Answers to Frequently Asked Questions Following are some of the questions we are frequently asked.  If you need additional information, please feel free to contact any member of our staff.  We're always glad to answer your questions!

Questions: PAYROLL TAX QUESTIONS: What are the 2009 and 2010 Medicare and Social Security tax rates? How much tax should be withheld from supplemental wages? What is the limit for elective deferrals? How much unemployment tax must be paid? What is the minimum wage I must pay? How do I correct an error on my quarterly Form 941 payroll tax return? BUSINESS USE OF AUTOS: What is the standard mileage rate? What costs are deductible for vehicles? Can I deduct 100% of my auto costs? How much depreciation can I deduct for my business vehicle? What is the Code Section 179 deduction? Answers: PAYROLL TAX QUESTIONS: Top What are the 2009 and 2010 Medicare and Social Security tax rates? Again for 2009 and 2010, all taxable earnings will be subject to the 1.45% Medicare tax for both employee and employer. What's new for 2010 is the Social Security wage base remains the same as in 2009 at $106,800. This is the first time since 1971 (when the base was $7,800) that there has been no increase in the the wage base. The tax rate remains the same at 6.2% for both employee and employer. The maximum Social Security tax to be deducted in 2009 and 2010 is $6,621.60 (up from $6,324 in 2008). Top How much tax should be withheld from supplemental wages? The flat Federal income tax withholding rate remains at 25%. (Separate rules apply to wages over $1,000,000. Please contact us if this applies.) All supplemental wages must also be included in calculating Medicare and Social Security taxes. Supplemental wages include bonuses, overtime pay, severance pay and other nonperiodic payments. Top What is the limit for elective deferrals? The maximum exclusion for elective deferrals, which applies to 401(k) plans, 403(b) annuities, and SEP's, is $16,500 for 2009 and 2010. Individuals over age 50 may make additional "catch-up" contributions of $5,500 for 2009 and 2010. Other forms of retirement plans have separate limitations. Please contact us for additional information. Top How much unemployment tax must be paid? Beginning January 1, 2010, the Florida unemployment tax rates will increase significantly! The previous minimum rate of .12% will increase to 1.18%. The maximum rate will remain the same at 5.4%. In addition, the maximum annual wages subject to the tax will increase fom $7,000 to $8,500. State unemployment rates are determined individually for each employer. The State of Florida mailed 2010 rate notices in November or December 2009. If you have not received your notice, you should contact us or the State. The Federal Unemployment wage bases remain at $7,000. The Federal Unemployment tax rate remains at .8% if all required State contributions are paid on time. Otherwise the rate is 6.2% - be sure your State unemployment taxes are timely paid! Top What is the minimum wage I must pay? Federal minimum wage was raised to $6.55 per hour effective July 24, 2008, and $7.25 per hour effective July 24, 2009. However, Florida minimum wage was increased to $7.21 per hour effective January 1, 2009. Effective July 24, 2009 Florida minimum wage is the same as the federal minimum wage of $7.25 per hour. Top How do I correct an error on my quarterly Form 941 payroll tax return? Errors discovered after December 31, 2008 must be reported on the new Form 941-X, Adjusted Employer's Quarterly Federal Tax Return. The form should be submitted as soon as the error is discovered. Before 2009, it was necessary to submit corrections with the Form 941 filed in the next quarter after the error was discovered. This resulted in a wait of up to three months to process the correction. Federal deposit rules are the same as used in 2009. You should aready have been notified by the IRS which deposit schedule you must follow. Remember, the IRS holds you responsible for determining the correct deposit schedule. Please contact us if you have any questions. Top Top BUSINESS USE OF AUTOS: Top What is the standard mileage rate? Beginning January 1, 2009, the standard cents per mile rate is 55 cents. During the first half of 2008 it was 50 1/2 cents and increased 8 cents on July 1, 2008. If you use this simplified method of reimbursement, do not forget you can still deduct actual costs for parking fees and tolls Top What costs are deductible for vehicles? If you chose to deduct actual expense, rather than the simplified standard mileage rate, you can deduct all operating costs such as gas, insurance, repairs, tags and depreciation. Top Can I deduct 100% of my auto costs? Generally, a vehicle has a personal use component. Only the portion related to the business use is deductible. The balance is considered a non-deductible personal expense. The business and personal percentages are determined by dividing the business miles driven by the total miles the vehicle was driven. If used less than 50% for business, special rules apply. If you have personal use of a business vehicle, and the "fringe benefit" amount is included on your W-2, (so you pay income tax on this amount) the business can deduct 100% of the vehicle opeating costs. You will find paying tax on the "fringe benefit" amount is still a good value compared to incurring the non-deductible personal costs. Top How much depreciation can I deduct for my business vehicle? This is an area where changes are continually being made. And those changes were not meant to simplify the rules! The allowable annual depreciation is determined by the year the vehicle is placed in service, the type of vehicle and the percentage of business use. Passenger automobiles placed in service in 2009 are allowed maximum depreciation of $2,960 in 2009, $4,800 in 2010, $2,850 in 2011 and $1,775 for any year thereafter. Vans and trucks placed in service in 2009 are allowed maximum depreciation of $3,060 in 2009, $4,900 in 2010, $2,950 in 2011 and $1,775 for any year thereafter. These amounts reflect 100% business use of the vehicle and must be reduced for any personal use. Top What is the Code Section 179 deduction? The Code Section 179 deduction is an election to treat the cost of an asset as an expense in the year of purchase, subject to a number of limitations and a maximum of $250,000 in 2009 and $134,000 in 2010. Please contact us if you would like more information about the limitations which might be relevant to you. This election is extremely limited for vehicles. Passenger automobiles, vans and trucks are limited to the previously stated depreciation amounts. No more than $25,000 of the cost of a heavy sport utility vehicle (6,000 GVW) placed in service after 2004 may be expensed under Code Section 179. Top