What's New?   Florida’s Minimum Wage Increased for 2012   Florida's minimum wage is $7.67 per hour, effective January 1, 2012.  The employers of "tipped employees" must pay a direct wage equal to the minimum ($7.67) minus the 2003 tip credit ($3.02), or a direct hourly wage of $4.65 as of January 1, 2012.   Employee Payroll Tax Cut Extended for First Two Months of 2012   Employees will pay only 4.2% (normally 6.2%) Social Security tax on wages earned during the first two months of 2012.  There is a recapture provision for employees who receive more than $18,350 (two-twelfths of the 2012 social security wage base) in wages during the two month period equal to 2% of the amount over $18,350.  The employer portion will remain at 6.2%.   Florida Unemployment Compensation Tax Rates for 2012   Effective January 1, 2012, the taxable wage base for State of Florida Unemployment Compensation increases from $7,000 to $8,500 per employee.  The minimum tax rate increases to .0202 or $171.70 per employee.  The maximum tax rate increases to .0540 or $459.00 per employee.  The Florida Department of Revenue will distribute notices of unemployment tax rates to each employer in December 2011.   Standard Mileage Rates for 2012   Effective January 1, 2012, the standard mileage rate for business purposes remains at 55.5 cents per mile. That can add up to a significant tax deduction but you have to keep written records that can prove the business purpose for miles claimed. If you forget to note the mileage for a particular trip, you can easily calculate by using the Google map feature for directions. For frequently used destinations, just keep a list of the roundtrip mileage and you don’t have to note the odometer start/end mileage readings. You also need to keep track of the TOTAL miles put on the vehicle(s) from January 1 through December 31. The easiest way to do this is by noting your odometer reading at the end of each year and then you only need keep track of actual business miles (also, keep track of "commuting" miles if you regularly commute to a worksite as an employee). For personal deductions, the medical (e.g., doctor visits) and moving mileage rates have decreased from 23.5 cents per mile to 23 cents per mile. The mileage rate for charitable purposes remains at 14 cents per mile.   Standard Mileage Rates for 2011   Effective July 1, 2011, the standard mileage rate for business purposes increases from 51 cents per mile to 55.5 cents per mile. That can add up to a significant tax deduction but you have to keep written records that can prove the business purpose for miles claimed. For personal deductions, the medical (e.g., doctor visits) and moving mileage rates have increased from 19 cents per mile to 23.5 cents per mile, effective July 1, 2011. The mileage rate for charitable purposes remains at 14 cents per mile.   Federal Unemployment Tax Rates for 2011   The Federal Unemployment (FUTA) tax rate decreased from .008 to .006 for wages paid beginning on July 1, 2011.  However, a .003 rate increase will apply to all taxable wages in 2011 for FUTA purposes.  This rate increase is a credit reduction that is used to pay back federal loans that were taken out by the State of Florida.   Federal Tax Deposits   Beginning January 1, 2011 businesses will be required to make federal tax deposits through the Electronic Federal Tax Payment System (EFTPS).  Financial institutions will no longer accept payment coupons. Deposits must be made through the website (https://www.eftps.gov/eftps/) or voice response system at  1-800-555-3453 and follow the prompts. Existing businesses should have been automatically pre-enrolled in EFTPS in anticipation of the new payment requirement. Payments MUST be scheduled by 8 p.m. ET the day before the due date to be received timely.   Employee Payroll Tax Cut for 2011   Employees will pay only 4.2% (normally 6.2%) Social Security tax on wages earned up to the $106,800 threshold in 2011. The employer portion will remain at 6.2% in 2011. Self-employed individuals will pay only 10.4% Social Security self-employment taxes on self-employment income up to the same threshold.   Bonus (First-Year) Depreciation Extended   Bonus first-year depreciation for qualifying new property has been extended and upgraded for the following periods: 50% bonus depreciation for new property acquired from January 1, 2010 through September 8, 2010 100% bonus depreciation for new property acquired from September 9, 2010 through December 31, 2011 50% bonus depreciation for new property acquired from January 1, 2012 through December 31, 2012 For 2010, the first year business-automobile write-off has increased by $8,000 (i.e. from $3,060 to $11,060 for autos and from $3,160 to $11,160 for light trucks and vans) for vehicles that qualify for bonus depreciation purposes.   Code Section 179 Expensing   Beginning in 2010, the maximum Code Sec. 179  expensing amount has been increased to $500,000 from $250,000.  The beginning-of-phaseout amount was increased to $2,000,000 meaning that $2,500,000 of expensing-eligible property could be purchased before fully phasing out. After 2011, the maximum expensing amount will decrease to $125,000 and the beginning-of-phaseout amount will decrease to $500,000.   For the first time ever, a taxpayer can treat up to $250,000 of qualified real property (qualified leasehold improvement property, qualified restaurant property, and qualified retail improvement property) as eligible expensing property for Code Sec. 179 purposes in 2010 or 2011.   Estate Tax Reinstated   The federal estate tax has been reinstated with an exemption amount of $5 million through 2012. The top tax rate will be 35%. Estates of decedents dying in 2010 must choose between (1) estate tax (based on a $5 million exemption and 35% top rate) and a step-up in basis, or (2) no estate tax and modified carryover basis. Therefore, planning to avoid or minimize the federal estate tax should still be part of your overall financial game plan.    In any case, reducing the size of your estate by making annual gifts continues to be a tax-smart strategy. The annual gift tax exclusion remains at $13,000 for 2011. The gift tax exclusion is the amount the IRS allows a taxpayer to gift to another individual without reporting the gift or using any of the lifetime exemption.