941 deposit rules for 2003
by Christopher Giles, CPA
 

The frequency of your federal payroll tax deposits for social security, medicare and income taxes is determined annually based on a four-quarter “lookback period.” For 2003, you must calculate the total taxes reported on Forms 941 for the four-quarter period July 1, 2001 through June 30, 2002. If you reported $50,000 or less of taxes during the lookback period, you are a monthly depositor; if you reported more than $50,000, you are a semiweekly depositor.

Under the monthly deposit schedule, your deposit period is the calendar month. The deposit of accumulated federal employee and employer taxes is due by the 15th day of the following month.

The deposit periods for semiweekly schedule depositors are based on paydays Wednesday through Friday and Saturday through Tuesday. The deposits of accumulated taxes are due on the following Wednesday and the following Friday, respectively.

If your deposit is due on a day that is not a banking day, the deposit is considered timely if it is made by the close of the next banking day. In addition to federal and state bank holidays, Saturdays and Sundays are treated as nonbanking days.

If you accumulate a tax liability of $100,000 or more on any day during a deposit period, you must deposit the tax by the next banking day, whether you are a monthly or semiweekly schedule depositor. If you are a monthly schedule depositor, and accumulate a $100,000 tax liability on any day, you become a semiweekly schedule depositor on the next day and remain so for at least the rest of the calendar year and for the following calendar year.

Penalties for failure to deposit taxes timely range from 2% to 10% of the liability depending on the number of days the deposit is late.
The two methods of depositing employment taxes are making deposits with Form 8109 – Federal Tax Deposit (FTD) coupons and electronic deposits using the Electronic Federal Tax Payment System (EFTPS).

If you use FTD coupons, you must mail or deliver each FTD coupon and a single payment covering the taxes to be deposited to an authorized depositary. Authorized payments include cash, a postal money order drawn on and to the order of the depositary, or a check or draft drawn on and to the order of the depositary. An authorized depositary is a financial institution (i.e, commercial bank) that is authorized to accept the FTD coupon.

If your total deposits of employment taxes exceeded $200,000 in calendar year 2001, or you were required to use EFTPS in 2002, you must make electronic deposits using EFTPS in 2003. Amounts subject to electronic deposit requirements but not deposited using EFTPS are subject to a 10% penalty. To obtain more information or to enroll in EFTPS, call 1-800-555-4477 or 1-800-945-8440, or visit the EFTPS website at www.eftps.gov. If you need any assistance, please contact us.

Use tax due on office cleaning
by Anne D’Amico, CPA/PFS
 

During recent state of New Jersey audits, a “hot issue” is use tax due on office cleaning. If a subcontractor cleans your office and does not charge sales tax, you are required to pay 6% use tax which is remitted with Form ST-50 Sales and Use Tax Quarterly Return. If you have any questions, please contact us.

Pennsylvania education tax credit
by Bret Stone
 

The Commonwealth of Pennsylvania offers a new way for businesses to reduce taxes and to improve the community. The Educational Improvement Tax Credit (“EITC”) was created in 2001 authorizing tax credits to businesses for up to 90% of contributions in the form of cash, personal property or services made to qualifying scholarship organizations or education improvement organizations. A business may receive up to $100,000 in credits per year.

Before making any contributions, a business must complete the application for EITC. The Department of Community and Economic Development (“DCED”) will be accepting applications for first year applicants beginning July 1, 2003 for the program’s fiscal year July 1, 2003 through June 30, 2004. There are a limited amount of credits available each year so applications are processed on a first-come-first-served basis. A business will receive a written notification of approval. Upon receipt of approval, the contribution(s) must be made within 60 days of the date on the letter. Confirmation of the contributed amounts must then be sent to the DCED within 90 days of the date on the letter or the credit letter will be rescinded.

A business will be approved for a tax credit equal to 75% of its contribution(s) to listed organization(s), up to a maximum of $100,000 per taxable year. The tax credit may be increased to 90% of the contribution(s) made, up to a maximum of $100,000 per taxable year, if the business agrees to provide the same amount of contribution(s) for two consecutive tax years. The second year application must be completed and mailed between May 15th and July 1st of the following fiscal year to ensure availability of tax credits. As in year one, the same approval process will ensue.

Tax credits must be utilized in the year received and may not be carried forward or back. The credits are nonrefundable and may not exceed the tax liability for that year.

The complete list of qualifying scholarship organizations and educational improvement organizations can be found online at www.inventpa.com. If you have any questions or need additional information, please call our office and speak to Dennis Vogt.

Potential tax benefits for IRS losses
 

If the current value of your IRA investment is less than your basis, there is a tax deduction available if the accounts are closed. In this case, losses incurred in your traditional and Roth IRA accounts qualify as a miscellaneous itemized deduction subject to the 2% of adjusted gross income limitation. The loss is calculated based on the amount distributed less your basis in the IRA. Generally, basis in a traditional IRA is the amount of non-deductible contributions made and basis in a Roth IRA is the cumulative amount of contributions made since inception.

The regulations apply separately to each type of IRA. In order to report a loss in a traditional IRA, all the traditional IRA accounts (but not Roth IRAs) must be liquidated. To report a loss in a Roth IRA, all the Roth IRA accounts (but not traditional IRAs) must be liquidated.
There are other tax aspects that may affect the deduction, so please contact us to discuss your particular situation.

Alloy Happenings
by Brad Sears
 

The firm is proud to announce that Alloy Silverstein Financial Services has been named winner of the 1st Global Capital Corp. Top Method 10 Producer Award. The award, which ASFS received at 1st Global’s national conference in Orlando, Florida, recognizes performance in ten areas of client financial planning, including tax planning, investment planning, and asset protection.

Ren Cicalese, CPA/PFS received a Certificate of Appreciation from the American Institute of Certified Public Accountants for volunteering services to those affected by the terrorist attacks of September 11, 2001.

Appointed chairman of the 2002 Rutgers University-Camden School of Business / School of Law golf outing.

Steven L. Shapiro, CPA/PFS was appointed director of “The Bank”, a subsidiary of Fulton Financial Corporation.

Chosen by Congressman Thomas M. Davis III of Virginia as a recipient of the National Leadership Award.

Joseph Adams, CPA passed the Series 7 General Securities Representative Examination.

Dennis Vogt, CPA lectured on “Retirement Plan Options for Family Businesses” at the Rutgers University - Camden Family Business Program.

George E. Barrett, CPA lectured on “Business Plans: What are They and Why Bother?” at the Rutgers University - Camden Family Business Program.

We are pleased to announce the addition of the following employees to our firm:

Kyratso Kaskabas, recent graduate of the University of Delaware.

Laura Simon, CPA, rejoining the firm.

Brenda Savova, recent graduate of Richard Stockton College.