readjust your year-end tax planning because of these new laws. As always Kopsa Otte is here to keep you informed!

Reserve Your Webinar Seat Now at:
https://www1.gotomeeting.com/register/245365497

MILLION, BILLION, TRILLION - YOU HAVE TO LOOK AT THIS

I have tried to explain several times in my blogs the huge huge huge difference between a million, a billion and a trillion. They sound so much alike, but they are not even close. You have to be able to comprehend these numbers to realize the federal and state deficits.

Recently President Obama said that he was going to trim $100 million of "fat and waste" out of the federal budget. Well this video really shows how insignificant that amount is when compared to the total annual budget. This does not even include the federal debt, just the annual expenditures.

Take a look.

http://wimp.com/budgetcuts/

QUESTION- PAYROLL TAX CHANGE FOR EMPLOYER

Larry,

You sent out Blog info on the Payroll Tax change from 2010 to 2011 (6.2 down to 4.2) Will this change the employer contribution as well?

Thanks
Lisa


Lisa-

No the employer contribution stays the same.

Happy Holidays,
Larry Kopsa CPA

WEBINAR TO KEEP YOU INFORMED- NEW TAX LAW

Join us for a Webinar on December 28

7:00pm CST

(5:00pm PST/6:00pm MST/8:00pm EST)

Larry Kopsa CPA will take you through the synopsis of the various components that are in the new tax laws. December 31st is right around the corner and you may need to readjust your year-end tax planning because of these new laws. As always Kopsa Otte is here to keep you informed!

Reserve Your Webinar Seat Now at:
https://www1.gotomeeting.com/register/245365497

Here’s a list of the items Larry will be covering:

Federal Estate Tax. 35% – the lowest since 1931 – with estates over $5 million per person. It’s effectively a repeal for most Americans since, with a little bit of decent estate planning, a married couple can pass $10 million to their heirs without being subject to the tax.

Individual Income Tax Rates. The same rates created as 2010. We have avoided a 3% hike – for a family making $50,000 that means you’ve avoided a $1,500 bump in tax for 2011.

Alternative Minimum Tax (AMT). We got our patch for two years. No word on 2012 and beyond.

Capital Gains Rates. Top rate for long-term gains stays at 15%.

Dividends. Same story as on capital gains rates: current rates are extended.

Payroll Tax “Holiday.” It’s a one year (just one, not two like much of the other provisions) cut in Social Security taxes for workers. For 2011, you’ll pay in 4.2% on the first $106,800 of wages rather than 6.2%. That means a 2% cut so that a worker earning $50,000 would pay $1,000 less in 2011. But only for 2011.

Child Tax Credit. The child tax credit had been bumped under Bush to $1,000 per child with a $3,000 earned income floor to make it refundable. That will stand for the next two years.

Earned Income Tax Credit (EITC). The EITC is probably the most controversial of the tax credits. It cost taxpayers $42.9 billion in 2008. The EITC base remains the same as for 2010.

American Opportunity Tax Credit (AOTC). The modified version of the Hope Credit allowed a slightly bigger credit ($2,500 versus $1,800) for students pursuing a degree.

State and Local Sales Tax Deduction. The option to deduct sales and local sales taxes on your federal income tax return – even if you don’t itemize – ended in 2009 has been reinstated for 2010 and 2011.

Transfers of IRAs to Charities. The option to allow those taxpayers over the age of 70-1/2 to roll their IRAs directly to charity.

So that’s the summary of what’s in the tax deal. The regulations are not yet out. More information as it becomes available.