The IRS has recently released this handy tool on their website www.irs.gov to help you in preparing your 2011 tax return.

Due to the fact that this credit originally started out as an interest free 15 year loan and then was later changed to an actual tax credit, filing your return for the next several years has become a challenging task.

If your purchase falls under the 15 year interest free loan, not reporting the correct information on your return will cause a significant delay in the IRS processing your tax return.

In order to determine your reporting requirements you will need the following information to use this look up tool.

1. Your Social Security number.
2. Date of birth
3. Home address.

• 55.5 cents per mile for business miles driven
• 23 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

One of the existing rules under HARP is about to get a major rewrite during 2012. Currently homeowners whose loans are owned by Fannie Mae or Freddie Mac can refinance their underwater home if the loan to value (LTV) is less than 125% of the appraised value.

During 2012 as the major changes to this program are rolled out, the 125% LTV cap will be removed. This program could potentially allow more underwater homeowners to refinance at today’s historically low rates.

Susan Tompor’s article in the Detroit Free Press does an excellent job at summarizing the qualifications that a homeowner would need to meet to possibly qualify under HARP.

Please copy the following address in your web browser to access the article.

http://www.freep.com/article/20111110/COL07/111100506

The IRS just recently issued some revised tax numbers for 2012.

Here are a few highlights:

Standard Deduction: $11,900 for married couples filing a joint return.
Personal Exemption: $3,800
Annual Gift Exclusion: $13,000

The full list of adjusted numbers can be found in IRS Revenue Procedure 2011-52 or copy the following link from the IRS website.

http://www.irs.gov/newsroom/article/0,,id=248485,00.html?portlet=107

Wouldn’t it be great if you had a second chance? Of course it would be. We all love to play Monday morning quarterback. If you converted an IRA to a Roth IRA during 2010 you still have a second chance to undo this conversion if you need to. However you only have until Monday October 17th, 2011 to make this decision.

Susan Tompor’s article in the Detroit Free Press did an excellent job of the issues to consider should you wish to exercise this second chance.

To access her article please copy the following link into your web browser.

http://www.freep.com/apps/pbcs.dll/article?AID=2011110020468

The Michigan Senate is currently in talks to reform or phase out the personal property taxes that businesses’ pay on items such as machinery, computers and other equipment. While it’s easy to cut revenues the question will be how or if the lost revenues will be replaced. The devil will definitely be in the details on this. However it is a good bet that all of this talk is just that, talk at this time. Nothing concrete will get done until the Michigan Supreme court hears the current lawsuit regarding the taxation of public pensions.

To find out more please see Karen Bouffard’s article in the Detroit News titled “Michigan Senate turns attention to business property tax reform”. See below for the link.

http://www.detnews.com/article/20110921/BIZ/109210417/1409/metro/Michigan-Senate-turns-attention-to-business-property-tax-reform

The other day I read an interesting article about the United States Postal Services current money problems.

Here are some of the problems that they are facing.

• Projected annual loss of over $9 billion dollars.
• Annual losses expected to reach $20 billion dollars by 2015.
• Need to contribute a $5.5 billion health care payment by September 30, 2011, yet don’t have the cash to do so.
• Mail volume down 26% in the last four years.

While part of the problem is technology driven, the government in the last few years hasn’t done them any favors either. The postal service is one of the few governmental agencies that has to pre fund its retiree benefits, and it has to the tune of $21 billion over the last three years.

It will be interesting to see if Congress will allow the postal service an extension on the September 30, 2011 payment. The better approach would be for Congress to take this opportunity and allow the postal service to take the steps it needs to get its revenue and cost structures in line with the current economic realities.

If your business or household were faced with similar problems would you maximize this opportunity to right the ship or waste it?

Entrepreneurs typically are in a hurry to open their business but forget to do the proper planning or to line up enough capital. As the article points out in the tax avoidance section, an accountant may seem like a luxury to a start up business; however they do in fact save your business money over time.

While the article is good it does not discuss the 4 D’s: death, divorce, disability and disinterest. The 4 D’s can be just as harmful to your business, especially if there are multiple owners or partners. You can however reduce the effect that the 4 D’s have on your business by having shareholder or operating agreements in place. These agreements will spell out how the business will resolve the 4 D’s when they occur.

To access the article copy & paste the following address into your web browser.

http://www.openforum.com/articles/the-7-most-common-money-mistakes-that-entrepreneurs-make

Business Tax Changes:

1. Michigan Business Tax is replaced by the Corporate Income Tax which taxes corporate income at a rate of 6%.
2. S Corporation, limited liability companies and partnerships would not be subject to this tax unless they elect to be taxed as a C Corporation for Federal income tax purposes.

Individual Tax Changes:

1. Non-refundable credits i.e. city income tax credit, public contribution credits and homeless food bank credits to name a few are eliminated.
2. Pension and retirement income deductions have been modified based on the age of the taxpayer.
3. Tax rate will remain at 4.35% until January 1, 2013.
4. $600 exemption for taxpayer’s dependents under the age of 19 is eliminated.

We are your business partner by negotiating with lenders to help you obtain the best financing possible for your business loan. We are your marketing department since we can help sell your products and services to our extensive professional contacts. Finally we are your teacher who helps to mentor you and your business.

To read her article please click the following link:

6 ways to get the most out of your accountant

This article was written by Jay Kossen, CPA at Numerico, PC. Click here to view Numerico’s website.