David J. Mlcak, P.C. Certified Public Accountant |  327 Fowlkes Street | Sealy, Texas | 77474 | Tel: (979) 885-4878
Certified Public Accountant
David J. Mlcak, P.C.
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Retirement - Will You Be Ready?

According to the Social Security Administration the average retirement benefits paid in 2013 was only $1,294 per month.  Among elderly Social Security Beneficiaries, 52% of married couples and 74% of unmarried persons receive 50% or more of their income from Social Security.  Even more alarming is that 22% of married couples and about 47% of unmarried persons rely on Social Security for 90% or more of their income. An estimated 51% of the workforce has no private pension coverage. In 1940, the life expectancy of a 65-year-old was almost 14 years.  Today’s life expectancy is more than 85 years of age, yet 34% of the workforce has no savings set aside specifically for retirement. By 2033, the number of older Americans will increase by 65 %, from 46.6 million today to over 77 million. In 2013 there were 2.8 working individuals for each individual receiving Social Security benefits.  By 2033 there will be 2.1 workers for each Social Security Beneficiary.

Will you be ready to retire?

Retirement is a serious event in everyone’s life, particularly in perilous economic times. Planning for retirement can be most challenging with hard-to-predict factors such as recession, volatile stock returns on investments, and rising, healthcare costs.  Whether you are just entering the workforce or at the height of your career, saving for retirement is a must. These are some of the most popular options available to you to prepare for retirement. Individual Retirement Accounts (IRA) Roth and Traditional IRA’s are two of the most common retirement accounts. For 2013, an individual with earned income can contribute up to $5,500, $6,500 for individuals age 50 or older. Traditional IRA contributions are normally tax deductible, but taxable at time of withdrawal whereas Roth contributions are non-deductible, but qualified distributions are non-taxable at the time of withdrawal. The deduction may be limited if you or your spouse are covered by a retirement plan at work and your income exceeds certain thresholds. Simplified Employee Pension Simplified Employee Pension’s (SEP) allow for employer only contributions, but are available to all size businesses, including sole proprietors. SEP’s allow for much larger contributions than IRA’s. If chosen to be made, contributions for eligible employees cannot exceed the lesser of 25% of the employee’s compensation or $51,000. Contributions are based on a percentage of each eligible employee’s compensation. 401(k) Plans 401(k) plans allow for employee elective salary deferrals. Employers can make deductible contributions and withdrawals are taxable at retirement. The employee contribution limit for 2013 for a traditional 401(k) plan is $17,500, $12,000 for SIMPLE (Savings Incentive Match Plan) 401(k) plan. Individuals age 50 or over are allowed to make catch-up contributions, $5,500 to traditional and $2,500 for SIMPLE. For new employees joining the workforce, time is on your side, but you must take advantage now. Most retirement contributions are due by April 15th with some extension exceptions. Right now is the perfect time to consider which retirement account is best for you. We will be glad to assist you in the process. Please feel free to contact us anytime at 979-885-4878.

House Bill 500 Passes, Makes Sweeping Changes to Texas Franchise Tax

Texas House Bill 500 (HB 500), signed by Governor Perry on June 14, 2013, modified the Texas Franchise Tax to provide for several new provisions and tax benefits that impact a variety of industries and taxpayers. Significant provisions in the Bill include: A permanent minimum $1 million deduction, which replaces the current small business exemption for businesses with less than $1 million of total revenues. This provision alleviates the anomaly created by the current small business exemption under which businesses with just over $1 million of total revenues are fully taxed (subject to current deductions) on all such revenues. A temporary rate reduction in 2014 of 2.5% of current rates, reducing the retailer rate to 0.4875% and the regular rate to 0.975%. If the Comptroller certifies that surplus revenues are sufficient, a temporary rate reduction in 2015 of 5% of current rates, reducing the retailer rate to 0.475% and the regular rate to 0.95%. Pipeline companies transporting products owned by others are eligible to deduct certain costs as costs of goods sold. Provisions in the Bill relating to special industries or classes include:

Expansion of Retail and Wholesale Tax Definition

Effective January 1, 2014, for reports originally due on or after January 1, 2014, taxpayers engaged in the following activities will be considered to be engaged in “retail of wholesale” trade. Automotive Repair Shops Rent-to-own stores Stores that rent tools, party and event supplies, furniture Heavy construction equipment leasing

Exemptions from franchise tax:

Non-admitted insurance company that is otherwise taxed in another state Political subdivision corporations that are formed to purchase electricity

Exclusions from total revenue:

Pharmacy networks’ reimbursements for payments to pharmacies within the network Payments by transporters of aggregates to subcontractors for delivery services Payments by transporters of barite to subcontractors for transportation services Landman service companies’ payments to subcontractors providing landman  services(i.e., performing title searches, negotiations related to acquisition, divestiture  or ownership of  mineral rights) Cost of vaccines to all companies Waterway transport companies’ direct costs of providing transportation services by waterways to the same extent a company that sells property in the ordinary course of business would subtract those costs as costs of goods sold Motor carriers’ flow-through revenue derived from taxes or fees

Additions to calculation of costs of goods sold:

Certain pipelines that provide transportation services for product owned by others  may deduct depreciation and certain costs of maintenance and operations Movie theaters may deduct costs associated with the acquisition, production,  exhibition, use and rights to use the film

Other Changes:

Deduction from apportioned margin allowed for relocation costs for a company’s relocation to Texas if it did not previously have a physical presence in the state Credit for rehabilitation of certified historic structures Retailer engaged in minimal amount of electric utilities does not fail to qualify for retail tax rate Internet hosting service revenues are sourced to Texas only if the customer is in Texas Repeal of requirement that companies file a report of sales by their non-nexus affiliates into Texas
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