Tech and Tax Talk

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I saw an ad in yesterday’s Wall Street Journal regarding a class action settlement against De Beers. There is $135 million dollars available to consumers who have purchased diamonds and diamond jewelry from September 20, 1997 to March 31, 2006. If you have purchases during this period, I encourage you to visit www.diamondsclassaction.com for more information. If you have a diamond purchase over $10,000, you will need to submit a copy of the receipt with your submission. The submission process was fairly simple and you do not need to send documentation at this time for purchases less than $10,000.

I just received this notice from the Connecticut Society of Certified Public Accountants:

“Effective October 1, 2007, any employer that provides healthcare insurance benefits, paid at least in part through payroll deduction, must now provide their employees with the ability to have those payroll deductions excluded from their gross income for state or federal income tax purposes. In other words, these employers must now establish a health insurance plan under Section 125 of the Internal Revenue Code. 

This new law, Public Act No. 07-185, does not define the term “employer” nor does it include a threshold number of employees. The law affects only those businesses that provide health insurance premiums to employees.

The relevant language from Public Act No. 07-185 follows:

Sec. 23. (New) (Effective October 1, 2007) Any employer that provides health insurance benefits to its employees for which any portion of the premiums are deducted from the employees’ pay shall offer such employees the opportunity to have such portion excluded from their gross income for state or federal income tax purposes, except as required under Section 125 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, from time to time amended.”

Essentially what this means is that if you provide health insurance for your employees and they pay a portion of the premium, you must set up a Section 125 health insurance plan so they they will not pay taxes on the money they spend on premiums. Setting up a Section 125 plan involves having plan documents drawn up and keeping them on file. This is not something you can get from your insurance company. All payroll services will help you with these documents. There are also software programs you can purchase. If you are providing health insurance to your employees, you need to look into this. If you work for an employer who provides health insurance, look at your paystub to make sure the funds are coming out before taxes are calculated.

There has been very little guidance on this. The cost for setting up a section 125 plan should not be too costly. Some payroll companies charge for the plan documents but some do not. Also, if you are doing your payroll yourself through QuickBooks or another accounting system, you will need to adjust your payroll setup so that the insurance premiums are taken out before taxes. If you have any questions regarding this new law, please call me, your payroll company or your insurance provider. 
 

If you are looking to purchase QuickBooks for the first time or are looking to upgrade, I think you should wait just a little bit longer. QuickBooks 2008 will be available for purchase in the next few days. I should receive my copy tomorrow. I’ll let you all know if there are any features which makes this a must buy.

Remember, if you are using QuickBooks payroll, Intuit requires that you upgrade every three years. Therefore, those of you using QuickBooks 2005 will need to upgrade this year. Don’t wait until the last minute. I worked with a company last year that had damage to their file and we had trouble upgrading it to QuickBooks 2007. We had to send it off to Intuit for repair which took almost six weeks. By purchasing the software now, we’ll have plenty of time to get it up and running for you.

If you are interested in purchasing the product, please call me. I have a contact at QuickBooks who will give you my special ProAdvisor pricing and free shipping. I just purchased the 2008 professional version for a client for $159.00 plus tax. The normal pricing through QuickBooks and most retailers is $179.99. If I see a lower price, I’ll be sure to post it.

There was an interesting article on PCmagazine.com about what it’s really costing you to print documents. They ran some tests on a few all-in-one machines to see if the information provided by the manufacturers was accurate. It appears that the manufacturers are giving us good information. Now we just need to use it.

We’ve been telling people for a while now that they cannot just look at the price of a printer when purchasing. It’s sometimes more important to look at what the printer is going to cost you to operate. For example, when we were looking at color laser printers, there were a variety of models all over the price spectrum. We knew we would be doing a significant amount of black and white printing on the machine as well as a good deal of color printing. We immediately started looking at the cartridge yields and pricing. In doing so, we found that a midpriced machine would be best for us. The lower priced machines would only yield about 1,000 sheets per cartridge. The mid-ranged machines would do approximately 3,500 sheets per cartridge. Both color printers had four cartridges and the cartridges were the same price for both machines. Therefore, we calculated that we would more than pay for the extra cost of the printer the first time we replaced the cartidges on the higher priced machine.

 We’ve had this printer for approximately one year and I have already changed the black cartridge once, just recently. We are about to change all the color cartridges. Had we purchased the lower end model, I would have gone through eight cartridges at a approximate cost of $560. The price difference in the two printers we looked at was only $200. Therefore, with the amount of printing we do, we made up for that pricing difference in a few months.

 Now, not everyone prints as much as we do. It’s important to look at your own printing needs and see what’s the best machine for you. Should you have any questions, please feel free to call us.

Can you believe we are already nearing the end of September? The third quarter is almost over. It’s time to make sure all your records are in order. Is your QuickBooks file up-to-date? Have you itemized your credit cards? Keeping track of those charitable contributions? How’s your mileage log fairing?

It’s time to get all those items in order. If you are behind or just need a refresher on what you need to get together, give me a call. I can help with Write-up, automating QuickBooks to download your banking and credit card information, or just help you with some tips and tricks to help you enter your data into QuickBooks more quickly.

It’s really important to check your credit reports each year to make sure there are no inaccurate listings. You should check all three credit reports. The credit bureaus have set up a website so you can check your credit reports free once a year.

The site is www.annualcreditreport.com. It’s not like www.freecreditreport.com which makes you sign up for a paid service to get your credit report. Annual Credit Report is a free service provided by the credit bureaus at the urging of the federal government. This site will not allow you to get your credit score, just your credit report.

When you get them, print them out and compare the three reports. Make sure there are no additional accounts on your report. Also, check to make sure that all the information is accurate.

If you have any questions, please feel free to post them here.

call your accountant. I can’t tell you how many times I have someone approach me at tax time and say, “Oh, I happened to sell a piece of property last year. How can we save some taxes on that?” By the time you ask me that question, it’s too late. If you are planning a major sale (stock, property, a business or other assets), call your accountant first. There may be strategies to help lower your taxes.

If you are selling a business or piece of property and plan to purchase another, you may be able to qualify for a 1031 like-kind exchange. This exchange would allow you to sell the first piece of property and defer the gain by rolling it into the next property.  There are companies that specialize in doing this kind of exchange, but the documentation must start before you sell the first property. It’ll cost you a bit in fees to do this type of transaction but if you are looking at a large capital gain, this may be the way to go. It costs you nothing to hear your options.

Also, if you are planning to purchase a building, there are companies out there that will help allocate the costs of the building to help achieve more favorable depreciation. Usually when you purchase a building, you depreciate that building over the life of the building, usually more than 20 years. There are some parts of the building that can qualify for shorter depreciation periods, allowing you to expense the building faster. If you are looking to purchase a building, feel free to contact me and I can direct you to a consultant who does these allocations.

If you have any questions, feel free to post here.

While going through the Massachusetts Department of Revenue website, I found a copy of the proposed Health Care Information Form to be filed with your 2007 Massachusetts tax return. Massachusetts passed comprehensive health insurance reform a few years ago. All residents over the age of 18 will be required to have health insurance. This new form requires all residents to disclose who their health insurance provider is and their account number. If you don’t have health insurance, there are complicated income guidelines to see if you would qualify for state assistance. If you do not have health insurance, you will lose your standard deduction on your state return. The additional taxes will help to pay for health insurance for the uninsured in Massachusetts.

If you prepare your own tax return or have an out-of-state tax preparer, please make sure you include this form in your tax package next spring. The state will withhold your refund if you do not submit that form. If you have more questions about this form, please email me or call my office.

From the Massachusetts Department of Revenue Website:

“Massachusetts will offer a “sales tax holiday weekend” on August 11 and 12, 2007. On those days, most purchases made by individuals on items for personal use costing $2,500 or less will not be subject to Massachusetts sales or use taxes.

The following do not qualify for the sales tax holiday exemption and remain subject to tax: all motor vehicles, motorboats, meals, telecommunications services, gas, steam, electricity, tobacco products and any single item whose price is in excess of $2,500.”