Kutchins, Robbins & Diamond, Ltd.

Tax Alert: Plan now for changes coming in 2013

Mary — Thu, 17 May 2012 14:54:06 +0000

What’s the summertime forecast? From a tax perspective, the outlook calls for planning now to prepare for changes gathering on the horizon – specifically, provisions currently expected to take effect in January 2013. Here are four new rules to think about during your mid-year tax review.

1. A decrease in tax-free contributions to your flexible spending account. Starting in January 2013, the maximum you can contribute to your FSA will be $2,500. In addition, the “use it or lose it” feature of FSAs means you won’t be able to carry any 2012 excess remaining in your account into 2013 (unless your plan provides a 2½ month grace period for using prior-year funds).

Planning move: Schedule elective medical procedures during the last half of 2012.

2. An increase in the threshold for claiming the itemized medical expenses deduction. Do you itemize? For 2012, you can claim a deduction on your federal income tax return for qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI).

Beginning in 2013, if you’re under age 65, your medical expenses will have to exceed 10% of your AGI to be deductible. This is the same percentage applied to qualified medical expenses when calculating the alternative minimum tax.

Planning move: Review your itemized deductions for 2012 to determine whether accelerating or delaying deductions makes the most sense for you. What to keep in mind: phase-outs and other limitations to itemized deductions that were in effect in prior years, as these may return in 2013.

3. An increase in Medicare tax on certain wages. The amount of Medicare tax you pay on wages and self-employment income is scheduled to go up next year. When you’re single and your wages are greater than $200,000, your employer will withhold an additional 0.9% of Medicare tax from your paycheck. Are you self-employed? The tax applies when net self-employment income exceeds the threshold. The income threshold is $250,000 for married couples.

Planning move: If you’re self-employed, review the way your business is organized. While you always want to pay yourself a reasonable amount of compensation, some entity types can allow for flexibility in the timing of wages or salary.

4. A new Medicare tax on unearned income. You probably associate Medicare tax with earned income – that is, the 1.45% tax your employer deducts from your pay. But a provision in the 2010 health care laws extends the Medicare tax to certain unearned income, beginning in 2013.

The new surtax is a flat rate of 3.8%, and will apply to interest, dividends, capital gains, annuities, royalties, and rents. It kicks in when your AGI exceeds $250,000 (for married filing jointly). When you file as single, the AGI threshold is $200,000.

Planning move: Consider adding tax-exempt bonds to your portfolio. The interest is not subject to the new tax. Roth conversions and selling assets with capital gains may also be a wise move in 2012.

Many other tax law changes are expected in 2013. Timely planning is essential for preserving tax- saving opportunities. Please give us a call to discuss strategies to put in place now to maximize your benefits.

Online Lending

Mary — Tue, 15 May 2012 18:41:07 +0000

by Tom Duffy

Written for Cheklist^® Magazine, Convention 2011, learn how online lending is on the “Move to the Web from Brick and Mortar”. The article discusses advantages, tax impacts and other items to consider. Read the article.

Filing reminder for tax-exempts

Mary — Thu, 03 May 2012 14:48:51 +0000

Tax-exempt organizations are required to file annual reports with the IRS. Those with gross receipts below $50,000 can file an E-postcard rather than a longer version of Form 990. The deadline for nonprofit filings is the 15th day of the fifth month after their year-end. For calendar-year organizations, the filing deadline for 2011 reports is May 15, 2012.

Al Kutchins named as newest advisory board member at DePaul University Coleman Entrepreneurship Center.

Mary — Thu, 03 May 2012 14:47:11 +0000

The Coleman Center recently sat down with its newest advisory board addition, Al Kutchins, Partner of Kutchins, Robbins, & Diamond, LTD, to discuss why he decided to join Coleman Center, what he’s working on and more.

http://coleman.depaul.edu/blog/2012/04/advisory-board-spotlight-al-kutchins/

June 21-24, 2012

Mary — Thu, 03 May 2012 14:31:07 +0000

GGI North & Latin American Joint Regional Conference,

Miami, Florida,

Contact: Allen Kutchins 847.278.4335,

www.ggi.com

LIFESTYLE OPTIONS

Mary — Thu, 05 Apr 2012 21:41:36 +0000

Schaumburg-based LifeStyle Options provides a variety of different services—including professional live-in care, medication management, and geriatric care—with a focus on empathy and integrity towards their clients. This devotion to quality service has earned LifeStyle Options, among other praise, the highest rating (A+) from the Better Business Bureau, as well as the BBB’s “Complaint Free” award. Throughout the company’s 23-year history, these high standards have been maintained and guided by the founder and CEO, Molly Miceli.

Miceli, a longtime resident of the Chicago area, originally transplanted from Norway, has nearly 40 years experience as a health care practitioner. Miceli began her career as a Certified Nurse’s Assistant, and became a Registered Nurse in 1975. After several years in that role, she realized that the health care industry in Illinois was failing to adequately provide for a specific need—quality health care services that existed outside of hospitals or other medical institutions. In 1989, she founded LifeStyle Options to help fill that void. By hiring professional, licensed caregivers, extensively vetted and routinely assessed, LifeStyle Options has been able to provide its clients high-quality medical care within their own homes. This business model encourages in LifeStyle Options’ clients the sense of independence and dignity that comes with receiving care in one’s most familiar environment, with family and friends close at hand.

Today, LifeStyle Options has grown to provide more service to a increasingly larger area, including Chicago, the surrounding suburbs, and more distant municipalities such as Kankakee and Rockford. Miceli grants a good deal of credit to KRD, in particular Partner Gene Barinholtz, who has worked with LifeStyle Options since 1991. Barinholtz has been a “very trustworthy” associate, says Miceli, and a vital force in cultivating the company’s growth. KRD provides full accounting services for LifeStyle Options, which includes more than simply reviewing their books. Barinholtz, says Miceli, “had such clear sense of all the accounting, and he was able to help us create that important roadmap [for the company]. Without Gene, we would have stumbled around for many years.”

While Miceli is understandably proud of the longevity and financial health of the company she created, she readily states that what pleases her most about the work she has done are the many reports of high customer satisfaction. LifeStyle Options believes firmly that the best wishes of their clients come first, and they offer full and unconditional guarantees for the quality of the care they provide. According to Miceli, a majority of the company’s referrals come from clients and caregivers—a mark of the trust engendered by the company.

KRD is pleased to continue its relationship with LifeStyle Options well into the future, and looks forward to providing its own exemplary services to a company that has built its considerable reputation on its own service.

5th Annual Campfire Ball 2012

Mary — Tue, 21 Feb 2012 17:12:46 +0000

Give children with cancer a chance to experience the carefree
fun of summer camp by joining us for Campfire Ball!

It’s summer camp with an urban twist and all the fun without the curfew,
just like you always wished camp would be!

CLICK HERE FOR TICKETS OR TO MAKE A DONATION

2012 Tax Planning

Mary — Tue, 21 Feb 2012 17:09:03 +0000

Each year the IRS adjusts certain tax numbers for inflation and tax law changes. Here are some of the adjusted numbers you’ll need for your 2012 tax planning:

Standard mileage rate for business driving remains at 55.5¢ a mile. Rate for medical and moving mileage decreases to 23¢ a mile. Rate for charitable driving remains at 14¢ a mile.
Section 179 maximum first-year expensing deduction decreases to $139,000, with a phase-out threshold of $560,000.
Transportation fringe benefit limit decreases to $125 for vehicle/transit passes and increases to $240 for qualified parking.
Social security taxable wage limit increases to $110,100. Retirees under full retirement age can earn up to $14,640 without losing benefits.
Kiddie tax threshold remains at $1,900 and applies up to age 19 (up to age 24 for full-time students).
Nanny tax threshold increases to $1,800.
Health savings account (HSA) contribution limit increases to $3,100 for individuals and to $6,250 for families. An additional $1,000 may be contributed by those 55 or older.
401(k) maximum salary deferral increases to $17,000 ($22,500 for 50 and older).
SIMPLE maximum salary deferral remains at $11,500 ($14,000 for 50 and older).
IRA contribution limit remains at $5,000 ($6,000 for 50 and older).
Estate tax top rate remains at 35%, and the exemption amount increases to $5,120,000.
The annual gift tax exclusion remains at $13,000.
Adoption tax credit decreases to $12,650 for adoption of an eligible child.

Illinois Compliance Initiatives

Mary — Tue, 21 Feb 2012 16:59:41 +0000

There are several new procedures that the State of Illinois is implementing in order to increase compliance with existing laws and thereby, increase revenues. Illinois and most other states are increasingly using computer programs to match information in order to identify underreported or unreported income and sales transactions.

Illinois has started a new discovery project. The program records taxpayers who have been filing Illinois tax returns as residents and then change to non-residents. Illinois then monitors the taxpayer for a spike in AGI. If there is a spike in AGI after the residency change, Illinois will investigate. This procedure has been put in place in order to identify a taxpayer who changes his or her residence to a lower taxed state prior to selling an asset at a large gain or receiving a large amount of income.

Illinois is cross checking whatever documents they have available to further taxpayer filing compliance. For instance, when a business applies for a lottery license, Illinois will check for compliance with the sales tax filings. This is also the method that was used very successfully in forcing gas stations into compliance.

Illinois has also been very successful in getting information from the customs department for use tax notifications. A program in which custom declaration forms are used to verify whether use tax has been paid on items that a taxpayer has brought into Illinois is in place in order to collect use tax from those Illinois residents.

States are also sharing more information with each other. A taxpayer bought a boat in Florida and told Florida that the boat was going to Illinois so no use tax was due to Florida. Florida notified Illinois who in turn notified the taxpayer and had the taxpayer remit the Illinois use tax.

Computer matching programs are being used more and more successfully at various levels of government in order to ensure compliance with tax laws. If a computer matching program identifies a potential discrepancy, it will generate a notice to the taxpayer. If you receive a notice of this kind, please do not ignore it. Ignoring it will not make it disappear but will only raise the issue to a higher level. Contact us for assistance and we will be glad to help you address the issue.

PANTHEON WINE SHOPPE

Mary — Mon, 05 Dec 2011 19:06:57 +0000

For the past five years, Pantheon Wine Shoppe of Northbrook has grown into a trusted source of fine wine, catering to the growing legions of wine enthusiasts throughout the Midwest. The company’s founder, Johnson Ho, brings to his business over 40 years of experience and passion for wine, cultivated during his formative years in Europe.

Ho began his fine wine career in 1977 at the American Restaurant, the finest gourmet establishment in Kansas City, Missouri. Within a year he had been appointed the sommelier, and in 1978 assisted in earning the restaurant a prestigious Mobil 5-Star rating. At that time, he discovered that wine collection and appreciation was a little-practiced hobby here—perhaps only one in every 200 people was a consumer of fine wine (bottles priced at $10 or higher). Over the past few decades, however, Ho has watched as the culture has changed, and more and more Americans began to develop their inner oenophiles. Today, it is estimated that wine is enjoyed by a third of the population. With the demand increasing for quality wine, and standard liquor stores unable to meet these customers’ needs, Ho established the Knightsbridge Wine Shoppe in Northbrook in 1986, and over the next twenty years built it into a successful and respected fine wine outlet. In 1999, Chicago Magazine named Knightsbridge the Best Wine Shop, and in 2000 Ho himself was honored as “The Windy City’s Wizard of Wine” by Market Watch Magazine.

In 2006, Ho noted that the wine culture was continuing to evolve, and that there was an increasing desire for more upscale wine. While many still appreciated the average $15 wines, more discerning customers were looking to purchase bottles that merited a higher price tag. With that in mind—and with the knowledge he had accrued and refined from running Knightsbridge—Ho established Pantheon, which stocks wines that average around $200 per bottle. Pantheon also caters to its clients by offering cellar design services for those who want to build their own wine storage at home. “It started as a favor to a client,” Ho explains. “And then it became a business. I got ideas from chateaus and castles I had seen…[Pantheon] is able to provide a new genre of sophisticated wine cellar design.”

Ho notes that with the growth of the wine industry in America, the bureaucracy and cost of starting and maintaining a wine-based business has become substantially more complicated. Whereas Ho was able to start his first wine shop with approximately $2500 to cover all licenses and insurance, today the renewals alone can cost four times as much, and require many more forms and accounting reports. To help him manage the paperwork, Ho employs the services of KRD CPAs. Jon Segal, a partner at KRD, has worked with Ho for over 23 years, and when Segal returned to KRD in 2001 Ho was happy to follow him there. KRD helps Pantheon file their tax reports, assess their insurance and risk factors, and answer questions from outside inspectors or auditors.

Ho’s plans for the future of Pantheon are towards focused, healthy growth. He believes in building his business synergistically, avoiding avenues that do not fit his company’s philosophy of providing top expertise and top customer service. You may visit their website at: http://www.pantheonws.com/

“Clients appreciate what we bring to their table…literally.” Ho quips. KRD looks forward to helping Pantheon achieve its goals.