Six questions to ask before starting a business

Throughout America , in rural towns and large cities, companies come and go with clockwork frequency. That specialty store with the ragged sign and lousy service? It's been replaced by a funky restaurant that serves great linguini. Yesterday's bicycle shop is today's bakery. It's no wonder. Creating a company that can survive even a few years is not an easy feat.

If you recently lost your job or have always dreamed about being your own boss, you may be contemplating a new business venture. Before launching a small business, increase your chances of success by answering a few simple questions.

1. Is there a market for my product or service? Test your target demographic. This can be as simple as putting together focus groups who will provide honest feedback. You might also attend trade shows to network with others in similar markets. Consider reviewing census figures for your area. For example, are you planning to sell baby clothes when most people in your target area are empty nesters?

2. How much money will I need? You'll want to review sales revenue and expense forecasts for the first year of planned operations. By the way, don't count on friends, relatives, or bankers to bail you out if cash flow doesn't meet expectations. A basic rule is that the company should have enough cash to survive - without tapping loans, credit cards, or lines of credit - for at least a year. For many people, that means starting the business while keeping their day job.

3. Do I have a business plan? A detailed business plan will help you think through all aspects of your company's start-up phase. It defines what you're selling. It lays out marketing strategies, start-up capital requirements, overhead expenses, expected cash flow, and plans for business growth. It should include a summary of your experience in that product or service.

4. Are my books in order? Whether you keep your own records or hire someone else to perform this important task, you should know whether your business is profitable on a monthly basis. That means tracking all expenses, including payroll costs and inventory. A sales-only focus has doomed many small businesses to failure.

5. How should the business be structured? Sole proprietors are liable for the business debts, taxes, and legal costs of their companies. You might want to consider setting up your firm as a corporation or limited liability company. Analyze this important decision at the outset so that you understand your options.

6. Should I set up a website? Whether or not you plan to use the Internet for sales, you can't ignore the potential value of an online presence. It might create a higher degree of visibility for your small business and enable you to advertise your main selling points to the general public. A website also gives the opportunity to promote your activities or offer special incentives.

Starting a small business is not for the faint of heart. For guidance in getting off to a good start, give us a call. Fall River #: 508-679-6079 New Bedford #: 508-999-0020

New Business: Our workforce is changing

Things are changing on the job front. Here are a few workforce numbers reported recently.

* If the trend reported in June 2009 continues, women will soon make up the majority of the nation's workforce. In June 2009 women held 49.83% of the country's 132 million jobs. This will be the first time in history that women constitute a majority on the job front.

* The Labor Department reports that in the first five months of 2009, 5.3% or some 7.6 million workers held more than one job.

* According to the Pew Research Center , the U.S. workforce is getting older. By 2016, 22.7% of the workforce will be aged 55 and older. Reasons cited include the effect of the current economic downturn on retirement savings and the extra years young people remain in school instead of joining the workforce.

* The Bureau of Labor Statistics reports that between 2000 and 2008, the number of workers aged 65 to 69 rose 25%. Workers in the 70 to 74 age group increased 32%, those in the 75 to 79 age group increased 38%, and those 80 and older increased 67%. It's clear that as people live longer, their attitudes toward retirement are changing.

Mortgage debt relief: Answers to frequently asked questions

To compound the financial woes resulting from a foreclosure or other mortgage restructuring for your home, the IRS generally imposes tax when debt is cancelled. In other words, you're taxed on the amount forgiven by the lender as if you actually received it as income. However, Congress provided some relief to homeowners under the "Mortgage Forgiveness Debt Relief Act of 2007."

Here are the answers to several common questions in this area.

* What relief does the recent law provide? Generally, it excludes tax on cancellation-of-debt income realized from a foreclosure, short sale, or other mortgage restructuring. This tax break only applies to debt used to buy, build, or improve your principal residence. It isn't available for vacation homes or investment property.

* Is there a limit? Yes. The exclusion can cover the tax due on up to $2 million of forgiven debt ($1 million if you're married and file separate tax returns). Any excess is taxable under the general rules.

* How does the exclusion affect your basis in the home? You must reduce your basis (the amount used to determine taxable gain or loss from a home sale) by the amount of cancelled debt excluded from taxable income. For example, if a loan restructuring results in cancellation of $50,000 of debt on a home with a basis of $450,000, your basis is reduced to $400,000. This could increase your taxable gain when you sell the home, although the first $250,000 of gain ($500,000 for joint filers) may still be sheltered by the home sale exclusion.

* How do I know how much debt is excluded? Your lender will send you Form 1099-C (Cancellation of Debt) showing the amount of debt forgiven and the fair market value of property given up through foreclosure. It also sends the IRS a copy of the form. The IRS encourages homeowners to check this information carefully.

* What is a short sale? Instead of foreclosing on a home, a lender may allow you to sell it for less than the mortgage amount and take the proceeds in full satisfaction of the debt. For instance, let's say you still have a mortgage of $250,000 on your home, but the home's value has dropped to $225,000. Assuming the bank agrees to a short sale and you incur $15,000 in selling expenses, you turn over the remaining $210,000 to the bank. The $40,000 difference, which will be reported on Form 1099-C, qualifies for the tax exclusion on cancellation-of-debt income.

* Is this tax relief permanent? No. Initially, the tax exclusion only applied to debt forgiven in 2007, 2008, or 2009. But the economic stimulus law passed last year - the "Emergency Economic Stabilization Act of 2008" - extended this tax break for three years through 2012.

This is just a brief overview of the new mortgage debt relief available to homeowners. Call us if you have questions pertaining to your situation.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

What's New in Taxes: A new vehicle could bring tax savings

If you're thinking of buying a new car, truck, motorcycle, or motor home this year, you might benefit from a tax break included in the "Recovery Act of 2009." Here are the details.

* You can deduct state and local sales taxes paid on up to $49,500 of the purchase price of a qualifying vehicle.

* Qualifying vehicles generally include new (not used) cars, light trucks, motorcycles, and motor homes purchased after February 16, 2009, and before January 1, 2010.

* The deduction can be claimed on your 2009 tax return regardless of whether or not you itemize other deductions.

* The deduction phases out for single taxpayers with income between $125,000 and $135,000. For joint filers, the phase-out range is $250,000 to $260,000.

For more information or planning assistance, give us a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Major Tax Deadlines For October 2009

* October 1 - Generally, the deadline for self-employeds and small businesses to establish a SIMPLE retirement plan for 2009.

* October 15 - Deadline for filing 2008 individual tax returns on automatic extension of the April 15 filing deadline.

* October 15 - If you converted a regular IRA to a Roth IRA in 2008 and now want to switch back to a regular IRA, you have until October 15, 2009, to do so without penalty.


NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Take a Break

Millions, Billions, Trillions: Just how much money is it?

The recent stimulus law provided about $800 billion dollars in an effort to get the U.S. economy back on track. The proposed 2010 federal budget hit the $3.5 trillion mark.

Just how much money is that? Most people have a hard time envisioning such astronomical amounts. Here's a visual that might help.

$1,000,000 - If you laid one million one-dollar bills end-to-end, you would have a path 95 miles long.

$1,000,000,000 - A billion one-dollar bills laid end-to-end would go around the earth almost four times. (The earth is about 25,000 miles around.)

$1,000,000,000,000 - A trillion one-dollar bills laid end-to-end would go around the earth 3,800 times. So a $3.5 trillion federal budget would wrap the world 13,000 times in one-dollar bills. And that, fellow taxpayers, is a lot of money.

As things change, update your beneficiaries

Although life's only certainties may be death and taxes, we rarely enjoy planning for them. But without planning, your assets can go to unintended recipients - including the government.

* Only the first step. Naming your beneficiaries is only the first step. It's just as important to periodically review the beneficiaries designated by your will, insurance policies, investment accounts, retirement plans, and similar documents. Examine each document carefully, because some assets may pass to the beneficiaries named in the governing document, regardless of the terms of your will.

Example: You name your husband as sole beneficiary of your life insurance policy and your 401(k) plan. After a few years, you divorce and remarry. You remove your ex-husband from your will and name your new husband as the insurance beneficiary, but you forget about the 401(k) plan. The result: When you die, your ex-husband probably will inherit the plan assets.

Events that might require changing beneficiaries include marriage, birth, divorce, death of a beneficiary, increases or decreases in your wealth, changes in tax law, or simple changes of heart. Even in the absence of a triggering event, it's wise to review your designations regularly. A beneficiary may have fallen out of favor. A once-needy beneficiary may have become wealthy, enabling you to divert your assets elsewhere. Ongoing changes to estate tax law may mandate different approaches to beneficiary selection.

* Where to start. When reviewing your beneficiary designations, start by listing the relevant documents. In addition to your will, personal life insurance, and active retirement plan, include employer-provided life insurance and life insurance associated with services such as credit cards, medical plans, and trade associations. You'll also need to look at stock purchase plans, stock option plans, and similar benefit programs.

If you haven't reviewed your beneficiary designations lately, think about doing it soon. For assistance in your review, give us and your attorney a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

New credit card rules become effective

The new "Credit Card Accountability, Responsibility and Disclosure Act of 2009" (CARD), which is designed to protect consumers from unfair credit practices, generally does not take effect until February 2010. But a few provisions went into effect on August 20, 2009.

Credit card companies must now give consumers 45 days notice before changing interest rates or fees. However, they don't need to warn you of a rate increase if your payment is late by 60 or more days.

The new law will not allow credit card companies to count your payment as late unless they've sent their bill at least 21 days before it is due.

Provisions in the law which go into effect next year will restrict rate increases on existing card debt and marketing to college students.

Is your business prepared for flu season?

The government is encouraging businesses to look ahead to the upcoming fall and winter flu season and to make plans to minimize the flu's effects on business productivity. Flu season may be worse this year due to the H1N1 or swine flu which still has not been effectively brought under control.

Some actions being suggested by government officials:

* Encourage vulnerable workers to get the flu vaccine as soon as it becomes available (pregnant women, health care providers, older individuals, and those with asthma, for example).

* Clean work areas, stock up on hand sanitizers, encourage frequent hand washing.

* Send workers home at the first sign of flu symptoms, and encourage them to stay home for at least 24 hours after fever abates.

* Consider staggering work shifts or letting employees work at home if a company-wide outbreak seems likely.

Your business should also consider developing a plan for operating if a flu pandemic strikes. The U.S. government has started to plan for the consequences of a pandemic, but in the chaos that would accompany a serious outbreak of flu, your business can't rely only on the government. At this point, it's probably too early to make concrete plans. But it's not too early to start thinking about the possible effects on your business and how you would deal with them.

Consider the following issues:

* Loss of employees. How would you cope if perhaps 25% of your employees were sick and unable to report for work? How would your business be affected?

* Quarantined employees. What would happen if a significant number of your employees were quarantined and unable to report to work? Could they work from home? It's quite possible that compulsory quarantine would be imposed if an area is affected by an outbreak.

* Loss of a supplier. How would you be affected if a major supplier lost employees and cut back production? How much inventory do you keep on hand?

* Disruption in shipping. A pandemic could well disrupt transportation and shipping. This could affect both your supplies of materials and your ability to ship a product.

* Loss of communications. In a worst case, telephone and/or Internet service could be interrupted. How would this affect your ability to do business?

The potential problems and the solutions to them are different for every business. There are certainly no easy answers. But the businesses that come through a pandemic in the best shape will be those that have done their planning! Make a start by assessing your vulnerabilities and thinking of possible responses.

Do a year-end investment review to cut taxes and increase returns

This is a good time of year to review and rebalance your investment portfolio. Although the recent market volatility has been disastrous for many investors, there may still be some year-end moves you can make that will cut your 2009 taxes and increase your after-tax returns. As you identify investments to buy and sell, keep the following tax implications in mind:

* First, remember that any sales you make within your retirement accounts are free of tax. If you need to trade just to rebalance your portfolio, consider doing it in your IRA or 401(k) plan.

* If you're selling investments to weed out poor performers, remember that losses can cut your tax bill. You can use capital losses to offset taxable gains, plus up to $3,000 of other income. If you still have losses left over, you can carry them forward to use in future years.

* Not all dividends on stocks and mutual funds are taxed at the same rate. "Qualified" dividends paid by most U.S. and some foreign companies enjoy lower rates of 5% or 15%, depending on your tax bracket.

* You can often manage the size of your gain or loss when you decide to sell some, but not all, of a particular stock or mutual fund. To do this, you must have kept good records of the date and the price for each share purchase. By selling the highest cost shares first, you'll minimize your taxable gain or maximize your loss. You must specify the particular shares you are selling at the time you sell.

* Don't forget to include any reinvested dividends when you calculate your cost basis for mutual fund shares.

* If you're planning to buy or sell mutual fund shares close to year-end, take the tax consequences of the fund's year-end distribution into account.

* If you want to dispose of stock that has appreciated, consider donating it to your favorite charity. You can generally claim a deduction for the appreciated value and avoid paying any tax on your gain.

Give us a call to find out more about year-end investment planning.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

The IRS reminds taxpayers to use new tax breaks

The IRS has issued a news release reminding taxpayers to take advantage of the tax breaks provided in the "American Recovery and Reinvestment Act of 2009," the recovery law passed earlier this year.

Among the tax benefits that are available for a limited time:

* First-time homebuyer credit of up to $8,000 for homes purchased before December 1, 2009.

* Deduction for state and local sales and excise taxes paid on the purchase of a new car, light truck, motor home, or motorcycle. No limit on the number of vehicles you may buy, but the deduction per vehicle is limited to tax on up to $49,500 of the purchase price. Higher-income taxpayers won't qualify for the deduction, and the deduction ends after 2009.

* Credit for energy-efficient home improvements of up to $1,500 for improvements done in 2009 and 2010.

* American opportunity tax credit of up to $2,500 for qualifying higher education expenses for 2009 and 2010.

The IRS is so concerned that taxpayers will not utilize these tax breaks that it has also launched a YouTube video site and an iTunes podcast with information about these tax breaks.

Major Tax Deadlines for September 2009

* September 15 - Due date for individuals to pay third quarter installment of 2009 estimated tax.

* September 15 - Due date for filing 2008 tax returns for calendar-year corporations that had an extension of the March 16 filing deadline.

* September 15 - Due date for filing 2008 partnership tax returns that had an extension of the April 15 filing deadline.

* October 1 - Deadline for businesses to adopt a SIMPLE retirement plan for 2009.

NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.

What's New in Finances: Social security and Medicare to go broke earlier than expected

The federal government estimates that Medicare and social security will run out of money even sooner than previously predicted. According to these latest estimates, Medicare will be depleted in 2017, and the social security trust fund will run out in 2037.

As baby boomers retire and sign up for social security and Medicare, these programs will be paying benefits to millions more. It's estimated that the number receiving social security benefits will increase by one to two million a year from 2009 through 2032. In the 1990's, by comparison, about half a million beneficiaries were added each year. Starting in 2011, more than one million people will be added to Medicare each year.


Consider direct education gifts - There's no limit and no taxes

There are many ways to pay for a child's education, but one of the methods that you might not be aware of is that of direct education gifts.

In 2009 a person is allowed to give up to $13,000 to another individual without running afoul of the gift tax exclusion. However, if a payment is made directly to a qualifying education institution, the $13,000 per person annual gift limitation does not apply. Not only are the gift tax limitations removed, making substantial education payments in this manner could also reduce the taxable estate of the person making the gift, thereby reducing exposure to estate taxes.

In this case, a "child" doesn't have to be your offspring. It can be a niece, nephew, grandchild, or anybody else of any age, either related or unrelated. And the term "education" isn't limited to only college tuition. The rules also apply to private education institutions where tuition is a requirement for entry, such as elementary and high schools.

However, only tuition is allowed to be paid under these rules. Books, room, board, supplies, and entertainment aren't eligible for this exclusion.

It's even possible to make payments for multiple school years at one time, so you're not limited to making annual gifts for each school year. A potential pitfall to this multiple-year strategy is that once the funds are given to the institution, they can't be refunded. If the student decides not to attend that institution, your tax-saving plan will have backfired.

While this gift and estate tax savings strategy might seem simple, contact us for assistance to ensure the desired outcome.

D.E. Rodrigues & Company Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Consider incremental cost in business purchasing

If you run a business, you probably make many different kinds of purchasing decisions. You might buy some items infrequently and only one at a time (for example, computers). At the other extreme, there are probably some items that you buy regularly and in relatively large quantities. For a print shop, paper might be your highest volume purchase. For a manufacturing business, it might be plastic or steel.

If you are responsible for buying large quantities of a single item, you'll want to become familiar with the concept of "incremental cost." It sounds forbidding, but it's relatively easy to understand, and it can be a powerful tool.

Example: Product X is a vital part of your business, and it's available at the following prices:

UNITS OF PRODUCT X 1,000 2,000 3,000 4,000

TOTAL PRICE $2,500 $4,750 $6,750 $8,750

AVG. PRICE PER UNIT $2.50 $2.38 $2.25 $2.19

Based on average price per unit, an order of 4,000 would seem to offer the best deal, at $2.19 per unit. But take a closer look. In this example, it costs an additional $2,000 to order 4,000 units instead of 3,000 units, which means that each of the additional 1,000 units has an incremental cost of $2.00.

However, the incremental cost to go from 2,000 to 3,000 units is exactly the same - $2.00 per unit, or a total of $2,000. In this example, your incremental cost does not decline after 3,000 units, so that's the quantity you might decide to order.

In real life, your purchasing decisions may be more complex, and you may need to consider issues like cash flow and storage costs. Even so, the concept of incremental cost can be a help. For assistance with cost decisions in your business, give us a call D.E. Rodrigues & Company.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

New Business: IRS defines new groups for work credit

The work opportunity tax credit is available to businesses that hire workers from certain disadvantaged target groups. The credit is based on the first-year wages paid to qualifying employees.

The "American Recovery and Reinvestment Act of 2009" added two new groups to the list that qualifies for the work opportunity credit: unemployed veterans and disconnected youth. The IRS recently published the definitions of these new categories.

An unemployed veteran is one who left the military during the five years prior to being hired and who received unemployment benefits for at least four weeks during the year prior to being hired.

A disconnected youth is an individual age 16 through 24 who has not been regularly employed or attending school during the six months prior to being hired, and who lacks basic skills for employment.

Put midyear tax planning on your summer agenda

Summer's here, and probably the last thing on your mind is tax planning. The problem is that if you wait until December, there's little time for changes to take effect. But if you take the time to plan now, you still have six months for your actions to make a difference on your 2009 tax return. With the recent tax changes, planning for the reduction of your 2009 taxes is more important than ever. Here are some suggestions to get you started.

* Pull out your 2008 income tax return, and review your income and deductions. Did you lose any credits or deductions because your income was above a certain threshold amount? If so, what can you do to keep this year's income below the threshold?

* You might want to schedule home improvement projects to benefit from the tax credits available for energy-saving expenditures on your principal residence.

* Evaluate your investment portfolio. If you have been avoiding the disheartening news, now is the time to reassert control over your investments. Review your holdings to see if you should take some losses to offset other income. If you're considering investment purchases, analyze the type of income you'll be receiving from the assets you buy. Then stash the investment in the proper account (taxable, deferred, or nontaxable) to achieve maximum return and tax savings.

* Adjust your retirement plan contributions. Are you still making contributions based on last year's numbers? Maximum amounts have increased for some plans in 2009. You can contribute up to $11,500 to a SIMPLE, up to $16,500 to a 401(k), and up to $5,000 to an IRA. Remember to add catch-up contributions if you'll be 50 by the end of December.

* Factor two recent tax changes into your planning for retirement fund withdrawals if you're 70-1/2 or older. First, the option to make a direct nontaxable donation of up to $100,000 from your IRA to a charity has been reinstated. Second, the requirement to take a minimum distribution from your retirement plan is waived for 2009. This applies to 401(k) plans, 403(b) plans, certain 457(b) plans, and IRAs.

* Now is the time to do tax planning for the upcoming fall college expenses. Check out the various tax breaks, including the new, enhanced Hope credit (renamed the American opportunity credit).

* The estate tax is still alive and well, so as part of your midyear review, do any updating that's needed to your will and other estate documents.

* Do some business tax planning, too. Plan your equipment purchases to benefit from the extension of 50% bonus depreciation for new equipment and up to $250,000 first-year expensing for new or used equipment.

Mix business with your summer vacation and you might be able to deduct some of your travel expenses on your 2009 tax return. To benefit, the primary reason for your trip has to be business.

Making time for 2009 tax planning now not only helps reduce your taxes, but also helps to put you in control of your entire financial situation. Tax planning should be a year-round process, but it's especially effective at midyear. Give us a call for guidance in implementing the best moves for your particular situation.

Fall River #: 508-679-6079 New Bedford #: 508-999-0020

What's New in Taxes: An update on tax collections

The economy hasn't been doing well, and when the economy slumps, so do tax collections. The American Institute for Economic Research reported a 34% drop in federal taxes collected in April 2009 compared with April 2008. For the 12 months ended in April 2009, tax revenue dropped 44% compared to a year earlier.

On the topic of taxes: President and Mrs. Obama reported 2008 income of $2.7 million and paid $855,000 in federal income tax. Vice President and Mrs. Biden reported $269,000 of income and paid $47,000 in federal income tax.

Major Tax Deadlines For August 2009

Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.

Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Take a Break

O say, can you sing our national anthem?
Surveys have shown that many Americans don’t know the words to our national anthem. The National Anthem Project is going to cities across the country to reteach the words to people.

If you tried to sing The Star Spangled Banner and got a bit muddled in the middle, here’s how the first stanza goes:

O say, can you see, by the dawn’s early light,
What so proudly we hailed at the twilight’s last gleaming?
Whose broad stripes and bright stars, through the perilous fight,
O’er the ramparts we watched, were so gallantly streaming?
And the rocket’s red glare, the bombs bursting in air,
Gave proof through the night that our flag was still there.
O say does that star spangled banner yet wave
O’er the land of the free, and the home of the brave?

Happy Independence Day! And if you would like to sing the other stanzas in our national anthem, go to www.thenationalanthemproject.org.

Changes affect 529 plans

Two changes could affect your 529 college plan. First, during 2009 and 2010, you can use 529 funds for tax-free purchases of computers, peripherals such as printers, certain educational software, and Internet access. Second, for 2009 you are permitted to make two investment strategy changes (in addition to changes made when switching the plan's beneficiary). Previously only one annual change was allowed.

How to raise financially literate children

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 Web site 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.

New COBRA health subsidy: What employers and employees need to know

Job loss brings many challenges to families, and that often includes obtaining affordable health insurance coverage. Under a 1985 federal law referred to as "COBRA," many employees who are discharged can keep health insurance coverage provided by their former employer for as many as 18 months. But to do so, the employee has to pay 100% of the COBRA premiums.

* Employees' subsidy

The economic stimulus law enacted last February significantly reduces the cost of COBRA health coverage for those who lose their jobs.

Qualified individuals who timely elect COBRA coverage are required to pay only 35% (instead of 100%) of these premiums. The remaining 65% of premiums are paid by the employer, but reimbursed by the federal government through tax credits. This subsidy is available for up to nine months after the job loss.

Those qualified for the subsidy include terminated employees and their family members who are eligible for COBRA coverage at any time from September 1, 2008, to December 31, 2009. Employees who voluntarily terminate employment or who are qualified to participate in another group health coverage plan (such as a spouse's employer's plan or Medicare) are not eligible for the subsidy.

The subsidy is phased out for higher-income taxpayers. For singles, the phase-out starts once modified adjusted gross income (AGI) exceeds $125,000. It is fully phased out at $145,000. The phase-out for married taxpayers filing jointly begins with modified AGI of $250,000 and is complete at $290,000. Any part of the subsidy paid to an individual that is subject to phase-out because of these income limitations must be repaid as an additional tax on the employee's federal income tax return.

* Employers' credit

COBRA coverage is only required for employers with 20 or more full- and part-time employees, but many states sponsor plans similar to COBRA for small employers.

An employer that sponsored a health insurance plan that included COBRA coverage is required to pay 65% of the COBRA premium if the terminated employee pays the remaining 35%. The government reimburses the employer through tax credits on the employer's quarterly payroll tax returns.

The new subsidy may make it possible for laid-off workers to continue affordable health insurance coverage until new employment and coverage can be found.

Final increase in federal minimum wage this month

July 24, 2009, brings the third and final increase in the federal minimum wage mandated by the "Small Business and Work Opportunity Act of 2007." That law was signed by George W. Bush on May 25, 2007.

The minimum wage increased to $5.85 on July 24, 2007, and again last July to $6.55. This final increase raises it to $7.25 an hour.

What's New in Finances: Factor graduation rates into choice of college

As college costs seem to increase every year, you might want to look at graduation rates for the colleges being considered by your family. After all, six years of college will certainly cost more than four.

A recent report from the American Enterprise Institute revealed that hundreds of colleges are failing to graduate their students in six years. According the the report, "four-year" colleges in this country graduate an average of 53% of entering students within six years. Individual colleges fall even below this national average, with some having six-year graduation rates as low as 30%.

Completing college within four years can depend on factors beyond the school's responsibility - factors such as student finances and ability. Nevertheless, it's smart to consider graduation rates in choosing what college to attend.

Follow the road to savings with tax credits

A tax deduction should never be overlooked, but it's a tax credit that can make a big difference in your tax bill. While a deduction will reduce your tax liability, it will only reduce it by your marginal tax rate. For example, if you're in the 25% bracket, a $1,000 deduction will save you $250 in taxes. But a credit is a dollar for dollar reduction of your tax liability. Regardless of your tax bracket, a $1,000 credit will reduce your tax liability by the full $1,000. In some cases, a credit will reduce your liability even below zero (called a refundable credit), giving you a refund of more taxes than you actually paid. Here are some of the more valuable credits.

* First-time homebuyer credit. This is a new refundable credit that provides a credit of up to $8,000 for first-home purchases in 2009 made by November 30.

* Child tax credit. If you qualify and meet income limits, you'll receive a $1,000 credit for each dependent child under age 17.

* Retirement savings contribution credit. This credit is for low- and middle-income taxpayers who contribute to a retirement plan, such as an IRA or 401(k). This overlooked credit is as much as 50% of the retirement contribution to a maximum credit of $1,000. There is also a credit for businesses who establish new pension plans.

* Energy credits. There are many energy-related credits - from the purchase of an alternative fuel vehicle, to the installation of solar/fuel cell property in a residence, to the production of biodiesel or ethanol.

* Foreign tax credit. The foreign tax credit lets you claim a credit on your federal tax return for taxes paid to a foreign country.

* Work credits. Credits are available to businesses for hiring certain low-income employees, employees residing in certain geographic locations, or various minority employees.

With over 40 credits available to individuals and businesses, all with their own rules and qualifications, it's easy to overlook some of them. Call us if you would like to review the credits for which you might qualify.

Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Major Tax Deadlines For July 2009

* July 31 - Due date for filing retirement or employee benefit plan returns (5500 series) for plans on a calendar year.

NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.
D.E. Rodrigues & Company
215 Pleasant Street 4th Floor BCP Bank Building Fall River, MA 02721
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Take a Break

Web surfing is good for the brain

A study by UCLA scientists found that Web surfing stimulates the brain and may possibly improve brain function. The study compared people aged 55 to 76 who surfed the Internet with those who didn't. MRI scans showed more brain activity in the group that surfed regularly, especially in the areas of the brain which are involved in complex reasoning and decision-making.

"A simple, everyday task like searching the Web appears to enhance brain circuitry in older adults, demonstrating that our brains are sensitive and can continue to learn as we grow older," said Dr. Gary Small, member of the research team.

What's New in Finances: "Do Not Call" doesn't prevent scammers

Registering with the National Do Not Call Registry is supposed to keep you from getting all those annoying mass marketing phone solicitations.

It appears that the current recession has brought out scam artists hungry for revenue and unconcerned about the illegality of their sales pitches. During the first quarter of this year, the Federal Trade Commission received 450,000 complaints from those who signed up with the Do Not Call Registry, but who are still receiving unwanted calls.

Among the scams currently being pitched: extended auto warranties, swine flu cures, debt renegotiation plans, and free lunch seminars promoting "low-risk" investments.

Be aware that the scammers are especially active right now, and be very skeptical of offers and promotions made by phone or e-mail.

New rules for NOLs

Essentially, a net operating loss or NOL is generated when a business has more deductions than income.

Under prior rules, a business that had an NOL could carry that loss back only two years for a refund of taxes paid in those earlier years. (The business could also choose to carry the loss forward for up to 20 years.)

The "American Recovery and Reinvestment Act of 2009" changed the carryback period to as many as five years. The new rule applies only to 2008 net operating losses in companies with average gross receipts over the last three years of $15 million or less.

* Planning opportunities

The carryback periods of three, four, or five years are elective. That means that the taxpayer can choose how long to carry back the NOL as long as it doesn't exceed five years.

This opens up many tax planning opportunities, especially if taxable income has fluctuated significantly over the years. Not only that, it's a terrific benefit to taxpayers with NOLs larger than could be absorbed over the traditional two-year period.

As an alternative to carrying the loss back to prior years, you can still elect to forgo the carryback altogether and simply carry your losses forward to reduce future taxes.

Remember that the new NOL rules are elective, and you may choose to carry losses back as you see fit for up to five years.

There are filing and time restrictions on this tax break for businesses, so contact us if you need details and filing assistance. Fall River #: 508-679-6079 New Bedford #: 508-999-0020

New Business: 2009 vehicle deductions

Each year the IRS publishes depreciation limits for business vehicles first placed in service that year. Because 50% bonus depreciation is allowed only for new vehicles, these limits are different for new and used vehicles.

For new business cars, the first-year limit is $10,960; for used cars, it's $2,960. After year one, the depreciation limits are the same for both new and used vehicles purchased in 2009: $4,800 in year two, $2,850 in year three, and $1,775 in all following years.

The 2009 first-year depreciation limit for trucks and vans is $11,060 for new vehicles and $3,060 for used vehicles. Limits for both new and used vehicles in year two are $4,900, in year three $2,950, and in each succeeding year $1,775.

For details relating to your 2009 business vehicle purchases, contact us.
Fall River Office #: 508-679-6079 New Bedford Office #: 508-999-0020

How to deal with finances after a spouse's death

The death of a spouse can leave the survivor with a bewildering array of financial problems. In many families, one partner handles all the financial matters. If that partner passes away first, without having discussed and documented the couple's financial affairs, the survivor may face a steep learning curve or make poor financial decisions out of ignorance.

In many cases, the surviving spouse will be the wife. In fact, recent studies indicate that seven out of ten baby boomer wives will outlive their husbands. So getting a handle on the family's financial affairs is especially important for women.

If you're dealing with the death of a spouse, here are a few guidelines to help you navigate.

* Locate important documents. These include wills, insurance policies, deeds, investment certificates, powers of attorney, birth and marriage certificates, bank statements, and vehicle titles. You'll need these documents to change beneficiaries, revise asset titles, and verify account balances.

* Keep paying bills. Don't risk losing your good credit by neglecting ongoing expenses.

* Check survivor benefits. Contact the Social Security Administration to learn about survivor benefits. Also call your spouse's former employer to find out about employee benefits, such as payouts of unpaid salary, unused vacation, and pensions.

* Decide how you'll handle life insurance proceeds. Benefits may be paid in a lump sum or an annuity. If you take proceeds in a lump sum, you'll want to place them at least temporarily in readily available investments, such as money market accounts. Survivors often live on insurance proceeds for many years, so think twice before using the insurance money to remodel the house, pay off the mortgage, or take an expensive vacation.

* Get competent legal and financial advice. Seek out qualified and trusted professionals to help you through the process of probate, taxes, and planning for your financial future. All too often, the surviving spouse makes irrevocable financial decisions or unnecessary purchases in the days and weeks following a partner's death. Unfortunately, widows and widowers are easy prey for con artists. Someone may call with a great deal on a "sure fire" investment, or attempt to capitalize on your grief by offering unnecessary goods or services. A trusted professional advisor can provide objectivity when such "opportunities" are presented.

* Plan before a death occurs. Ideally, you and your spouse will develop a financial plan before a death occurs. One way to organize such a plan is to set up a tabbed binder that outlines the family's financial affairs. One tab might list key contacts, such as lawyers, accountants, and business associates. Another tab might disclose the location of important documents.

Discussing and documenting your financial affairs will be time well spent. If you need assistance, give us a call. http://www.rodriguesandcompany.com/
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Energy-saving home improvements could cut your 2009 taxes

President Obama signed the "American Recovery and Reinvestment Act of 2009" into law on February 17, 2009. Among the various provisions in the law are new energy tax credits that can really add up to savings for the homeowner. Making energy-saving improvements to your home will help to save on utility bills, enhance your efforts to go "green," add value to the home, and perhaps reduce your tax bill for 2009. These residential energy tax credits fall into two main categories: energy efficiency improvements and renewable energy systems. In many cases, the "Recovery Act" adjusts or extends similar energy credits previously available.

* Energy efficiency

The "Recovery Act" adjusts the residential energy property credits previously allowed, increasing the tax credit to 30% and the maximum aggregate cap to $1,500. The credit applies to eligible property placed into service in your principal residence during 2009 and 2010. Qualifying improvements for this energy credit include insulation; exterior windows and doors; central air conditioning systems; water heaters and furnaces burning natural gas, propane, or oil; stoves using renewable biomass fuel such as wood, pellets, and plants; hot water boilers; electric heat pump water heaters; certain metal roofs; and advanced main air circulating fans.

Installation of these items as part of a newly constructed home does not qualify for the credit. For certain eligible items, the credit can be calculated based only on the cost of materials; for other items, the cost of installation also can be included. This credit is not subject to income phase-outs, and the credit is allowed under the alternative minimum tax.

* Renewable energy

The 2009 law also generally removes the tax credit dollar limits for renewable energy systems. Such property includes solar hot water heaters, geothermal heat pumps, and wind energy systems. The tax credit, available through 2016, is up to 30% of the cost, including both labor and materials. Primary residences, second homes, and rental units qualify for this credit; existing and newly constructed structures are eligible.

Now may be the right time to upgrade the energy efficiency of your home. To discuss the tax breaks available for the improvements you have in mind, Give us a call. We can help you sort through the details.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

What's New in Taxes: School's out! That means moving time for millions

Millions of people move each year, often during the summer months when children are out of school. If you're considering a move this summer, be aware that moving can have some important tax consequences.

* Retirement plans. If you have a retirement plan at work, you may have several choices upon leaving a job. You can roll your retirement funds into an IRA, possibly roll the money into a new employer's plan, or perhaps even leave the money in your former employer's plan. Keep in mind that any amount distributed directly to you is subject to automatic 20% income tax withholding, and you may also face a 10% early withdrawal penalty.

* 401(k) loans. Facing a layoff or new job and need cash? Tap your 401(k) balance only as a last resort. If you have an existing 401(k) loan, pay it off. If you leave your employer and can't repay the loan within a preset time, the loan balance is considered a withdrawal. As such, you'll be hit with income taxes and possibly a 10% penalty.

* Job search expenses. Expenses incurred to search for a new job are tax-deductible, even if your job search doesn't land you that coveted position. To qualify, you must be looking for a job in the same occupation.

* Moving expenses. If your job-related move qualifies (the IRS has both a distance and a time test), you can deduct the costs of moving your household goods and your family.

* Home sale. When you sell your home, you can exclude up to $250,000 of the gain from your taxes. The exclusion amount is $500,000 for married couples filing a joint return. To qualify for the full exclusion, you must have owned and occupied the house as your main home for two out of the five years prior to its sale. A partial exclusion may apply if you fail the two-year test due to a job-related move.

If you're considering a job-related move and want help sorting out the tax issues, give us a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Major Tax Deadlines -For June 2009

* June 15 - Second quarter 2009 individual estimated tax is due.

* June 15 - Due date for calendar-year corporations to pay second installment of 2009 estimated tax.

* June 15 - Due date for calendar-year trust and estates to pay second installment of 2009 estimated tax.

NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.
D.E. Rodrigues & Company Fall River #: 508-679-6079
New Bedford #: 508-999-0020

What's New in Finances: Credit card companies trim rewards

The economic downturn has claimed another casualty: the rewards programs offered by credit card companies. Used to encourage credit card holders to charge purchases, these programs offered cash rebates, airline tickets, and other freebies for each dollar charged.

Now banks are struggling to remain profitable and are cutting back on their rewards programs. Airlines, too, are trimming their free mileage programs by raising the number of miles required to qualify for free tickets.

If you use a credit card that offers rewards for purchases charged, be aware of these changes. You might want to monitor your rewards more carefully than in the past and cash them in before they expire or stricter redemption rules are put into effect.

Put your tax refund to good use

Did you recently receive an income tax refund? Here are some suggestions for making the most of it.

* Pay off consumer debt. This is generally one of the best uses for extra cash. For example, if you typically carry a credit card balance and pay 16% interest, you'll realize a 16% return if you pay off that debt. You probably won't save quite as much by paying off other types of loans, but you should consider that as well.

* Contribute to an individual retirement account (IRA). A contribution to an IRA is a good idea whether it's tax-deductible or not because IRA earnings grow tax-deferred. If you're self-employed and show a profit for the year, you can also make a tax-deductible contribution to a Keogh plan.

* Start or add to an education fund. Consider investing your extra money for your child's education. We can help you decide whether your education fund should be held in your name, your child's name, or in trust. We can also make sure that you don't get snared by the "kiddie tax."

* Invest in yourself. While planning for your family's education, don't forget yourself. Have you put off training for new job responsibilities or a new career because you couldn't afford it? Now that you have some extra cash, spending it on yourself may be the best investment of all. You also may be entitled to a tax deduction for education expenses that are required by your employer or that improve the skills required on your current job.

Don't just spend a tax refund; put it to work improving your financial well-being.

New Business: Government jobs pay more than private sector jobs

Even as the economy struggles, workers in government jobs are enjoying an increase in pay and benefits.

According to the Bureau of Labor Statistics, the average private sector hourly wage in December 2008 was $27.35. Workers in government jobs were earning an average hourly wage of $39.25. These figures include pay and benefits, and it is in the area of benefits that the gap between private and public pay has widened. Public employees' benefits averaged $13.38 an hour, while private company employees averaged $7.98 an hour in benefits.

Health benefits were a major factor in the variance between public and private compensation. Government paid an average of $8,800 a year for a worker's medical insurance, while private companies paid $4,100.

How does your company measure up?

No matter how successful your business has been in the past, you can probably do better. And if you've been struggling to keep your head above water, there's certainly room for improvement. So how can you gain ground on the competition?

Try the process known in business circles as "benchmarking." This is a strategic technique for comparing various aspects of your business to the top marks in your particular industry or profession. Then you can play "follow the leader" by emulating the best practices in those areas where you need to improve.

Benchmarking first gained wide acceptance in the manufacturing sector. For example, suppose a manufacturing company determines that it can produce only 100 widgets per hour as opposed to 500 widgets an hour produced by a competitor. This indicates a need to improve the company's widget-making process. The same analytical tool may be extended to virtually every line of work.

Be mindful that benchmarking is not a one-shot deal. It is an ongoing process that requires you to continually challenge yourself to improve performance.

What aspects of a business might benefit from benchmarking? Naturally, this varies according to industry, location, and other factors, but the following areas are generally worth examination:

* Costs of producing goods or providing services.
* Length of time needed to design and market products.
* Procedures used in production activities.
* Personnel management procedures.
* Sales department activities.
* Marketing and advertising.
* Factors influencing public opinion about your products or services.

Benchmarking can create results where it counts - on the bottom line. Contact our office if we can assist with evaluating your business practices.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

What's New in Taxes IRS gives up on private debt collection

The use of private debt collection agencies to collect overdue taxes was started in 2006. Some in Congress have agitated for an end to the program from its very beginning. Now, after an extensive review of the cost-effectiveness of the program, the IRS announced that it will not renew contracts with the private agencies.

Instead, the IRS plans to hire an additional 1,000 collection personnel in 2009. The Commissioner stated that collection work is best done by IRS employees who, in these troubled economic times, have more options in dealing with taxpayers struggling to meet their tax obligations.

How long should you keep tax records?

After filing your 2008 tax return, you may be wondering how long to keep your tax records. Unless fraud, evasion, or a substantial understatement of income is involved, the IRS generally has only three years in which to question your return. If the IRS asks, you must be able to prove the validity of your tax return, which includes providing the underlying supporting data. How long you keep your paperwork depends directly on the statute of limitations, but here are some guidelines.

* Your copy of the tax return. Consider keeping it forever since you never know when this document will come in handy. Remember that in many cases, the IRS destroys original returns after four or five years. It's always best to have your copy to fall back on.

* Cancelled checks, bank/investment statements, and receipts. Keep them for seven years. Because of various combinations of the statute of limitations and technical provisions in the law, keeping them for seven years, rather than just for three years, is recommended.

* Stock or bond trade confirmation statements. Keep for seven years after the sale of the stock. For example, say that you bought 200 shares of stock in 1986 and sold them in 2008. You'll want to hold on to both the buy and sell confirmation statements until at least April 2015.

* Escrow closing documents and improvements to property. Keep for seven years after the sale of the property. Keep these documents to prove your cost of the property when it is finally sold. This is true for rental property, investment property, and even your personal residence. You might think that keeping cost basis records on your personal residence is no longer required because of the gain exclusion rules on the sale of a principal residence. That's not entirely true, since these laws could change at any time, or your gain could exceed the gain exclusion limits.

This listing is not all-inclusive, and you might have special circumstances. If you need any help with your recordkeeping requirements, give us a call.
Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Major Tax Deadlines For May 2009

* May 15 - Deadline for calendar-year exempt organizations to file 2008 information returns.

* June 1 - Deadline for IRA, SEP, SIMPLE, Roth IRA, MSA, and education savings account trustees to file annual statements (Form 5498) with the IRS, with copies to participants.

NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.

Fall River #: 508-679-6079 Or New Bedford #: 508-999-0020

Big business expresses views on health care reform

According to a recent survey of 489 U.S. employers, big companies do not favor many of the proposals now being offered for reforming the country's health care system. Nearly 88% of those surveyed opposed the idea of replacing the tax exclusion for employer-paid health insurance premiums with refundable health care tax credits for employees.

Survey respondents also opposed requiring companies to contribute to individual health coverage for employees if the company didn't have group coverage.

The companies did indicate support for health care reforms that emphasized the individual's responsibility for health care.

----------- IMPORTANT INFORMATION ----------

Consumers are advised that the IRS does not initiate taxpayer communications via e-ail.
In addition, the IRS does not request detailed personal information via e-mail or ask taxpayers for the PIN numbers, passwords, or similar secret access information for their credit card, bank, or other financial accounts.

Are you a fireman or a business manager?

In your business are you constantly putting out fires caused by cash shortages? How well you manage your cash flow affects your business's profitability and longevity. Here are a few "fire prevention" suggestions.

* Create a cash flow projection. A cash flow forecast should be one of the quarterly reports prepared in every small business. It consists of your beginning cash balance plus your expected receipts minus your expected disbursements. A forecast allows you to anticipate cash shortfalls in order to give you time to carefully consider all your financing options.

* Collect your money as fast as possible. Send invoices as soon as you ship goods instead of billing at the end of the month. Your invoices should clearly show the payment due date and any penalty for late payment.

* Follow up on delinquent receivables. The longer an account remains unpaid, the greater the chances are that you'll never see your money. Once an account becomes delinquent, make no more credit sales to that customer until the account is brought up to date.

* Postpone paying your bills. Take early payment discounts when it makes sense, but otherwise use the full grace period to pay your bills. You might want to pay early to key suppliers.

* Don't let inventory build up. If your inventory includes slow-selling and high-cost items, consider making them special order items. Get rid of obsolete inventory to free up cash and valuable shelf space.

* Track your expenses. At least once a month, compare your spending with your budget. If you are spending more than you planned, it's a good indicator that you may need to take corrective action.

* Establish a lifeline of credit. Set up a line of credit before you need it. It takes time to secure a loan from a bank, and it may be more expensive and difficult to obtain credit when you really need it.

For a review of your company's cash management plan or for help in establishing one for your business, give us a call. Fall River #: 508-679-6079 New Bedford #: 508-999-0020

Use the "saver's credit" to cut your tax bill

Would you like to shave $1,000 off your income tax bill? Would your spouse like to join in the tax savings of up to $2,000 on a joint return? This potential savings comes in the form of a tax credit called the "retirement savings contributions credit" or "saver's credit." Unlike a tax deduction, a tax credit is a dollar for dollar reduction of the taxes you owe.

How do you qualify for this credit? By contributing to a retirement plan, you could be eligible for the saver's credit. This includes contributions to both Roth and traditional IRAs. It also includes salary deferrals into SEP, SIMPLE, 401(k), 403(b), and 457 plans.

How much is the credit? The credit ranges from 10% to 50% of the first $2,000 contributed to a retirement plan. In other words, the maximum credit is $1,000 for an individual. If you and your spouse both contribute at least $2,000 to your retirement accounts, you could qualify for up to a $2,000 credit on a joint return.

Are there limitations? Like many tax breaks, this credit decreases or phases out entirely once your income reaches certain levels. The credit is not available if 2008 income exceeded $26,500 for individuals, $39,750 for heads of household, and $53,000 for married couples filing a joint return. 2009 income limits are $27,750 for singles, $41,625 for heads of household, and $55,000 for married couples. In addition, you cannot take the credit if you are under age 18, a full-time student, or someone else's dependent.

Here's an example. Say you put $3,000 into an IRA and you qualify for the maximum $1,000 saver's credit. You can deduct your $3,000 contribution for a tax savings of $450 ($3,000 x 15% tax rate). Add this $450 tax savings to the $1,000 saver's credit, and your total tax savings equals $1,450.

If you haven't been contributing to a retirement plan, this tax credit adds yet another incentive to do so. You have until April 15, 2009, to make a 2008 IRA contribution that could reduce your 2008 taxes. For more information about the saver's credit or about retirement accounts, contact our office. Fall River # 508-679-6079 New Bedford # 508-999-0020

IRS expands 2009 homebuyer credit

The IRS announced recently that taxpayers who qualify for the first-time homebuyer tax credit on a home purchased from January 1, 2009, through November 30, 2009, may claim the credit on either their 2008 income tax return due April 15, 2009, or on their 2009 tax returns due April 15, 2010.

This option makes it possible for qualifying taxpayers to put money in their pockets in 2009, rather than waiting until next year to benefit from this tax break.

The first-time homebuyer tax credit provides a refundable credit of 10% of the home's purchase price, up to a maximum credit of $8,000. If the taxpayer lives in the home for at least three years, the credit does not have to be repaid. Income limits apply, with phase-out of the credit starting at $75,000 for single taxpayers and $150,000 for married couples filing jointly.

For first homes purchased from April 9, 2008, through December 31, 2008, a credit of up to $7,500 is available to qualifying taxpayers. This credit can only be taken on a 2008 tax return, and it must be repaid in 15 equal installments beginning with the 2010 tax year.

Major Tax Deadlines - For April 2009

Our Staff at D.E. Rodrigues & Company

Fall River office

* April 1 - Deadline for taking your first required IRA distribution if you turned 70-1/2 in 2008. Unless you're still working, this deadline also applies to your other retirement accounts (except for Roth IRAs).

* April 15 - Individual income tax returns for 2008 are due.

* April 15 - 2008 calendar-year partnership returns are due.

* April 15 - 2008 annual gift tax returns are due.

* April 15 - 2008 income tax returns for calendar-year trusts and estates are due.

* April 15 - Deadline for making 2008 IRA contributions.

* April 15 - Deadline for employers to make contributions to certain retirement plans.

* April 15 - First installment of 2009 individual estimated tax is due.

* April 15 - Deadline for amending 2005 individual tax returns (unless the 2005 return had a filing extension).

* April 15 - Deadline for original filing of 2005 individual income tax return to claim a refund of taxes. Each year some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.

NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.

Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, if you owe $2,500 or less for the calendar quarter, or if your estimated annual liability is $1,000 or less.

* Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.

* Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.

For more information on tax deadlines that apply to you or your business, contact our office.

Rodrigues & Company Fall River #: 508-679-6079 New Bedford #: 508-999-0020

New law has tax breaks for businesses.

The American Recovery and Reinvestment Act of 2009 contains a number of provisions that will affect businesses. Here's a brief overview.
* Bonus depreciation. First-year 50% bonus depreciation for new business equipment purchases is extended through 2009 (through 2010 for certain property).
* Increased expensing. Code Section 179 first-year expensing of new and used business equipment purchases is extended through 2009 at the higher limit of $250,000. The deduction is reduced once purchases for the year exceed $800,000.
* Loss carryback period. The new law allows businesses with average gross receipts of $15 million or less to carry back net operating losses for up to five years, rather than the normal two years. The longer carryback period applies only to losses incurred in a tax year beginning or ending in 2008.
* Work opportunity tax credit. Two new categories of targeted groups are eligible for the work opportunity tax credit: unemployed veterans and disconnected youth. The credit applies to workers in these groups hired in 2009 and 2010.
* COBRA benefits. Employees who lose their jobs between September 1, 2008, and January 1, 2010, may elect to pay 35% of their COBRA coverage and have that treated as paying the full amount. The former employer is required to pay the remaining 65% and will be credited for this amount against income tax withholding and payroll taxes otherwise payable to the federal government. Income and other limitations on COBRA coverage apply.
The new law is a massive 1,000 page document, so this quick review by no means covers all the provisions that may affect your business. For guidance in your business tax planning under this latest law, contact our office.

Put your financial house in order !

With another new year underway, now is a great time to assess your household finances, make any needed changes, and prepare for new opportunities. To help you get started, here are a few suggestions.
* Take control of your credit cards. Over-reliance on credit cards hurts you in several ways. With interest rates typically in double digits, it's the most expensive way to borrow money. Think of those monthly interest payments as draining off dollars that you could be investing in a home or saving for your later years. And too much debt can hurt your credit score and make other borrowing more difficult. It takes time and discipline to reduce credit card debt, but it's well worth the effort.
* Build a cash reserve for emergencies. Your financial situation can quickly spin out of control if you can't come up with cash when you need it. If you lose your job, you might have to live on reduced income for several months. Or there could be unplanned medical bills, car repairs, or home repair costs. Even if you have insurance, reimbursements can take time, and there are deductibles to meet. Work hard to put aside at least three months' living expenses. Invest it in a safe, liquid account, and resist the temptation to raid it for non-emergencies.
* Review your credit report. The law requires each of the three major credit bureaus to give you a free copy of your credit report every twelve months. The reports shouldn't contain significant errors; if they do, make sure the discrepancies get resolved.
* Make or update a home inventory. Go through your house with a video camera and describe what you see, along with pertinent information about your most valuable assets (purchase dates, prices, estimated values). Make an extra copy or two of the tape. Keep one for yourself, put one in a safety deposit box, or send one to a friend or relative (preferably in another town) for safe keeping. Should you experience a fire or other disaster, your home inventory can be vital for getting insurance claims approved.
* Increase your savings. The start of a new year is often a time when companies provide cost-of-living adjustments (COLAs) to their employees. If your employer provides such a benefit, consider contributing a portion of the increase to your 401(k) plan or other savings account. It's a relatively painless way to save more.
* Calculate your net worth. This is a great yardstick for measuring your household's financial growth (or shrinkage) from year to year. Simply put, your net worth is the value of your assets (house, personal property, bank accounts, car, investments) minus your liabilities (mortgage, credit card balances, loans). Widely available financial software can help you automate this task.
* Set financial goals. Financially speaking, where do you want to be a year from now? What steps do you have to take now to make that happen? Take time to dream; then put your goals in writing. Thoughtful planning is a first step toward prioritizing both spending and saving.
* Purge old financial records. If you're a financial packrat who keeps old cancelled checks and bank statements long past when they may be needed for an IRS audit or your own use, consider shredding them.
If you'd like additional suggestions for setting your financial house in order this coming year, Give us a call at (508) 679-6079
D.E. Rodrigues & Company

What's New in Finances: Home foreclosures may be slowing

Statistics on home foreclosures for January 2009 showed a 10% decrease from December 2008 foreclosures. Though the January rate is still up 18% from a year ago, the decline from December may be an indication that moratoriums and mortgage modifications may be having an effect.
According to a RealtyTrac report, one in every 466 homes had a foreclosure filing in January. The states with the highest home foreclosure rates were Nevada , California , Arizona , Florida , and Oregon .
President Obama recently announced a foreclosure prevention plan designed to help struggling homeowners with refinancing or modifying their mortgages.
RealtyTrac estimates that another three million foreclosures will occur in 2009.

Has your business considered the benefits of going green?

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.
* Offering "green" shopping bags. As you shop these days, you will see that 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.

Itemizing deductions: Three facts you should know

You know the general rule about itemized deductions: Compare your total allowable expenses against your standard deduction, and use the amount that provides the greatest tax benefit.
Illustration. If you're under age 65, married filing jointly, itemizing may reduce your 2008 tax bill if your qualifying deductions are greater than the basic 2008 standard deduction of $10,900 ($5,450 for single filers under age 65).

Here are three other facts about itemizing you may be less familiar with.

1. There's a special rule when you're married and file separate returns. If either of you itemizes, the other's standard deduction amount is usually considered to be zero. When this situation applies, you'll generally be better off itemizing no matter the amount of your allowable expenses.

2. Your itemized deductions may be limited. For instance, unreimbursed medical expenses are deductible only if the amount you spent exceeds 7.5% of your adjusted gross income (AGI). Miscellaneous deductions such as certain legal fees must equal more than 2% of AGI to be deductible.
In addition, if your AGI for 2008 reached $159,950, the total amount of your itemized deductions is reduced.

3. You can itemize even though your standard deduction is higher. Why would you want to? One reason: The standard deduction isn't considered in the computation of the alternative minimum tax (AMT), but some itemized deductions are. If you're subject to the AMT, in certain cases your overall tax liability may be less if you choose to itemize.
Other rules may apply to your situation. For help with the calculations or with any of your tax filing concerns, give us a call (508)679-6079

What's New in Taxes: Tax breaks are included in the new Recovery Act

The American Recovery and Reinvestment Act of 2009 includes a bevy of new tax breaks. The key provisions summarized below are generally retroactive to January 1, 2009.
* Making work pay credit. Employees and self-employeds can claim a credit for 2009 and 2010 equal to the lesser of 6.2% of earned income or $400 ($800 for joint filers). The credit phases out once adjusted gross income (AGI) reaches $75,000 for singles and $150,000 for couples.
* Alternative minimum tax (AMT). The new law creates another "patch" for 2009 through higher exemption amounts: $46,700 for singles and $70,950 for couples. This change will prevent an estimated 26 million middle-income taxpayers from being hit by the AMT.
* First-time homebuyer's credit. This credit is enhanced for 2009. The maximum credit increases from $7,500 to $8,000 for homes purchased from January 1, 2009, through November 30, 2009. Repayment isn't required if you live in the home at least three years. Phase-out of the credit remains for an AGI above $75,000 for singles and $150,000 for joint filers.
* New vehicle deductions. A buyer can claim a new above-the-line deduction for sales and excise taxes on the first $49,500 of a vehicle's price. The deduction phases out for an AGI above $125,000 ($250,000 for joint filers). It applies to 2009 purchases after February 16.
* Education credits. For 2009 and 2010, the maximum Hope credit - renamed the "American Opportunity Tax Credit" - increases from $1,800 to $2,500 and may be claimed for all four years of college (instead of the first two). Phase-out begins at $80,000 of AGI for singles and $160,000 for joint filers.
* Child tax credit. The refundable portion of the child tax credit is increased for 2009 and 2010 by lowering the income threshold for refundability from $8,500 to $3,000.
* Energy incentives. Among numerous energy provisions, the new law increases the residential energy credit from 10% to 30% and raises the maximum cap to $1,500 for installations in 2009 and 2010.
There's much more in the new law, ranging from a tax exclusion for $2,400 of unemployment benefits in 2009 to a one-time $250 payment to certain retirees and veterans.
For guidance in tax planning under these latest changes, contact us.