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