Florida's minimum wage increases on Jan 1, 2012

Florida's minimum wage for non-tipped employees will increase Jan. 1 to $7.67 an hour, a 4.9 percent increase from the $7.31 an hour minimum for 2011, according to the Florida Department of Economic Opportunity.

Wages for tipped employees will rise to $4.65 an hour, up from $4.29. The wage increase is based on the increase of the federal Consumer Price Index for wage workers in the southeastern United States.

Following a 2004 constitutional amendment, Florida is one of 10 states that automatically raise minimum wage rates. The federal rate, now $7.25 an hour, must be raised by an act of Congress.

Tax Advantages available to homeowners!

Here are some potential tax savings for homeowners this tax season. If you are interested in learning how not to miss these on your upcoming tax returns, please call or email us to learn how to use each to its fullest potential.

1. 2010 is the last tax filing year to benefit from a refundable “first time homebuyers’ credit” of 10 percent of the purchase price of a new home—up to $8,000. The credit is available for homes purchased before October 1, 2010 and the purchasers must have entered into a binding agreement to buy the home before May 1, 2010.

2. A refundable “repeat homebuyers’ credit” is available for purchasers who entered a contract to buy a home by April 30, 2010 and closed on the sale of the home before October 1, 2010. The credit is 10 percent of the purchase price with a limit of $6,500.

3. Homeowners can exclude up to $250,000 of gain on the sale of their homes (up to $500,000 for joint filers) if they have owned and lived in the home as their principal residence for two out of the five years prior to the sale, although a partial exclusion may be available for sales due to change of employment, health or unforeseen circumstances.

4. Homeowners may also take the interest on their mortgage indebtedness of up to $1 million as an itemized deduction. The interest can be on their principal residence and a second home/house you are trying to sell.

5. For ordinary income purposes, up to $100,000 in home-equity loan interest can also be deducted.

6. Points paid on a home mortgage loan for the purchase or improvement of a principal residence are deductible in the year paid to the extent that the points represent a customary practice in the area. Points paid on a refinancing loan must be amortized over the term of the loan.

7. Through 2010, mortgage insurance premiums may also be deducted as mortgage interest. However, the mortgage insurance had to be originally acquired on or after Jan. 1, 2007. We question the value of PMI insurance when it did little to stop the destruction of housing values in the country.

8. Homeowners are also able to take their state and local property taxes as an itemized deduction.

9. If a residence of the taxpayer is rented for fewer than 15 days during the year, the rental income is excludable from gross income and no deductions attributable to such rental are allowable. This means that if you have property for rent but are unable to rent it, you can't take a deduction for expenses of the property.

10. If a homeowner’s mortgage debt of up to $2 million on their principal residence is forgiven, as in a write-down or foreclosure, it is not treated as “cancellation of debt income.” This special relief is temporary and is available for six years, retroactively for taxpayers filing amended returns, from January 1, 2007 through the end of 2011. This exclusion from income is necessary because without it any underwater homeowner would be liable for the "income" they received (debt forgiven) if they lost their home.

11. If you own a home and installed qualifying energy-efficient fixtures and systems by Dec. 31, 2010, you may claim a 30-percent tax credit – up to a maximum of $1,500 for both the 2009 and 2010 tax years. Obama's American Recovery and Reinvestment Act of 2009 (ARRA) provides for energy tax credits applying to the installation of insulation and energy-efficient exterior windows and doors, heat pumps, furnaces, central air conditioners and water pumps. This is a tricky deduction because taxpayers often incorrectly assume that any item that saves energy is eligible for a tax deduction. The IRS guidelines are quite clear on what is deductible so you need to talk to a CPA or other tax preparer to be sure your energy efficient purchases are actually covered by the 30-percent energy credit. Did you get that? ;-)

12. A separate 30-percent credit is available to homeowners who installed alternative energy equipment such as fuel cells, solar water heaters, solar electric equipment, small wind energy property and geothermal heat pumps.

Here comes tax time! Take time to gather your tax data as soon as possible. You should round up all receipts and gather canceled checks, such as those from charities; check your latest brokerage statements for year-to-date gains or losses; make a checklist of accounts to keep track of the 1099s, if any, when they arrive; and get medical receipts and insurance reimbursement forms in order as well as caluclate the total for health insurance premiums paid. If you start organizing your files now, it will be easier to avoid a last-minute rush to our office. It is much easier to have the originals or to request replacements when you have time, instead of discovering at the last minute that you are missing some item that prevents you from finishing your tax return by the due date.

Accounting Fraud in the movie Industry...

A Film Director has been indicted in $4,700,000 Film Tax Credit Scheme.

A director who directed 2 movies has been indicted for fraudulently obtaining over $4.7 million in film tax credits from the state of Massachusetts.

Daniel Adams allegedly claimed inflated expenses for two films that resulted in the nearly $5 million overpayment.

Adams received the tax credits for the 2009 movie “The Lightkeepers,” starring Richard Dreyfuss and many others. One item inflated was payments of $2.5 million to Dreyfuss, when in fact the star only received $400,000.

A Grand Jury returned indictments Monday against the 50-year-old director and producer on charges of making a false claims, larceny over $250, procuring the presentation of a false claim to the Department of Revenue, filing a false document with the Department of Revenue, and procuring the preparation of a false tax return.

This investigation began in March 2010, when an investigator at the Department of Revenue spotted suspicious tax returns connected to the production. During the course of its review of the tax credit application, the department discovered that withholding tax had not been paid on the lead actors’ salaries. They required payment of that tax before issuing the tax credit certificate.

Prosecutors claim Adams participated in a scheme to defraud taxpayers that began in 2006. He allegedly submitted fraudulent tax credit applications that greatly inflated expenses for the pair of Cape Cod-based film projects and in turn received a tax credit overpayment of more than $4.7 million. The Massachusetts film tax credit statute allows a film production company to receive a 25 percent tax credit for various payroll and production expenses.

Earlier, Adams organized an LLC for the purpose of producing and distributing a motion picture. Through the LLC, he allegedly solicited independent investors and also sought financing based on the tax credits the film would generate.

Tax credit financers will often advance money to projects under an agreement to later purchase the tax credits at a discounted rate after they are issued. The tax credits are then issued at the conclusion of a film, when all expenses are reviewed by a CPA and then submitted to the Department of Revenue.

Once the production wrapped up, Adams allegedly supplied his expenses to an independent accountant and reported the eligible costs to the Department of Revenue of more than $6.7 million.

This resulted in a tax credit payment of more than $1.6 million. Investigators allege that multiple reported costs were fictitious or inflated, and that the eligible costs to produce the film were in fact only $2.3 million. As a result, prosecutors allege Adams received an overpayment in tax credits of $1.1 million.

In January 2009, Adams organized an LLC for the purpose of producing and distributing a motion picture. He then allegedly entered into an agreement with a tax credit financer to advance funding for the production in return for purchasing the anticipated film tax credits.

At the conclusion of the film, Adams next allegedly supplied the expenses to an independent accountant and reported eligible costs to the revenue department of over $17 million. Based on the accepted expense figure, the LLC was awarded more than $4.2million in tax credits.

According to investigators, the film accounts in reality showed that there was no other major funding for the film and that the only deposits of significance were those from the tax credit financer, totaling approximately $3 million. Numerous items listed as expenditures were allegedly fictitious or inflated. For example, prosecutors allege Adams reported that he had paid actor Richard Dreyfuss $2.5 million, when in fact he was paid only $400,000. As a result, prosecutors allege Adams received an overpayment in tax credits of more than $3.6 million.
A Grand Jury returned indictments against Adams on Monday and he was arraigned on Tuesday, where the judge set a bail of $100,000.

Florida Business Groups Fighting Unemployment (UCT-6) Tax Increase

Unless Florida's Governor & Legislature act to prevent it, beginning in 2012, the Florida minimum unemployment tax will rise from a calculated $72 at companies with the best per employee rates to over $172 for the same employee. Companies with active job losses due to firings/layoffs can expect to see thier unemployment rate go from a current high of $378 per employee to an increase for 2012 of $459 for the same employee. The diffence between companies with the best rate of Unemployment tax and those with the worst rates is based on the company's employment history, ie. a company that hires and fires more regularily will have a higher rate than a company that has a history of not firing/laying off employees. Along with this rate increase the maximum payroll amount taxed will increase also from $7,000 per employee to a new $8,500 maximum.

Here is how the increase will occur:

The initial tax rate for new employers is .0270 (2.7%). Beginning January 1, 2012, the first $8,500 ($7,000 previous to 2012) in wages paid to each employee during a calendar year is taxable. Any amount over $8,500 for the year is excess wages and is not subject to tax. 

The Breakdown:
2012 Tax Rates (effective January 1, 2012)
Minimum rate: .0202 or $171.70 per employee
Maximum rate: .0540 or $459.00 per employee
(The 2012 rate is based on annual salary up to $8,500 per employee)

The OLD 2011 UC tax rates are currently:

2011 Tax Rates
Minimum rate: .0103 or $72.10 per employee
Maximum rate: .0540 or $378.00 per employee
(The 2011 rate is based on annual salary up to $7,000 per employee)

2012 Standard Mileage Rates

IRS Announces 2012 Standard Mileage Rates, Most Rates Are the Same as in July

The IRS has issued the 2012 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, 2012, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
•55.5 cents per mile for business miles driven
•23 cents per mile driven for medical or moving purposes
•14 cents per mile driven in service of charitable organizations

The rate for business miles driven is unchanged from the mid-year adjustment that became effective on July 1, 2011. The medical and moving rate has been reduced by 0.5 cents per mile.

GASB to possibly require Cash Flow Projections

The Governmental Accounting Standards Board (GASB)has proposed that state and local governments should include five-year projections of their cash inflows and outflows, and financial obligations, to supplement their financial statements.

The desire is to help interested parties (taxpayers, bond holders and other interested parties) better determine a government financial health.

The procedures would effect state and local government bodies. It would reequire the institutions to provide projections of their cash inflows and cash outflows, and explain the known causes of fluctuations. They would also be required to include projections of their financial obligations, including bonds, pensions, other post-employment benefits, and long-term contracts, in addition to explanations of the known causes of fluctuations. GASB also recommended that they include projections of their annual debt service payments.

Projections would be based on current policy, informed by historical information, and adjusted for known events and conditions that would affect the government’s finances during the projection periods. Governments would be required to present projections for at least the next five fiscal years. The projections would be reported as required supplementary information following the notes to the financial statements.

The proposals are outlined in the document, “Preliminary Views, Economic Condition Reporting: Financial Projections.”