November 2010 // Robert Palmer and Associates

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Dear Clients,

What do the results of the 2010 election mean for tax law patches? Well, we have new electees, a new party moving forward, new ideas and everyone cautious to not step on anyone's toes. The next two weeks will contain a lot of introductions and commentary regarding upcoming tax law changes; however, don't expect to see forward moving progress until the start of 2011. The Treasury has to issue withholding tables soon in order to have them ready for 2011 and no one wants to upset the masses; therefore, the chance of a law that would immediately change increasing taxes is very dim. Congress will not want to trim paychecks for all to start off the new year.

Democrats have been thwarting the Bush tax cuts for months now. We expect a two-year extension for all taxpayers, this idea of taxing the rich more is almost dead now. This proposal hit the rocks when the immediate effects will hit the small business entrepreneurs currently keeping our economy moving forward slowly. Looking forward, expect an extension of capital gains and dividends legislation at a maximum rate of 15%. Look for AMT patch ups and retroactively passing a patch up of the tax breaks which lapsed in 2009. Overall, we are running at a huge deficit, which we'll continue to do as no real tax increases are under way nor is our government discussing expense cuts.

To get your questions answered about tax law patches, send us an email, we will be more than happy to answer your questions. Alternatively, call 803.547.7676 to schedule an appointment.

Long term care premium Deductions
Did you know long term care premiums are considered itemized deductions? Recently the IRS announced an increase in the amount of long term care premium deductions. While these are an itemized deduction, they are still a popular deduction for those paying premiums year to year. Based on age, the following table shows the maximum premium deduction:

Attained Age Before Close of Taxable Year	2011 Limits	2010 Limits
40 or less	$340	$330
More than 40 but not more than 50	$640	$620
More than 50 but not more than 60	$1,270	$1,230
More than 60 but not more than 70	$3,390	$3,290
More than 70	$4,240	$4,110

If you have questions about itemized deductions, contact Robert Palmer and Associates by calling 803.547.7676 or send us an email and we will make a recommendation for you.

Overhead Expense Reductions for Small Business Owners
As many small businesses continue to suffer with weak profit margins, here are some creative ideas to reduce small business overhead expense:

Reduce leasing/rent expense: Considerations include subleasing the space not in use, renegotiate the lease, or find cheaper space with the glut of commercial space on the market. Consider the use of a shared executive suite and as a last resort shut down the current space and move back into your home office.
Renegotiate your pricing with your current vendor base. Ask for deals or specials to keep costs down to your customers. Time to shop insurances yet again; especially health insurance.
Look at green opportunities such as reusing folder stock, keeping the lights off when not in use, and printing on both sides of the paper.
Software renewals are a huge expense for small businesses. Research free forms of software such as the suite of office products provided by Google.
Reduce travel expenses and reduce postage expense by providing output digitally through Email or FTP.

For more advice on how to reduce small business expenses, send us an email or call 803.547.7676, we look forward to answering any questions you may have.

Rental Property Owners to issue 1099s
Hidden within the recent Small Business Jobs Act was one provision which escaped us all. Starting in 2011, taxpayers who own rental property are being required by statute to issue 1099s to any service provider who is paid $600 or more during the calendar year. Based on our historical data, examples of service providers would be HVAC repair, handyman services, plumbers, electricians, and lawn care companies. This is an informational form, but big penalties exist for those who are not in compliance. While the 1099 form issuance actually takes place in January of 2012, the period of coverage begins on January 1, 2011. Rental property owners have to be ready January 1 to collect expenses along with form W-9 from each service provider they plan to use during the year. The 1099 form requires a federal tax id or social security number along with correct name spelling and address information on the face of the form, and the W-9 form provides this information to the payer.

If you have any questions regarding the new requirements for rental property owners, send us an email, we look forward to answering any questions you may have.

Health Care credits for your 2010 tax return.
Further guidance has been provided on the actual calculation for claiming the health care credit for small businesses who pay at least 50% of the premium cost for each enrolled employee. As we begin to see the details of the credit calculation, which is somewhat complicated, we understand the employer must have reports showing the annual costs of insurance for each employee, along with the amount paid to each employee. As the calculation becomes clearer and we see the IRS form, we will present further details on this item. For now, we need for the small business employers to put together a copy of all health plan invoices. The majority of the remainder of the source documentation for the calculation is contained in your yearly payroll reports.

For assistance, send us an email or call 803.547.7676, we look forward to assisting you.

Missing a refund check?
The IRS wants to return approximately $164.6 Million in undelivered refund checks to taxpayers. If you believe you are missing a refund check, please call the IRS at 1-800-829-1954 to make a claim.

UPCOMING DUE DATES:


DECEMBER 15	Payroll taxes due for monthly depositors.
January 15	Payroll taxes due for monthly depositors.
January 18	Estimated tax payment due.
January 31	4th quarter payroll tax returns due

ROBERT PALMER & ASSOCIATES
1171 Market Street, Suite 101, Fort Mill, SC 29708

803.547.7676