IS THE POSTAL SERVICE THE NEXT GREECE?

This was recently posted on the Tax Foundation website. Interesting parallel between Greece and the Postal Service.

by Michael Schuyler

Earlier this year, Postmaster General Patrick Donahoe compared the U.S. Postal Service to Greece. "If we don't do something about the costs of this organization, we will look like Greece....We need less expensive work hours, and we need more flexibility on who can do what jobs." Several days later, the postmaster general repeated the analogy in an interview with Federal News Radio. "Look what's going on in Greece ... The key for us (to avert a Greek-style disaster) is this: Provide great service ... at a very reasonable cost."

Although the postmaster general has made the Greek analogy only a few times in passing, the topic is worth considering in more detail. Greece's disastrous experience holds valuable lessons, applicable to the Postal Service, regarding the dangers of large and persistent deficits and the desirability of addressing financial problems sooner rather than later.

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CHECK THE BALANCE IN YOUR FLEXIBLE SPENDING ACCOUNT

Just a reminder. If your employer still has not implemented the 2½-month grace period that IRS now permits you must clean it out by December 31. If you do not, any money remaining in your account is forfeited.

Remember that in the Patient Protection Act there is a $2,500 annual ceiling on health FSA that takes effect for 2013.

REIMBURSE EMPLOYEE MILEAGE

Q:  Hi Larry, I have a question about how to reimburse an employee for mileage. I just read what the deduction is but I need to know what the rate is for a business to pay back an employee for auto expenses they incur running errands for the business. I am assuming it is an amount per mile and I have asked them to keep a log.

A: You are correct that they should turn in a log (diary) of their miles.  By your question I am assuming that these are routine trips around town such as to the bank etc.  If this is true instead of a daily log the employee can determine the routine miles for the trip and then if they can somehow document the number of trips you can just multiply to determine total business miles.  Having said that in my opinion the IRS likes a detailed log but the other method works.

The mileage rate is 55.5 cents for 2012 and 56.5 cents for 2013.  The amount given to the employee is not added to the W-2 and you do not have to give the employee a 1099.  It is deductible to you and not income to the employee.

SCIENCE GOES WILD #2

Last week I mentioned the Ig Nobels.

 

Our second winner:
A British-American group won the physics prize for

“Figuring Out How a Ponytail Bounces.”

 

QUICKBOOKS 2013 UPDATE

In response to customer feedback, QB’s has released an update for QB 2013 that will allow you to change the black ribbon at the top to a lighter color which is easier to read and looks similar to the older versions of QB’s. This is under Edit>Preferences>Switch to colored icons/light background. Always run updates because they may contain more options to switch the color scheme back to "normal."

Default

Preference

SELLING SOME LOSERS CAN TRIM YOUR TAX BILL

Capital losses offset your gains, plus up to $3,000 of other income. Any excess losses are carried over to next year.

Note the wash-sale rule: If you buy the identical securities within 30 days before or after the sale, the loss isn't deductible. Instead the disallowed loss is added to the basis of the new shares. The rule can bite you if your IRA quickly buys stock that you sold at a loss in a taxable account. You can innocently run afoul of this rule if you sell a mutual fund at a loss within 30 days of the date a dividend is reinvested.

DON'T FORGET ABOUT THE 0% RATE ON LONG-TERM CAPITAL GAINS AND DIVIDENDS

If your income other than gains and dividends is in the 10% or 15% bracket, profits on sales of assets owned for over a year and dividends are tax free until they push you into the 25% bracket. That bracket starts at $70,700 of taxable income for couples and $35,350 for singles. The balance of your long-term gains and dividends is taxed at 15%. But short-term capital gains are taxed as ordinary income ... up to a 35% rate.