2011 Tax Deadlines and MD Changes
January 6, 2011 | 
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There are some important changes and deadlines affecting the 3.5 million taxpayers working on their 2010 income tax returns you should be aware of:
- Filing deadline is April 18th, 2011, not April 15th. Due to the celebration of Emancipation Day by Washington DC on April 15, 2011, personal income tax returns are due the following Monday.
- Splitting your Direct Deposit. This year, you can deposit portions of your refund into multiple accounts by using Form 588.
- Local Tax Rate Increase. For the tax year 2011, Baltimore City has increased the local tax rate to 3.20%
- Increased Pension Exclusion. This year, Maryland’s maximum pension exclusion (available to qualifying tax payers 65 or older), increased from $24,500 to $26,000.
These are just a few. Make sure you consult with your tax advisor and are aware of 2011 deadlines and changes.
Questions?
Tax Update
January 4, 2011 | Subscribe to our RSS Feed
I want to use this week’s blog to give an update of some of the changes or lack thereof that were passed in the recent tax bill. The business changes are the ones that may most affect your dental practices. This isn’t the most exciting stuff to write about so I apologize, but it is important information.
Businesses:
- Bonus depreciation equal to 100 percent of the cost of qualified property placed in service before January 1, 2012 and 50 percent additional depreciation deduction for qualified property placed in service after December 31, 2011, and before January 1, 2013.
- The luxury car bonus depreciation cap of $8,000 remains in effect in 2011 and 2012.
- Current depreciation rules for qualified leasehold improvement property allowing 15-year straight-line cost recovery remains in effect for property placed in service on or before December 31, 2011.
- The Section 179 expense limitation is $500,000 for tax years beginning in 2010 and 2011. And (this is exciting) for tax years beginning in 2010 and 2011 a taxpayer may elect to expense up to $250,000 of qualified leasehold improvements as Section 179 property.
Individuals
- Extends the Bush tax cut rates of 10, 15, 25, 28, 33 and 35 percent through 2012.
- The capital gains and dividend rates remain unchanged through 2012.
- The personal exemption phaseout for high income taxpayers does not apply until 2013.
- The overall limitation on itemized deductions does not apply for two additional years.
- Employees are to receive a two percent Social Security holiday during 2011. This tax holiday also applies to self-employed individuals. Employees will pay 4.2 percent on wages and self-employed individuals will pay 10.4 percent.
- The student loan interest deduction is extended through 2012 with income limitations.
- The child and dependent care expense credits are extended through 2012.
This is just a brief overview of the changes in the new tax law. No tax advice is being offered in this blog. Be sure to consult your tax adviser as to how these changes may affect you.
Questions for Larry?
Larry.goldberg@glassjacobson.com
2010 Last Minute Tax Savings
December 27, 2010 | Subscribe to our RSS Feed
Business owners, there are still a few things you can do before the end of the year to impact your 2010 tax bill. Check out the links below- you might qualify for some substantial savings.
Research and Development Credits
Single Member LLCs taxed as S Corporations
2010 Tax Tips Series- Small Business Jobs Act
December 22, 2010 | Subscribe to our RSS Feed
Tax Tips and Planning for 2010 finishes with its fourth installment. Tax Partner Steve Albert discusses the new Small Business Jobs Act, highlights some of the key provisions and identifies ways you and your business could benefit.
The purpose of the Small Business Jobs Act is to help employers save tax dollars to invest back in their business. Some of the provisions are complex, and the video below will explain a few of them. Click here for a detailed breakdown of the SBJA from the IRS.
Questions?
steven.albert@glassjacobson.com
Make the Switch?
December 21, 2010 | Subscribe to our RSS Feed
I wrote, earlier this year, about pending legislation that would have taxed the net income of dental practices, set up as S Corporation’s, as self employment income. If passed the new law would have added self employment tax to that income as well as regular income tax. With the Republicans gaining control of the House after the recent mid-term elections it looks like all you S Corporation dental practices should be safe for awhile. This is certainly good news heading into 2011 and the future.
What this lack of change also means is that it is a good time to revisit having sole proprietorships or single member LLCs taxed as S Corporations. For those entities the tax savings from such a switch can be considerable and who wouldn’t like to put a few thousand dollars in their pocket instead of Uncle Sam’s.
Just be advised that you will now have to take a “reasonable” salary as an S Corporation shareholder, which will include some Social Security and Medicare tax that is analogous to the SE tax. Your accountant can help you set your salary at the proper level. Keep in mind you have to take a salary as the IRS is well aware of the tactic of S Corporation shareholders taking all compensation as distributions. Remember “Pigs get fat, hogs get slaughtered”.
Possible downsides to making this change would be
- Reduced capacity to make deductible contributions to retirement accounts
- Needing to prepare separate tax returns for the S Corporation
The switch to be taxed as an S Corporation can easily be made by your accountant. This is a great opportunity for all you sole proprietor and single member LLC dentists to put some extra money in your pockets in coming years. Talk to your accountant to see if this switch is right for you.
Questions for Larry the Accountodontist?
larry.goldberg@glassjacobson.com