McKonomics

Practical IT Security - 10 Tips for Success

 The world of information technology has a great many facets. There are a variety of considerations relative to security, software, applications, operating systems, and other areas. However, regardless of the technology you're using, there are foundational areas that must be considered for any computing environment. These are the basics of security; these are the 10 tips for success.

1. Passwords

Passwords are vital to securing any access. A password is like a key or combination lock, the more complex the combination, the better a lock will be. Each password should be unique to the device, website, or asset you want to protect. What could happen if someone knew your password?  What-if scenarios will help you to decide how strong you want to make your password.

2. Antivirus and Malware

You do not want to have to have these on your computer. Period. What could go wrong if your computer was infected? How much time would you lose? When it comes to malware, prevention is far better than dealing with the problem after the fact. Install trusted antivirus software, run periodic scans, and train employees on web surfing and e-mail habits so you can help to prevent this problem from happening.

Pennsylvania Governor-Elect Tom Corbett’s Tax Reform Initiatives

 The 2010 Pennsylvania gubernatorial election results may bring new tax reforms to Pennsylvania businesses once governor-elect Tom Corbett takes office in January 2011. Corbett's economic plan for revitalizing Pennsylvania's economy focuses on innovation, improved job creation, and an educated workforce. Tax reform is a focus of Corbett's intentions for improving the business climate and creating jobs in Pennsylvania. Tax reform will certainly be a highly-debated issue in the coming months, with the Pennsylvania budget deficits growing into the billions of dollars because of decreased state tax revenues, unfunded state pensions, and Federal stimulus money running out. In addition, Corbett plans to revitalize Pennsylvania's economy through a blended tax reform program that assists small and large job creators with the following proposed reforms:

Finish Phase-Out of the Capital Stock/Foreign Franchise Tax - The Capital Stock and Foreign Franchise Tax is imposed on the assets of incorporated entities, including S-Corps and LLC's. The tax is imposed on both Pennsylvania entities and non-Pennsylvania entities that conduct business in Pennsylvania. The tax is scheduled to phase-out by 2014 and Corbett intends to maintain the full phase-out schedule.

Year-End Charitable Gift Planning

 Americans donated more than $303 billion to charitable causes last year, according to the Giving USA Foundation. And while that represents a slight decline from the year before, Americans continued to give generously despite the economy.

The holidays are a popular time to make gifts. If you're getting ready to donate, be aware of the charitable tax deduction rules and some important

Monetary Donation Guidelines

To deduct a charitable donation of money, regardless of the amount, a taxpayer must have a bank record or a written communication from the charity showing the name of the organization, as well as the date and amount of the contribution.

Update on the Journey to International Financial Standards (IFRS)

 International Financial Reporting Standards (IFRS) are back on the radar screen. Although many business leaders, regulators and financial professionals believe that globalization requires a single set of international accounting standards, they have hit road blocks trying to decide how, and how quickly to require them.

IFRS, a universal, global accounting language -- which is widely used outside the U.S. -- is geared toward providing investors with more easily comparable financial information and enhanced transparency. 

A recent survey indicated that U.S. companies need four to five years to prepare for a switch. Meanwhile, the SEC just issued a progress report on the potential transition for U.S. public companies.

Here's a rundown of these recent developments. 

IRS Grants W-2 Relief for Employers

 More Time to Report the Value Of Healthcare Coverage

The Patient Protection and Affordable Care Act does a lot more than mandate healthcare coverage. It also requires that companies report the value of employer-sponsored group health coverage on employee W-2s.

Under the health reform law, reporting was supposed to begin with W-2s for the 2011 tax year. But thanks to a recent ruling from the IRS, employers now have an additional year to comply with this requirement. (IRS Notice 2010-69)

New rules: Beginning with W-2s issued for 2012, employers will have to include the value of the healthcare coverage they sponsor for staff members. The purpose is "to provide employees with greater transparency into overall healthcare costs." The IRS wants to make it clear that this reporting is for information only, and the value of the health insurance does not represent taxable income to recipients.

Businesses: Big Tax Savings

 The Small Business Jobs and Credit Act of 2010, which was signed into law on September 27, contains a number of valuable tax breaks for businesses. The new law's two significant changes come in the form of more generous rules for depreciation write-offs.

1. Bigger Section 179 depreciation deductions are allowed for qualifying new and used assets that are placed in service in tax years beginning in 2010 and 2011. Under the Section 179 deduction election, many small and medium-sized businesses can instantly depreciate most or all of the cost of many assets in the year in which they are first placed in service.

In addition, qualified real property improvements placed in service in tax years beginning in 2010 and 2011 are also eligible for the Section 179 deduction. Real property costs have never been eligible before.

2. First-year bonus depreciation of an extra 50 percent is allowed for qualifying new (not used) assets that are placed in service by December 31, 2010. The bonus depreciation break had expired at the end of 2009, but the new law retroactively reinstates it for qualifying assets that are placed in service during calendar year 2010.

Buckets of Money for Retirement

 You've diversified your investment portfolio. But have you diversified your tax burden? Making sure that the after-tax value of your savings isn't riding on just one tax rate doesn't get a lot of attention. But make no mistake: failure to diversify your tax exposure before you retire could reduce what you have to live on later.

Many people plan for retirement by contributing diligently to 401k and other tax-deferred accounts such as traditional IRA's. That makes sense because they may be receiving matching contributions from their employer and the gains compound without the drag of taxes. However, withdrawals from these accounts will be taxed as ordinary income which can take the biggest tax bite out of your savings. When you consider that your withdrawals must be large enough to cover your expenses plus the taxes on the withdrawals, you may find yourself in a higher tax bracket than you think.

So, how should you cope with this dilemma? Diversify. One sound strategy is to fund three buckets of money-tax-deferred, tax-free, and long-term capital gains. Having three buckets will give you some maneuvering room when it comes to funding your retirement.

New Small Business Law Provides Tax Incentives

 After several failed attempts to arrive at a consensus, Congress finally passed the Small Business Jobs and Credit Act on September 23, 2010. This new legislation, which President Obama signed into law on Monday, provides various tax incentives targeted to small business owners.

Here are several key provisions in the new law:

Enhanced Section 179 depreciation deductions: Under Section 179 of the Internal Revenue Code, a business can currently deduct the cost of qualified property placed in service during the year, within an annual limit. Prior to the new law, the limit for 2010 was $250,000, although the maximum deduction was subject to a phase-out for annual purchases above $800,000. The new law increases the maximum deduction to $500,000 for 2010 and 2011 with a phase-out threshold of $2 million. Eligible assets include computers, office equipment, and furniture. Certain real estate improvement costs now qualify for Section 179 deductions of up to $250,000.

"Bonus depreciation" is back: The new law also restores the bonus depreciation tax break, which expired after 2009. A business may claim a deduction equal to 50 percent of the cost of qualified assets, which include vehicles. (An additional year of bonus depreciation through 2011 is allowed for property with a cost recovery period of ten years or longer and certain transportation property.)

How to Benefit Tax-Wise From a Home Office

Today's technology makes it possible for more people to work from home. Companies benefit from the reduced overhead, while individuals avoid the hassles of commuting and enjoy a more relaxed work environment. In addition, a person who works from home -- either employed or self-employed -- might be able to claim tax deductions for maintaining an office there.

 

But simply working from home isn't enough to make you eligible for the tax break. To qualify, you must meet these two IRS guidelines.

 

1. Regular and Exclusive Business Use

 

Your home office can be a room in your house or a separate, detached structure, such as a garage or freestanding building on your property.

 

But it must be used regularly and exclusively for business. In other words, you can't simply set up a computer in a corner of your family room to occasionally print invoices, while the rest of the time, the kids use the computer for e-mailing and homework and your spouse uses it for family finances. 

Reducing Your Workforce? Don’t Forget Your 401k Plan

In today's economic climate, many companies have taken, or are planning to take, steps to reduce payroll costs including layoffs. Most employers are aware that they may fully terminate a 401k plan at their discretion; however, layoffs or other employer initiated actions may trigger a partial plan termination. Upon the full termination of a 401k plan, all affected participants become fully vested in their account balances. The same is true for a partial plan termination.

 

A partial plan termination typically occurs when an employer reduces its workforce and related plan participation by 20%. The timeline to consider the reduction will depend on specific facts and circumstances. However, in general the reduction rate is determined by dividing the number of participating employees who were affected by an employer initiated reduction by the number of all employees participating in the plan at the beginning of the applicable period (generally the plan year). This means that all matching contributions and other employer contributions become fully vested for all affected participants, regardless of a vesting schedule.