2011 & 2012 Annual limits and rates for Fica tax, Social Security tax, maximum pension & 401K deductions contributions, reimbursed mileage rate, depreciation, self-employed heath, insurance deduction, gift tax and corporate tax rates. QuickBooks help and training for small business. QuickBooks help and training for small business.
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2011 & 2012
Fica Tax Rates and Tax Limits
All the Important tax limits on one page

 


   

 

 

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Free: 2011 tax calendar (download pdf file)


Payroll tax Social Security Fica and Futa Limit

 

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2011 FICA Tax (941 Tax) limit  - Fica Limit

NEW RATE FOR 2011 & 2012
                         
FICA rate for Employees is 4.2% (NOT 6.2%)  FICA  Rate for Employers is 6.2%
                                 Medicare remains at 1.45% for both Employers and Employees

Social Security tax includes FICA 6.2% and Medicare 1.45%. The FICA tax limit (Social Security) changes annually. The Medicare tax has no limit.  Employer FICA tax is 6.2% and employee rate is 4.2%. Both FICA tax rate (6.2%)  and Medicare tax rate (1.45%) as a rule do not change however to help the economy, 2011 have provided reduction in tax to the employee. In addition to FICA tax limit and Social Security Limit, other tax limits and tax rate (s) can be found on this webpage.

2011 Medicare Wage Base limit         


2011 Social Security Wage Base limit
2012 Social Security Wage Base limit

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Unlimited


$106,800 2011
$110,100 2012

Wow...in 2002  the limit was $87,000!

FUTA Tax (940) limit

2011 Federal Unemployment limit  through 12/31/2011

Before July 1, 2011, the FUTA tax rate is 6.2%,  after June 30, 2011, the FUTA tax rate is scheduled to decrease to 6.0%. The tax applies to the first $7,000 you pay to each employee as wages during the year.  Generally, you can take a credit against your FUTA tax for amounts you paid into state unemployment funds. The credit may be as much as 5.4% of FUTA taxable wages. If you are entitled to the maximum 5.4% credit, the FUTA tax rate after credit is 0.8% (0.6% after June 30, 2011).

$   7,000

.8% to 6/30/2011
.6% after 07/01/2011

Shortcuts, tips, resources  for payroll taxes and human resources

QuickBooks Payroll

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Credit card companies will be reporting credit card sales by merchants to the IRS beginning in 2011 on Form 1099-K. Click here to view a draft of the 1099-K to see what will be reported. That means you ARE NOT to include in your vendor
1099-Misc Forms payments you made to them with credit or debit cards or paypal transactions

 

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2011 Mileage Rate 

Click here for IRS source   2011 Business mileage on a vehicle
                               2012 Business mileage on a vehicle

Interesting article on what auto expense is deductible
2011 Mileage - Business rate
2012 Mileage - Business rate
$ .51 per mile  (51 cents) to 6/30
$ .555 per mile (55.5 cents) to 12/31
$ .555 per mile (55.5 cents)  1/1/2012
2011 Mileage - Charity rate
2012 Mileage - Charity rate
$  .14 per mile 2011
$  .14 per mile 2012

2011 Milage - Medical and Moving Rate

2012 Mileage - Medical and Moving rate
$  .19  per mile   (19 cents) 6/30
$ .235 per mile   (23.5 cents)to 12/31
$ .23 per mile   (23 cents)
1/1/2012


Payroll tax rules Part A  and Part B  for employees or owners using a company vehicle

Revenue procedure 2009-54 (year 2010) detailed discussion on rules under which the amount of ordinary and necessary expenses of local travel or transportation away from home are deemed substantiated .

Need prior year rates? Click below
2010 rates and limits - Social Security, Mileage, Pension, 401K, IRA
2009 rates and limits - Social Security, Mileage, Pension, 401K, IRA

2008 rates and limits - Social Security, Mileage, Pension, 401K, IRA
2007 rates and limits - Social Security, Mileage, Pension, 401K, IRA

2006 rates and limits - Social Security, Mileage, Pension, 401K, IRA
2005 rates and limits - Social Security, Mileage, Pension, 401K, IRA

2004 rates and limits - Social Security, Mileage, Pension, 401K, IRA
2003 rates and limits - Social Security, Mileage, Pension, 401K, IRA

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2011 Maximum contributions and limits to pensions, IRA, and 401K

Click here for official source for:  
2011 limitations

Take control of your finances!
Choosing a retirement plan

2011 Maximum employee 401K contribution limit
 





2011 $16,500 +$5,500 (over age 50)
2012 $17,000 + $5,500 (over age 50)

2011 Catch up contribution Limit  (over age 50)

$ 5,500 (2011)  and 2012
 included in above

2011 Employer contribution to 401K is limited          

2011 total additions (employer contribution plus employee contribution) cannot exceed lesser of :


Tidbit: Did you know that the employer must remit salary reduction contributions no later than the 7th business day following withholding. Click here to read more,   You will find this tidbit under Fiduciary Responsibilities > Basic Responsibilities > Sentence begins with For plans with fewer than 100 employees.

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Up to 25% of compensation

2011 $49,000 or 100% of compensation
           $54,500 for over age 50

2012  $50,000 or 100% of compensation


 

2011 Maximum Annual Compensation limits  for determining benefits or contributions under  a qualified plan  (401(a)(17), 404(l), 408(k)(3)(C), & 408(k)(6)(D)

Note:  for  (2011) definition of a key employee in a top heavy plan is $160,000
          for
(2012) definition of a key employee in a top heavy plan is $165,000

      
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$  245,000   2011

$   250,000   2012
 
 

2011 Maximum Annual Defined Contribution- Employer Contributions for 2011 to an employee SEP-IRA cannot exceed the lesser of  the following amounts:

 

2011 Simplified Employee Pension
Employers contribution for employees is  based on the  plan document, which cannot be more restrictive than including all employees who performed services for the employer in the last 3 of 5 years with earnings greater than:

Employees covered under collective bargaining employees & certain nonresident aliens may also be exclude.

Special rules apply to the self-employed. See publication 560 (www.irs.gov) for a worksheet on how to calculate a 2009 SEP contribution for a self employed Schedule C Filer.  For the  worksheet,(same worksheet works for 2011)  click here.

Learn more- The ABCs of SEP Plans
Checklist- are you in compliance with IRS SEP rules and regs? Pdf


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25% of the employee's W2 compensation
( up to $ 245,000 2011)
         or
$   49,000   (2011)

$   50,000  (2012)



$      550   (2011) and 2012
    
  

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2011 Simple Retirement Account (Simple IRA)
Maximum Pretax Employee contribution




Learn more- The ABCs of Simple Plans
Checklist- are you in compliance with IRS Simple rules and regs? Pdf




$    11,500     2011 2012
      
+ over age 50 catch up

The employer contributes up to 3% of W2 wages which is in addition to the Employee deferral max above (Maximum ER contribution is $11,500)

2011 Simple Catch up Deferral (over age 50)

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$   2,500 ( 2011) & 2012
      

 2011 Limit to  Traditional IRA, nondeductible IRA, or Roth IRA.
 2012 Limit   
 Who can contribute





$    5,000 + over age 50 catch up
 $   5,000 + over age 50 catch up
 

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IRA Catch up Deferral (over age 50)

$     1000  (2011) & 2012

Learn about small business pensions

Retirement Plan Navigator

Resource for CPAs and retirement plan administrators

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How retirement income is taxed (pdf)

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2011 Maximum Earnings for Retirees

2011 Maximum retirement earnings before Social Security benefits are reduced
(One dollar in benefits will be withheld for every $2 in earnings above the limit)

Retirement Age from 65 to 67 depending upon Year of Birth

Normal Retirement Age Year of birth Age
1937 and prior 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943-54 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67

Over
 Retirement Age

Under Age:

2011 under full retirement age reduction begins

 

The year an individual reaches retirement age:
2011 reduction begins
Apples only to earnings for months prior to attaining full retirement age. $1 in benefits will be withheld for  ever $3 in earnings above limit


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unlimited earnings permitted - no reduction

2011
earnings over $ 14,160 ($1180/mo)
2012
earnings over $ 14,640 ($1220/mo)


2011
earnings over $37,680/yr (3140/mo)

2012
Earnings over $38,880 (3240/mo)
In the year the individual reaches full retirement age, earnings  months prior to attaining full retirement age - One dollar in benefits will be withheld for every $3 in earnings above the limit of  $37,680 (2010)


Minimum Wage hourly rates

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Link to a chart of all States Minimum Wage rates
Federal minimum wage 

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2011 Corporation and Individual Tax Rates

Individual Rates         Original 2011 source    2012 source

  • $ 5,800 2011 Standard deduction for Single    (2012  $5,950)

  • $ 5,800 2011 Standard deduction for Married filing separate  (2012 $5,950)

  • $ 8,500 2011 Standard deduction for Head of household  (2012 $8,700)

  • $11,600 2011 Standard deduction for Married filing Joint (2012 $11,900)

Exemption amount 2011 $3,700  (2012 $3,800)

2011 Deduction for personal exemption phase out begins :
**2011 Phase out: The phase out of the personal exemption amount under 151(d)(3) does not apply to any taxable year beginning after December 31, 2009, and before January 1, 2013.
Accordingly
personal exemption phaseouts ended. For 2011, taxpayers with AGI above a certain amount will no longer lose part of their deduction for personal exemptions and itemized deductions.  

Deduction for itemized deductions phase out begins when
AGI Threshold
2011 Phaseout:
The overall limitation on itemized deductions under 68 does not apply to any
taxable year beginning after December 31, 2009,
Accordingly,
 itemized deduction phaseouts ended. For 2011, taxpayers with AGI above a certain amount will no longer lose part of their deduction for personal exemptions and itemized deductions.

             

Click here to view IRS website containing these 2011 rates

For tax forms and extensions to file individual tax returns click here

2011 Tax Rates

2011 Individual Tax  Rates 10% 15% 25% 28% 33% 35%

Single

  8,500 next  26,000
to 34,500
next 49,100 to 83,600 next 90,800
to 174,400
next 204,750
to 379,150
amounts over
379,150

Head Of Household

12,150 next 34,100
to 46,250
next 73,150
 to 119,400
next 73,950
to 193,350
next 185,800 to 379,150 amounts over
379,150

Married Joint

17,000

next 52,000
to
69,000
next 70,350
 to 139,350
next 72,950
to 212,300
next 166,850 to 379,150 amounts over
 379,150

Click here to view IRS website containing these rates

 
2012 Individual Tax  Rates 10% 15% 25% 28% 33% 35%

Single

  8,700 next  26,650
to 35,350
next 50,300 to 88,650 next 93,000
to 178,650
next 210,000
to 388,350
amounts over
 373,650

Head Of Household

12,400

next 34,950
to 47,350
next 74,950
 to 122,300
next 75,750
to 198,050
next 190,300 to 388,350 amounts over
388,350

Married Joint

17,400

next 53,300
to 70,700
next 72,000
 to 142,700
next 74,750
to 217,450
next 170,900 to 388,350 amounts over
388,350

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Click here for: 2011 Corporate Rates
 
 
 

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Gift Tax

Federal gift tax exclusion-
click on annual exclusion
Taxable gifts count as part of the $1 million you are allowed to give away during your lifetime before you must pay Gift Tax.
These exclusions do not count towards the $1 million.
 

2006-2008 Estate Tax Applicable Exclusion Amount

2009  Estate Tax Applicable Exclusion Amount

2010 Estate Tax - No tax therefore no exclusion- This may change retroactively!

2011 Estate Tax Exclusion Amount


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$    13,000 (2010 and 2011)
    

 

$2,000,000


$3,500,000

None

$1,000,000  tax on the rest is 55%


Health Savings Accounts (HSA)

High Deductible Health Plan and Contribution Limits

 2011 limits
Maximum HSA Contribution Limit   Minimum Policy Deductible Annual out-of- pocket does not exceed
2011 Self -only coverage annual deductible
2012
$3050
$3100
$1,200 $5,950
$6,050
2011 Family coverage annual deductible
2012
$6150
$6250
$2,400 $11,900
$12,100

2011 Over Age 55 (not over 50!!) Catch up contribution is $1000
(not mentioned in the 2011 documentation attached here )  
(2012 documentation attached here)

Individuals who are eligible individuals on the first day of the last month of the taxable year (December for most taxpayers) are allowed the full annual contribution (plus catch up contribution, if 55 or older by year end), regardless of the number of months the individual was an eligible individual in the year. For individuals who are no longer eligible individuals on that date, both the HSA contribution and catch up contribution apply pro rata based on the number of months of the year a taxpayer is an eligible individual.

Beginning in 2011 over the counter medications cannot be paid with HSA dollars

If you withdraw funds from an HSA before age 65 and used those funds for purposes other than qualified medical expenses there is a penalty tax of and additional 10%. In 2011 that penalty increases to 20%.

Learn more about Health Savings Accounts and administrative requirements
 
 
What new taxes and tax credits come with the new Healthcare bill??  

Employers health care tax credit - If you have 10 or fewer workers with average salaries of $25,000 and pay at least 50% of
health care premiums, your credit will be 35% of the premiums paid.  But small businesses with more than 25 employees or pay average annual wages of over $50,000 will not qualify for a credit. Click here to read the rev proc 2010-44 ruling on how to calculate the tax credit.

03/22/10 Healthcare bill will be funded in part by the wealthy. Click here to read the Amendment - Start reading at page 88
Nice summary of the bill and the amendment by ria.thomsonreuteres.com

For years after 2010 employers will have to disclose the value of the benefit provided by them for each employee's health insurance on the W-2 Form. An Excise tax will be imposed on high-cost employer sponsored health coverage. The tax will be levied at the insurer level.

For tax years after 12/31/2012 A surtax labeled "Additional Hospital Insurance Tax (HI). Hospital insurance benefits in Medicare are funded by payroll taxes on wages and self-employment income. Workers and employers each pay 1.45% for a total of 2.9% medicare tax, which is collected on the workers entire earnings.  A 0.9% surtax on wages and self employment income  in excess of Modified adjusted gross income over the Threshold amount limit ($250,000 Joint Returns, all others $200,000) will be assessed.

For tax years after 12/31/2012 3.8%  surtax of the lesser of Net Investment income or excess of Modified adjusted gross income over the Threshold amount limit ($250,000 Joint Returns, all others $200,000)
Net Investment income  -Sum of:

  • Interest, dividends, annuities, rents (does not include distributions from qualified retirement plans)

  • Income from a trade or business (described in paragraph 2)- Passive activity, business  trading in financial instruments, Income on investment of working capital

  • Gain from sales of disposition of property (other than property held in business)

For tax years after 12/31/2012 FSA (flexible spending account) new limit is $2500. Currently there is no limit.

 

 
   

Travel Reimbursement Rules for Lodging, Meals & Incidental Expenses

 
See Revenue Ruling for details on flat rate reimbursement plans

Meals while away on business
50% deductible
 

 

 
Depreciation

2010 Limit  $134,000  (This may change!!)
2010 Limit Section 179 $250,000  (
3/11/10 Bill  HR 2847)

2010 and 2011 Limit Section 179 $500,000 (Small Business Jobs Act)
2012 Limit Section 179 $125,000
2013 Limit Section 179 $25,000


New or used property qualifies, leased property usually does not qualify

The amount of investment qualifying for this immediate deduction begins to phase out for small businesses with investment in excess of $800,000  $2,000,000

Regs now permit Section 179 on off-the-shelf software


Elect to deduct $5000 start-up & $5000 organizational expenses in the year the business begins.
Effective for expenses incurred after 10/22/04. Be sure to read more on the details of this rule.
Deductions reduced by the amount of which the cumulative cost of start-up or organizational expenditures exceed $50,000 respectively

 Luxury Auto depreciation rules:
A car is defined as a four-wheel passenger automobile designed for use on public roads and is rated at 6,000 pounds or less unloaded gross vehicle weight

 
1st year depreciation limit
 $3060  (2010)

($11,060 for automobiles for which the special depreciation allowance applies)

Caution. These limits are reduced if the business use of the vehicle is less than 100%
Special use vehicles (over 6000lbs loaded) now exempt from luxury auto rules and can be deducted under section 179 SUVs (over 6000lbs)
 

Heavy Trucks & Vans

  read more

Not updated for 2010 limits



Not updated for 2010 limits

Publication 946 has a nice table for limits on depreciation of vehicles

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Statute of Limitations

3 years from tax period due date or 3 years from date original return received whichever is later
unless the taxpayer fails to include on a return any information with respect to a listed transaction
then the statute of limitations will not expire before 1 year after the Secretary is furnished with the information.
See more-Statute of Limitations guidelines
see also
How long should you retain your receipts and business documents
 

Tax Tips from the IRS

 

    Click to view tax tips at www.IRS.Gov

 
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IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that, any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding any tax related penalties that may be imposed on you or any other person under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed in this communication  
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