May 1, 1993 Tax Season is Over! We want to thank all of our clients for their business, patience and understanding. New York Extends Tax Rates Because the New York State Legislature failed to authorize spending cuts they voted to extend the personal income tax rates for the 1993 tax year. The top rate of 7.875% is now scheduled to drop to 7.5% on April 1, 1994 for calendar year taxpayers and further decrease to 7% on April 1, 1995. The top tax rate had been scheduled to drop to 7.5% effective April 1, 1993. New York City personal income tax rates that were in effect for the 1992 taxable year are extended to taxable years beginning in 1993. Lower city tax rates that were scheduled to apply in 1993, 1994, and subsequent taxable years have been deferred until 1994, 1995 and subsequent taxable years. Scheduled increases in the standard deduction for both State and New York City income tax purposes are also delayed. Under this measure, the standard deduction for resident unmarried individuals is $6,000 for the 1993 tax year; the standard deduction for unmarried individuals was scheduled to be $6,600 for tax year 1993. Corresponding changes are made to delay the scheduled increase in the standard deduction for married persons filing jointly, surviving spouses and heads of households. The corporation franchise tax surcharge continues to be imposed at the rate of 15% for taxable years ending before July 1, 1994. The surcharge will decrease to 10% for taxable years ending after June 30, 1994 and before July 1, 1995, and is scheduled to expire thereafter. The rate had been scheduled to decrease to 10% for taxable years ending after June 30, 1993 and before July 1, 1994 and to expire thereafter. Estimate Worries You have a regular corporation, not an "S" corporation and you had a loss last year. This year you expect to make a profit. You figure you don`t have to make estimated tax payments since you paid in an amount equal to last year`s tax liability (zero). Several years ago you would have been correct, but today Congress in its infinite wisdom has passed a law that says you only have to pay in an amount equal to last year`s tax liability if you had a tax liability the prior year and filed a tax return. Otherwise, you will have to estimate to the best of your ability (within 90%) of the tax liability. Penalties will apply, to the extent you estimate incorrectly. This conforms Federal law to what New York City adopted years ago. If this confounds you, we feel the same. Nevertheless, give us a call and we will help you to ESTIMATE. If you have any questions about these or any other matters, please call us.