Your Accounting Firm in Baltimore, Maryland

NEWSLETTERS

Newsletter 1 - Sent November 11, 2002

In order to keep you informed about new and exciting developments in the world of tax and financial planning, we will periodically be sending e-mails of this nature. Please provide feedback and of course if you would like to be removed from this list please inform me. Please pass on this information to anyone that you feel will benefit.

This message is to inform you of a great tool for college planning. I highly recommend that you take a look at www.upromise.com.. This organization allows you at no charge to accumulate earnings to be used toward a section 529 college savings plan. Your account will grow automatically as mine already has. The earnings are not large but over time will add up! And it’s free! If you have any questions about this or anything else related to your financial well-being please don’t hesitate to contact me. Thanx!!

Newsletter 2 - Sent January 9, 2003

Breaking news! President Bush has just unveiled a new “Economic Stimulus Package” better known as a tax cut proposal. Of course, in order for this plan to be signed into law, it must first be approved by both houses of Congress. Even though this plan may not make it through, some variation probably will. In order to keep you informed from the outset, and to help you sift through the information overload, here is a brief synopsis of the proposed changes:

Three of the tax cuts are really just accelerating to January 1, 2003 items that would have been phased in by 2010 as passed in the 2001 tax bill. They are:

1) Child tax credit rebate – The child tax credit that is currently $600 per child under the age of 17 would be raised to $1,000 per child effective immediately. This means that a check in the amount of $400 per child would be mailed to all qualifying taxpayers as soon as this would become law.

2) Expanded 10% bracket - the lowest marginal tax rate of 10% would apply to higher levels of income

3) Reduction to all marginal tax rates – this would reduce taxes across the board.

The next four items were not included in the 2001 tax bill but would still be retroactive to January 1, 2003:

4) Eliminate taxation of dividends to individuals – this is the item that will have the broadest implications to the financial markets. All stock dividends would be considered tax free. Many retirees would realize a windfall with this one, as much of their taxable income is in the form of dividends. This would also generate more investing interest in dividend paying stocks, preferred shares and utilities. Another provision of this item is that even if a company would not declare a dividend, the earnings would be added to the cost basis of the stock causing a smaller capital gain on the sale. (How will we ever determine cost basis??)

5) Elimination of the “Marriage tax penalty” – this would adjust all tax brackets and rates so that two single taxpayers would pay the same tax as 2 married taxpayers.

6) Raising the threshold of the dreaded Alternative Minimum Tax – this tax was designed many years ago to impose a tax on very wealthy individuals that were paying little tax mostly due to complicated real estate investments. It has recently been affecting quite a few “middle class” taxpayers it was never intended for (maybe even you!). This would help eliminate this injustice.

7) Tripling of the current year business deduction for new assets purchased (Section 179 expense) from the current $25,000 to $75,000 – this would stimulate asset purchases by small business allowing them to expand their businesses at a faster rate.

If you would like to know how this will effect your personal tax situation or would like clarification of any of these items, please contact me. I am looking forward to hearing from you and hope you have found this newsletter informative. All feedback is appreciated. Thank you!

Newsletter 3 - Sent March 24, 2003

Hope all is well!! Just a brief note to show everyone the article from yesterday’s Baltimore Sun. I was contacted by the reporter and am quoted in the article. Enjoy!! Please check out my website www.jeffbaercpa.com . It still needs work but it is a start! If you would like to know why I was the only CPA on the internet that was found by the reporter, please contact me so that I can tell you and plug a valued client. If you have any question, concerns or referrals, please contact me Thanx!!

Newsletter 4 - Sent May 30, 2003

Well they’ve done it!! President Bush and Congress have just agreed upon and signed into law the “Job & Growth Tax Relief Reconciliation Act of 2003” otherwise known as JGTRRA!! (Where do they come up with these names?) The bottom line seems to be that there are all kinds of goodies in here for individuals as well as small businesses. Please be aware that there are sunset provisions to many of these changes and the timetables for enactment and repeal are quite complex and confusing!! Please consult your tax advisor (that’s meJ) before acting on any of this information! These tax cuts are designed to stimulate the economy. Of course, I caution you that spending this windfall immediately may not be the most prudent course of action.

Well, here we go:

1) Child tax credit rebate – The child tax credit that is currently $600 per child under the age of 17 is increased to $1,000 per child effective immediately. This means that a check in the amount of $400 per child will be mailed to all qualifying taxpayers beginning in July. The amount of the check will be based on the number of child tax credits claimed on the taxpayers 2002 return.

2) Expanded 10% bracket - the lowest marginal tax rate of 10% will apply to higher levels of income for 2003.

3) Reduction to all marginal tax rates – this will reduce taxes across the board.

4) Dividends – The new tax rate for dividends is 15%. This is a drastic change from prior to JGTRRA when dividends were taxed as ordinary income.

5) Long term capital gains tax rates have been reduced from 20% to 15% for higher income taxpayers and from 10% to 5% for lower income taxpayers. This 5% rate will go to zero in 2008 for one year only. Another great tax planning tip would be to gift highly appreciated securities to a child over the age of 14 in order for the child to sell the securities subject to a zero % long term capital gain tax rate. Of course this gifting could also be done right now and still save 10%. (15%-5%)

6) The exemption amount of the dreaded Alternative Minimum Tax has been raised slightly. This will have minimal effect if any on most taxpayers.

7) Quadrupling of the current year business deduction for new assets purchased (Section 179 expense) from the current $25,000 to $100,000 – this would stimulate asset purchases by small business allowing them to expand their businesses at a faster rate.

There are more details of this tax act which are beyond the scope of this newsletter. If you would like more information about any of these provisions or would like to know how this will affect your personal tax situation, please contact me. I am looking forward to hearing from you and hope you have found this information helpful. Please respond with any comments or suggestions. Thank you

Newsletter 5 - Sent June 8, 2003

My firm is pleased to announce our newest member! Our beautiful baby daughter (Baer Cub) was born on Saturday June 7, 2003 at 2:30 in the afternoon. She weighed 9 pounds and three ounces. Looks like blond hair with my blue eyes. She is sooooo adorable!!!! Name to be announced.