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Tips
for Accumulating Tax Data
Below are a few additional "hot
topics" our clients are always asking about, such as mileage rates,
social security benefits, tax rates, etc.
Changes for 2011, include changes in the mileage
rates as well as changes to the FUTA
rates and Social Security
Limits.
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Standard
Deduction and Phase-Out Levels
Standard Deduction
The basic standard deductions are:
|
2012 |
2011 |
|
Married, filing joint return |
$11,700 |
$11,600 |
|
Surviving spouse |
$11,700 |
$11,600 |
|
Head of Household |
$8,700 |
$8,500 |
|
Unmarried
(not surviving spouse or head of household)
|
$5,950 |
$5,800 |
|
Married, filing separate return |
$5,950 |
$5,800 |
|
"Kiddie" standard deduction alternative amount |
$950 |
$950 |
|
The additional standard deduction amount for the aged and blind
(if the individual is also
unmarried and not a surviving spouse, $1,450 in 2011 and 2012). |
$1,150 |
$1,150 |
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Personal Exemption Amounts
|
|
2012 |
2011 |
|
Personal exemption amounts
|
$3,800 |
$3,700 |
Gift Tax Exclusion
The annual gift tax exemption remains at $13,000 in 2011 and 2012.
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| Social Security
Limits |
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The social security tax rate has been reduced to
4.2% for the employee portion, but remains at 6.2% for the employer
portion in 2011.
The
Medicare tax rate remains
at 1.45% for both employee and employer.
|
|
|
2012 |
2011 |
| Social Security Wage Base |
$110,100
|
$106,800
|
| Medicare |
No Limit
|
No Limit
|
The
Maximum Amount of Earnings and Still Receive Full Benefits
|
|
2012
|
2011
|
|
Under
Full Retirement Age |
$14,640 |
$14,160
|
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Over
Full Retirement Age |
No
Limit |
No Limit
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Full retirement age (also called
"normal retirement age") has been 65 for many years. However,
beginning with people born in 1938 or later, that age will gradually
increase until it reaches 67 for people born after 1959.
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| Record
Retention Schedule |
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Retain
Indefinitely
 |
Audit
reports |
|
Capital
stock and bond records, ledgers, transfer registers, stubs showing
issues, record of interest coupons, options, etc. |
|
Cash
books |
|
Charts
of accounts |
|
Checks
(canceled for important payments, i.e. taxes, purchases of property,
special contracts, etc.) (filed with transaction papers) |
|
Contracts
and leases in force |
|
Copyrights,
patents, trademark registrations |
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Corporation
charter, minute books and bylaws |
|
Correspondence
(legal and important matters only) |
|
Deeds,
mortgages, easements and other property records |
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Depreciation
schedules |
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Financial
statements (end-of-year, other months optional) |
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General
ledgers and journals |
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Insurance
records, current accident reports, claims, policies, etc. |
|
Property
appraisals |
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Property
records - including costs, depreciation reserves, end-of-year trial
balances, blueprints and plans |
|
Tax
returns and work papers, including records to support carrybacks and
carryovers |
|
|
Retain
7-8 years
|
Accident
reports and claims (settled cases) |
|
Accounts
payable ledgers and schedules |
|
Accounts
receivable ledgers and schedules |
|
Bank
statements |
|
Canceled
checks (except checks kept permanently) |
|
Contracts
and leases (expired) |
|
Expense
analysis and expense distribution schedules |
|
Inventories
of products, materials and supplies |
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Invoices
to customers |
|
Invoices
from vendors |
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Maintenance
and repair records (buildings and machinery) |
|
Notes
receivable ledgers and schedules |
|
Option
records (expired) |
|
Payroll
records and summaries, including payments to pensioners and
timesheets |
|
Plant
cost ledgers |
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Purchase
orders (purchasing department copy) |
|
Sales
records |
|
Scrap
and salvage records (inventories, sales, etc.) |
|
Subsidiary
records |
|
Time
books |
|
Voucher
register and schedules |
|
Vouchers
for payments to vendors, employees, etc. (includes allowances and
reimbursement of employees, officers, etc. for travel and
entertainment) |
|
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Retain
6 years
|
Commission
reports |
|
Employee
disability benefits records |
|
Employee
withholding tax statements |
|
Equipment
leases (after expiration) |
|
Fire
damage reports |
|
Monthly
trial balances |
|
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Retain
2 years and less
|
Purchase
orders (except purchasing department copy) |
|
Receiving
sheets |
|
Requisitions |
|
Stenographer's
notebooks |
|
Stockroom
withdrawal forms |
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* The above listing is only a guide
and is not all inclusive. If you have any questions or need
additional information, please contact us at (540) 662-7070.
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Current Mileage Rates
The standard mileage rate for business mileage (in
lieu of using actual expenses), as well as the standard rates for
use of your car for medical and moving or charitable purposes are as
follows:
| |
1/1/11-6/30/11 |
7/1/11-12/31/11
|
2012
|
| Business |
51 cents/mile |
55.5 cents/mile |
55.5 cents/mile |
| Medical & Moving |
19 cents/mile |
23.5 cents/mile |
23.5 cents/mile |
| Charitable |
14 cents/mile |
14 cents/mile |
14 cents/mile |
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Current Minimum Wage
Rate
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The current federal minimum wage for covered nonexempt
employees is $7.25 per hour effective July 24, 2009.
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Retirement Plans Below
are the annual contribution limits on elective deferrals for
retirement plans. Indexed
Contribution & Benefit Limits for Qualified Plans
| Type of Plan |
2012 |
2011 |
| Individual Retirement Accounts
(IRAs)* |
$5,000 |
$5,000 |
| Section 401(k) plans or SAR-SEPs* |
$17,000 |
$16,500 |
| Section 403(b) plans* |
$17,000 |
$16,500 |
| Section 408(p)(2)(E) SIMPLE Contributions* |
$11,500 |
$11,500 |
| Section 457(b)(2) limit* |
$17,000 |
$16,500 |
| Section 415 limit for: |
|
|
|
Defined contribution plans^ |
$50,000 |
$49,000 |
|
Defined benefit plans |
$200,000 |
$195,000 |
| Highly compensated employees
Section 414(q) |
$115,000 |
$110,000 |
| Top Heavy Key
Employee Officer compensation limit |
$165,000 |
$160,000 |
| Governmental
"Grandfathered" plan compensation limit |
$375,000 |
$360,000 |
|
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*Age 50 Additional contributions |
|
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401(k) type plans |
$5,500 |
$5,500 |
|
SIMPLEs |
$2,500 |
$2,500 |
|
IRAs |
$1,000 |
$1,000 |
|
^The Section 415 compensation limit for defined contribution
plans is $250,000 for 2012 and $245,000 for 2011. |
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Roth IRAs --- 2012 & 2011
| - Nondeductible Contributions |
|
|
| - Qualified tax-free distributions |
|
|
| - AGI limit for maximum contributions: |
2012 |
2011 |
| Joint filers |
$173,000 |
$169,000 |
| Individual filers |
$110,000 |
$107,000 |
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Health Savings Accounts
| Contribution Limits |
2012 |
2011 |
| Individual, self-only |
$3,100 |
$3,050 |
| Family Coverage |
$6,250 |
$6,150 |
| Catch-up for those age 55 and older |
$1,000 |
$1,000 |
For 2011 and 2012, the minimum deductible for a high-deductible health
plan (HDHP) is $1,200 for self-only coverage and $2,400 for family
coverage. The maximum out-of-pocket limit is $5,950 in 2011 and $6,050 in
2012 for self-only coverage
and $11,900 in 2011 and $12,100 in 2012 for family plans.
Health Care Reform Act
While
recent legislation concerning the Health Care Overhaul is comprehensive, the
complete effect has not been determined. This link provides a summary of
the major changes and the applicable time table. More updates will be
added as they are received.
FUTA Rate Change
Effective July 1, 2011, the FUTA tax rate will decrease from
0.8 % to 0.6% for all employers as a result of the 0.2% surtax not being
extended. However, there is also a .3% credit reduction calculation in
effect for the entire calendar year 2011. If you have any questions please contact us.
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