Ketel Thorstenson to host (2) Tax Law Seminars

Join me to discuss 2010 tax legislation for businesses, individuals and estates. This sweeping legislation affects all taxpayers. You can choose from (2) seminars we will be hosting at the Holiday Inn, Rushmore Plaza:

Tuesday, January 18th from 12-1 pm OR

Tuesday, January 25th from 5:30-6:30 pm

The seminars are free of charge.

Register by e-mailing Deb Worley at debw@ktllp.com or calling 342-5630.

Watch out for that new Estate Taxation Law

In 2009, the federal estate exemption was $3,500,000 per person with a 45 percent estate tax rate. For 2010, there is no estate tax. In 2011, the federal estate exemption is scheduled to decrease to $1,000,000 per person with a 55 percent estate tax rate. If we don’t see any changes from Congress before January 1, 2011, will you need to do some estate planning?

Denise Webster, Tax Partner and Estate Planning Niche Expert

Nonprofits must file 990 Form by May 15, 2010

To small nonprofits clubs out there:

Remember the May 15 deadline for newly required IRS reporting. Lions Clubs, Boys Scouts, American Legions, etc. are affected. A simple 990 N Form, available at irs.gov, ensures that receipts remain non-taxable. Ideally, your organization received IRS notification three years ago and got on track with the filing requirement at that time. If otherwise, scramble now! The filing takes around 30 minutes.

- Amanda Bechen, CPA and Tax Manager with Ketel Thorstenson, LLP

Obama HIRE Act affects area businesses

President Obama signed into law a bill that could benefit many business in the Black Hills area. The HIRE Act states that if you (the business owner) hire an employee after February 3, 2010 that has been unemployed or worked less than 40 hours (total) in the last 60 days, then you do not have to match the 6.2% social security tax on those employees’s wages for wages after March 18, 2010 through December 31, 2010. The employer social security tax exemption only applies to the first $106,800 of wages for each employee. Seasonal and part time employees will qualify if they meet the requirements. However, newly hired family members of the business owner do not qualify. The tax exemption is not permitted if a person is hired to replace another employee unless the other employee left voluntarily or was fired for just cause. There is no limit on the minimum number of hours the employees have to work during the week after they are employed. In addition, the exemption can be claimed on as many new employees with no limit on the total amount of tax benefits that can be claimed by you. I think this could be very beneficial for the businesses that hire high school and college students, or other seasonal help for the summer since most of them could meet the requirements.

Michelle Minnerath, Tax Manager and CPA

Homebuyer Credit Ends Soon!

Remember: be eligible to claim the first-time homebuyer tax credit, you must purchase or enter into a binding contract to purchase a principal residence by 4/30/10. If you have a binding contract by 4/30/10, you must close on the home by 6/30/10. To qualify as a first-time homebuyer, you must not have jointly or separately owned another principal residence during the three years prior to the date of purchase. To be a long-time resident homebuyer, you must have lived in the same principal residence for any consecutive five-year period during the eight-year period ending on the date the new home is purchased.

Roth IRA Conversions

2010 might be a great time to convert your traditional IRAs!

Two advantages of Roth IRAs over traditional IRAs are that qualifying withdrawals from Roths are tax-free and the if you are the original Roth owner - then you don't need to take required minimum distributions after reaching age 70 1/2, and so you can pass the account's assets onto your heirs. And, beginning this year, the $100,000 modified AGI restriction on converting traditional IRA to a Roth IRA went away.

This, combined with the lower IRA asset values, makes 2010 the year for manyof you to convert your traditional IRAs to a Roth. There is also an election that can be made that allows you to defer paying the tax on the 2010 conversion until 2011 and 2012.

Kevin Sickels, CPA and Tax Manager

Haiti Contributions are deductible for 2009 tax returns

Taxpayers may claim a charitable contribution deduction in tax year 2009 for cash donations made before Mar. 1, 2010, for the relief of victims of the Jan. 12, 2010 earthquake in Haiti. The contributions must be made specifically for the relief of victims in areas affected by the Jan. 12 earthquake in Haiti. It appears that only contributions fully earmarked for the Haiti earthquake relief qualify for the election.

Paul Thorstenson, Tax Partner