Expansion of bottle deposit. The Massachusetts Bottle Bill imposes a redeemable $0.05 deposit on all carbonated sodas, beer and malt beverages. The budget proposal would expand the definition of “beverages” to require consumers to pay an additional $0.05¢ on water, flavored waters, iced teas, coffee based drinks and sports drinks. The governor’s fiscal year 2012 budget assumes that by adopting these changes the state will collect at least $20 million in additional revenues next year.

Enhanced tax enforcement measures. In fiscal year 2012 the Department proposes to expand the number of employees directly performing tax examination, audit and appeals functions. This is projected to result in additional tax revenues to the Commonwealth of $61.5 million, primarily through increased assessments and settlements with taxpayers.

Award reflects company’s consistently high level of customer service

(WESTWOOD, MA) Padgett Business Services has been awarded the prestigious 2010 Angie’s List Super Service Award, an honor bestowed annually on approximately 5 percent of all the companies rated on the nation’s leading provider of consumer reviews on local service companies.

“Our Super Service Award winners are the cream of the crop when it comes to providing consistently high quality customer service, as judged by the customers who hired them,” said Angie Hicks, founder of Angie’s List.

Padgett Business Services specializes in providing the small business community with highly personalized accounting, tax and advisory services that much bigger corporations typically have access to.  “We work very hard to earn the trust and confidence of our clients.  It is an honor to have been granted this award.  At Padgett we are a team and strive make a difference in each of our clients’ businesses.” John Barucci, Owner, of the Westwood location said.

Angie’s List Super Service Award winners have met strict eligibility requirements including earning a minimum number of reports, an exemplary rating from their customers and abiding by Angie’s List operational guidelines.

Service company ratings are updated daily on Angie’s List, but members can find the 2010 Super Service Award logo next to company names in search results on AngiesList.com.

###

Angie’s List collects consumer reviews on local contractors and doctors in more than 500 service categories. Currently, more than 1 million consumers across the U.S. rely on Angie’s List to help them make the best hiring decisions. Members get unlimited access to local ratings via Internet or phone, exclusive discounts, the Angie’s List magazine and help from the Angie’s List complaint resolution service. Take a quick tour of Angie’s List and view the latest Angie’s List news

Tax Cuts Extended for Two Years

The income tax rates for individuals will stay at 10%, 15%, 25%, 28%, 33% and 35% (instead of moving to 15%, 28%, 31%, 36% and 39.6%). Additionally, the size of the 15% tax bracket for joint filers and qualified surviving spouses will remain at 200% (instead of dropping to 167%) of the 15% tax bracket for individual filers.

Preferential Rates For Capital Gains and Qualified Dividends Extended for Two Years

Long-term capital gain rate will continue to be taxed at a maximum rate of 15%.

Temporary Employee/Self-Employed Payroll Tax Cut for 2011

Under current law, employees pay a 6.2% Social Security tax on all wages earned up to $106,800 (in 2011) and self-employed individuals pay 12.4% Social Security self-employment taxes on all their self-employment income up to the same threshold. For 2011, the 2010 Tax Reform Act gives a two-percentage-point payroll/self-employment tax holiday for employees and self-employeds. As a result, employees will pay only 4.2% Social Security tax on wages and self-employment individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the threshold.

Tax Breaks for Individuals Retroactively Reinstated and Extended Through 2011

The $250 above-the-line deduction for certain expenses of elementary and secondary school teachers;

The election to take an itemized deduction for State and local general sales taxes in lieu of the itemized deduction permitted for State and local income taxes; the above-the-line deduction for qualified tuition and related expenses;

The rule allowing premiums for mortgage insurance to be deductible as interest that is qualified residence interest and;

The tax credit for energy-efficient improvements to existing homes.

1. Dependency exemption. You may be able to claim the cared-for individual as your dependent, thus qualifying for an exemption. To qualify, (a) you must provide more than 50% of the individual’s support costs, (b) must either live with you or be related, (c) must not have gross income in excess of the exemption amount, which is $3,650 for 2010, (d) must not file a joint return for the year, and (e) must be a U.S. citizen or a resident of the U.S., Canada, or Mexico. If the support test ((a), above) can only be met by a group (several children, for example, combining to support a parent), a “multiple support” form can be filed to grant one of the group the exemption, subject to certain conditions.

2. Medical expenses. If the individual qualifies as your dependent, you can include any medical expenses you incur for him/her along with your own when determining your medical deduction. If he/she doesn’t qualify as your dependent only because of the gross income or joint return test ((c) and (d), above), you can still include these medical costs with your own. The costs of qualified long-term care services required by a chronically ill individual and eligible long-term care insurance premiums are included in the definition of deductible medical expenses. There’s an annual cap on the amount of premiums that can be deducted. The cap is based on age, going as high as $4,110 for 2010 ($3,980 in 2009) for an individual over 70.

3. Filing status. If you aren’t married, you may qualify for “head of household” status by virtue of the individual you’re caring for. If the person you’re caring for (a) lives in your household, (b) you cover more than half the household costs, (c) he/she qualifies as your dependent, and (d) he/she is a relative, you can claim head of household filing status. If the person you’re caring for is your parent, he/she need not live with you, as long as you provide more than half of his household costs and he/she qualifies as your dependent.

4. Dependent care credit. If the cared-for individual qualifies as your dependent, lives with you, and physically or mentally cannot take care of himself, you may qualify for the dependent care credit for costs you incur for his/her care to enable you and your spouse to go to work.

5. Exclusion for payments under life insurance contracts. Any lifetime payments received under a life insurance contract on the life of a person who is either terminally or chronically ill are excluded from gross income. A similar exclusion applies to the sale or assignment of a life insurance contract to a person who regularly buys or takes assignments of such contracts and meets other qualifying standards.

If your situation qualifies you for any of the above tax benefits, or you wish to discuss your situation further, please call us at (781) 326-9966.

Job Hunting Expenses – Defined

Expenses of seeking new employment can encompass a broad range of items. Some of the more common expenses for which deductions have been allowed are:

• the cost of resumes, including postage for sending them to prospective employers;
• job counselling and referral fees;
• employment agency fees;
• telephone charges related to seeking new employment;
• local as well as out-of-town travel for interviews, to the extent not reimbursed by the prospective employer.

For job-search expenses to be deductible, you must be looking for employment in the same trade or business in which you are engaged. For this purpose, a corporation’s secretary-treasurer seeking a position as assistant to the vice president of finance at another corporation was seeking employment in the same trade or business. But an artist seeking work in the business end of the art field was held to be looking for a job in a new trade or business. And IRS says any job in the private sector is a new trade or business for a retired military officer.

Accepting temporary employment in another line of work won’t affect your deduction for expenses in searching for permanent employment in your regular line of work. But job hunting costs aren’t deductible if you are looking for a job in a new trade or business, even if you find employment as a result of the search.

First time job seekers

IRS says that job hunting expenses incurred in seeking employment for the first time are not deductible. This rule can be tough on students and others entering the job market for the first time. But it may be possible to avoid the impact of this rule through an internship or other employment during the student’s senior year. In addition to looking good on a resume, this type of work experience can be a trade or business in which the student is engaged (thus avoiding the first time job seeking rule).

Reentry into job market

If an individual is temporarily unemployed, expenses of seeking employment in the field in which he or she was previously employed are deductible. But IRS takes the position that if there is a substantial time break between earlier employment and the current search, you cannot deduct the expenses of looking for a job. Thus, if there has been a gap of several years since the last employment, for example, to take care of small children or to return to school to pursue post-graduate studies, the cost of seeking employment is not deductible.

Other limitations on deductibility

Deductible expenses in seeking employment are claimed as miscellaneous itemized deductions. As a result, individuals who take the standard deduction cannot claim such expenses. In addition, miscellaneous itemized deductions are deductible only to the extent that, in the aggregate, they exceed 2% of your adjusted gross income. Thus, unless your job hunting costs are large or you have other significant miscellaneous deductions, you may not be able to derive any tax benefit from these expenses.

I hope that this overview of the tax treatment of job search expenses is helpful. If you have any specific questions, or need additional information regarding this or other tax related matters, please feel free to call us at (781) 326-9966.