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Cost of
MBA Program |
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The Court
made an interesting observation about MBA degrees versus degrees that serve
as a foundational qualification to obtain a professional license (for example,
law school). The Court noted that an MBA program differs from law school,
for instance, because the MBA program is a more general course of study
that does not lead to a professional license or certification. Taxpayer
may deduct education expenses as ordinary and necessary business expenses
if the education (1) maintains or improves skills for his current employment
or business or (2) meets his employer’s express requirements as a condition
for retaining the established employment relationship. However, the cost
is not deductible if the education qualifies the individual for a new trade
or business, which is often the issue the court determines. The individuals’
intent
or whether he actually becomes employed in a new trade or business is irrelevant. |
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Lifetime
Learning Credit |
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This credit
is for students taking non-degree courses for undergraduate, graduate,
professional degree students, and students acquiring or improving job skills.
The credit amount is a maximum $2000 per household (not per student) or
20% of tuition expenses on a maximum of $10,000 of qualified tuition and
fees paid. The student does not need to be full time nor take a minimum
number of courses. |
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American
Opportunity Credit |
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For 2011 students
will be eligible for a credit of up to $2500 per student for the first
four years of the student’s post secondary education. Eligible Institutions
include any accredited college, university, vocational school or other
accredited post-secondary education institution. Eligible expenses include
tuition, equipment and course materials paid to the educational institution.
Room and Board, other living expenses, insurance, medical expenses and
transportation expenses DO NOT qualify. Income limits apply. |
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Penalty
for Failure to File Partnership or S-Corporation Returns |
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Even though
Partnerships and S-Corporations pay no Federal Taxes you must still file
a timely return. S-corporations are due on March 15th and Partnerships
are due April 15th. The penalty is $195 times the number of shareholders
or partners, times the number of months the return is late. Make sure you
prepare your returns by the deadline or file an extension. |
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2011 Updates |
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Business Standard
Mileage 2011 = 51 cents/mile
Charity Work
Mileage Rate 2011 = 14 cents/mile
Medical and
Moving Mileage Rate 2011 = 14 cents/mile
Section 179
Depreciation Deduction 2011 = $500,000
Maximum Earnings
subject to Social Security Tax 2011 = $106,800
For 2011 the
6.2% Social Security Tax paid by employees was reduced to 4.2% |
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Small Business
Health Care Tax Credit |
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Small employers
that provide health care coverage to their employees and that meet certain
requirements (“qualified employers”) generally are eligible for a federal
income tax credit for health insurance premiums they pay for certain employees.
In order to be a qualified employer, (1) the employer must have fewer than
25 full-time equivalent employees (“FTEs”) for the tax year, (2) the average
annual wages of its employees for the year must be less than $50,000 per
FTE, and (3) the employer must pay the premiums under a “qualifying arrangement”.
Note the credit does not include the owner of the business. |
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Gift Tax |
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The annual
gift tax exclusion for 2011 remains at $13,000 per recipient. If you exceed
that amount you will have to file and possible pay gift tax. Here is an
example of how it works: if you are married and have two children, you
are allowed to give each child $26,000 before you would have to file gift
tax, you can give each child $13,000 and your spouse can give each child
$13,000. You and not your children pay the tax; the gift is not taxable
to your children and it is not deductible by you. |
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2011 Retirement
Contribution Amounts |
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IRA contribution
limits: Under Age 50 $5000, Over Age 50 $6000 SIMPLE IRA’S elective deferral
limits: Under Age 50 $11,500, Over Age 50 $14,000 401(k) elective deferral
limits: Under Age 50 $16,500, Over Age 50 $22,000 Profit-sharing plans
and SEP IRA’s: Contribution limit: $49,000 Compensation limit (for contributions)
$245,000 Maximum contribution percentage (Self-employed/Employer) 20 /
25% |
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Transportation
to Work Fringe Benefit Credit |
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Check with
your Employer to see if they offer any type of commuter refunds, they are
tax deductible for the employer and tax free to the employee. The maximum
amounts allowed in 2012 for Transit Passes, and Commuter Highway Vehicle
Transportation is $125/month; Qualified Parking is $240/month; and $20/month
if you commute on a regular basis to work via bicycle, to cover costs of
repairs, maintenance and purchase of your bike. A qualified bicycle commuting
month is any month you use the bicycle regularly for a substantial portion
of the travel between your residence and place of employment and you do
not receive any of the other qualified transportation fringe benefits.
You are not entitled to this exclusion if the reimbursement for bicycle
commuting is made under a compensation reduction agreement. |
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or
call to schedule an appointment: 215.985.0106 |
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