There’s a list for everything these days. Best places to work. Ten toys your dog will love. Five best dishes to order at Italian restaurants. The list of lists goes on and on.

Best places to retire lists are especially popular. But are those places really a good fit for you? When you’re ready to start planning your retirement, it’s probably better to write your own list.

Location, Location, Location

Choosing a retirement location is a key decision. Lists of top retiree-friendly places to live can be a good starting point, but you definitely should plan to do your own research. Some of the more popular retirement locations may offer a great climate, but what about proximity to family, friends, health care facilities, or cultural and recreational activities you enjoy? Think about your personal priorities before you decide to make a move or stay put.

Taxes, Taxes, Taxes

If a portion of your income will come from a tax-advantaged retirement account or pension, you could owe state income tax on those amounts. Some states allow retirees to exclude from tax all or part of their retirement income, but state laws vary. State income-tax rates also are different from state to state.

Retiring in a state with low or no state income tax may be a way to reduce your overall tax burden, but be sure to consider other potential taxes as well. Even if you plan to rent, property taxes can be a factor since landlords are likely to pass along any increases to their tenants. And don’t forget sales taxes. You’ll need to do some research because sales taxes vary from state to state, county to county, and even city to city.

Cost of Living

Aside from taxes, you’ll want to consider general living costs. The choice you make about where you’ll live could have an impact on the cost of food, gas, housing, travel and transportation, and many other items in your retirement budget.

–Source: ClientLine Press, February 2012

Additional Links:

Top 10 most tax friendly states to retire to

http://www.topretirements.com/state/most_tax-friendly_states_for_retirement.html

Top 10 worst states to retire to

 http://www.topretirements.com/blog/great-towns/worst-states-to-retire-2012-northeast-and-midwest-come-up-losers.html/

1. Form 1099-MISC required for noncorporate service providers.

If you paid any service provider at least $600 for services during 2011, you must provide Form 1099-MISC to them no later than Jan. 31, 2012. If the provider is a corporation you do not have to provide Form 1099-    MISC.**You must provide Form 1099-MISC to sole proprietorships, partnerships and attorneys or medical service providers who do business as corporations. The only way to know if a service provider is a corporation is to have them complete IRS Form W-9, Request for Taxpayer Identification Number and Certification.

2. If you paid electronically, skip the 1099. You’re no longer required to send service providers a Form 1099-MISC if you paid for their services with a credit card, debit card, gift card or another electronic payment medium (e.g., PayPal). The bank or credit card company that made the actual payment will send the contractor Form 1099-K.

3. TIN truncation pilot program extended through 2012. The IRS is extending the Taxpayer Identification Number (TIN) truncation pilot program through 2012 for 1099s that are filed in 2012 and 2013.  Payees’ TINs may be truncated on their paper copies but forms filed with the IRS must contain their full TINs. Under the truncation procedure, the first five digits are replaced with either asterisks or Xs:***-**-1234 or XXX-XX-1234.

4. Better safe than sorry! If you are unsure whether a Form 1099-MISC is required, go-ahead and send one. You can’t go wrong sending more 1099s than are required, but you set yourself up for penalties if you do not send all qualified service providers their Form 1099-MISC.

5. Don’t be late. If you’re sending your Forms 1099-MISC to the IRS by mail, you must mail them no later than Feb. 28. If you’re sending an electronic file, you must file it by Mar. 31 with the IRS.

For additional tips including an on-demand webinar, visit www.americanap.org OR if you have questions you can call your accountant or one of our accountants at 651-451-9373.

A beneficiary who inherits a traditional IRA doesn’t receive a pass on income taxes. If you inherit an IRA, be cautious about simply liquidating the account, since the tax bite could be quite large. Instead, talk with your accountant about your distribution options.

As a Surviving Spouse…You can leave the account as is and designate yourself as the account owner, assuming you are the sole designated beneficiary of your spouse’s IRA. Or you can roll the funds over into your own traditional IRA. Either way, you won’t have to take any money out until after you reach age 70-1/2. Then you’ll have to start taking RMDs. If you want to, you can allow the rest of your IRA to continue growing tax deferred.

A surviving spouse can also choose to be treated as the IRA beneficiary. This might be the better choice if you’ll need to take money from the IRA before you turn 59-1/2, since withdrawals by IRA beneficiaries escape the 10% tax penalty on early withdrawals. What about RMDs? If you go the beneficiary route, you generally won’t have to start taking them until the year your spouse would have reached 70-1/2.

As a Nonspouse Designated Beneficiary…You can also stretch out withdrawals — and the related income taxes — by setting up an inherited IRA. The deadline for taking your first RMD is December 31 of the year after the year the account owner died. You may make additional withdrawals from the IRA at any time.

Somewhat different rules may apply if you receive an IRA that has passed through an estate instead of directly to you as the account’s designated beneficiary. To get the most from your IRA inheritance, you’ll want to carefully evaluate your options.

***This article is from Client Line News–January 2012

To claim the expense, an individual must establish the medical purpose of the diet and provide documentation of what was spent for the special diet and what would have been spent on a normal diet.

If you have questions about whether or not this deduction applies to you, please consult with your accountant or email me at kswitala@haworthco.com.

http://www.npi-opus.com/opus/web/newsletter.cfm?ord=133335

http://www.haworthco.com

End of the year tax saving tips from Cheryl Haan, CPA with Haworth & Company, Ltd:

Take advantage of low capital gains rates: If you’re in the 10 or 15 percent bracket — taxable income below $67,900 for married couples and $33,950 for singles — profits on long-term capital gains (or ones owned more than 12 months) won’t be taxed at all in 2011 and 2012. That’s right: Your capital gains tax rate will be ZERO percent. It might make sense to sell taxable assets at gains in the next two years, because most experts believe that rates will rise in the future.

Sell losers: If you have investment losses in a taxable account, now is the time to use those losers to your advantage. You can sell losing positions to offset gains that you have taken previously in the year, to minimize your tax hit. If you have more losses than gains, you can deduct up to $3,000 of losses against ordinary income

Fully fund your college savings 529 plan: The average public university now charges over $8,200 for tuition and fees — a massive 8.3 percent increase from last year — so now’s the time to get a leg up on your education savings with a 529 plan. Money saved in these programs grows tax-free and withdrawals used to pay for college sidesteps taxes, too.

Project your income: If you’re self-employed, estimate your income for 2011 and 2012. If your tax bracket could rise next year, delay making tax-deductible business purchases until January, when the write-offs will become more valuable. If you think you’ll bring in less money in 2012, do exactly the opposite.

Pay your 4^th quarter state estimated payment by 12/31 (instead of 1/15) to be able to deduct on this year’s federal return rather than next years. This works as long as you are not hit with AMT tax.

For more tax saving strategies for your small business, please email Cheryl Haan at chaan@haworthco.com.

Loan covenants are requirements and/or restricitions that a lender imposes as part of a business loan agreement. With credit still tight and the economy still sluggish, lenders are very serious about loan covenants. You should be, too.

Different Types

Covenants fall into three categories:

• Afffirmative covenants are requirements that your business must fulfill. Some examples include submitting periodic financial statements to the lender, carrying certain types of insurance policies, and making current employment-tax payments.
• Negative covenants are restrictions that prevent you from doing certain things without the lender’s approval. Some examples of things that might need to be pre-approved include borrowing from other sources, making management changes, and selling equipment.
• Financial covenants require your business to maintain various  financial rations related to working capital, net worth, profitability, and cash flow.

Finances in the Spotlight

How do lenders know if you’re in compliance? They review your financial statements, tax filings, and other reports. Depending on the terms of your loan agreement, your lender may even conduct on-site field audits every now and again to verify that you have the assets that are serving as collateral for your loan.

The Cost of Noncompliance

If you violate a covenant, your loan will technically be in default, putting your lender in a position to either take the collateral securing the loan, call the loan, or require that the terms of your agreement be substantially modified. You may have an opportunity to “fix” the problem before the lender takes action against you — or you may not.

Be Careful

Anytime you apply for a new loan, be sure to carefully review the covenants that may be included in your agreement. Some terms may be negotiable. Then, just as carefully, evaluate whether your company will be able to comply.

If you want to be sure your business is using the correct rate, go on the Minnesota Department of Revenue’s website and input the nine digit zip code of the destination of your client or your retail establishments.

http://taxes.state.mn.us/taxcalc/Pages/index.aspx

This calculator will allow you to enter the amount of the sale to get the exact amount of sales tax to collect, however using that field is optional. Simply click the submit button and use the rate provided to charge your customer.

If you don’t know the nine digit zip code you can go to the United States Postal website at https://tools.usps.com/go/ZipLookupAction!input.action?mode=0&refresh=true to input the address and the nine digit zip code will be provided.

Kate Judson, CPA
Haworth & Co.
651-451-9373 (p)
651-451-5923 (f)

By: Glenn M. Starfield, guest blogger

The current economic climate has led to an interesting new trend in business. In a recent study by CareerBuilder, only 45 percent of employers saw employee retention as a problem, while 87 percent of employees are open to a new job opportunity or are actively seeking a new job. This extreme difference in the views of the current hiring situation shows that many businesses may be vulnerable to losing their top employees, and may not even know it.  The national unemployment rate in September held at 9.1% according to the Bureau of Labor Statistics, but here in Dakota County we have improved to 6.5%.  As the
unemployment rate improves in the local market, strategies to retain your best talent will have to be on the forefront of your planning.

So what can businesses do to guarantee that their best employees won’t be leaving for greener pastures? There are several steps employers can take to make sure the most valuable employees in their company are going to be there long term.

Improve the Work Environment

First, provide a work environment that gives employees respect, recognition, and feedback, with some fun mixed in every now and then for good measure. Top employees want to know they will be given one of the basic aspects of the workplace, respect. Remove this attitude from the office, and be prepared to see the very best of the team walk out the door quickly. A respectful work environment should include recognition for accomplishments and goals being met, but also feedback and constructive criticism to encourage growth.

Most employees want to do a great job for their company, and desire to produce great results, so they deserve to be recognized for their efforts. Helpful advice on a project or tips on what to do before the next presentation helps employees perform better and feel like they are needed at work. And, a work environment with the occasional family day or ice cream social during a break lets employees know the company cares about them.

Offer Training Opportunities

The next way to encourage the best employees to stay with a company is to offer training and learning options. Training can come in several varieties, including onsite computer or leadership classes, mentorship programs, or reimbursement for classes at a local university or vocational school. In a survey of 1,400 chief financial officers, 29 percent planned on offering training or education in 2011, while 24 percent planned on offering a mentorship program.

These additional learning opportunities not only help employees feel more committed to the company, but also provide businesses with employees who are better trained, loyal to the company and willing to go out into the community to talk about the great benefits they receive.

Competitive Compensation

The final, and usually most talked about way to retain great employees, is to offer a competitive compensation and benefits package. The most obvious of ways to keep great employees is to pay them more, but in today’s economic climate, a pay raise may not be feasible for small businesses. But, that doesn’t mean there aren’t creative ways to offer the hardest working employees benefits other companies don’t have.

The best employees know their company may not be able to give them a bonus or pay raise right now, but a small form of appreciation can make a big difference in their decision to search for a new job or stay in their current position.Consider offering a flexible work schedule one or two days a week. In a 2010 report from the president’s Council of Economic Advisers, a flexible work program that allowed 10 to 15 percent of its employee’s flexible hours helped increase retention rates by 15 percent.

The best employees will always be in high demand, but that doesn’t mean companies have to lose them. With a few, cost-effective programs and work environment changes, the best employees will be more committed to their employer and, because of their contentment in their role, can attract even more hard-working, dedicated employees.

For More Information:

Glenn M. Starfield                                                                                        Express Employment Professionals                                                                 20908 Holyoke Avenue                                                                 Lakeville,MN55044                                                                                           (952) 469-5112                                                    Glenn.Starfield@ExpressPros.com