news & noteworthy October 1, 2004

Alerts, Updates and Other Tax and Accounting Tidbits for Business and Home

Presented electronically by Norman, Johnson & Co., PA Certified Public Accountants

Ready for Check 21? – The Check Clearing for the 21^st Century Act, or Check 21, as it is known, goes into effect October 28, 2004. Although it hasn’t received a great deal of public exposure it may drastically change some aspects of banking. Check 21 will streamline the check processing system now used by banks. The law allows banks to make an electronic image of your check when first negotiated and then transmit that image to your bank for processing. The paper copy is destroyed (“truncated” in government speak). What does that mean to you? Well, if you still get your paper checks with your statement, that won’t happen; and more importantly clearing times will decrease by days. So if you write your checks with anticipation of depositing your paycheck by the end of the week – better watch out – that check may beat you to the bank.

Tax Breaks Extended – Late in September Congress passed legislation to extend three popular expiring tax breaks through the end of the decade. The package extends and broadens the use of the relatively new 10% tax bracket, extends the relief from the so-called “marriage penalty”, and extends the $1,000 per child tax credit. It is estimated that the tax breaks package would benefit 94 million taxpayers.

Worthy Quote: “A politician would do well to remember that he has to live with his conscience longer than he does with his constituents.”  — Melvin R. Laird, Secretary of Defense for the Nixon Administration.

Fast facts on US financial literacy – Financial literacy is a growing problem for every income group in our society. Here are some fast facts on the state of American finances.

The US has the lowest national savings rate in the industrialized world.

In 2003, 1.6 million Americans filed for bankruptcy, the highest in history.

The average American family spends $1.22 of every dollar it earns. (Do the math!)

53% of women are not covered by a pension plan as compared to only 22% of men.

College students carry an average of 3 credit cards, each with an average balance of $2,748.

In 2002, the average American household owed $8,000 in credit card debt as compared to $2,600 in 1989.

Facts from all over: Lots of expenses, little payback – 28% of the total health-care expenditures that an individual will incur during a lifetime will take place during the final year of life. Show me the internet – 51% of Americans who access the web from their home computers do so with high-speed broadband connections. In Japan that number is 91%. The Price of Growth – 16 of the 20 most polluted cities in the world are in China. Bring cash – Tokyo is the world’s most expensive city to live in today. Tokyo is 33% more expensive than New York City. Most do, some don’t – 84% of the American population had health insurance in 2003. The 16% of the population that didn’t have health insurance represents 45 million people. Can you say Hemi? – Global demand for oil each day has increased by 2 million barrels in just the last 12 months to 82 million barrels per day.

Non-profit News: charities on the rise – There are some three million registered tax exempt "nonprofits" in the U.S., about a third of which are 501(c)(3) charities. The number of organizations in the latter category has increased by 60% in the last decade. At the same time, the percentage of local government resources received from Federal sources has declined from over 26% to 20%.

Watching the Calendar • Witches and goblins, oh my! No I’m not thinking of Halloween this month, just reminding that the last due date for tax return extenders is October 15^th! • There are just 33 more days until the presidential election.

Employee news:

We welcome our newest employee, Robert Gordon. Robert, a Greer resident, and soon to be USC Upstate graduate will be working with the audit teams.

Angie Arledge marked four years of service to the firm in September; Tammy Grice marks four years service in October.

Got a friend or associate that needs help with accounting, taxes, or financial planning? We appreciate your referrals. Invite your referral to call for a complimentary conference to review their situation.

Jim Norman and Gary Johnson

Norman, Johnson & Co., PA is a Spartanburg, SC based CPA firm which was founded in 1990. The firm offers a wide range of audit, accounting, tax, business consulting, and financial planning services for individuals, businesses, governmental entities, and not-for-profit clients.

This newsletter is published monthly on the first of each month and alerts and special topics as they are deemed informative. Information contained in this newsletter is derived from sources believed to be accurate. You should discuss any legal, tax, or financial matters with the appropriate professional before applying them to your specific situation.

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