YOU CAN'T ROUND ON YOUR PAYROLL REPORTS

This was hard to believe.  The IRS put out a memo and said that rounding to the nearest dollar on Form 941 is not allowable.

Neither the form nor instructions permit rounding. And the law gives filers the option to report in cents on all tax forms, so IRS can’t remove the cents column. Employers will have to keep reporting their payroll tax liability to the penny.

Keep track of your 'cents'...

IRS ANNOUNCES 2013 IRA AND GIFT TAX NUMBERS

Two tax breaks will be larger next year, thanks to an increase in inflation.

The ceiling on IRA contributions will jump to $5,500, a $500 increase.

• As a result, taxpayers age 50 or older in 2013 will be able to put in up to $6,500.

It is also calculated that the annual gift tax exclusion will rise to $14,000, up $1,000 from 2012.

• This is not official yet. The Revenue Service will officially announce these figures next month.

ACCOUNTANTS NOT OPTIMISTIC ABOUT THE ECONOMIC FUTURE

I don't think any profession is in a better position to judge the  economy than CPAs.  We are on the front line dealing with clients in all aspects of their business.   

Now a new survey from our governing organization, the American Institute of Certified Public Accountants (AICPA) shows that CPA's economic outlook has diminished.

CPA executives’ optimism over the U.S. economy has faded substantially over the past two quarters, the AICPA’s Business & Industry Economic Outlook Survey for the third quarter shows. After a significant rise in confidence that ended in the first quarter of 2012, CPAs report dimming expectations in virtually every major economic indicator.

The CPA Outlook Index--a comprehensive gauge of executive sentiment within the survey--fell four points to 63 for the quarter. The index had matched a post-recession high of 69 at the start of this year, but has declined each of the past two quarters.

BACK-TO-SCHOOL TIPS FOR STUDENTS AND PARENTS PAYING COLLEGE EXPENSES

The IRS just released a nice summary of education credits and deductions. If you have any questions let us know.

Back-to-School Tips for Students and Parents Paying College Expenses

Whether you’re a recent high school graduate going to college for the first time or a returning student, it will soon be time to head to campus, and payment deadlines for tuition and other fees are not far behind.

The IRS offers some tips about education tax benefits that can help offset some college costs for students and parents. Typically, these benefits apply to you, your spouse or a dependent for whom you claim an exemption on your tax return.

· American Opportunity Credit. This credit, originally created under the American Recovery and Reinvestment Act, is still available for 2012. The credit can be up to $2,500 per eligible student and is available for the first four years of post secondary education at an eligible institution. Forty percent of this credit is refundable, which means that you may be able to receive up to $1,000, even if you don't owe any taxes. Qualified expenses include tuition and fees, course related books, supplies and equipment.

· Lifetime Learning Credit. In 2012, you may be able to claim a Lifetime Learning Credit of up to $2,000 for qualified education expenses paid for a student enrolled in eligible educational institutions. There is no limit on the number of years you can claim the Lifetime Learning Credit for an eligible student.

You can claim only one type of education credit per student in the same tax year. However, if you pay college expenses for more than one student in the same year, you can choose to take credits on a per-student, per-year basis. For example, you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for the other student.

· Student loan interest deduction. Generally, personal interest you pay, other than certain mortgage interest, is not deductible. However, you may be able to deduct interest paid on a qualified student loan during the year. It can reduce the amount of your income subject to tax by up to $2,500, even if you don’t itemize deductions.

These education benefits are subject to income limitations, and may be reduced or eliminated depending on your income. For more information, visit the Tax Benefits for Education Information Center at IRS.gov or check out Publication 970, Tax Benefits for Education, which can be downloaded at IRS.gov or ordered by calling 800-TAX-FORM (800-829-3676).

Links:

· American Opportunity Tax Credit

· Tax Benefits for Education: Information Center
· Publication 970, Tax Benefits for Education
· The American Recovery and Reinvestment Act of 2009: Information Center
· Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

ON A PERSONAL NOTE

I hope everyone had a great Labor Day weekend. I spent the weekend camping out and canoeing with my 15 year old son, Ryan and his Boy Scout Troop. We spent a day on the water going down the Niobrara river. This beautiful river has been named one of the top 25 canoeing rivers in the United States. The scenery and the wild life are amazing. Even though the bugs were really bad and it was really hot, it was a great time. (I should add that the ground was a little hard.) As my family has heard me say several times, “life is short, make memories.”

I hope that you made as many memories this Labor Day as I did.

FOOD STAMP USE HITS RECORD HIGH

Food stamp use reached a record high in June, the U.S. Department of Agriculture said this week, with 46.7 million people enrolled in the program for low-income families. The latest figures mean that food stamps will once again be a flash point in the presidential campaign. The number of people on food stamps rose 0.4 percent from May and was 3.3 percent higher than a year earlier.

“Too many middle-class families who have fallen on hard times are still struggling,” said Agriculture Secretary Tom Vilsack. The program is “one more example of government incompetence,” said Sen. Jeff Sessions (R-Ala.), who wants cuts in the program. It now costs $71.8 billion a year.

A REMINDER FOR 12/31 CORPORATIONS

A reminder for calendar year corporations that filed for an extension.

Contributions to retirement plans must be made by September 17, 2012, the same day that their income tax returns are due. Normally, the deadline for filing and making payins is September15, but that day falls on a Saturday this year. For firms on fiscal years (non December 31st) with extensions, the due date is 8½ months after the fiscal year ends.