Tax Update from Miller Cooper & Co.

September 2010

Edited by Chris Rim, CPA

Senior Manager, Miller Cooper

In this issue:

Illinois Grants Brief Tax Amnesty Window

Facts about the Nonbusiness Energy Property Credit

The Making Work Pay Tax Credit Still Available

Social Security Wage Base to Remain Unchanged in 2011

Miller Cooper Presents "Green by Design" Webcast on Wednesday

Miller Cooper's Client Portal Is Live!

Illinois Grants Brief Tax Amnesty Window

On August 16, Gov. Pat Quinn signed a tax amnesty bill allowing delinquent taxpayers to pay back state taxes without risk of penalties or interest. Taxpayers owing state taxes due from July 1, 2002 through July 1, 2009 may pay during the amnesty period of October 1 to November 8. To qualify for the tax amnesty, the taxpayer must pay all taxes due for the period. Some restrictions do apply, including taxpayers who are party to any pending litigation of tax liabilities.

The bill contains a special incentive to delinquent taxpayers to take advantage of the amnesty period. Those who do not satisfy their liabilities during the amnesty period will face interest and penalties in an amount that is 200% of the amount that would be otherwise imposed. The Illinois interest rate is variable, and penalties of up to 20% can be imposed before the 200% increase.

For more information, please contact Ignacio Mendez, Principal. 

Facts about the Nonbusiness Energy Property Credit

The Nonbusiness Energy Property Credit, a tax credit for making energy efficient improvements to homes was increased as part of the American Recovery and Reinvestment Act of 2009.

Here are some factors about the Nonbusiness Energy Property Credit that may benefit some taxpayers:

1. The new law increases the credit rate to 30% of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
2. The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
3. To qualify as “energy efficient” for purposes of this tax credit, products generally must meet higher standards than the standards for the credit that was available in 2007.
4. Manufacturers must certify that their products meet the new standards and they must provide a written statement to the taxpayer either with the packaging of the product or in a printable format on the manufacturers’ Website.
5. Qualifying improvements must be placed into service after December 31, 2008, and before January 1, 2011.
6. The improvements must be made to the taxpayer’s principal residence located in the United States and must be claimed for the year that the improvements were made.

The Making Work Pay Tax Credit Still Available

 The Making Work Pay Credit – still available for 2010 – equals 6.2% of a taxpayer’s earned income. The maximum credit for a married couple filing a joint return is $800 and $400 for other taxpayers. Eligible self-employed taxpayers can benefit from the credit by evaluating their expected income tax liability and, if they are eligible, by making the appropriate adjustments to the amounts of their estimated tax payments.

Taxpayers who fall into any of the following groups during 2010 should review their tax withholding to ensure enough tax is being withheld. Those who should pay particular attention to their withholding include:

• Married couples with two incomes
• Individuals with multiple jobs
• Dependents
• Pensioners

The Making Work Pay tax credit is reduced or unavailable for higher-income taxpayers. The reduction in the credit begins at $75,000 of income for single taxpayers and $150,000 for couples filing a joint return.

Social Security Wage Base to Remain Unchanged in 2011

The 2010 Annual Report of the Social Security Administration’s Office of Chief Actuary projects the Social Security wage base will remain at $106,800 for 2011. What does this mean to taxpayers? The maximum amount of compensation subject to Social Security tax (6.2% each for employees and employers; 12.4% for self-employed) should remain at $106,800 through the end of 2011. The other portion of FICA tax, the Medicare tax (1.45% each for employees and employers; 2.9% for self-employed), has no compensation limit.

The Report forecasts the following wage limits for the Social Security portion of the FICA tax through 2019 as follows:

• 2011 – $106,800

• 2012 – $113,700

• 2013 – $118,200

• 2014 – $123,600

• 2015 – $129,300

• 2016 – $135,300

• 2017 – $141,000

• 2018 – $147,300

• 2019 – $153,600

Miller Cooper Presents “Green by Design” Webcast on Wednesday

Please join us for a complimentary webinar, “Green by Design: Understanding the Energy Tax Deduction and the benefits it could provide to your business”

 The webinar will take place on Wednesday, August 25, 2010 from 3:00 – 4:00 p.m. CDT

Highlights of the program include:

• Ideal candidates for Energy Tax Certification – 179D

• Components of a building that can be analyzed
      and receive certification

• Lighting rules and standards necessary for
      qualification

• The CPA “Cookbook” for developing an Energy Tax
         Niche

 Who should join us:  Architects, Engineers, Property Owners, Corporations, Energy Consultants, and Lighting, HVAC, Roof & Insulation Contractors

Click here to register

This program is approved for 1 hour of CPE credit; 1 unit of AIA credit and/or 1 USGBC CE credit.

Miller Cooper’s Client Portal Is Live!

Miller Cooper has launched a Client Portal from its website (www.millercooper.com) using the same secure technology as online banking. The Portal enables clients to log into our services directly from their own computers. Clients will receive a secure ID and password, which will allow them to access their financial documents, transfer data and exchange information with us 24/7.

With the government-mandated electronic filing requirement for Forms 1040 and 1041 going into effect on January 1, 2011, the Portal will also allow clients to access their completed returns in a secure setting and facilitate compliance with the new regulations.

If you would like more information, please contact Marianne Phalin, Principal.

For more information on these articles, please contact Ricky Max, Principal or Avrum Katz, Principal. You can also call us at 847-205-5000.

Miller, Cooper & Co., Ltd.

1751 Lake Cook Road, Suite 400, Deerfield, IL  60015     500 West Madison St., Suite 3350, Chicago, IL  60661