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Got college-bound kids? Then you might have questions about the kiddie tax, since these federal rules can apply to the unearned income of full-time students up to age 24.

Here's an overview.

• The basics. The kiddie tax affects how much you'll pay on part of the investment income your child receives, such as interest or dividends. When the rules come into play, this "unearned income" is taxed using your rates.

• How the tax is applied. For 2010, the first $950 of your child's unearned income is tax-free. Tax is calculated on the next $950 using your child's federal tax rate, which can be as low as 5%. Unearned income over $1,900 is taxed at your federal income tax rate, when that rate is higher than your child's.

For an 18-year-old, the kiddie tax applies when your child's earned income — that is, money received from wages, salary, tips, commissions, and bonuses — is less than half the cost of providing necessities such as food, clothing, and shelter.

The same 50% support exception applies when your child is a full-time student and age 19 through 23.

• Planning tip. Consider hiring your college student in your family business. Wages are earned income and can lessen or eliminate the kiddie tax.

Still have questions about the kiddie tax? Give us a call. We have answers, information, and planning strategies.

"You put your money in, and you take your money out." Unfortunately, the rules for taking withdrawals from your IRA are not as simple as those for performing the classic children's dance.

Here are three general guidelines.

• Early withdrawals. You'll pay regular income tax as well as a 10% penalty on early withdrawals from your traditional IRA unless an exception applies. Early withdrawals are those you take when you're under age 59½.

Exceptions that let you avoid the penalty include amounts you withdraw to use for the following:

• certain educational or medical expenses

• medical insurance when you're unemployed

• building, buying or rebuilding your first home

You may also qualify for an exception to the early withdrawal penalty if you're a military reservist, or when you inherit an IRA, take nontaxable distributions, or roll over eligible amounts within 60 days of the withdrawal.

• Required minimum distributions. For 2010, you're once again required to take distributions from your traditional IRA when you reach age 70½. The penalty for withdrawing less than the required amount is 50% of the shortage.

The required minimum distribution rules also apply when you inherit a traditional or a Roth IRA.
 
• Excess contributions. When you deposit more than the allowable maximum contribution into your IRA, you generally need to withdraw the excess along with any earnings by the due date of your tax return. Otherwise you may owe a 6% penalty, which can be assessed each year for as long as you leave the extra amount in your IRA.

The maximum IRA contribution limit for 2010 is $5,000 (plus an extra $1,000 if you're over age 50) or your earned income, whichever is less.

July 6, 2010— Henry & Horne, LLP announces the addition of their new Healthcare blog; “The Weekly Dose” – Prescribing Accounting, Tax, Consulting and Financial Services to the Healthcare Industry.  The blog is located on the firm’s website at http://www.hhcpa.com/blogs/healthcare-cpa-accounting-services/.

“The Weekly Dose” is a compilation of entries from Henry & Horne’s Healthcare niche which is headed up by Managing Director Tom Cooper and Partner Gary Fleming, CPA.

The entries cover a wide range of topics including personal experiences and updated information on the healthcare industry.

Entries will be diverse and will cover topics associated with healthcare and accounting industries.

This is Henry & Horne’s sixth blog. The other blogs include, Nonprofit GPS – Your Personal Navigation System through the Not-for-Profit Community, contains information on the not-for-profit community; Perspectives - Demystifying Valuation, Economic Damages and Forensic Accounting, contains information regarding the business valuation and litigation community; The 411 on Employee Benefits Plans – Valuable Information on 401k’s, Pensions, ESOP’s, Form 5500 Preparation and much more! dives into the world of employee benefits audits; Tax Insights – Providing information on state, local, federal, estate and international taxation, and Accountants Understanding The Obstacles - Providing audits, reviews, compilations, CPA Tuneup® and bookkeeping services. All the blogs are updated weekly and can be found on the firm’s website.
 

March 17, 2010 - Henry & Horne, LLP was selected for the 2009 Best of Business Award in the Certified Public Accountant category by the Small Business Commerce Association (SBCA)

The SBCA Award Program recognizes the top 5% of small businesses throughout the country. Using statistical research and consumer feedback, the SBCA identifies companies that they believe to have demonstrated what makes small businesses a vital part of the American Economy. A selection committee chooses the winners based off statistical research and information taken from monthly surveys, a review of consumer rankings, and other consumer reports.

Mark Eberle, CPA and Managing Partner at Henry & Horne, said the Firm is “honored and pleased to earn this recognition, and we sincerely thank all of our employees, clients and business associates who make awards like this possible.”

The SBCA is a San Francisco based organization. It is a private sector entity that aims to provide tactical guidance with many day to day issues that small business owners face. In addition to their main goal of providing a central repository of small business operational advice; they use consumer feedback to identify companies that exemplify what makes small business a vital part of the American Economy.