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Texas falls to second most expensive according to Bankrate.com’s 2010 Closing Costs Survey

NEW YORK, Aug. 16 /PRNewswire-FirstCall/ — A new study released by Bankrate, Inc. reveals that the costs associated with buying a home may are on the rise. Bankrate’s 2010 Closing Costs Survey reveals that the average origination and title fees on a $200,000 mortgage this year totaled $3,741, up from $2,732 in 2009. The full results of the study can be seen here: http://www.bankrate.com/finance/mortgages/2010-closing-costs/.
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In the study’s geographical breakdown, New York leads the nation at an average fee of $5,623, with Texas, Utah, San Francisco, and Los Angeles rounding out the top five. Arkansas is the least expensive area with an average fee of $3,007, replacing Nevada, now number 34, at the bottom of the list.

One of the reasons for such a dramatic rise in the average estimated closing costs across the nation has to do with new regulations implemented in January of this year. When providing a potential borrower a Good Faith Estimate (GFE) of costs, regulations now require lenders to provide a Title and Closing Fee estimate within 10 percent of what the final cost will be; in previous years, estimates could fall lower on the spectrum without penalty for the lender.

“The big rise in average closing costs may scare some homebuyers, but it’s important to keep things in perspective,” said Greg McBride, CFA, senior financial analyst for Bankrate.com. “Increased regulation on lenders’ GFEs means more accurate estimates and less expenses popping up for consumers on the back end.”

For this study, Bankrate surveyed one area in 49 states, two areas in California (Los Angeles and San Francisco) and the District of Columbia. Researchers picked a ZIP code in some of the largest cities in each state and requested information on the closing costs for at $200,000 loan. They requested fees on a 30-year, fixed-rate mortgage for a borrower with a 20 percent down payment and good credit to buy a single-family house. Bankrate’s survey includes lenders’ origination fees and title and settlement fees, and not taxes or prepaid items.

by Business Council of New York State

ALBANY, NY (08/05/2010)(readMedia)– “The State Senate’s vote Tuesday night to establish a property tax cap is welcome news to all New Yorkers,” said Kenneth Adams, president and CEO of The Business Council of New York State. “In backing Governor Paterson’s property tax cap proposal, the Senate has sided with an overwhelming number of New Yorkers who are crying out for property tax relief. It is a welcome and timely decision.”

The concept of setting cap to limit the annual growth of property taxes in New York has extensive support – 76% of all respondents including 83% of homeowners in a recent Siena poll expressed their support for a property tax cap. Upstate and suburban middle-class homeowners make up the largest group of supporters.

New York ranks among the top three states in the US for highest property taxes. Property taxes in New York are 59 percent above the national average. When property taxes are measured as a percentage of home value, 15 of the 25 highest taxed counties in the US are in New York State.

“Governor Paterson deserves credit for advancing this proposal and using the bully pulpit of his office to forcefully advocate for it. Now that the State Senate has joined him, the fate of this vital reform is left to the Assembly majority,” continued Adams. “The Assembly majority should respond to the pleas of homeowners across the state and support this proposal.”

The property tax is by far the largest non-federal tax paid by New Yorkers. In 2009 local governments collected a stunning $46 billion in property taxes from business and homeowners; $16 billion of that was collected in New York City alone. “Many New York City residents are renters, so they don’t feel the bite of the property tax directly,” continued Adams. “But look again folks – it’s in your rent.”

Governor Paterson’s proposal would cap annual increases in local property taxes at 4% or 120% of the rate of inflation, whichever is lower. Attorney General Andrew Cuomo has proposed setting a 2% cap. Rick Lazio has also proposed a tax cap.

“Ultimately, we need a more aggressive property tax cap like the one proposed by Attorney General Cuomo, but the current measure is a good first step,” added Adams. “So-called ‘circuit breakers’ or increased school-aid from Albany are not workable solutions. They’re expensive band-aids. A hard cap on all types of property taxes along with mandate relief for local schools and governments are essential to reducing the tax burden in New York, slowing upstate population losses, and putting the state on a path to economic recovery.”

To read more about enacting a property tax cap in New York visit www.taxcapnow.org/

Top-Performing Companies on Target to Hold Costs Below Excise Threshold Until 2023

NEW YORK–(BUSINESS WIRE)–Health care reform’s so-called “Cadillac plan” excise tax will affect more than 60% of large employers’ active health plans by the provision’s 2018 effective date, according to an analysis conducted by Towers Watson (NYSE, NASDAQ: TW), a global professional services company. Based on data from the firm’s 2010 Health Care Cost Survey, the study also found that, by taking certain actions, employers can contain their costs and significantly delay hitting the excise tax cost ceiling for a number of years.

“The original concept of the excise tax was to penalize employers with excessively rich health benefit plans,” said Randall Abbott, a senior consultant for Towers Watson. “Assuming even reasonable annual plan cost increases to project 2018 costs, many of today’s average plans will easily exceed the cost ceiling primarily directed at today’s ‘gold-plated’ plans.”

The excise tax was included in the Patient Protection and Affordable Care Act (PPACA) passed into law on March 23, 2010. The provision levies a 40% nondeductible tax on the annual value of health plan costs for employees that exceed $10,200 for single coverage or $27,500 for family coverage in 2018. Towers Watson data reveal that the average 2010 cost of medical coverage for active single and family plans is $5,184 and $14,988, respectively. When these figures are projected out to 2018 with reasonable estimates of future health care inflation, the excise tax is often triggered.

As a result of the excise tax provision, a plan with single coverage costs of $11,200 in 2018 would exceed the limit by $1,000 and be assessed a tax of $400. If 10,000 employees were enrolled in that plan, the total tax bill would be $4,000,000. The tax is paid by the employer either through increased premiums on an insured plan or a surcharge levied by the administrator of a self-funded health plan. Employers will be forced to either absorb the additional tax or pass some, or all, of it back to employees in the form of higher premiums.

“All it takes to drive costs above the excise tax cap for six in ten employers is an 8% average annual cost increase. And, without making plan design changes, that’s what many employers are projecting,” said Dave Osterndorf, a consulting actuary with Towers Watson. “This rate of increase has been typical for the past several years. We see it as an open question as to whether the recently passed PPACA will mitigate cost trends in the near term for employers.”

The study found wide variations by industry. For about half of the industries examined, more than seven out of 10 employers will have at least one plan that will exceed the excise tax threshold in 2018, including the aerospace, chemicals, energy and utilities, health services and pharmaceutical industries.

It’s important to note that, based on the survey data, employers who are top performers* at managing their health benefit strategies have lower costs and face an annual plan cost increase of only 6%. These companies will experience about a five-year buffer before hitting the excise tax ceiling. “These top performers may avoid hitting the excise threshold until 2023 or beyond due to their focus on workforce health improvement, wellness, chronic condition management, and communicating the prudent use of health care goods and services,” explained Osterndorf.

“There is some good news: Employers have a long runway to plan for 2018, so there is time to approach the issue strategically and thoughtfully. But reform and the excise tax may have unintended consequences,” Abbott said. “As employers strive to preserve the affordability of core health coverage, there will be difficult decisions to change or eliminate ancillary benefits like dental coverage and health flexible spending accounts, which are included in the excise tax definition.” Excise tax rules will also be needed to clarify certain confusing aspects of the law. For example, it appears that the cost of a self-funded dental plan is included in the tax calculation, but an insured dental plan is not.

One reason that employers need to be thinking about the excise tax now is the potential impact on any retiree plans they may sponsor. While the actual excise tax is not charged until 2018 (at the earliest), the projection of that future tax might be required to be recognized in an employer’s financial statements today. “This is one of the more poorly understood impacts of the excise tax — and one that employers are just beginning to address with their actuaries and auditors,” noted Osterndorf.

“The excise tax is likely to have repercussions beyond health care plan design and delivery. To continue to offer sustainable employee benefit programs, employers today will need to look at all areas of employee rewards,” Abbott concluded.

Much attention has been paid by the media and others to the recent rapid rise in consumer bankruptcies. But less attention has been paid to the even faster rise in business bankruptcies. Recently, John Golmant, a statistician in the Statistics Division of the Administrative Office, examined the numbers behind the increase.

In 2009, a total of 1,402,816 bankruptcy petitions were filed in the federal courts, an increase of 35 percent from the 1,042,806 filed in 2008. The 2009 total marks the greatest number of bankruptcy filings since 2005, the year the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) was passed and implemented.

Filings by debtors with predominantly non-business (consumer) debts—those incurred for personal rather than business needs—totaled 1,344,095, a 34 percent increase over 2008. Filings involving predominantly business debts totaled 58,721, a 52 percent increase over 2008. In fiscal year 2005, the last full year before BAPCPA took effect, a record 1,782,643 bankruptcy petitions were filed (1,748,421 consumer filings and 34,222 business filings). While overall monthly filings exceeded 100,000 in each month throughout fiscal year 2005, they plummeted to less than 15,000 in November 2005. However, overall monthly filings have been steadily increasing ever since. In fiscal year 2009, the number of consumer filings was still 23 percent below 2005 levels, but the number of business filings was 72 percent above 2005 levels.

The Bankruptcy Code (title 11 of the U.S. Code) is broken into chapters—each of which describes a facet of the federal bankruptcy law. Chapter 7 provides for “liquidation” (i.e., the sale of a debtor’s nonexempt property and distribution of the proceeds to creditors). Chapter 11 provides for reorganization (or planned liquidation) under a plan, normally proposed by the debtor and submitted to the court. It usually involves a corporation or partnership, but individuals can also seek relief in Chapter 11. Chapter 12 refers to debts of a family farmer or family fisherman. Chapter 13 provides for adjustment of debts for an individual with regular income, usually over three to five years.

Figure 1 shows monthly business filings by Chapter (excluding Chapter 12). It demonstrates that business filings surged in 2009, especially Chapter 11 filings. Chapter 7 (debt liquidation) filings comprised the largest percentage of business filings and increased 51 percent. Chapter 11 (debt restructuring) filings grew a remarkable 69 percent. Figure 1 also indicates that monthly business filings are now roughly twice what they were before the implementation of BAPCPA.

Figure 2 highlights the period during 2009 when Chapter 11 petitions surged. Chapter 11 filings grew rapidly during March and April, and much of the rise (44 percent) occurred in the three districts that typically handle the most Chapter 11 bankruptcies—the District of Delaware, the Southern District of New York, and the Central District of California. The increase can be attributed to economic problems in a variety of industries, as communications firms, real estate companies, retail malls, automotive companies, and construction companies all filed large numbers of Chapter 11 petitions.

Figure 3 shows that business petitions, as a percentage of total bankruptcy filings, have doubled since the passage of BAPCPA, perhaps suggesting a shift in filing patterns. Business filings have not played as significant a role in the bankruptcy courts since the early 1990s, when overall filings were below 1 million. The increases may be related to continuing economic weakness—as evidenced by high unemployment and by continued instability in the housing market in many regions of the country—but the impact of BAPCPA cannot be ignored either. The 2005 Act was aimed primarily at debtors who file consumer bankruptcy petitions, and it disproportionately affected the number of consumer bankruptcies filed post-BAPCPA. Both consumer and business filings dipped following the implementation of BAPCPA, but consumer filings dropped more severely, and the growth in consumer filings has been much slower than that of business filings. If the economy improves, it remains to be seen whether the current higher ratio of business filings will persist.

From the California Society of Enrolled Agents

SACRAMENTO, Calif., April 9 /PRNewswire-USNewswire/ — With less than one week to go to the dreaded April 15 tax deadline, David Shaw, EA, President of the California Society of Enrolled Agents, reminds procrastinating taxpayers that they have options if they can’t pay their state/federal tax bill in full – and some options are much, much better than others.

“The worst possible choice, unfortunately, is the one opted for by many taxpayers – do nothing, don’t pay, don’t file,” he says. “This is a terrible decision and a big mistake – it’s not worth the aggravation and certainly not worth the heftier tax bills you’re going to incur as a result.”

Mr. Shaw offers the following advice to taxpayers who can’t file their returns on time, or can’t pay on time:
–  File an Extension. A request for a six-month extension of time to file
a tax return will automatically be granted by the IRS (use Form 4868).
Remember, the tax liability must be properly estimated at the time of
the request, because you could incur extra penalties by estimating too
low.
–  Request an Installment Agreement. The IRS will usually approve an
Installment Agreement for taxpayers who owe less than $25,000 and who
are current with their other taxes. Use Form 9465 to request an
Installment Agreement; be sure to indicate the amount of your proposed
monthly payment and the date each month you wish to make your payment.
The Agreement covers payment of the balance due plus penalties and
interest for a period of up to five years. The IRS charges a nominal
fee for setting up an Agreement.

Whether or not you file an extension, you are still responsible for any taxes owed but not paid by April 15, including penalties and interest. Here’s the big difference, though: If you file late without an extension, you’ll owe an additional five percent per month of the balance due (up to a maximum of 25%) on top of the interest. With an extension, however, the penalty for late payment is much less, only one-half of one percent per month. With an installment agreement, it’s even less, only one-quarter of one percent per month.

RIVERWOODS, Ill., March 8 /PRNewswire/ — Raising kids is expensive, but the tax laws can ease that burden, according to CCH, a Wolters Kluwer business and a leading provider of tax, accounting and audit information, software and services (CCHGroup.com). From birth through college graduation, there are breaks that reduce taxes and help defray the costs of education. Here are ten ways: 1. Personal Exemption – A reduction of taxable income of $3,650 ($3,650 in 2010) for each dependent child under age 19 or, if a full-time student, under age 24. For divorced parents filing separately, generally the exemption goes to the parent who has custody for the greater part of the year. 2. Child Credit – A reduction of tax of $1,000 per child, beginning to phase out when adjusted gross income (AGI) exceeds $75,000 for single filers and $110,000 for joint filers. May be partially refundable, depending on income. 3. Childcare Tax Credit – A credit based on childcare expenses for children up to age 13, or older children if they are physically or mentally incapable of caring for themselves. Credit taken against maximum qualifying expenses of $3,000 for one qualifying dependent and $6,000 for two or more. Credit equals 35 percent of qualifying expenses for taxpayers with AGI up to $15,000 and decreases with income to 20 percent of allowable expenses for AGI of $43,000 or more. 4. Adoption Credit – A maximum credit of $12,150 for a regular adoption, with credit amounts phased out at incomes between $182,180 and $222,180 for both single filers and joint filers. For a special-needs adoption, the credit is figured without regard to the actual expenses paid or incurred in the year the adoption becomes final. 5. Earned Income Tax Credit (EITC) – Amounts increase for eligible taxpayers with children. Size of increase depends on income level, number of children. 6. Coverdell Education Savings Accounts (ESAs) – Earnings in these accounts grow tax-free. Withdrawals also are tax-free if used to pay for qualified educational expenses. Can be used to pay for tuition, fees, books, supplies and equipment for both K-12 and post-secondary. For K-12, can also pay for uniforms, transportation, supplementary items and services such as extended day programs, room and board and purchase of computer technology and Internet access. Contributions limited to $2,000 per year. 7. Qualified Tuition Programs (529 Plans) – Investment earnings in these plans are not taxed if withdrawals are used for qualified expenses. Contributions to state-sponsored programs are partially or fully deductible on some state tax returns. Annual contribution limits for the plans are set by the state or educational institutions sponsoring the plan and may be in excess of $300,000, but a contribution in excess of $65,000 by any individual ($130,000 for joint filers) in one year could restrict those persons’ ability to make additional contributions in further years without being subject to gift tax. 8. Bond interest – For 2009, interest on proceeds of qualified savings bonds (specifically, Series I bonds or qualified Series EE bonds issued after 1989) cashed to pay education expenses is tax free for joint filers with less than $104,900 in AGI, partially tax free for AGI of $104,900-$134,900; comparable limits for single filers are $69,950-$84,950. For 2010 returns, phaseout ranges are $105,100-$135,100 for joint returns, $70,100-$85,100 for single filers. 9. Higher Education Tuition Deduction – An above the line deduction for qualifying educational expenses of up to $4,000 at an accredited post-secondary institution. The deduction is reduced to $2,000 at AGI above $65,000 ($130,000 for joint filers) and is not available if AGI exceeds $80,000 ($160,000 for joint filers). This must be coordinated with other educational exclusions and cannot be used for anyone for whom the American Opportunity Tax Credit or Lifetime Learning Credit is claimed. 10. American Opportunity, Hope and Lifetime Learning Credits – For 2009 and 2010, the American Opportunity Credit virtually replaces the Hope and Lifetime Learning credits for undergraduate expenses, providing a credit of up to $2,500 per student per year for the first four years of post-secondary qualified tuition and expenses. Up to 40 percent of the credit is refundable, depending on income. Residents of Ark., Ill., Ind., Iowa, Kan., Mich., Minn., Miss., Neb. and Wis. who are in the “Midwestern Disaster Area” might do better choosing the Hope Credit for 2009 expenses.

CHICAGO, Jan. 26, 2010 – Contractors are coming off what has to be one of the most dramatic decades in history. Bookended by 9/11 and a severe recession, with boom years in the middle, the past 10 years have challenged the resources of even the most financially solid and best-run companies. Recently enacted stimulus bills offer new tax-saving opportunities, while current budget deficits and the change of administration portend tax increases. Contractors need to do what they can to maximize cash by effectively managing their tax burdens and protecting themselves against tax increases and assessments. With 2010 ushering in a very uncertain tax climate, construction contractors should keep in mind the following tax tips:
Make the most of your net operating loss deduction. Recent tax legislation opens up opportunities for taxpayers of all sizes to choose an extended carryback period for net operating losses (NOLs). This provision allows contractors who have NOLs to choose a five-, four- or three-year carryback period (increased from the normal two-year rule) for NOLs incurred in a tax year beginning or ending in 2008 or 2009. Keep in mind, however, that only a single year can qualify for this enhanced carryback period. Taxpayers with NOLs in two or three qualifying years need additional analysis to maximize their cash refunds.
Take a hard look at bonus depreciation deductions. As an incentive for investment in equipment, taxpayers are allowed to deduct half of the cost of 2009 qualifying property in the first year of use, and then depreciate the remaining half of the asset over its normal useful life. For five-year equipment (the most common tax life for construction equipment), this allows a deduction of 60 percent of the asset’s cost in the first year of its life. For contractors in a tax-loss position, this deduction increases NOL carryback opportunities. However, pass-through entities such as S corporations or LLCs should be aware that significant individual income tax increases are possible, which may make depreciation deductions worth more in the future. Careful planning is required to make sure this deduction is right for you.
Consider future capital gains and dividend tax rate increases. Under current law, capital gains and qualified dividends are taxed at a favorable 15 percent federal income tax rate. This preferential treatment is scheduled to expire at the end of 2010 and individuals (absent a law change) will face higher taxes on these items in 2011. Taxpayers with significant capital gains transactions should work with tax advisers to analyze whether accelerating capital gains and dividends into 2010 is a prudent tax move.
Take full advantage of capital asset expensing deductions. Rules originally intended for small businesses were expanded significantly to allow contractors to expense up to $250,000 of 2009 fixed asset costs, provided less than $800,000 of assets were placed in service throughout the year. Unlike bonus depreciation, this applies to new or used assets. However, this deduction cannot be taken if a contractor is already in a tax-loss position.
Consider not deferring income. The traditional wisdom of deferring income for tax purposes deserves another look. With many government entities looking for increased tax revenues, new tax policies and rate increases are very possible. At the current time, individual taxpayers are a target. With tax increases scheduled for 2011, taxpayers would be well-advised to consider whether deferring taxable income is still the most cash-efficient option.

“To learn how these tax tips may apply to your contracting business, please contact your tax advisor,” said Todd Taggart, Tax partner and practice leader of Grant Thornton LLP’s Construction practice.

Grant Thornton LLP’s Construction, Real Estate and Hospitality group has developed 10 tax tips for contractors. To read all of the tax tips, go to www.GrantThornton.com/CRHtaxtips or email CRH@gt.com.