The Disabled Access Tax Credit

December 22, 2009 | Subscribe to our RSS Feed

The Disabled Access Tax Credit may be available to a medical practice that purchases adjustable height medical table(s) for the intended purpose of complying with the Americans with Disabilities Act of 1990 (“ADA”).

An eligible medical practice must meet at least one of the following qualifications:

- Annual gross receipts of the practice did not exceed $1,000,000 during the preceding year;

-OR-

- The practice had no more than 30 full-time employees during the preceding year.

The eligibility for this credit also depends upon particular circumstances surrounding the purchase and whether it truly was for the purpose of complying with the ADA.

Submitted by Cheryl McCann

Questions:

cheryl.mccann@glassjacobson.com

Maryland Governor Outlines Proposal To Lessen Rise in Unemployment Tax Rates

December 18, 2009 | Subscribe to our RSS Feed

On Dec. 17^th, Gov. Martin O’Malley outlined a plan to reduce the steep increases in 2010 unemployment tax rates.  O’Malley’s plan, which he intends to introduce as emergency legislation, would not eliminate the unemployment tax increases, but would reduce them somewhat.

Currently, the minimum annual tax paid by employers is $51 per employee and the maximum is $775.

Without action, the minimum will increase to $187 per employee and the maximum will reach $1,147.50.

If O’Malley’s plan is adopted, the minimum will rise to $153 per employee, with a maximum of $1,096.50.

The Maryland General Assembly’s 2010 session convenes Jan. 13 and ends April 12. If filed as emergency legislation, O’Malley’s bill would require a three-fifths majority in each chamber and would take effect immediately upon signing.

For more information on the MD Legislature’s plan, visit: http://baltimore.bizjournals.com/baltimore/stories/2009/12/21/story2.html?b=1261371600^2609481

Ten Ways a Small Business Can Prevent Fraud

December 17, 2009 | Subscribe to our RSS Feed

1. Active Oversite. The owner should receive an unopened bank statement so he or she can review it for suspicious transactions. Moreover, the principals need to ensure they understand the entity’s revenue and expense streams so they will be able to notice unusual trends.
2. Set a good example. The most effective thing you can do to prevent fraud in your business is to create a working culture that values honesty and integrity. If you take a lax approach to company policies and procedures, your staff will be more likely to “bend the rules”, creating an open door for fraud. But if you model an attitude of compliance to your own policies and procedures, your employees will notice and you will be well on your way to eliminating fraud before it begins.
3. Restrict bank account access and perform regular bank reconciliations.
4. Use dual controls. Never have one person writing, receiving and reconciling your business accounts. If you don’t have the staff to add a second person, consider using an automated banking service to add dual control.
5. Eliminate paper checks. The more checks there are circulating for your company, the greater the chance they may be intercepted, duplicated or manipulated by a fraudster.
6. Give employees a way to report fraud. Employees should also be provided with a way to anonymously report incidents of fraud within the company. Many employees are hesitant to report incidents of fraud because they are afraid of either losing their jobs or being alienated by their peers. Anonymous reporting not only alerts you to potential problems, but also limits the ability of fraudsters to intimidate their coworkers into silence.
7. Mandatory Vacations. An employee who never takes a day off work is a red flag for fraud. Fraudulent employees fear that whoever does their job in their absence will notice that something isn’t quite right and their activities will be revealed. Safeguard your company by implementing a policy that requires all employees to annually take at least one week of vacation – in consecutive days.
8. Adequately prescreen employee applicants. Fraud-proofing begins by hiring employers who are competent and trustworthy. You might be surprised how much you can learn a lot about the character of potential employees before you hire them. Run pre-employment background checks to screen the applicant’s criminal history,
9. Have a written code of ethics.
10. Treat employees well and have reasonable expectations.

Submitted by Jake Flowers, CPA and Jennifer Verch, CPA, CFE

Questions:

jake.flowers@glassjacobson.com

jennifer.verch@glassjacobson

A New Opportunity with Roth IRA Conversions

December 16, 2009 | Subscribe to our RSS Feed

In January 2010, there will be dramatic changes in planning for Individual Retirement Accounts. Higher income individuals will now be able to take advantage of a conversion opportunity once limited to those taxpayers with an adjusted gross income less than $100,000. The answer to the question “Should I convert to a Roth IRA,” however, is not a simple one.

THE ROTH IRA CONVERSION RULES Currently, taxpayers can convert traditional IRAs and qualified retirement accounts, such as 401(k) accounts, to a Roth IRA as long as their adjusted gross income is under $100,000. In 2010, and for all subsequent tax years, the $100,000 limit is eliminated and all taxpayers will be permitted to convert certain retirement assets to a Roth IRA.

The amount converted to a Roth IRA will be included as ordinary income for the year in which the account was converted. However, for conversion in 2010 only, taxpayers can elect to defer half of their tax liability to 2011 and the other half to 2012.

The Roth IRA can grow and be distributed tax-free as long as distributions are not taken within five years of the first contribution or conversion, and not until after age 59½.

ROTH IRA CONVERSION CONSIDERATIONS Among the factors to consider when converting retirement assets to a Roth IRA include investment timeline; available assets to pay the resulting income taxes; current income tax bracket; anticipated income tax bracket in retirement; and whether income tax rates might be lower or higher in the future. Whether a Roth IRA conversion makes sense will depend on some of these factors and each individual’s specific financial and estate planning goals and objectives.

POTENTIAL REASONS TO CONVERT TO A ROTH IRA There are a number of potential reasons to convert retirement assets to a Roth IRA. Some of the more compelling ones are:

1. Many retirement accounts have recently lost value. Conversion now would result in a lower income tax liability and the ability to shelter any future growth from income taxes.

2. A conversion to a Roth IRA can be “recharacterized” back into a traditional IRA with no tax consequences up to the tax filing deadline, plus extension, for the year of conversion. This provides great flexibility in planning, from both a tax and investment perspective.

3. The ability to recharacterize allows for the diversification of asset classes among multiple Roth IRAs. Those that decrease in value during this period can be recharacterized and those that increase in value can remain Roth IRAs, subject to individual investment and other considerations.

4. If funds outside the IRA are available to pay the income taxes on conversion, the entire amount of the converted IRA will be available to grow tax-free.

5. The conversion provides a hedge against possible increases in income tax rates for future years when distributions may be made in retirement.

6. Unlike traditional IRAs, there are no required minimum distributions from Roth IRAs starting at age 70½. Therefore, if Roth IRA funds are not needed in retirement, the entire Roth IRA can continue to grow tax-free and provide a much larger inherited account for beneficiaries.

7. Additionally, the beneficiaries of the Roth IRA can then stretch the inherited Roth IRA account tax-free over their lifetimes by taking only the minimum required distributions each year. This allows the undistributed account to remain invested and continue to grow tax-free.

While considering the possibility of a Roth IRA conversion, this is also an excellent opportunity to review and update beneficiary designations on all retirement accounts because they, not your will, usually control the disposition of the accounts at death. Glass Jacobson’s position as a comprehensive wealth management firm provides us the advantage of having professionals who can address all income tax, estate and investment aspects of the decision making process. Please contact us to discuss your particular situation.

Submitted by Gary Anderson

Questions:

gary.anderson@glassjacobsonIA.com

The Facts on 401(K)s – Roth v. Traditional

December 10, 2009 | Subscribe to our RSS Feed

The main difference between a Roth 401(k) and a Traditional 401(k) deals with the taxation of contributions and investment earnings. Key features of both plans are highlighted in the table below:

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