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

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.

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.

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

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.

THE 10 SILLIEST VIDEOS WE WASTED TIME WATCHING THIS YEAR

Click on the this link to watch what You Tube calls "a time-waster extraordinaire." SILLY VIDEOS

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

CAPITAL GAINS OPPORTUNITY

This year's plunging markets have left most investors feeling poorer. If your 401k looks like a 201k, you're not alone! But many long-term investors still have assets worth more than what they paid for them. If you're among this lucky group, and you're in the 10% or 15% tax bracket, the Tax Code gives you a special break.

Specifically, tax on most long-term capital gains from property held more than 12 months is cut to zero percent. That's right...tax-free capital gains! (For 2008, this bracket includes single filers with taxable incomes up to $32,550, and joint filers up to $65,100.) As the year moves to a close, you should have a pretty good idea what your income will be. If you expect your taxable income (after all deductions and personal exemptions) to be below the limit, you might want to consider selling some of your appreciated assets to pocket tax-free income.

Even if you have profitable investments you'd like to keep, you might consider selling them now and immediately repurchasing them. Why would you do such a thing? This will raise your "basis" from the price you originally paid to the new price - and save you tax when you sell down the road. (The special zero percent rate is scheduled to expire after 2010, and President-elect Obama has proposed to raise the top rate on capital gains to 20%. So selling now can still benefit you even if you plan to keep the investment. Of course, you'd want to consider transaction costs before taking advantage of this strategy.)

Today's challenging market makes it even more important to invest with an eye on taxes.

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.

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.

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.

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.

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.

HAPPY THANKSGIVING!

Click The Pumpkin

GETTING A LOAN IS NOT AS EASY AS IT USED TO BE - TOUGHER CREDIT STANDARDS

(INC.com) -- The number of small-business loans continues to decline as banks raise standards on personal credit ratings, leaving fewer owners able to access working capital, according to lenders and policy experts. "Lending standards have tightened and loan demand is down considerably," Chad Moutray, the chief economist at the Small-Business Administration's Office of Advocacy, said this week at a roundtable on small-business credit held by the Securities and Exchange Commission in Washington. Other panelists urged policymakers to look beyond traditional bank loans. "I think we need to get busy in developing game plans and getting more creative," said Andrew Sherman, a small-business policy expert at Dickstein Shapiro, a Washington-based law firm. Sherman called ongoing uncertainties in the financial market a "cloud that's getting in the way of our productivity and our competitiveness."

FOLLOW THIS ADVICE TO HELP ELIMINATE SPAM

Here is some sound advice from Snopes.com. This may eliminate some spam from your mailbox if you follow it.

1) Any time you see an E-Mail that says forward this on to '10' of your friends, or sign this petition, or you'll get bad luck, good luck, or whatever, it almost always has an E-Mail tracker program attached that tracks the cookies and E-Mails of those folks you forward to.

The host sender is getting a copy each time it gets forwarded and then is able to get lists of 'active' E-Mails to use in SPAM E-Mails, or sell to other spammers.

2) Almost all E-Mails that ask you to add your name and forward on to others are similar to that mass letter years ago that asked people to send business cards to the little kid in Florida who wanted to break the Guinness Book of Records for the most cards. All it was, and all any of this type of E-Mail is, is a way to get names and 'cookie ' tracking information for telemarketers and spammers - - to validate active E-Mail accounts for their own profitable purposes.

You can do your friends and family members a GREAT favor (PLEASE) by sending this information to them. You will be providing a service to your friends, and will be rewarded by not getting thousands of spam E-Mails in the future!

If you have been sending out (FORWARDING) the above kinds of E-Mail, now you know why you get so much SPAM!

Do yourself a favor and STOP adding your name(s) to those types of listings regardless how inviting they might sound! You may think you are supporting a GREAT cause, but you are NOT in the long run. Instead, you will be getting tons of junk mail later! Plus, we are helping the spammers get rich! Let's don't make it easy for them!

Also: E-Mail petitions are NOT acceptable to Congress/Parliament or any other organization. To be acceptable, petitions must have a signed signature and full address of the person signing the petition.

INVESTING IN TODAY'S CHALLENGING MARKET

The stock market has made headlines this year with record volatility, record drops, and even record gains. And while many investors are still sitting on the sidelines, you may already be looking for bargains amidst the wreckage. So, we're writing to alert you to a possible problem with acting now.

Are you considering buying mutual funds in a taxable account (as opposed to an IRA or 401K)? Then you should be aware that most funds distribute capital gains this time of year. These distributions are taxable to you as long-term capital gains, even if you just bought the fund.

The average U.S diversified stock fund is down about 33% for the year. Funds in most other categories are down as well. But many of those funds sold assets for nice profits earlier this year. This means you may get socked with a nasty tax surprise!

There are generally two ways to avoid this bite. The first is to find funds without capital gains to distribute. The second is to wait until a fund actually pays out capital gain distributions. Make sure that you discuss with your broker to see if they expect distributions, and if so, when they will be paid.

Today's challenging market makes it even more important to invest with an eye on taxes.

JUST HOW BAD IS THE ECONOMY? MAYBE YOU CAN'T BELIEVE ALL YOU HEAR

All we seem to hear is bad economic news. If you read the "real" economic news, the economy is not great, but certainly not as bad as you would think. The "talking heads" on the tube would make you think that the big depression is coming back. As the columnist George Will recently said, "an airplane that lands safely does not make news." Did you know that in October the economy rose by about 3%? That is off from past growth, but is still positive.

Here is an article that I thought might shed a little light on the subject.

(Star Tribune, Minneapolis) -- Suppose that everything you know is wrong.

· Consider the commonly held belief that corporate America is headed into a recession, tapped out for cash. Not so. Cash compared with total corporate debt is near a 50-year high.

· Certainly consumer debt appears unmanageable, with late payments nearing record levels on credit cards and real estate, right? Not true. The percentage of home loans 30 days or more past due, while rising, is nowhere near record levels.

· You say troubled home and auto loans are dragging down the economy as never before? Wrong again. While together such loans lopped 1.5 points off U.S. economic growth in recent quarters, it has been worse. In the final three months of last year, housing and auto pared more than 2 points from the chief barometer of economic progress.

“Most of that, I’ve got to believe, is behind us,” said Jim Paulsen, chief investment strategist at Wells Capital Management. Paulsen argues that the economy has more going for it than popularly believed. Paradoxically, the president, Congress and Federal Reserve officials have stoked fears instead of calming them, in Paulsen’s view. “We’ve never had a fear crisis like this,” he said. “All of our monetary and fiscal tools are to restore economic fundamentals. When it comes to fear, our toolbox is empty.” In earlier economic crises, three of every four problems were fundamental roadblocks to economic growth, Paulsen said. “This one is three-quarters fear.”

CALL TO ACTION

A NEW ADMINISTRATION….NOW WHAT?

As we have heard, “change is coming.” We are concerned that one change that is coming is higher taxes! Given the projected increases in the federal income tax, capital gains, and qualified dividend rates, you may want to take action before December 31st to keep more of your money in your pocket. To determine if you'll be affected, we have prepared the enclosed checklist for you. Please click on this link to review the checklist: Call to Action Checklist.

If you feel that you might be impacted by any or all of these items, contact us! If you already have a pretax appointment scheduled with us, we will be discussing these items at that time.

We are watching the activity in Washington D.C. very closely so that we can best serve you, therefore we will keep you posted. Let us know if you have any questions.

It is a pleasure serving you!

Larry Kopsa CPA

CHRISTMAS CAKES

The Holidays are upon us...what a busy time of year! If you plan to do any baking in the midst of all the holiday chaos, you might enjoy the following link. Pick A Cake

I thought it was pretty cool. I forwarded it to my wife... I'm not sure if she will get the hint. All you have to do is click on a link and the recipe will come up.

Enjoy!

Larry Kopsa CPA