Click to return to SIOL ARCHIVES page

            
STRATEGIC ISSUES...ONLINE 
For week of July 24, 2006, Issue #270
 
Featured Articles:
1.  New "Kiddie Tax" Covers More Kids
2.  Tech Tip Weekly:   Linking Text Boxes in MS Word
3.  Focus on Fraud:   
4.  Compliance Calendar
 
If you would like to have further information on any of these articles, let us know.  We would appreciate receiving your comments and/or suggestions, anytime!
acarroll@pmcpa.com
 
1.  New "Kiddie Tax" Covers More Kids
 
Do your children have savings accounts or other investments held in their own name?  If so, the tax on those investments could change.  That's because of a change in recent tax legislation, which expanded the "kiddie tax" to cover children up to age 18.  Previously it applied only up to age 14.  And the change is retroactive to the beginning of 2006.
 
The new rule could limit a common tax-reduction strategy known as income shifting.  It also means you should carefully review all savings and other investments held in your child's name to make sure you know how they're being taxed.
 
The kiddie tax applies to investment earnings such as interest and dividends.  It doesn't cover earned income - wages from your kid's summer job, for example.  Here's how it works.  The first $850 of your child's investment income is generally free of tax.  The next $850 is taxed at the child's own rate.  But all unearned income above that amount is taxed at your tax rate, which is usually higher than your child's.
 
The intent is to limit income shifting.  That's the strategy of putting investments in a child's name to take advantage of their lower tax rates.  Previously the kiddie tax limited the benefits of income shifting up to age 14.  Now it extends the limit to age 18.
 
Remember, though, income shifting can still produce some tax savings.  Up to $1,700 of your child's investment earnings may be taxed a lower rate than you pay.  But also remember that giving assets to your child has nontax implications too.
 
Please contact our office if you have questions about how the kiddie tax might affect you.
 
2.  Tech Tip Weekly:  Linking Text Boxes in MS Word
 
You might use text boxes to create a sidebar that has text related to the main topic of your MS Word document.  If the sidebar is particularly long, you can continue it in another text box.
 
Follow these steps to create a set of nicely linked text boxes:
 
1.  Type the text you want to place in a series of text boxes.
 
Linked text boxes work best if you first create the text they contain.  You can even type the text in a separate document.
 
2.  Create two or more text boxes to hold the text.
 
Position the text boxes where you want them to appear in your document.  They don't have to be on the same page.
 
3.  Select the text you typed in Step 1 and press CTRL+C.
 
4.  Select the first text box and press Ctrl+V.
 
The text from the Clipboard pastes into the first text box.  The text box displays as much of the text as it can; the rest is hidden.
 
5.  Right-click the text box and choose Create Text Box Link.
 
The mouse pointer changes to a weird looking coffee cup.
 
6.  Click the second text box.
 
The text from the first text box continues into the second.
 
7.  If you want to spill text into additional text boxes, repeat Steps 5 and 6.
 
You can link as many text boxes together as you want.
 
3.  Focus on Fraud:  Executive Summary of the 2006 Report to the Nation (RTTN)
 
As was overviewed last time in this column, this study is based on data compiled from 1,134 cases of occupational fraud that were investigated between January 2004 and January 2006.  Information from each case was reported by a Certified Fraud Examiner who investigated the case.
 
Highlights, each to be covered in more depth in upcoming columns:
 
Occupational fraud and abuse imposes enormous costs on organizations.
 
Occupational fraud schemes can be very difficult to detect.
 
Occupational frauds are more likely to be detected by a tip than by other means such as internal audits, external audits or internal controls.
 
Certain anti-fraud controls can have a measurable impact on an organization's exposure to fraud.
 
Small businesses continue to suffer disproportionate fraud losses.
 
One reason small businesses suffer such high fraud losses is that they generally do a poor job of proactively detecting fraud.
 
The size of the loss caused by occupational fraud is strongly related to the position of the perpetrator.
 
Most of the occupational fraud schemes in the study involved either the accounting department or upper management.
 
Next week's article:  2006 RTTN:  The enormous cost of occupational fraud and abuse.
 
4.  Compliance Calendar
 
July 28
-Employers deposit Social Security, Medicare and withheld income tax for July 22, 23, 24, and 25.
 
August 2
-Employers deposit Social Security, Medicare and withheld income tax for July 26, 27, and 28.
 
August 4
-Employers deposit Social Security, Medicare and withheld income tax for July 29, 30, 31, and August 1.
 
 
Thank you for subscribing to the weekly edition of Strategic Issues...Online.  If you wish to unsubscribe to this newsletter, please Reply to this e-mail and type "unsubscribe" in the subject line and your name will be removed.  If you know of someone else who would benefit from this newsletter, please feel free to forward this on to them or send us their e-mail address and we will be happy to add them to our mailing list. This newsletter has been compiled by Prangley Marks, LLP for our clients and other interested persons.  The information presented may or may not apply to your facts and circumstances and should not be acted upon without professional advice.  
 ***Privacy Policy***
Prangley Marks, LLP will not sell, distribute, or otherwise misuse any email addresses received or collected for the purpose of this newsletter.
 
In order to comply with requirements imposed by the IRS which may apply to the Strategic Issues...Online as distributed or as re-circulated by our members, please be advised of the following:
THE ABOVE ADVICE WAS NOT INTENDED OR WRITTEN TO BE USED, AND IT CANNOT BE USED, BY YOU FOR THE PURPOSES OF AVOIDING ANY PENALTY THAT MAY BE IMPOSED BY THE INTERNAL REVENUE SERVICE.
Prangley Marks, LLP
Accountants & Consultants
"The Way We Figure, We Are The Only CPA Firm You Will Ever Need"
11th Floor Bridgewater Place, 333 Bridge Street, NW, Grand Rapids, MI  49504-5356
Phone#:  616-774-9004, Fax#:  616-774-9081