Maris and Associates, CPAs

When planning gifts for children think beyond the traditional

2011-12-14T15:48:00.000-08:00

When planning gifts for children youmight want to think beyond the traditional retail offerings. Consider financialgifts that can bestow benefits for many years to come.

Some financial gift options you might consider:

* U.S. savings bonds. Savings bonds are used by manyfamilies to introduce children to the savings concept. I bonds are indexed forinflation and can provide relatively attractive rates of return.

* IRAs (regular or Roth). For 2011, you can contribute thelower of $5,000 or the earned income of the child. An early financial start canproduce amazing benefits from compounded interest accumulated over severaldecades.

* Stocks or mutual funds. Equities are a good way tointroduce a child to the investment world.

* Collectible stock certificates. Vibrant framedcertificates are available for many companies. A Disney, Dream Works, orCoca-Cola stock certificate can provide a colorful reminder of the importanceof investing for the future.

* Collectibles. Postage stamps or coin collection kits canprovide years of enjoyment and form the basis for some life-long hobbies. Aninteresting gift idea is an official U.S. mint proof coin set for the year thechild was born.

Please call us if you would like to review the tax issuesrelated to any of these financial gift options, especially if you areconsidering a larger amount.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

To succeed in business, have a plan

2011-12-02T12:32:00.000-08:00

Taking a trip without a map may get you lost, and trying to run a business without a plan is likely to have the same result.

A business plan is a map, your company's written guide into the future. Not only does a good plan let you know where you are and where you're headed, it provides potential lenders and investors with a portrait of your company.

Each plan will differ, but certain items are essential.

* First, you must define your market niche and identify the competition. How does your product or service differ from theirs?

* Next, determine your product and delivery costs; then look at your product pricing.

* Do you need new equipment or skills to compete now and in the future?

* What is your marketing scheme?

* How will you get the capital you need for your plans?

* Examine your key operating ratios, and determine projected profits for years covered by the plan.

Most business plans fail because they lack detail. A well-developed plan gives a new company immediate respect in the eyes of lenders, not only because it shows you to be thorough and far-sighted, but because lenders rarely see good business plans.

Wayne Gretzky, when asked the reason for his success said, "Some people skate to where the puck is. I skate to where the puck is going to be." A good plan should help you do the same for your business.

Contact us to discuss your business plan.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Heed the rules for deducting charitable contributions

2011-11-04T12:05:00.000-07:00

Sticking to the rules when making charitable contributions can save tax dollars. Here are three tips.

* Recordkeeping is vital if you want to be able to deduct a contribution to charity.

What records do you need? For starters, to claim an itemized deduction, you're required to have support for all cash contributions, no matter what the amount. A bank statement, a copy of the cancelled check, or a credit card record will usually suffice for donations under $250. For donations of $250 or more, a statement from the charity is required, giving the charity's name, the date, the amount of your donation, and the value of goods and services received for the donation, if any. In the case of payroll donations, your pay stub or W-2 can back up your deduction.

The substantiation rules for noncash donations such as household items differ depending on the type of property and its value. For instance, you'll need a contemporaneous written acknowledgment from the charity for donations of $250 or more. As a general rule, "contemporaneous" means you receive the acknowledgment before you file your return or before the due date of your return, whichever is earlier.

* Make a gift from your IRA. The break allowing a transfer of up to $100,000 from your IRA to a qualified charity is available for 2011. To benefit, you must be over age 70½, and the contribution has to be a direct payment from your IRA to the charitable organization.

* Write down your vehicle mileage for charitable driving. Written records rule, whether you claim the standard mileage deduction of 14¢ a mile or actual expenses. Make sure your log or other paperwork includes the name of the charity, the date, and the miles you drove or the total cost you incurred.

Please call for advice on getting the most benefit from your donations, including appreciated property and out-of-pocket expenses.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Your business succession plan must answer three key questions

2011-09-13T15:24:00.000-07:00

Succession planning is very important for a family owned business. Before you sit down with your tax and legal advisors to draw up a succession plan, you should think through three key issues: who do you want to succeed you, when do you want the transition to take place, and how do you want to structure the transition?

* WHO? The question of who will succeed you in the business can be the toughest of all, largely because there is so much emotion involved. Most owners want to pass the business on to the family. But are your children willing to take on the business, and if so, are they capable of running it? Will it cause a family squabble if one or two children want to run the business, but others are not interested? Resolving these issues may take a lot of honest, open discussion with family members to discover their true feelings. If there is not an obvious family successor, other alternatives include selling the business to an outsider, promoting an existing employee to head the business while you retain ownership, or even selling the business to the employees.

* WHEN? When you make the transition depends on a number of factors, such as your age, health, retirement goals, and the readiness of a successor. Consider whether you want to maintain some involvement with the business or make a clean break. Remember, though, you should always have a contingency succession plan in case of sudden death or disability.

* HOW? How you structure the transition depends partly on the answers to the earlier questions and partly on financial considerations. Think through issues such as whether you need retirement income from the business or whether you primarily want to minimize estate taxes. Knowing your goals for the transition will make it much easier to tailor a succession plan that fits your specific situation.

For guidance in your business succession planning, give us a call.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

How to raise financially literate children

2011-08-15T16:58:00.000-07:00

If everything your children ever learned about personal finances came from the mass media, they might think credit is a limitless resource and savings something you only find on a clearance rack. To fill in the gaps in their financial education, parents should teach their children the fundamentals of handling money. But where do you start? Perhaps begin with the following benchmarks of financial literacy.

* Time Value of Money
One of the most essential of all financial concepts is the time value of money. Children should be shown the benefits of saving money, watching it grow, and patiently deferring purchases until a future time. When children grow a little older, they can learn the reverse lesson: how debt today results in accumulated interest costs down the road. To illustrate the point, show them a loan amortization schedule for a typical car or home loan. That will get their attention.

* Transactional Skills
In today's cashless society, your children will someday need to know how to write a check, use a debit or credit card, and how to bank online. When they are ready, consider setting aside a morning to take them to the bank, introduce them to a representative, and set up their first checking account and bank card under the tutelage of the banker. Children will appreciate this rite of passage to adulthood, and they will learn how to navigate an ATM or bank website the right way, not just the way you do it.

* Keeping Good Records
You might feel a little hypocritical when pointing out your children's recordkeeping shortcomings, but they probably need your help more than you think. Knowing how to reconcile a checkbook and track where they spend their money is a valuable life skill. Developing a system for safely storing receipts, warranties, and other valuable papers is also important. When they begin driving, point out the location and importance of the vehicle proof of insurance and registration.

* Reflecting Your Values
Like any other area of life, you will naturally want to pass down truisms that have guided you financially. Succinct phrases often suit this purpose quite effectively, such as, "keep a little gas in the tank, a little money in the bank." Or, "don't place all your eggs in one basket." Sound corny? Perhaps. But such sayings today might just remind your children of something important tomorrow.

Those who value philanthropy should consider including their children in the charity selection process. Teach them why certain causes are important to you and how you determine the amount to give. Perhaps you could give your children gifting discretion over a small sum of charitable dollars.

* Investments 101
The day will eventually come when your children will be ready to talk investments, retirement, and taxes. Feeling intimidated yet? There is no need to fear. Our firm can assist you and your children with these advanced topics. Being financially literate is not child's play. But then again, neither is being a parent.

People and service you can count on!

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Just what are the other expenses you can legitimately deduct?

2011-07-28T09:36:00.000-07:00

What "other" business expenses are deductible? The generic term you see on your tax form may leave you scratching your head. Just what other expenses can you legitimately deduct?

While there's no hard and fast rule, examples include insurance premiums, legal and professional fees, supplies you use in your business, utilities, auto expenses, and the deduction for certain energy-efficient commercial building property.

Here's a guide for less obvious items:

* Like all costs you incur in your business, "other" expenses must be ordinary and necessary in order to be deductible. In tax law, "ordinary" means normal, usual, or customary in the context of your business.

For example, if you're a commercial fisherman, boat insurance is an ordinary expense. Other business owners may have a harder time justifying a deduction for boat expenses.

* An expense is necessary if it is appropriate and helpful to the operation of your business.

* Some expenses are only partially deductible. For instance, the cost of meals and entertainment must have a direct business purpose before you can claim a deduction. Even then, your deduction is generally limited to 50% of your cost.

* Certain expenses are specifically identified as nondeductible. Personal, living, or family expenses fit into this category, as do fines, penalties, political contributions, commuting to and from your job, and most lobbying costs.

Contact us any time you have a question about the deductibility of a business expense. We'll help you get the greatest tax benefit.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Six ways for your business to go green

2011-07-14T17:25:00.000-07:00

We see, hear, and read every day that the world is becoming more environmentally conscious and taking steps to "go green." While many of these may be out of reach for smaller businesses, there are several things that even small businesses can do to head toward going green.

* Recycling. Most communities these days provide recycling centers. Therefore, businesses should find it fairly easy to provide internal receptacles and to transport or purchase recycling pick-up services for such recyclables as paper (including shredded), newspapers and magazines, aluminum cans, and plastic bottles.

* Installing energy-efficient light bulbs. Compact fluorescent light bulbs are more energy-efficient than incandescent bulbs, offering a greener alternative. Also, watch for the next generation of commercial-use energy-efficient LED (light-emitting diode) bulbs. While LED pricing currently is rather high, LED bulbs typically use one-tenth the power of traditional light bulbs and last up to 20 times longer. Also, as volumes increase, prices should fall.

* Going smoke-free (or tobacco-free). One way for businesses to create a cleaner, healthier environment is to go smoke-free. This might involve eliminating smoking indoors, while providing limited smoking areas outside; or a business might go totally smoke-free, prohibiting smoking anywhere on the premises - indoors or outdoors. Further, a business might offer its employees complimentary or discounted programs to assist them in their efforts to quit smoking.

* Providing favored parking spaces. Businesses might consider offering special parking spaces for hybrid vehicles and transportation forms that use lesser amounts of fuel (e.g., motorcycles, scooters). The provision of easily accessible bicycle racks also is important.

* Going "paperless." While most would agree that going totally paperless probably is unachievable, many companies already have begun to make progress in decreasing the amount of paper they use. To reduce paper, consider offering electronic portals to clients or utilizing other electronic means of sharing and working with data. Our office is approximately 75% paperless!

* Offering "green" shopping bags. Many stores are selling reusable shopping bags. Consider distributing to your customers, clients, and prospects a green shopping bag with your business logo. You take a step toward environmental consciousness, while garnering some publicity at the same time.

These are just a few of the steps a small business can take toward "going green." The benefit to your business includes energy cost savings and maybe a bit of positive publicity, plus making a contribution to a healthier environment.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Tax breaks can help when disaster strikes

2011-06-30T12:15:00.000-07:00

Recent events here and abroad are reminders that disasters can occur at any time - often with staggering human and financial costs. If you're a victim of disaster, you may receive insurance and federal disaster aid. But the tax code also offers some relief. You may be able to take an itemized deduction for part of your loss. In tax terms, it's a "casualty loss," and it can also apply to events such as a car crash, a house fire, or theft. Here are the basics.

The loss or damage must be due to an unexpected and sudden event. Losses due to slow deterioration over the years, such as rot, rust, or insect damage, don't qualify.

Your tax deduction won't equal your total loss. You must subtract any insurance or other reimbursement. Then you must also deduct $100 for each loss and 10% of your adjusted gross income.

Your loss may also be limited by your adjusted basis in the property. That's generally what you paid for it, plus or minus any improvements or previous losses.

In a widespread disaster, the area may be classified a "Presidentially declared disaster area." If that happens, you have a special option. You can claim your casualty loss against the current year's taxes. Or you can amend the previous year's return and claim your loss against that year's taxes. That usually generates a faster refund, but it may change the amount of your deduction.

If you suffer a casualty loss, please contact us. We'll explain the rules and help you claim the maximum possible tax benefit.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

www.mariscpa.com

Will the dreaded AMT affect you?

2011-06-21T16:00:00.000-07:00

With the attention surrounding the alternative minimum tax (AMT) year after year, you may be wondering if you'll be snared by it in 2011. What can cause you to owe the tax?

The answer lies in items that are treated differently when calculating the AMT than they are when figuring your regular tax. Certain itemized deductions fall into this category. For instance, under the regular federal income tax computation, you can claim an itemized deduction for medical and dental expenses in excess of 7.5% of adjusted gross income.

For the AMT, these expenses must exceed 10% of your adjusted gross income, which means your deduction is limited even more.

Another example: Taxes, including real estate taxes, state income taxes, and sales taxes, are not allowed under the AMT calculation.

The same restriction applies to miscellaneous itemized deductions such as investment expenses and employee business expenses.

Your mortgage interest deduction may differ for AMT purposes, too. Why? Interest you pay on home equity loans is generally not deductible unless you use the loan proceeds to buy, build, or improve your primary or second residence.

Don't itemize? The standard deduction is also not allowed for the AMT calculation. That's one reason it can sometimes make sense to itemize even when your standard deduction is higher.

In addition to the items mentioned here, the IRS form used to compute your AMT liability includes other adjustments that may affect you. Give us a call for an AMT review. We can help with planning suggestions and strategies you may be able to implement before year-end.

Maris & Associates, CPA's

10512 19th Ave SE, Suite 101

Everett, WA 98208

425-338-0414

info@mariscpa.com

www.mariscpa.com

Consider the time value of money in making business decisions

2011-05-20T10:53:00.000-07:00

Suppose you’reselling your business, and it’s worth $400,000. You’re offered $210,000 downand lump sums of $100,000 at the end of year one and year two. Should you takethe offer?

Most peopleknow that $1,000 now is worth more than $1,000 a year from now. Here’s why:

1.Inflation: In a year, a dollar will buy less than it would today.

2. Risk:Over time, the risk increases that some of the money owed you will not be paid.

3.Opportunity loss: Funds on hand could be invested and earning more money.

Presentvalue analysis attempts to quantify these variables. It discounts the value offuture funds by estimating inflation rates, risks of loss, and rates of returnfrom alternative investments.

Assume youcould earn 2% by investing in a $100,000 CD. Disregarding compounding, in ayear your investment would be worth $102,000. Conversely, if you postponedreceipt of $100,000 for a year and inflation eroded the principal by 3%, you’dreceive the equivalent of $97,000 in today’s dollars. (Note that with 3%erosion, even the $102,000 CD proceeds would be worth only $98,940 in today’sdollars.)

In theopening example, your proposed “investment” (a two-year $200,000 notereceivable) would be far riskier than a CD. To compensate, you might decide notto accept anything less than an 8% return. A present value table indicates thatat 8%, the discount factors for one and two years are .926 and .857,respectively. $100,000 times .926 is $92,600; $100,000 times .857 is $85,700.

Thus, intoday’s dollars, the buyer is offering $388,300 ($210,000 down payment plus$92,600 plus $85,700). Since your business is worth $400,000, you would beselling for $11,700 less than full value.

A similaranalysis can be applied to any business transaction involving future payments. Forhelp with the calculations or assistance with any of your business needs, callus for an appointment.

Maris & Associates CPA's

10512 19th Ave SE #101

Everett, WA 98208

www.mariscpa.com

425-338-0414

Plan for a Smaller Refund

2011-05-06T15:22:00.000-07:00

Did you receive a big refund check from last year’s taxes? If so, you’re not alone. Many of us deliberately pay extra taxes throughout the year so we can enjoy a nice bonus early the next year. Sometimes it’s insurance against having to come up with extra cash when you file your return. That’s a valid concern. But sometimes it’s just a form of enforced saving. Or perhaps you’ve simply never bothered to adjust your withholding. Those aren’t such good reasons. After all, when you overpay your taxes, you’re making an interest-free loan to the government.

Should you adjust your withholding? Reducing your withholding is as simple as filing a new Form W-4 with your employer. The form comes with a worksheet to figure out how many allowances you should claim. Don’t forget to allow for your other taxable income besides wages, such as dividends or investment gains.

If you’re worried about underpaying tax, there are a couple of rules you should know. Generally, you’ll escape a penalty if you pay, through withholding or quarterly estimated payments, at least 100% of last year’s taxes (110% if your adjusted gross income is over $150,000), or if you pay at least 90% of what you owe for this year.

If you reduce withholding, here are some ideas on how to use your extra take-home pay.

* Contribute more to your employer’s 401(k) plan, especially if your company matches contributions. You’ll enjoy a double benefit because the extra contributions will reduce the tax on your wages as well as provide tax-deferred savings.

* Pay down balances you’re carrying on your credit cards. That’s equivalent to earning interest on your extra payments, often at double-digit rates.

* Put the money in a tax-favored Coverdell IRA or Section 529 plan for your child’s education.

Contact our office if you’d like help figuring out your withholding level for 2011.

Maris & Associates CPA's

10512 19th Ave SE #101

Everett, WA 98208

www.mariscpa.com

425-338-0414

Business Tax Planning

2011-05-05T16:45:00.001-07:00

There’sa new twist on an existing option for accelerated write-off of assets youpurchase from September 9, 2010 through December 31, 2011. You can choose toexpense 100% of the cost of new equipment, such as machinery, some vehicles,and computers under expanded “bonus” depreciation rules.

Whilethis sounds similar to Section 179, which also allows immediate expensing ofassets you’d otherwise have to write off over several years, differencesbetween the two methods exist. For instance, the amount of Section 179expensing you can claim may be limited by your income. In contrast, bonusdepreciation can create an operating loss that you may be able to carry back toprior years to generate a refund. Also, bonus depreciation is available onlyfor new assets; Section 179 expensing applies to both new and used assets.

Andwhat about the rules for Section 179? The expensing limit was increased to$500,000. Your deduction begins to shrink if you buy more than $2 million ofassets.

Anotherdepreciation break was also extended: the 15-year life for certain leaseholdand retail improvements and restaurant buildings and improvements. These assetswill no longer qualify for 15-year depreciation after 2011.

Checkout this tax break if your business has fewer than 25 full-time employees: Youmight qualify for a tax credit of up to 35% of employer-paid health care costs.

We can help you with your tax planning. Please give us a call and see us on our website at www.mariscpa.com. Thanks for reading.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

How to improve your credit score

2011-02-24T11:44:00.000-08:00

The days of easy credit, offered to anyone who can breathe, are history. In this sluggish economy, lenders want to know whether borrowers are likely to stay current on their loans, mortgages, and credit card accounts. Banks and other lending institutions are looking more closely at credit scores, the numbers that (in theory at least) predict the likelihood that a borrower will default on his or her outstanding debts. As a result, knowing your score and ensuring that it's climbing toward the upper percentiles should be a part of your regular financial planning.

The most commonly used credit score is the FICO, developed by Fair Isaac Corporation. FICO scores range from a low of 300 to a high of 850 and may be obtained (for a fee) at myfico.com. The score is considered a predictor: the higher the score, the more creditworthy the consumer. Not so long ago, a score that just nudged the 700 mark would bring lenders to the table with their lowest interest rates. Over the last few years, however, higher scores are often required to get premium rates.

About 35% of the FICO score is derived from your payment history, and another 15% comes from the length of that history. Ten percent of the score is based on the types of credit you use—credit cards, retail accounts, and other types of loans. Another 30% takes into account the amounts you owe as a fraction of your available credit. These numbers and others are fed into the FICO calculator to determine your overall score.

To raise that score, focus on the numbers that matter most:

* Avoid late payments. If you must juggle payments because of cash flow problems, try to limit the number of past-due accounts. A history of late payments on several accounts will hurt your score more than delinquencies on a single account.

* Mix it up. Spread your debt over several types of accounts: installment loans, credit cards, and accounts with retail merchants.

* Curb spending. Keep your outstanding balances to less than 50% of your available credit.

* Check your credit report regularly. By law, you're entitled to a free annual credit report from the three main credit-reporting agencies. Check the report for errors, and follow up to ensure that problems get fixed. One vendor's erroneous reporting can tank your score.

Good credit is a valuable commodity. Guard it carefully.

Maris & Associates CPA's
10512 19th Ave SE #101
Everett, WA 98208
425-338-0414
info@mariscpa.com

Choose the right filing status

2011-02-16T16:34:00.000-08:00

Whilegathering information to complete your income tax return, you may give littlethought to your filing status. But there's a reason "filing status"choices appear at the beginning of tax forms: They're important.

Why?Because filing status can impact exemptions, reportable income, deductions,credits, tax rates, liability, the type of form you file, and whether you needto file at all. In addition, some states require that you use the statusreported on your federal return, which can affect the amount of state tax youpay.

Hereare facts to consider when determining filing status:

1.Your status generally depends on whether you're married or single on the lastday of your taxable year (typically December 31). In cases of divorce orseparate maintenance decrees, the laws of your state determine whether you'reconsidered married or single. Same-sex marriages are not recognized for federalincome tax purposes.

2.As a married couple, you can choose joint or separate returns. When you fileseparately, you can change your mind later and amend your return to filejointly. However, you can't switch from joint status to married filingseparately after the due date of the original return.

3.If you were widowed during the year and have not remarried, you have the optionof filing jointly with your late spouse. When you're widowed and have dependentchildren, you can continue to use joint tax rates for two additional yearsfollowing the year your spouse died.

4.Head of household status is intended for single taxpayers with dependentchildren. It may also be available when you're single and maintaining aseparate household for a parent - including one living in a nursing home.

If you need more information or if you have questionsabout your filing status please contact us.

Thanks for reading,

Maris & Associates CPA's

10512 19th Ave SE Suite 101

Everett, WA 98208

425-338-0414

info@mariscpa.com

Overview of Key provisions in the 2010 Tax Relief Act

2011-01-25T15:43:00.000-08:00

Here’s anoverview of the key provisions in the law:

Tax rates.The existing tax rates established in the 2001 and 2003 tax laws will continuefor all taxpayers through 2012. This means the top tax rate for 2011 and 2012will remain at 35% instead of reverting to 39.6% as it would have done had the2010 Tax Relief Act not passed.

Capitalgains and dividends. The top rate for long-term capital gains will remain at15% for taxpayers in all but the two lowest ordinary income brackets; thosetaxpayers will continue to have a 0% rate on capital gains. Dividends willcontinue to be taxed at the 15% and 0% rates instead of reverting to ordinaryincome rates as high as 39.6%.

Itemizeddeductions and personal exemptions. Higher-income taxpayers will not have theiritemized deductions limited and their personal exemptions phased out.

Educationtax breaks. The law extends the American Opportunity Tax Credit through 2012.The income exclusion for up to $5,250 of employer-provided education assistanceto employees is continued for two years. The higher contribution limit of$2,000 and other enhancements to Coverdell Education Savings Accounts wereextended for two years.

Alternativeminimum tax (AMT). The AMT was given another “patch” for 2010 and 2011, a movethat will keep the tax from hitting millions more taxpayers. For 2010, theexemption amount is $47,450 for individuals and $72,450 for married couplesfiling joint returns. For 2011, the exemption is $48,450 for singles and$74,450 for couples. Without this adjustment, the exemption amounts for 2010and 2011 would have been $33,750 for singles and $45,000 for couples.

Payrolltax. A new tax break is created for workers who pay social security taxes. For2011, the employee rate for social security tax is cut from 6.2% to 4.2% onwages up to $106,800. Self-employed individuals will pay 10.4% onself-employment income up to $106,800. Employers will continue to pay 6.2% onemployee wages. This payroll tax rate cut does not affect the Medicare portionof payroll taxes for either employees or employers.

Extenders.Tax breaks that have come to be called “extenders” because they’re typicallyextended retroactively every year, but just for a year, are again extended bythe new law.

Effectivefor 2010 and 2011 returns, taxpayers have the option of deducting state andlocal sales taxes instead of state and local income taxes. The deduction for upto $4,000 of higher education expenses and the deduction for teachers who buyclassroom supplies are extended. Those age 70½ or older may again contribute upto $100,000 tax-free from an IRA to a charity. Note that the deduction for realestate taxes paid by nonitemizers was not extended.

Businessprovisions. The law extends the research tax credit for 2010 and 2011, and itextends the work opportunity tax credit through 2011. Bonus depreciation isincreased from 50% to 100% for qualified business purchases made from September9, 2010, through December 31, 2011. 50% bonus depreciation will be available in2012.

Estate tax.The estate tax was perhaps the most contentious issue in the law, and it cameclose to unraveling the deal. The compromise that was agreed upon restores theestate tax retroactive to January 1, 2010, and continues it through December31, 2012. It establishes a top rate of 35% and an exclusion amount of $5million ($10 million for married couples). Estates of persons who died in 2010have the option of applying the estate tax and receiving a step-up in basis onproperty passing to heirs or having no estate tax but using a carryover of thedecedent’s basis in property.

The 2010 TaxRelief Act also provides an additional 13 months of benefits to the unemployed.

Most of theprovisions in the new law will probably go unnoticed by the majority oftaxpayers since the law basically keeps things as they were for another twoyears. However, there are several significant changes that are likely to affectyou or your business. For more information and planning guidance as you beginsorting out your tax situation for 2011, contact our office.

Maris & Associates, CPA's

10512 19th Ave SE #101

Everett, WA 98208

425-338-0414

www.mariscpa.com

http://www.facebook.com/pages/Maris-Associates-CPAs

There's still time to make 2010 tax-free gifts

2010-12-07T13:47:00.000-08:00

The tax code allows you to give away up to $13,000 each year to as many people as you want, without triggering gift tax. If you and your spouse "split" your gifts, you can double this $13,000 annual gift-tax exclusion and give $26,000 per recipient.

If you're thinking of sharing your wealth, here are some important gift-giving considerations.

* All gifts during the year, including birthday and holiday presents, count toward the $13,000 (or $26,000) annual gift tax exclusion. For example, say you give a $500 birthday present to your grandchild. You may give another $12,500 to that grandchild during the year without triggering the need for a gift tax return.

* A gift made by check isn't complete until the recipient actually deposits or cashes the check. Plan accordingly when making year-end gifts, especially if you want such gifts to be counted toward this year's gift tax exclusion.

* For a gift to be valid, you must part with ownership. Pay special attention to gifts of stock in the family business or gifts of your personal residence.

* Three types of gifts are exempt from the $13,000 limit. You can make unlimited gifts for tuition expenses or medical expenses on behalf of any person, provided you make the payments directly to the educational institution or health care provider. You can also make unlimited gifts to your spouse.

If you would like to discuss the benefits of making tax-free gifts, please contact our office.

Maris & Associates, CPA's

10512 19th Ave SE #101

Everett, WA 98208

425-338-0414

info@mariscpa.com

Act fast if you want to cut your 2010 taxes

2010-12-07T13:30:00.000-08:00

1. Tax rates are likely to go higher in 2011, so you might benefit from shifting income into 2010 and delaying deductions until 2011. It’s always a matter of personal circumstances, so analyze the two-year results of shifting income and deductions before you do anything.

2. Remember that required minimum distributions from retirement plans are back this year. If you’re over 70½, your 2010 distribution must be taken by December 31 or a 50% penalty may apply. If you turn 70½ this year, you could wait until April 1, 2011, to take your first distribution. In deciding, consider the likelihood of higher tax rates next year and the fact that a delay means you'll have two taxable distributions for 2011.

3. With the $100,000 income limit dropped for converting a traditional IRA to a Roth, consider doing a conversion before year-end. You can elect to pay the tax over two years’ tax returns, 2011 and 2012, or pay in full on your 2010 return.

4. Consider buying needed equipment for your business to benefit from the first-year $500,000 expensing option and 50% bonus depreciation.

5. If you’re planning to add employees soon, do so before January 1, 2011. If you hire someone who has been unemployed for a while, you might qualify for an exemption from social security payroll taxes on the new hire’s wages. Keep the new worker for at least a year and you could also qualify for a tax credit of up to $1,000.

6. Start a pension plan for your small business. You may be entitled to a credit of up to $500 in each of the plan’s first three years.

7. Review your portfolio and start thinking about offsetting gains and losses for the year. You can deduct $3,000 of losses against ordinary income.
Call us to discuss your tax situation and what we can do to help.

Maris & Associates, CPA's

10512 19th Ave SE #101

Everett, WA 98208

425-338-0414

info@mariscpa.com

HIRE employees before January

2010-11-23T14:59:00.000-08:00

If you're planning to add employees in your business, consider doing so before January 1, 2011. Under the "HIRE Act" passed earlier this year, you could qualify for an exemption from social security payroll taxes on wages paid a new worker who had been unemployed for the previous 60 days or more. Keep the new worker for at least a year, and you could also qualify for a tax credit of up to $1,000.

New law raises insurance coverage on bank accounts

2010-10-28T16:46:00.000-07:00

For years, bank accounts were FDIC-insured up to $100,000. Then during the recent financial crisis, the insurance limit was increased to $250,000. But this increase was only temporary; it was scheduled to drop back to $100,000 in 2014.

The good news is that the financial reform law just signed permanently sets the FDIC insurance limit at $250,000 per account, per depositor, per bank. The $250,000 coverage applies for each of four categories of ownership: individual, joint, retirement, and trust accounts.

Maris & Associates, CPA's

10512 19th Ave SE #101

Everett, WA 98208

425-338-0414

info@mariscpa.com

Tax credit for small business

2010-10-15T15:34:00.000-07:00

Look into this new 2010 tax credit for your small business

When small business owners think about the recent health care reform, they may be thinking only of its long-term implications. But the legislation actually provides an immediate tax break for qualified small businesses and nonprofit organizations. Beginning this year, the "Patient Protection and Affordable Care Act" offers a tax credit of up to 35% of employer-paid health care costs. Does your business qualify? The answer lies in a little math. We can help with that.

* First, you must have fewer than 25 full-time employees. Keep in mind that owners and their family members who draw a salary are not counted in the total. Neither are seasonal employees working 120 days or less per year. The term "full-time employee" is actually a bit of a misnomer; the IRS is really counting full-time equivalents, or FTEs. To figure your FTEs, add up the annual hours you paid to non-owner, nonseasonal employees (full-time or part-time) and divide by 2,080. If the result is less than 25, you're ready to move to the next step.

* Next calculate your employees' average wages. Just as in the calculation of full-time workers, you don't count wages paid to owners, family members, or seasonal workers. After subtracting out the above pay, divide the net figure by the number of FTEs above, and if the result is less than $50,000, you are still in the running for the credit.

* To meet requirement number three, your business must cover at least 50% of the cost of employees' health insurance. For 2010, you need only pay 50% or more of the single coverage premium even if the employee is enrolled in a family plan. Next year this special rule goes away.

From now through the year 2013, the maximum tax credit is 35% of the employer's share of the premiums. But only businesses with 10 or fewer full-time employees and average wages of $25,000 or less actually get this rate. The percentage drops as the number of employees or the average pay increases. Another little wrinkle: Beginning in 2014, the maximum credit rises to 50%, but the tax break becomes available only to those businesses that purchase their health insurance through a state exchange. And even then, you can only claim the credit for two years.

If you're a small business owner, look into this tax perk as soon as possible. For help in running the numbers, just give us a call.

Maris & Associates CPA's

10512 19^th Ave SE #101, Everett, WA 98208 ~ 425-338-0414 begin_of_the_skype_highlighting 425-338-0414 end_of_the_skype_highlighting ~ info@mariscpa.com
Visit our Website www.mariscpa.com for more resources and information.

Don't fall for a health care reform scams

2010-09-24T16:59:00.000-07:00

The new health care law is confusing to many, and the con artists are wasting no time in taking advantage of people's uncertainty about the new rules. State insurance commissioners warn that con artists are calling, e-mailing, and even showing up at people's doors trying to sell insurance policies they say are required under the new law.

The facts are that the requirement to have health insurance doesn't begin until 2014, and there is no jail sentence involved for those who don't carry insurance.

Scam artists are preying on people who are uninformed or confused about the new health care law. To protect yourself, become familiar with the main provisions in the law. And be sure to follow the general guidelines to avoid becoming a victim of fraud: Don't give your credit card, bank account, or social security numbers to anyone you don't know, and don't sign up for anything without checking its legitimacy.

IRS extends filing deadline for Small Charities

2010-09-01T10:23:00.000-07:00

All nonprofit organizations (except for churches and church-related groups) must file an annual return with the IRS. Failure to do so for three consecutive years results in the loss of the organization's tax-exempt status. The filing deadline for the 2009 return was May 17, 2010, and thousands of small charities hit the three-year failure to file point on that date.

The IRS had conducted an extensive notification program to remind charities of their filing obligation, but large numbers still have not filed. Now the IRS has extended the filing deadline to October 15, 2010, hoping that small charities will bring their filings up to date and avoid losing their tax-exempt status.

If you are responsible for a nonprofit organization and need details or filing assistance, give our office a call.

Maris & Associates CPA's

10512 19^th Ave SE #101, Everett, WA 98208 ~ 425-338-0414 ~ info@mariscpa.com
Visit our Website www.mariscpa.com for more resources and information.

Don't overlook the Roth five-year holding requirement

2010-08-26T15:30:00.000-07:00

The new, less restrictive rules in effect this year for Roth conversions may have you pondering whether now's a good time to convert your traditional IRA funds to a Roth IRA. While your decision involves many factors, one wrinkle to consider is the five-year holding period for converted assets.

The time limit has nothing to do with distributions of regular contributions from your Roth. As you know, you can withdraw regular contributions at any time, tax- and penalty-free, no matter your age. That's because you deposit those amounts into your Roth using money on which you've already paid income tax.

Rather, the five-year holding period comes into play when you're under age 59½ at the time you make a Roth conversion. In that case, you'll generally have to wait five years (or until you turn 59½, whichever comes first) before you can pull the "conversion assets" out penalty-free.

When you fail to meet the five-year rule, the penalty is the same 10% you'd pay if you took an early withdrawal from your traditional IRA. That's the purpose of the five-year rule - to discourage premature distributions from retirement accounts.

Once you reach age 59½, the 10% penalty disappears, though the five-year holding period for converted assets may still apply. For example, say you use the conversion to fund an initial Roth. During the first five years your new account exists, you'll pay ordinary income tax on withdrawals of the income earned from the converted amounts.

The five-year holding period can also affect your beneficiaries. For instance, if you had no prior Roth account before making a conversion, your beneficiaries will pay ordinary income tax on distributions of earnings. However, they can withdraw converted amounts with no federal income tax or penalty.

Give us a call to discuss this and other Roth conversion rules. We're ready to help.

Maris & Associates CPA's

10512 19^th Ave SE #101, Everett, WA 98208 ~ 425-338-0414 ~ info@mariscpa.com
Visit our Website www.mariscpa.com for more resources and information.

How to prevent employee theft

2010-08-16T11:48:00.000-07:00

Employee embezzlement and other forms of theft often follow a predictable pattern. First, the employee is faced with significant external pressures such as high gambling debts, mounting medical bills, or substance abuse problems. To relieve this pressure, he or she finds an opportunity to steal from the company, especially if the firm's internal controls are perceived to be weak. From there, it's easy to rationalize fraudulent behavior - "I'll just take some money now, and pay it back later," or "I deserve a raise, but management's stingy, so I'll provide it myself," or "They've got plenty. They'll never miss it."

As a business owner, what can you do to prevent employee embezzlement and theft?

~ Screen job applicants thoroughly. Review a potential employee's criminal history, verify education and past employment, and check references. If an applicant is willing to lie on a resume, why should you trust that person with your business assets?

~ Make your policy crystal clear. Your employees should know that theft of any kind will not be tolerated, and managers should model integrity in their interactions with clients, competitors, and government regulators.

~ Segregate duties. If one employee takes in cash, someone else should prepare or oversee preparation of the cash deposit, and another should record transactions in the company books. Although such separation of duties may be hard to establish in a small company, creative owners will find ways to prevent such transactions from being concentrated in the hands of a single employee.

~ Conduct regular audits. Employees should know that their activities are subject to surprise reviews and an annual independent audit. They'll be less likely to steal if they know that someone is following after them, checking their work.

~ Track down customer complaints. If a customer claims that a bill was paid but a credit doesn't show up in the accounting records, an employee might be stealing your business receipts.

Homebuyer tax credit is extended

2010-08-02T11:52:00.000-07:00

If you signed a contract before May 1st to buy a home, but have been unable to close the deal, you still have time to apply for the homebuyer tax credit. The deadline for finalizing the paperwork on your new home has been extended through September 30, 2010.
Here's what you need to know:

~ The extension applies only if you already had a contract in place by April 30, 2010. The new deadline is available for first-time homebuyers and long-term residents.

~ The maximum credit remains unchanged ($8,000 for first-time homebuyers and $6,500 for long-time residents) as do other rules for qualifying.

~You can claim the credit on your 2009 or 2010 federal income tax return. You'll have to complete Form 5405, First-Time Homebuyer Credit and Repayment of the Credit, and attach proof that you meet the requirements.

Not sure if you qualify? We can help. Please call 425-338-0414 or email us at info@mariscpa.com for more information.
Maris & Associates, CPA's Inc
www.mariscpa.com

Health Care Reform affects FSA & debit cards

2010-07-27T16:17:00.000-07:00

Effective January 1, 2011 OTC medicines and drugs (except insulin) are no longer eligible for reimbursement under FSA unless prescribed by a medical doctor! The newly enacted law states:

… reimbursement for expenses incurred for a medicine or a drug shall be
treated as a reimbursement for medical expenses only if such medicine or
drug is a prescribed drug (determined without regard to whether such drug
is available without a prescription) or is insulin. – H.R. 3590

Also, debit cards will be denied when purchasing these items as participants will need to submit a claim form for reimbursement along with a copy of the prescription.