Anquillare, Ruocco, Traester and Company

                                         Certified Public Accountants and Consultants

Six-Month Automatic Extensions Available to Most Taxpayers in 2006

The Treasury Department and the Internal Revenue Service (IRS) recently announced that taxpayers will now be able to request an automatic, six-month tax-filing extension for most common individual and business returns under regulations.

The new regulations, by eliminating and combining several existing IRS forms, will provide streamlined and much easier procedures that are expected to save taxpayers between $73 million and $94 million, annually. As a result, beginning January 1, 2006, most individuals and businesses will be able to request a full six-month tax-filing extension, without a reason or even a signature.

The new automatic extension procedures will eliminate three existing forms, thus making it much easier for business taxpayers.  Under existing procedures, only corporations can request an automatic six-month tax-filing extension. The new regulations will also make this option available to most non-corporate business taxpayers, including partnerships and trusts.

Treasury Decision 9229 is available on the IRS website, www.IRS.gov, and will be published in the Federal Register on November 7, 2005.

IRS Announces 2006 Standard Mileage Rate

Recently, the Internal Revenue Service (IRS) revised the standard mileage rate for operating an automobile for business, charitable, medical, or moving purposes.

Beginning January 1, 2006, the standard mileage rates for the use of a car, van, pickup, or panel truck will be:

•        44.5 cents per mile for business miles driven

•        18 cents per mile driven for medical or moving purposes

•        14 cents per mile driven in service of charitable organizations, other than activities related to Hurricane Katrina relief

The new rate for business miles is higher than the 40.5 cents per mile rate used for most of 2005, but is lower than the 48.5 cents per mile rate used in the aftermath of Hurricane Katrina when fuel prices were rapidly rising and in most places exceeded $3 a gallon. The medical mileage rate is an increase over 2005's 15 cents per mile but it is still lower than the post-Katrina rate of 22 cents per mile.

New Rules for College Savings

Section 529 College Savings Plans, named for their place in the tax code, offer federal tax-free savings for any college or university in the country. Since they became tax-free (exempt from federal taxes) in 2002, 529s have become a multi-billion dollar business.

Choosing the best 529 plan can be overwhelming, especially since there are over 80 plans to choose from with each state offering a different plan. You have the option to choose a plan from any state.

Although every state offers at least one 529 plan, always be sure to check your home state's plan first, as they may offer a state-tax benefit. There are usually incentives for investing your money in-state; however the actual tax breaks vary by each individual state.

If you live in a state that does not offer tax benefits, then you should definitely research other states to find the best plan for you.

Finding the right plan for you can be complicated and extremely confusing. Without the proper research and guidance, you could end up investing your money in a bad plan and would have been better off investing in your own taxable account.

Luckily, due to their ever growing popularity, there are plenty of websites to help guide you to a plan that fits your personal needs. A few websites that can help guide you are: www.collegesavingsfoundation.org, www.smartmoney.com, and www.apps.nasd.com/investor_Information/Smart/529/Calc/529_Analyzer.asp (this website has a plan calculator to help choose a plan that fits your needs).

Recently, the National Association of Securities Department announced that Ameriprise Financial, Inc. (formerly American Express Financial Advisors) will be fined $1.25 million for insufficiently supervising the sales of 529 plans to their customers. According to NASD, Ameriprise did not follow proper guidelines when choosing the correct 529 plan for individuals. Rather, they simply had all their customers only invest in the Wisconsin 529 plan, which was not the best choice for the majority of their clients.

It is important for you, as an investor, to make sure you have the proper information about the plan you choose.

It would certainly be much easier if there were not so many plans to choose from, however we can help guide you in making the right decision. The potential tax savings make 529 plans extremely valuable and worth the time in choosing the right one.

Personal Needs Allowance Increases

Effective July 1, 2005. In order to match the social security COLA of 2.7% for 2005, long-term care facility residents who receive Medicaid and those who receive Improved Pension from the Veteran's Administration have been given a $2 per month increase to their personal needs allowance. This will bring Medicaid recipients' personal needs allowances up to $59 (from $57) monthly. Those receiving Improved Pensions from the Veteran's Administration will receive the $59 personal needs allowance in addition to their pension, totaling $149 monthly. Nursing facility residents that receive reduced SSI benefits of $30 will be entitled to receive $29 per month in State supplemental benefits.

Average Cost of Long Term Care and Personal Needs Allowable

The average cost of care for calculating and imposing the transfer of asset penalty period has increased to $7905 per month effective for individuals who apply on or before July 1, 2005 and for recipients who become institutionalized on or after July 1, 2005.

New Data Reporting Procedures for Skilled Nursing Facilities

The Department of Health and Human Services has announced new data reporting procedures for Skilled Nursing Facilities (SNFs). Beginning December 27, 2005, SNFs will be required on a daily basis to post staffing data of licensed and unlicensed staff that will be directly caring for residents in the facility. They will also be required to post daily census data of the patients.

The new data reporting procedures will enable patients, families, and the general public to make informed decisions about their healthcare.

Required Data to be Posted Daily Includes:

•        Name of the facility

•        Current date

•        Resident Census

•        Number of nursing staff by categories for each shift

•        The total number and the actual hours worked by category

•        Specific shifts of the facility

Facilities will be obligated to post the total and actual hours worked per shift by licensed and unlicensed nursing staff including: registered nurses, licensed practical nurses, licensed vocational nurses, and certified nurse aides.

There are no specific requirements on the format of the data; however it must be printed in a clear and readable format at the beginning of each shift.

This data must be posted daily in a prominent, accessible place for the public, the facility's staff, patients, and their families. Hard copies of the data must also be made available and any changes to the data must be made immediately.

Facilities are required to keep this information on file for a minimum of 18 months.

2006 Inflation-adjusted Tax Provisions

By law, a variety of tax provisions are revised each year to keep pace with inflation. As a result, the IRS has modified more than three dozen tax benefits for 2006, affecting virtually every taxpayer. For example, for 2006: (1) the value of each personal and dependency exemption, available to most taxpayers, will be $3,300, up $100 from 2005; (2) the new standard deduction will be $10,300 for married couples filing a joint return, $5,150 for singles, and $7,550 for heads of households; (3) tax-bracket thresholds will increase for each filing status; (4) the annual gift tax exemption will be $12,000, up from $11,000 in 2005; and (5) taxpayers will be able to expense up to $108,000 of the cost of eligible property under IRC Sec.179, with the allowable deduction reduced dollar-for-dollar to the extent that eligible Section 179 property placed in service during 2006 exceeds $430,000. Rev. Proc. 2005-70, 2005-47 IRB.