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Does your child have a job this summer?  Are you wondering whether he/she will have to file a tax return?The answer depends on several factors, including the amount of W-2 wages, self-employment income, tips, interest, dividends and stock sales.  For instance, if wages are the only source of income, your child can generally earn up to $5,800 during 2011 before a federal return is necessary.However, most employers will withhold federal and/or state income tax, therefore a return may be required even when the wages earned are lower than the filing requirement.  That's because filing is the only way to claim a refund of overpaid taxes.Additionally, your child may have a state filing requirement even if he/she does not have a federal filing requirement.  This is due to not all states follow the federal threshold for filing. 

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The Associated Builders and Contractors, Inc. (ABC) has been working with the City of Wilmington regarding their tax audit process for contractors.  The City has agreed not to send out proposed assessment letters to contractors that respond to the notice of audit letter within 30 calendar days.  If the Auditee does not respond within 30 days the City will make an assessment based upon the revenue records from the Delaware Division of Revenue and/or the Department of Labor. Once the City receives the contractor response a Pre-Audit Conference Call will be scheduled to review the audit process.  The City will then supply the contractor with an Excel file that contains the W-2 records including names, addresses and social security numbers.  The contractor is then responsible to verify the information and provide any missing/requested information to the City.  After the City receives this information a more accurate assessment will be made if needed. Regarding the Head Tax, the City will ask for missing information for the current year and 3 years prior. 

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The world is becoming more environmentally conscious and taking step to "go green. While most would agree that going totally paperless probably is unachievable, many companies already have begun to make progress in decreasing the amount of paper they use. Gunnip began using a paperless system in 2006. To further reduce paper, we offer electronic portals to clients. Contact us if you would like to utilize this electronic means of sharing and working with data. 

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Effective July 1, 2011, the 0.2% federal unemployment tax (FUTA) surtax is no more. The FUTA tax rate, before consideration of state unemployment tax credits, is now 6.0%.That means employers need to separately track FUTA taxable wages paid before July 1, 2011, and FUTA taxable wages paid after June 30, 2011, since the FUTA tax rates are different during those periods.Employers whose FUTA tax is greater than $500 for the calendar year need to make quarterly FUTA deposits; the next payment is due on Aug. 1, 2011.  The August payment is based on taxable wages paid through June 30, 2011, so it will be calculated using the 6.2% rate. However, the next payment, due on Oct. 31, 2011, will be computed using the 6.0% FUTA tax rate if legislation is not enacted to retroactively reinstate the FUTA surtax beginning July 1, 2011. 

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A caption on the website of the Delaware Economic Development Office reads "Why Delaware?" Pro-business climate and a corporate capital of the world are two terms which appear on the website, as answers to the question posed - Why Delaware? Add enhanced tax credits to the scoreboard. Recently Delaware enhanced its investment and employment credits, with legislation providing for tax credits equal to $500 or $750 (if in targeted areas) for increases in the number of qualified employees.  These provisions are effective for taxable periods beginning after 6-30-2011. Generally, this credit can be utilized by taxpayers making, over a consecutive 12 month period, a qualified investment of at least $200,000 in a qualified facility in Delaware, so long as the taxpayer employs five qualified employees. The credit cannot exceed more than 50% of the tax due for the year that the investment is made, as well as over the subsequent 9 years, so long as the facility remains in place.While previous incentives existed, in lower amounts, some were restricted to those situations where the qualified investment was placed in service before June 30, 2009.  The new legislation removes this date limitation, and also establishes an application requirement which obliges a taxpayer to seek written approval, confirming the taxpayer's qualification for these tax credits, within 36 months after the qualified facility was placed in service. Certainly more details will follow about the process to be followed by those seeking these types of tax credits. For the moment, it is simply noteworthy that Delaware continues to recognize and compete for new investment and new jobs, in Delaware, with tax incentives.  Clearly tax incentives, alone, are not the only things needed to entice new investment in a state, but certainly these types of incentives are something that ought to be considered as part of a decision to invest. Remaining competitive with other states soliciting new business, while at the same time remaining fiscally responsible, is something Delaware seems to strive for. 

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The IRS recently announced that small companies will get an additional year before being required to report the value of employee health benefits on their employees' W-2 forms.Health reform legislation passed in 2010 included a requirement that employers report on W-2 forms the value of health coverage they provide to employees. The IRS had already provided relief for all businesses by making reporting optional for 2011 W-2 forms.Now,  small companies that file fewer than 250 W-2s need not report the value of benefits until filing 2012 W-2 forms early in 2013. 

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The IRS has announced that the optional mileage allowance for owned or leased autos (including vans, pickups or panel trucks) will increase 4.5¢ from 51¢ to 55.5¢ per mile for business travel from July 1, 2011 to Dec. 31, 2011 to better reflect the real operating cost in this period of rapidly rising gas prices. This rate can also be used by employers to reimburse tax-free under an accountable plan employees who supply their own autos for business use, and to value personal use of certain low-cost employer-provided vehicles. Standard mileage rates also increased for medical and moving expenses to 23.5 cents from the previous amount of 19 cents per mile. Charitable mileage remained the same at 14 cents per mile.

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The Delaware legislators have expanded the contribution check-offs. A new law (effective 06/07/2011) creates a voluntary check-off on the Delaware income tax returns for contributions to the White Clay Creek Wild and Scenic River Preservation Fund, to enhance water resource restoration and management programs within the White Clay Creek watershed.

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The IRS has published the first Automatic Revocation of Exemption List. It lists approximately 275,000 nonprofits nationally, a little more than 850 in the state of Delaware, who failed to file an annual information return or notice with the IRS and have now had their tax-exempt status revoked. The IRS will update the Automatic Revocation of Exemption List monthly.  Revocations are mandatory under the Pension Protection Act of 2006.  The act requires the IRS to revoke the tax exemption of any nonprofit that is required to file an annual return (Form 990, 990-N, 990-EZ, or 990-PF) but has failed to do so for three consecutive years.If your nonprofit organization is listed, you can longer accept tax-deductible contributions and must now must file a federal income tax return and pay federal income taxes. You can review the list here: IRS Automatic Revocation ListIf your organization is on the list and you need help understanding the implications, please contact us at info@gunnip.com or 302.225.5000. 

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Just a quick note to welcome you to our blog and let you know why we've established it.  Our primary goal is to share important information with our clients and friends. Through the course of our work, we are constantly coming across new developments and helpful hints that could impact your business and personal finances. Through our experience, we can guide you through the latest financial and tax information available.

Our posts will be contributed by various members of Gunnip; therefore the topics and style will vary.  Since we all have different perspectives and areas of interest, some authors may share interesting articles, video, commentary, etc.  Another contributor may include a reminder for an upcoming filing, or a tax tip you may benefit from. Another might include a humorous anecdote or share information on a local community event.We'd also like to pass along information about our staff and the great things they are doing. Be on the lookout for news about new hires, promotions, and the tax-time, stress-buster activities we hold to keep things fun in the office.  What we won't do on this blog is politicize the information. Our posts will be factual, contextual, and respectable.

Thank you for taking the time to visit us and we hope that you find this blog useful. If you enjoy it, please consider signing up for the email notifications when a new post has been submitted.  You can also follow us on the popular social media platforms. If you have any questions, don't hesitate to contact us at info@gunnip.com or 302.225.5000. 

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