Timothy W. Tuttle & Associates
Volume 1 Edition 7 Please email comments to firstname.lastname@example.org June 2005
Major Tax Deadlines
For June 2005
June 15 - Second quarter 2005 individual estimated tax is due.
June 15 - Expiration date for automatic two-month extension given to U.S. citizens and resident aliens living and working outside of the U.S. and Puerto Rico to file 2004 income tax returns. File Form 4868 to request an additional two-month extension.
NOTE: Businesses are required to make federal tax deposits on dates determined by various factors that differ from business to business.
Payroll tax deposits: Employers generally must deposit Form 941 payroll taxes (income tax withheld from employees' pay and both the employer's and employees' share of social security taxes) on either a monthly or semiweekly deposit schedule. There are exceptions if you owe $100,000 or more on any day during a deposit period, or if you owe $2,500 or less for the calendar quarter.
Monthly depositors are required to deposit payroll taxes accumulated within a calendar month by the fifteenth of the following month.
Semiweekly depositors generally must deposit payroll taxes on Wednesdays or Fridays, depending on when wages are paid.
For more information on tax deadlines that apply to your business, contact
What's New in Taxes
IRS certifies hybrid cars for $2,000 tax deduction
If you're planning to purchase a new car this year, be aware that buying a clean-fuel vehicle could give you a tax deduction of up to $2,000.
Among the vehicles the IRS recently certified for the deduction are the 2005 models of the Honda Insight, Honda Civic Hybrid, Honda Accord Hybrid, Ford Escape Hybrid, and Toyota Prius. The 2006 Lexus RX 400h was also certified for the deduction.
You must be the car's original owner, and you're allowed this deduction even if you don't itemize deductions on your return.
Wedding bells bring tax concerns
June is the traditional month for weddings. We associate marriage with love, roses, and wedding cake. But if you're walking down the aisle this summer, don't wait too long after the wedding to spend a little time on tax matters. Here's a checklist of things to consider:
* If you've taken your spouse's last name or hyphenated your last name, you need to notify the Social Security Administration. The agency will link your new name to your social security number and issue a new social security card.
* If you move to a new home, send a change of address to the IRS, the financial institutions where you've had accounts this year, and current-year employers. Then your W-2s, year-end tax forms, and IRS notices will find their way to you.
* Your marital status for tax filing is determined by your status on the last day of the year. Calculate the impact of the marriage penalty to see whether you need to change your income tax withholding. File a new Form W-4 with your employer's payroll department to notify them of your name change and any withholding change.
Update your will and other estate planning documents. Don't forget to review the beneficiaries on your IRAs, 401(k) plan, and life insurance policies. You'll want to make sure your documents are updated and taxes are minimized in the event of your disability or death.
Many of these suggestions don't apply just to marriage. Divorce or the birth of a child are similar major life events that will affect your taxes. For assistance with your tax planning relating to any of these events, give us a call.
Age discrimination ruling could have major consequences
Company policies that are intended to discriminate against older workers are illegal under the Age Discrimination in Employment Act. Now a new ruling handed down by the Supreme Court will allow discrimination claims when an employer's actions or policies disproportionately affect older workers even when there is no intent to discriminate.
This decision will let workers over age 40 sue for alleged age discrimination without having to prove that the employer's actions were intended to discriminate.
The ruling said that an employer's action will not be considered illegal if reasonable factors other than age are responsible for the disproportionate negative impact on older workers. In light of the court decision, businesses should review employee compensation, benefits, and policies to determine if they have a disproportionately negative impact on workers over 40, even though that is not the company's intent.
Your business can flourish, even when the "big boys" come to town
Many local businesses fold when a large retailer comes to their town. Is it possible to compete with these giants? You also have increasing competition from the Internet and mail order sales. What should you do?
Most locally owned businesses have a strong local following. You should capitalize on this. Go the extra mile in solving customer problems. If you don't have an item your customer is looking for, help locate it. If customers show up five minutes before or after closing time, accommodate them as best you can. If the till is "closed out," accept almost-exact change, or send them an invoice. Customers may have battled heavy traffic to get to your door. They will appreciate your extra courtesy. Better still, they will tell their friends.
It is important that customer service be supported from the top down. Every employee from the manager to the cleaning staff should know the company's customer service philosophy and practice it. It is imperative that new employees be schooled on customer service before they have customer contact.
It does little good to talk good customer service only to find that your customers are being let down. Unless you are getting unsolicited compliments from your customers, your customer service probably needs some improvement. Remember, it costs about five times as much to acquire a new customer as it does to keep a current customer happy.
What local businesses do you enjoy dealing with the most? Analyze what they do that makes you want to deal with them. Maybe you can employ elements of their customer service in your business.
If we can be of assistance, please call us. We are here to help your business be as profitable as possible.
What's New in Financial Strategies
Flexible spending account "use it or lose it" rule changes
Flexible spending accounts (FSAs) let workers set aside pre-tax dollars to pay for medical expenses and child care costs. The rule, up until now, has been that any money left in these accounts at the end of the year was forfeited - a "use it or lose it" rule that could leave employees with planning headaches in trying to match actual expenses for the year with set-aside funds.
Now the IRS is making things a bit easier for those with FSAs. In a new ruling, the IRS is letting employers modify their FSAs to extend the reimbursement deadline for a given year by two-and-a-half months. So if your employer changes the company's plan to allow for this grace period, you should be able to avoid the end of year scramble to use up remaining dollars in your flexible spending account.
No, you're probably not saving enough
How much money did you save last year? If you didn't save at least 10% of your earnings, you didn't save enough. If your savings in 2004 fell short, the only solution is to take charge of your financial future right now and start saving more money.
Saving money doesn't have to be hard work. In fact, many successful savers have found simple ways to cut spending and increase their savings. Here are some tips to help you get started and stay on track.
* Set goals. To give your savings purpose, set specific financial goals. For example, it's advisable to have an emergency fund of approximately six months' worth of living expenses to cover any cash outlays that may catch you by surprise. Nothing can derail your financial plans faster than a series of mishaps that force you to take drastic financial measures. Other saving goals may include a college savings fund, vacation fund, or a fund for major purchases.
* Treat your savings as your most important monthly bill. Write a check to savings first, or have your savings automatically deducted from your checking account or paycheck.
* Tax-deferred retirement accounts offer a smart way for you to save money for retirement. If your employer offers a 401(k) or SIMPLE retirement plan, contribute the maximum amount allowed. If your employer offers no plan, contribute to an individual retirement account (IRA). The money you contribute to a retirement account can reduce your taxable income and grow tax-free until withdrawn.
* Another way to maximize savings is to track your expenses for a few months. This is a great way to spot unnecessary or wasteful spending; it doesn't take much work to see potential cutbacks.
* When it comes to saving, think "control." For example, control the use of your credit cards. The amount you pay each month in finance charges could go to savings instead. Also, control the use of your ATM card. Get in the habit of giving yourself a regular cash allowance, and try to live with it.
You should be saving at least 10% of your earnings. Seem impossible? If you took a new job at 10% less pay, you would get by. For help in setting financial goals and developing a savings plan, call us.
Chuckle of the Month
"If you can smile when things go wrong, then you have someone in mind
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The information contained in this newsletter is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. For more information on anything in ONLINE ADVISOR, or for assistance with any of your tax, business, or financial strategy concerns, contact our office.
Timothy W. Tuttle & Associates