Looking to hire? Hire an unemployed veteran

President Obama recently signed into law the returning heroes and wounded warriors work opportunity tax credits. Under this program, an employer can receive a 40% tax credit on the first $14,000 of wages paid to a qualifying veteran ($24,000 if disabled) who has been unemployed for six months or more in the year before they were hired. If the veteran was unemployed for less than six months but more than four weeks in the year prior to being hired, the company can receive a 40% credit on the first $6,000 of wages paid to the veteran. The credit applies to veterans starting work after November 21, 2011 and before January 1, 2013.

The credit is only available for the wages paid to the veteran in the first year of employment. The employer should fill out form 8850 on or before the day the individual is offered employment. This form should be filed with the designated local agency within 28 days of the employee beginning work to receive certification that the individual is a member of a targeted group.

Nathan Laurentius, CPA

(December 2011)

Retirement Plan Limits Released for 2012

The IRS has released the 2012 contribution limits for retirement plans. Some contribution levels will change from their 2011 limits. The maximum contribution for Section 401(k) deferrals will increase to $17,000.  The catch-up contribution for individuals over 50 remains unchanged at $5,500.

The limit on a participant's annual addition to a defined contribution plan is increased from $49,000 to $50,000 for 2012.

Traditional IRA and Roth IRA contribution limits will remain the same as 2011 levels.  The maximum contribution will be $5,000.  The catch-up contribution for individuals over 50 will be $1,000.

A taxpayer may receive a tax deduction for their contribution to a traditional IRA.  However these deductions are phased out if modified adjusted gross income (AGI) is above the phase-out limits.  The AGI thresholds have changed for 2012. The phase-out range for singles and heads of household who are active participants in an employer-sponsored retirement plan will occur if the taxpayer's AGI is between $58,000 and $68,000. 

The phase-out range for married couples filing jointly is between $92,000 and $112,000 of AGI, if the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan but is married to someone who is an active participant, the deduction is phased out if the couple's AGI is between $173,000 and $183,000.

The phase-out range for individuals who contribute to Roth IRAs increased $4,000 for 2012 to $173,000 through $183,000 for married filing jointly filers.   For single filers and head of household, the income phase-out range increased $3,000 from 2011 levels to $110,000 through $125,000. 

Please contact us if you have questions relating to your retirement plan contributions.

Karen Davis, CPA, JD

(December 2011)

Standard Mileage Increased for 2012

The standard mileage rate for 2012 will be increased to 55.5 cents per mile. This is a 4.5 cent increase over 2011 limits. The rate for medical travel will increase to 23 cents a mile, while the charitable rate will stay at 14 cents.

Nathan Laurentius, CPA

(December 2011)

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