HSA limits increase for 2012

The amount you can set aside in a health savings account (HSA) in 2012 increased to $3,100 for an individual and to $6,250 for a family. If you’re 55 or older, you’re allowed an additional $1,000 contribution. HSAs permit taxpayers who have high deductible health insurance plans to set aside pretax dollars that can be withdrawn tax-free to pay medical expenses not reimbursed by insurance.

Need more time to file?

If you can’t file your 2011 tax return by the April 17 deadline, you can file for an extension by that date and get until October 15, 2012, to file. You can request the extension on paper, by phone, or online. The extension is automatic, with no explanation necessary. Be aware, however, that an extension to file does not give you more time to pay taxes due for 2011. For assistance, contact our office.
 
Vincent I. Porter, CPA
Porter & Company, CPA's
One Arlington Centre
1112 E. Copeland Rd. Suite 140
Arlington, TX 76011
817-261-2582 , x 2 Office
817-460-7609 Fax
www.MyTexasCPA.com

Be smart with your tax refund

Are you receiving a tax refund this year? No doubt you've already heard the standard admonishment about why you should not be giving the government an interest-free loan. Maybe you've decided to "do better" during 2012 by revising your withholding or estimated tax payments to reduce the amount of next year's refund -- or maybe you haven't.
Either way, set aside your guilt. Financial planning means creating effective strategies that work for you -- which can include forcing yourself to save by overpaying your income tax during the year.
The more important consideration is what you do with the money you get back. Here are ideas for making the most of your refund.
* Save. The unexpected happens. The question is, how do you pay the resulting bills? Parking part of your refund in a readily accessible location, such as a bank checking, savings, or money market account, will help you weather short-term, temporary setbacks without incurring penalties or transaction fees.
* Spend. Spending your refund wisely can get your finances in shape and pay off over the long run. For instance, home improvements like energy-efficient windows or a new water heater may result in lower electric and insurance bills. Refinancing your mortgage reduces your monthly cash outlay, freeing money for investing or saving. Ditto for paying down high-interest credit cards -- so long as you resist the urge to reload them.
* Self-invest. Using your refund to refresh your current career-related skills or to learn new ones can provide a double benefit: more employment opportunities and tax savings. Unsure of your job security? Put your refund to work by financing a home-based business and creating a second stream of income.
Give us a call for assistance related to your tax withholding, estimated tax payments, or tax refund.

April 17 -- a big day for taxes

Tuesday, April 17, is the deadline for filing certain returns and taking certain tax-related actions. Here are the major deadlines.

* Filing 2011 income tax returns for individuals. If you cannot file your return by this deadline, be sure to file an extension request by April 17. The automatic extension (you don’t need to explain to the IRS why you need more time) gives you until October 15, 2012, to file your return. An extension does not, generally, give you more time to pay taxes you still owe.

* Filing 2011 partnership returns for calendar-year partnerships.

* Filing 2011 income tax returns for calendar-year trusts and estates.

* Filing 2011 annual gift tax returns.

* Making 2011 IRA contributions.

* Paying the first quarterly estimate of 2012 individual estimated tax.

* Amending 2008 individual tax returns (unless the 2008 return had a filing extension).

* Original filing of 2008 individual income tax return to claim a refund of taxes. Some taxpayers have tax refunds due them for prior years, and unless a return is filed to claim the refund by the three-year statute of limitations, the refund is lost forever.

2011 refunds are delayed

Taxpayers are waiting longer for their tax refunds this year largely due to IRS efforts to catch fraudulent filings. According to a recent IRS report, the Service has identified more than 2.1 million fraudulent tax returns, many of which involve identity theft. IRS computers have had additional screening steps added which is the major factor in the refund delays.

Tips for managing part-time employees

Part-time employees can play a valuable role in a small business, especially while a business is waiting for general economic recovery. Part-timers can help you deal with variations in workload without having to hire a full-time employee. And often, when there are many job applicants for any opening, you can find a person with above-average skills for the position.

But part-timers can turn into a liability if not managed well. You could end up with poorly motivated workers, unsure of their duties, unfamiliar with the company, and unsure who they report to. Here are a few tips to prevent this situation.

* Think before you hire. Know why you're hiring. Decide exactly what you want the person to do, what hours you want the person to work, and who he or she will report to. The position may have well-defined duties, or it may involve filling in wherever needed. Decide on the pay level and what benefits you'll offer.

* Communicate clearly with the part-timer. Explain the person's duties, and who his or her superior is. Be very clear on hours and benefits. The more flexibility you can offer, the easier it will be to recruit somebody and the happier the new worker is likely to be. Make sure you explain what job performance you expect.

* Communicate clearly with your full-time staff. Explain why you're hiring a part-time person. Make it clear what that person will and won't be expected to do. Designate who will manage and assign work to the part-timer. Otherwise you might find everyone trying to unload work on the new employee.

* Make the part-timer feel like part of the company. Provide introductory training on specific duties and on the company's business and policies. Assign a mentor or "buddy," someone the new person can turn to with everyday questions. Wherever possible, include part-timers in staff meetings and company functions.

* Monitor part-timers' progress. Provide feedback on their performance and recognition if they're doing a good job. Consider including them in any bonus or incentive schemes. And monitor the reactions of your full-time employees. Sometimes there can be resentment of a part-timer's shorter hours, especially if your other employees are overloaded and having to work overtime.

With attention to these points, you can make hiring a part-time employee a winning decision for your company.

Does this April 2 deadline apply to you?

If you reached age 70½ last year, April 2, 2012, could be an important deadline. That's the last day you can take your required minimum distribution (RMD) for 2011 from your traditional IRAs. If you miss that deadline, the penalty could be a 50% excise tax on the amount you should have withdrawn.

Here's how the rules work. Once you reach age 70½, you must start taking annual distributions from your traditional IRAs. Normally these distributions must occur by December 31 of each year. But a special rule lets you defer the first distribution until April of the year after you reach age 70½. So if you turned 70½ last year, April 2 is the deadline for your 2011 distribution. Be aware that you'll still need to take your 2012 RMD before the end of this year.

Generally, the amount of the RMD for any year is based on your age. You take the balance in all your traditional IRAs as of the last day of the previous year, and divide by a factor representing your life expectancy. The IRS has published a standard life expectancy table to use in the calculation. Special rules might apply if your spouse is more than ten years younger than you are.

Because all or part of your distribution may be taxable income, it is important to include RMDs in your tax planning. Ideally you should start planning for RMDs several years before you reach age 70½. But whether you're planning in advance or looking at a distribution on April 2, contact our office for more detailed advice.

The RMD rules don't apply to Roth IRAs. Unless you're still working, this deadline also applies to your other retirement accounts.