It is New Year’s Day as I write this newsletter. Somehow the lack of any New Years Day college football bowl games has motivated me to write to you. Lesson one; never underestimate the power of the National Football League and the BCS.
I am a little gun shy of making predictions. In 2008 we predicted a stock market rally that of course never happened. Last year we predicted $5.00 a gallon gas at the end of the year, (It didn’t come close to that price but apparently is headed that way this year) a Chicago Cubs World Series, the increased value of the Internet in just about everything we do including marketing your business, and more doom and gloom in the Public Sector. Two out of four I guess is not bad.
With some certainty I predict the tough economic times will continue. The new year will bring continued misery to millions of Americans, including the jobless, those facing housing trouble and many who had hoped to retire but must work on — if they're lucky enough to have a job. After the recession and the lost decade of the 00s, the typical American household’s real income is back at 1997 levels.
Very slow growth makes it almost impossible to rescue this situation for years. Indeed, the danger of long-term contraction — and how does a society based on fairly high growth manage it — is real.
As you have probably already heard the temporary reduction in the amount of Social Security Tax you withhold from your employees remains in effect until February 29, 2012. That means the amount of Social Security tax you withhold continues to be 4.2% of wages paid through the end of February. Your matching portion of Social Security taxes remains unchanged at 6.2%.
January is always our busiest month. We generate hundreds of your employee’s W-2 forms and quarterly taxes. In addition, at the end of the month we prepare any 1099 forms you may need to furnish your independent contractors. Technically the W-2 and 1099 forms have to be sent to the recipients until the end of January. However, the IRS continues to maintain a policy that will allow employers an additional two weeks to furnish these forms. Sometimes we take advantage of it.
We have already started in December processing your quarterly forms for this month. Some clients will be paying their federal tax liability electronically, while others will not. New IRS mandates to pay all taxes electronically are now in place. Unless your liability is very small, IRS now requires employers to pay and file electronically. We are on top of the new mandate and will notify you of any changes that may apply specifically to you. As usual 1099 forms will be processed last. Don’t expect any 1099 forms mailed to you until very late in January.
We are rushing to complete our mega redesign of our two tax internet sites 1taxes.com and the smallbizwiz.com. Both sites are scheduled to be up and running by the end of the month. We are trying to make more resources available to our existing clients while still making them a key in our marketing message to new clients.
Lastly, I wanted to say thanks for everything in 2011. It was a tough year for a lot of reasons and I won't miss it, I appreciate all of the support from our fabulous clients, the goodwill from you fine people is always heartening. Thank you and Happy New Year.
"Now is the accepted time to make your regular annual good resolutions. Next week you can begin paving hell with them as usual. Yesterday, everybody smoked his last cigar, took his last drink, and swore his last oath. Today, we are a pious and exemplary community. Thirty days from now, we shall have cast our reformation to the winds and gone to cutting our ancient shortcomings considerably shorter than ever. We shall also reflect pleasantly upon how we did the same old thing last year about this time. However, go in, community. New Year's is a harmless annual institution, of no particular use to anybody save as a scapegoat for promiscuous drunks, and friendly calls, and humbug resolutions, and we wish you to enjoy it with a looseness suited to the greatness of the occasion." - Mark Twain
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