Thursday, December 20, 2012

526,421 FAMILY FARMS THREATENED BY NEW DEATH TAX


New legislation that jumps the death tax to 55 percent of estates exceeding $1 million threatens 526,421 family farms, of about 25 percent of all farms in America, according to a Senate analysis.

According to the analysis from the Senate Republican Policy Committee, chaired by Wyoming's John Barrasso:

If President Obama and Senate Democrats do not act, the federal government will begin taking more than half the value of family farm estates exceeding $1 million beginning next year. This summer, Majority Leader Harry Reid and Senate Democrats passed legislation (S.3412) on a party-line vote that allows Washington to take up to 55 percent, a huge increase over today's top rate of 35 percent, and drop the tax's exemption from $5.1 million to $1 million. The lower exemption -- combined with soaring farm real estate values -- could put more than 420,000 additional farm estates at risk from the death tax.

Farm values are largely tied up in non-liquid assets like land, buildings, and livestock. Many farm and ranch families would be forced to sell their assets to satisfy Washington Democrats' insatiable appetite for tax money. Up to 24 percent of America's farm and ranch families could be forced to hand over a large chunk of their heritage to the Internal Revenue Service when a family member dies. This would economically devastate rural communities. The President and Senate Democrats should join Republicans in rejecting this irresponsible policy.


SCIENCE GOES WILD #2


Last week I mentioned the Ig Nobels.

 
Our second winner:
A British-American group won the physics prize for

“Figuring Out How a Ponytail Bounces.”

REIMBURSE EMPLOYEE MILEAGE


Q:  Hi Larry, I have a question about how to reimburse an employee for mileage. I just read what the deduction is but I need to know what the rate is for a business to pay back an employee for auto expenses they incur running errands for the business. I am assuming it is an amount per mile and I have asked them to keep a log.

A: You are correct that they should turn in a log (diary) of their miles.  By your question I am assuming that these are routine trips around town such as to the bank etc.  If this is true instead of a daily log the employee can determine the routine miles for the trip and then if they can somehow document the number of trips you can just multiply to determine total business miles.  Having said that in my opinion the IRS likes a detailed log but the other method works.

The mileage rate is 55.5 cents for 2012 and 56.5 cents for 2013.  The amount given to the employee is not added to the W-2 and you do not have to give the employee a 1099.  It is deductible to you and not income to the employee.

Wednesday, December 19, 2012

QUICKBOOKS 2013 UPDATE


In response to customer feedback, QB’s has released an update for QB 2013 that will allow you to change the black ribbon at the top to a lighter color which is easier to read and looks similar to the older versions of QB’s.  This is under Edit>Preferences>Switch to colored icons/light background.  Always run updates because they may contain more options to switch the color scheme back to "normal."

Default



Preference




Saturday, December 15, 2012

SELLING SOME LOSERS CAN TRIM YOUR TAX BILL


Capital losses offset your gains, plus up to $3,000 of other income. Any excess losses are carried over to next year.

Note the wash-sale rule: If you buy the identical securities within 30 days before or after the sale, the loss isn't deductible. Instead the disallowed loss is added to the basis of the new shares. The rule can bite you if your IRA quickly buys stock that you sold at a loss in a taxable account. You can innocently run afoul of this rule if you sell a mutual fund at a loss within 30 days of the date a dividend is reinvested.

Friday, December 14, 2012

DON'T FORGET ABOUT THE 0% RATE ON LONG-TERM CAPITAL GAINS AND DIVIDENDS


If your income other than gains and dividends is in the 10% or 15% bracket, profits on sales of assets owned for over a year and dividends are tax free until they push you into the 25% bracket. That bracket starts at $70,700 of taxable income for couples and $35,350 for singles. The balance of your long-term gains and dividends is taxed at 15%. But short-term capital gains are taxed as ordinary income ... up to a 35% rate.

Thursday, December 13, 2012

CHECK THE BALANCE IN YOUR FLEXIBLE SPENDING ACCOUNT


Just a reminder.  If your employer still has not implemented the 2½-month grace period that IRS now permits you must clean it out by December 31.  If you do not, any money remaining in your account is forfeited.

Remember that in the Patient Protection Act there is a $2,500 annual ceiling on health FSA that takes effect for 2013.
 
 

MAIL CHECKS FOR DEDUCTIBLE ITEMS BEFORE YEAR-END TO ENSURE A 2012 WRITE-OFF


You are able to claim the deduction this year even if the checks do not clear until January. And make sure you know the tax rules if you are charging deductible items. For charges that you make with a retail store credit card, you are allowed to claim the deduction for the item only in the tax year in which you pay the bill. For transactions made with a bank credit card, you take the write-off in the tax year that you charged the goods, even if you pay the bill next year.

Wednesday, December 12, 2012

CHECK THE BALANCE IN YOUR FLEXIBLE SPENDING ACCOUNT


Just a reminder~

 If your employer still has not implemented the 2½-month grace period that IRS now permits you must clean it out by December 31. If you do not, any money remaining in your account is forfeited.

Remember that in the Patient Protection Act there is a $2,500 annual ceiling on health FSA that takes effect for 2013.

Friday, December 7, 2012

2013 RAPIDLY APPROACHING WHILE MANY PAYROLL TAX ISSUES REMAIN UNRESOLVED


There is a great deal of concern in the tax community generally about unresolved tax issues, including the sunsetting tax provisions, extenders, and lack of an alternative minimum tax (AMT) patch. However, one group in particular—payroll professionals—has an especially pressing need for certain tax issues to be decided in order to compute 2013 withholding. This article details a number of these key issues. 

Withholding tables. Income tax rates are scheduled to increase on Jan. 1, 2013, if Congress does not act before then to keep the rates at the current levels. It's unclear whether IRS will release the 2013 withholding tables without congressional action. 

Backup withholding. The backup withholding rate will increase from 28% to 31% on Jan. 1, 2013, if Congress does not act to keep the income tax rates at current levels.  

Payroll tax cut. The “payroll tax cut” has temporarily lowered the Social Security withholding tax rate on wages earned by employees in 2011 and 2012 from 6.2% to 4.2%. Currently, there is no legislation in Congress that would extend the payroll tax cut beyond Dec. 31, 2012, but there has been some recent talk in Washington about either extending the cut or providing some other payroll tax stimulus.  

Commuting benefits. Without congressional action, the annual tax-free exclusion for the combined value of employer-provided transit passes and transportation in a commuter highway vehicle ($125 a month in 2012) will remain unconnected to the tax-free exclusion for qualified parking expenses ($240 a month in 2012).  

Employer-provided educational assistance. Through Dec. 31, 2012, employers may provide up to $5,250 annually in educational assistance to an employee on a tax-free basis. This provision will expire on Jan. 1, 2013, without congressional action. If the provision does expire, education expenses will only be able to be excluded from an employee's income if the expenses qualify as a working condition fringe benefit.  

Adoption assistance. In 2012, employees may exclude from gross income up to $12,650 paid or reimbursed by an employer for qualifying adoption expenses under an adoption assistance program. This fringe benefit will not be available in 2013 without congressional action.  

koa observation: Until some of the issues above are resolved, it is unclear whether IRS will release the 2013 Circular E (IRS Publication 15), 2013 Form W-4, and 2013 Form 941.

AG EXPORTS AT RISK WITHOUT LONG-TERM FARM BILL


(Brownfield) -- BrownfieldAgNews.com reports U.S. Ag Secretary Tom Vilsack says that without a five-year farm bill, ag exports are threatened.  He adds that "it's not just farm income, it's also nearly a million jobs that are at risk here."

To read the article: CLICK HERE


Thursday, December 6, 2012

CHRISTMAS CARD FROM THE IRS

The IRS just issued a gift to taxpayers. It is their Tax Tips for the "Season of Giving." Note that they stayed "politically correct."

IRS Offers Tax Tips for “The Season of Giving"

December is traditionally a month for giving generously to charities, friends and family. But it’s also a time that can have a major impact on the tax return you’ll file in the New Year. Here are some “Season of Giving” tips from the IRS covering everything from charity donations to refund planning:
  • Contribute to Qualified Charities. If you plan to take an itemized charitable deduction on your 2012 tax return, your donation must go to a qualified charity by Dec. 31. Ask the charity about its tax-exempt status. You can also visit IRS.gov and use the Exempt Organizations Select Check tool to check if your favorite charity is a qualified charity. Donations charged to a credit card by Dec. 31 are deductible for 2012, even if you pay the bill in 2013. A gift by check also counts for 2012 as long as you mail it in December. Gifts given to individuals, whether to friends, family or strangers, are not deductible.
  • What You Can Deduct. You generally can deduct your cash contributions and the fair market value of most property you donate to a qualified charity. Special rules apply to several types of donated property, including clothing or household items, cars and boats.
  • Keep Records of All Donations. You need to keep a record of any donations you deduct, regardless of the amount. You must have a written record of all cash contributions to claim a deduction. This may include a cancelled check, bank or credit card statement or payroll deduction record. You can also ask the charity for a written statement that shows the charity’s name, contribution date and amount.
  • Gather Records in a Safe Place. As long as you’re gathering those records for your charitable contributions, it’s a good time to start rounding up documents you will need to file your tax return in 2013. This includes receipts, canceled checks and other documents that support income or deductions you will claim on your tax return. Be sure to store them in a safe place so you can easily access them later when you file your tax return.
  • Plan Ahead for Major Purchases. If you are making major purchases during the holiday season, don’t base them solely on the expectation of receiving your tax refund before the bills arrive. Many factors can impact the timing of a tax refund. The IRS issues most refunds in less than 21 days after receiving a tax return. However, if your tax return requires additional review, it may take longer to receive your refund.

For more information about contributions, check out Publication 526, Charitable Contributions. The booklet is available on IRS.gov or order by mail at 800-TAX-FORM (800-829-3676).

ACTING IRS COMMISSIONER: CONGRESS' FAILURE TO ACT ON FISCAL CLIFF COULD DELAY FILING SEASON


Taxpayers may face a significantly delayed filing season and a much larger tax bill for 2012 if Congress fails to timely resolve fiscal cliff issues, Acting IRS Commissioner Steven T. Miller said on December 6.

Speaking at the 25th Annual Institute on Current Issues in International Tax sponsored by IRS and the George Washington University School of Law in Washington, Miller said that “I remain optimistic that the fiscal cliff will be resolved by the end of this calendar fiscal year [but] if that turns out not to be true, then what is clear is that many of us will see a delayed filing season.”

Miller said that the uncertainty as to what the tax law will be in 2012 creates a risk for the entire tax system, including a strain on IRS, tax practitioners, and ultimately, taxpayers.

“There is currently a real discussion about the tax rates for the next year and beyond as well as the national debt and that is an incredibly important discussion,” he said. “But taxpayers and the IRS need to know what the tax provisions are for 2012 so you know what you owe and so we know how to process the return beginning in January.”

He noted that the alternative minimum tax (AMT) and other extender provisions had expired at the end of 2011, but that these had been overshadowed by other higher profile fiscal cliff issues. Miller said that in programming its systems, IRS has assumed that Congress will patch the AMT as it has for so many years in the past. However, he warned that if Congress fails to resolve fiscal cliff issues prior to the end of the year and the IRS's assumptions are incorrect, the filing season will be delayed for many taxpayers.

 

Friday, November 30, 2012

SECTION 179 FOR 2013

As we are doing year end tax planning, the question has come up several times on how to plan for the fast write off of equipment called section 179 will change in 2013. It is confusing. The current law is a limit of $25,000 for 2013, but will Congress change this low number. Who knows?

Both the President and Congress have discussed increasing the deduction up to $500,000 with a phase-out starting at $2 million. It appears at the moment that the Democrats are pushing this more than the Republicans, but they have other incentives that may provide small business tax relief similar to the Section 179 deduction.

There is even a chance that it may go to $500,000 from the current $139,000 in 2012. Maybe now that the election is over we will get some movement.

We will keep you posted.

“IT’S LATER!”

We’ve been telling you since the start of the year that tax planning is the key to paying the minimum tax possible. We’ve urged you to come in for your free tax analysis, but we’ve been disappointed that you haven’t accepted our offer.

Most of you agree that tax planning is a good idea that can save you money. But you’ve procrastinated, and made excuses to avoid taking advantage of the opportunity. You told yourself “I’ll wait ‘til later, after April 15.” Then after April 15, you said “I’ll wait ‘til later, when it’s closer to the end of the year.” Then, as the year drew to a close, you said “I’ll wait ‘til later, after the election results are in.”

Well, guess what. It’s later.

December 31 is just a few short weeks away. If you we don’t sit down to talk before then, your best planning opportunities will vanish, just like Cinderella’s carriage turning back to a pumpkin. And trust us here — you do not want to be left without a ride home that night!

December 31 is even more important this year than usual, because there’s so much uncertainty in the air. Will the Bush tax cuts be extended? How much will the new Obamacare taxes cost you? What opportunities are you missing to save? We can’t give you the answers if we don’t sit down to plan.

Do it before it’s too late. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and show you how smart planning can save thousands more tomorrow. So call now to schedule your Analysis!

Thursday, November 29, 2012

TAXPAYER RUNS HER CAT HOBBY THROUGH HER CORPORATION AND GETS SKINNED

 
Don't try to run your hobby through your corporation.  As this taxpayer found out It could make your hobby much more expensive.

Financing a hobby through a corporation comes with a double tax whammy. The firm can’t write off the losses. And the owner has a taxable dividend equal to the amount of out-of-pocket costs that the corporation paid for the activity.

A cat breeder and fancier found this out when she had her profitable consulting firm operate her cattery. The cattery won championships,but it was extremely unprofitable. An Appeals Court held that the cattery wasn’t a trade or business of the corporation, but was instead the personal hobby of the shareholder (DKD Enterprises, 8th Cir.).
 

GOOD AND BAD NEWS IN THE RURAL AREA


The Rural Mainstreet Index put out by Creighton University climbed to its highest level since June of this year. The index had been flat or lower due to the drought during the previous three months, but with the report released last month, it rose to a solid 56.6 from September’s weak 48.3. It was the first time since June that it rose above the growth neutral 50 level.

Bankers report uncertainty surrounding healthcare reform, the elections and the fiscal cliff are all restraining employers from much new hiring.

One in four bankers expect a recession in 2013, however, the elections seem to be clouding the outlook.

Saturday, November 24, 2012

“BLACK FRIDAY” TAX PLANNING PUTS TAXES ON SALE

The holidays are here, and millions of Americans kicked off the season with “Black Friday” shopping. Braving the crowds and the cold, facing scorn from family they’ve left behind, they line up at obscenely early hours (or duck out of Thanksgiving dinner before the pumpkin pie is even served) to save $20 on a DVD player or $40 on a flat-screen television.

It’s sad, but true, that most Americans spend more time planning their “Black Friday” shopping than they spend planning their taxes. But that can be an expensive mistake!

What if the IRS had a sale? What if the IRS let you discount your taxes by thousands of dollars, this year and every year to come? And what if they let you do it from the comfort of your home or your office, without lining up in the pre-dawn hours of a chilly November morning? Would you give thanks for a sale like that?

You’re probably not holding your breath for the scrooges at the IRS to hold a “sale.” The good news is, you don’t have to wait for that to happen. You just need a plan. Tax planning is the key to paying the legal minimum, especially with the “fiscal cliff” looming on the horizon. And a good tax plan can pay for a holiday season full of gifts and fun.

Have we showed you how “Black Friday” tax planning can save thousands?

Friday, November 23, 2012

AS THIS PERSON FOUND OUT, THE RULES ON INHERITED IRAS CAN BE COMPLICATED

The 60-day rollover rule won’t apply if an inherited IRA is first paid to you, as a woman who was the beneficiary of her deceased mom’s IRA learned the hard way.

The custodian paid the death benefits to the daughter. Within the usual 60-day period, she set up a new IRA and deposited into the account the check she had received. Because she didn’t arrange to have the money transferred directly into her IRA, the Tax Court says she’s taxed on the distribution.
(Beech, TC Summ. Op. 2012-74)

Thursday, November 22, 2012

2013 STANDARD MILEAGE RATES UP

The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
  • 56.5 cents per mile for business miles driven
  • 24 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations
The rate for business miles driven during 2013 increases 1 cent from the 2012 rate.  The medical and moving rate is also up 1 cent per mile from the 2012 rate.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

Wednesday, November 21, 2012

ESTATE TAX IMPACT ON FARMERS AND RANCHERS

Fox News just reported on the change in the estate tax on January 1st will impact farmers and ranchers.

To watch the video: CLICK HERE

Friday, November 16, 2012

GET THEM WHILE YOU STILL CAN


Thursday, November 15, 2012

IRS APPROVES LEAVE-SHARING PROGRAMS TO HELP HURRICANE SANDY VICTIMS


IRS has announced that employees won't be taxed when they forgo vacation, sick, or personal leave in exchange for employer contributions of amounts to charitable organizations providing relief to Hurricane Sandy victims. Employers may deduct the amounts as business expenses.

Treatment of leave based-programs.

Some employers have set up programs where employees can donate their vacation, sick or personal leave in exchange for the employer making cash payments to qualified tax-exempt organizations that provide relief for the victims of Hurricane Sandy. The IRS has announced that it will not assert that cash payments an employer makes to organizations in exchange for vacation, sick, or personal leave that its employees elect to forgo constitute gross income or wages of the employees if the payments are:

(1) made to the qualified organizations for the relief of victims of Hurricane Sandy; and

(2) paid to qualified organizations before Jan. 1, 2014.

Nor will giving employees the choice to participate cause employees to be considered in constructive receipt of income. However, employees who participate in a leave-sharing donation program won't be allowed to claim a charitable contribution deduction for the value of forgone leave excluded from compensation and wages.

As for employers, IRS won't assert that payments made under a leave-sharing donation program are deductible as charitable contributions.

Thus, the employer will be able to deduct the payments without being subject to the various charitable contribution limits to C corporations. 

Treatment of Form W-2. Amounts representing leave-sharing donations need not be included in Box 1 (wages, tips, or other compensation), Box 3 (Social Security wages, if applicable), or Box 5 (Medicare wages and tips) of Form W-2.

In other words, these amounts also will be free of income- and payroll-tax withholding.

Participation in these programs can help both employees who itemize and those who don't. For example, a non-itemizer who forgoes $2,000 worth of leave will get the equivalent of a $2,000 deduction that would not be available if he took the leave and contributed $2,000 in cash himself.

The lower adjusted gross income (AGI) from participating in the program may make it possible for the employee to achieve a greater tax benefit from any of the numerous deductions and credits that are reduced as AGI increases. For example, participation may yield a higher deduction for a contribution to a traditional IRA. Itemizers can also benefit from the lower AGI. Both itemizers and non-itemizers can save Social Security taxes on the amount foregone. On the downside, participation could result in smaller retirement plan contributions depending on how compensation is defined under the employer's retirement plan.
 

IRS WARNS CONSUMERS OF POSSIBLE SCAMS RELATING TO HURRICANE SANDY RELIEF

The Internal Revenue Service today issued a consumer alert about possible scams taking place in the wake of Hurricane Sandy.

Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Such fraudulent schemes may involve contact by telephone, social media, email or in-person solicitations.

The IRS cautions both hurricane victims and people wishing to make disaster-related charitable donations to avoid scam artists by following these tips:

  • To help disaster victims, donate to recognized charities.
  • Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. The IRS website at IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities may also be found on the Federal Emergency Management Agency (FEMA) Web site at fema.gov.
  • Don’t give out personal financial information — such as Social Security numbers or credit card and bank account numbers and passwords — to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money.
  • Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.
  • Call the IRS toll-free disaster assistance telephone number, 1-866-562-5227, if you are a hurricane victim with specific questions about tax relief or disaster related tax issues.
Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds. They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’identities or financial resources.

Bogus websites may solicit funds for disaster victims. Such fraudulent sites frequently mimic the sites of, or use names similar to, legitimate charities, or claim to be affiliated with legitimate charities, in order to persuade members of the public to send money or provide personal financial information that can be used to steal identities or financial resources. Additionally, scammers often send e-mail that steers the recipient to bogus websites that sound as though they are affiliated with legitimate charitable causes.

Taxpayers suspecting disaster-related frauds should go to IRS.gov and search for the keywords “Report Phishing.”

More information about tax scams and schemes may be found at IRS.gov using the keywords “scams and schemes.”


THIS IS WHAT EXPERTS ARE SAYING ABOUT THE FUTURE OF THE AFFORDABLE CARE ACT

  I just spent 2 days attending the National Tax Conference.  One of the speakers was a specialist in health care reform.  The more I learn about the act the more confusing it is.  Here are a few of his comments of the unexpected outcome of the act that he thinks will come about as employers and taxpayers become more aware of the act. 
 
·         Many owners may consider transferring enough ownership to prevent combination of entities into one “employer” for tax purposes.  This will help keep the employee number under 50 to avoid providing expensive insurance for full time employees. 
·         Many employers will increase  the amount of self coverage that they pay for, but may eliminate or substantially reduce family coverage.
·         Because employers will be encouraged to keep employees under 30 hours, lower income workers will most likely need to work at least two jobs to make a living.   Therefore, these employees will need two jobs to have a chance at making a living.
·         Many employers may eliminate health insurance coverage completely.  This will place these employees into the “public” exchange plan.  Employers will consider this since it may be substantially cheaper to simply pay the penalty and adjust pay for upper level employees.
·         It is cheaper for employers to have younger employees to keep their average premiums downs, so there will be an advantage to reduce the number of older employees.
 



Sunday, November 11, 2012

EMPLOYERS HIRING VETERANS BY YEAR'S END MAY GET EXPANDED TAX CREDIT


Employers planning to claim an expanded tax credit for hiring certain veterans should act soon, according to the IRS. Many businesses may qualify to receive thousands of dollars through the Work Opportunity Tax Credit, but only if the veteran begins work before the new year.

Here are six key facts about the WOTC as expanded by VOW to Hire Heroes Act of 2011.

1. Hiring Deadline: Employers may be able to claim the expanded WOTC for qualified veterans who begin work on or after Nov. 22, 2011 but before Jan. 1, 2013.

2. Maximum Credit: The maximum tax credit is $9,600 per worker for employers that operate for-profit businesses, or $6,240 per worker for tax-exempt organizations.

3. Credit Factors: The amount of credit will depend on a number of factors. Such factors include the length of the veteran’s unemployment before being hired, the number of hours the veteran works and the amount of the wages the veteran receives during the first-year of employment.

4. Disabled Veterans: Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.

5. State Certification: Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. The form must be filed within 28 days after the qualified veteran starts work. For additional information about your SWA visit the U.S. Department of Labor’s WOTC website.

6. E-file: Some states accept Form 8850 electronically.

Friday, November 9, 2012

I CAN JUST ABOUT GUARANTEE A TAX INCREASE OF 2% NEXT YEAR


If you are an employee or if you are self employed, the 2% reduction of Social Security tax is phased out at the end of 2012 and it is doubtful that it will be reinstated. What does this mean to you. For every $100 that you earn from wages or self employment your tax will increase by $2.00. So, for example if your gross earnings before withholding is $1,500 for your first paycheck in 2013 your net pay will be $30.00 less than the same paycheck in 2012.

Here is a chart:
Wages            More Tax
$30,000              $ 600
$40,000              $ 800
$50,000            $1,000
$80,000            $1,600
$100,000          $2,000

Here is more information from an Associated Press article:

Report: Employee payroll tax reduction likely to go away as Social Security takes hit'

(AP) -- The AP reports that "come January, 163 million U.S. workers can expect to feel the pinch" of a return to a 6.2% Social Security tax rate for employees, "regardless of who wins the election." The end to the temporary reduction in Social Security payroll taxes "will cost a typical worker about $1,000 a year, and two-earner family with six-figure incomes as much as $4,500," the story notes. The Social Security payroll tax break for employees was offered by President Obama two years ago, but now "politicians from both parties say they are concerned that it threatens the independent revenue stream that funds Social Security."

Thursday, November 8, 2012

NEW GIFT TAX AMOUNT

In 2013, the amount that you can gift without filing a gift tax return has increased from $13,000 to $14,000. If you give more than this amount, you are required to file a return; however, in most cases, this gift will still be free from gift taxes. Although this amount is adjusted for inflation, it does not change until the amount increases by more than $1,000. Therefore, the next increase will be to $15,000 and this will probably take three or more years assuming current inflation rates.

Wednesday, November 7, 2012

AREN'T YOU GLAD YOU DON'T LIVE IN OHIO?


More than 58,000 television ads on the presidential race were broadcast over the last month in Ohio. To view them all, you’d have to watch ads 24 hours a day for 80 days.  Bloomberg.com

Friday, November 2, 2012

LAST WEEK’S BLOG


Last week I decided that I was going to tell people who I was supporting for president and why. I knew there would be some ramifications for this and I was right.

I was called a “Right Ring Radical”, a “stooge for the Republican Party” and some other names that I probably shouldn’t say. . I was disappointed that none of the people that criticized my blog told me what was wrong with my rationale.  They just called me names.  People, the countries deficit problem is huge and it needs to be dealt with. We can’t close our eyes and leave things as they are. I looked forward to receiving some comments of people telling me why I was wrong which I did not get.

I think that everybody should be able to have their opinion. That’s why we have a free country.  Because of my comments, we had several people unsubscribe to my blog. It’s interesting. I try to give information that hopefully can help people in their business but, apparently, the information I give is not enough to offset the anger they felt because I dare to express my opinion.

I apologize if I offended you.

Thursday, November 1, 2012

WHAT I’VE BEEN UP TO


On October 31, I was honored to make a presentation to the Nebraska CPA Annual Meeting on income tax updates.  As part of my presentation I reviewed all the cases, rulings and the future of income taxes with the 190 CPA’s that were in attendance.

It is always an honor to make this presentation but it is also stressful.  This is not only stressful on me; it is stressful to the firm.   It takes me a considerable amount of time to put the Tax Update together and our staff does a terrific job of making sure everything gets done while I am engrossed in putting this project.

The good thing about the program is that it does make me look at all the court cases, revenue rulings, procedures and happenings over the last twelve months so that I am completely up to date.

Knowledge is Power!

TAX BREAKS AFTER HURRICANE SANDY

 
While many of us have been consumed by news of the 2012 election, we're all sobered by the devastation of Hurricane Sandy. If you plan to help out, keep in mind some of these tips for making the most of your storm relief donations.

~You can deduct up to 50% of your adjusted gross income for cash gifts to "501(c)(3) organizations" or public charities working on behalf of storm victims.

~If you give more than $250, you'll need a written receipt dated no later than the filing date of your return.

~Gifts of clothing, furniture, electronics, and household items are deductible at fair-market value, such as the price they would bring at a resale shop. Consider buying software, available at any office-supply store, for tracking your gifts and their value. You might be surprised how much you save!

~Congress and the IRS have cracked down on inflated car and truck deductions. If you give away a vehicle, you can deduct its fair market value only if the charity uses it for "exempt" purposes (such as a church using a van to drive parishioners). If the charity sells the vehicle, your deduction is limited to the charity's actual proceeds. If you claim more than $500, you'll generally have to attach a certification to your return that states the vehicle was sold in an arm's-length sale and includes the gross proceeds from the sale.

The IRS cautions all of us to seek out qualified charities, and warns of unscrupulous operators looking to take advantage of our generosity during a time of crisis. The IRS has also issued Publication 3833, Disaster Relief: Providing Assistance Through Charitable Organizations, for those who want to contribute or form a new charity.


Wednesday, October 31, 2012

TIPS FOR FILING HURRICANE SANDY DAMAGE CLAIMS

Because so many consumers experienced claims problems in the wake of Hurricane Katrina and Irene, the CFA urges homeowners dealing with losses caused by Hurricane Sandy to be vigilant with their insurance companies to ensure that that they receive a full and fair settlement.

As consumers prepare to contact their insurance companies in the wake of the storm, the CFA offers the following tips:

AFTER THE STORM
1. Report your claim as promptly as possible as insurance companies generally handle them first come, first serve.
2. Once your claim is reported, be sure to get your claim number and write it down. Insurance company claims departments can locate your file easiest by your claim number.
3. When the insurance company sends out an adjuster to survey your damage, ask if he/she is an employee of the insurance company or an independent adjuster (I.A.) hired by them. If an independent adjuster, try to secure the name of the actual company adjuster that the I.A. is sending your information to or are they authorized to make claim decisions and payments on behalf of your insurance company.

KEEP GOOD RECORDSDocumentation, Documentation
1. Start a notebook documenting contacts with your insurance company. List the date, time and a brief description of the exchange.
2. Inventory your damaged possessions.
3. Obtain a repair estimate from a trusted local contractor. Keep receipts from emergency repairs and any costs you incur in temporary housing. This may be reimbursable under the "Additional Living Expense" portion of your homeowners' policy.

IF THE CLAIM IS DENIED OR THE OFFER IS TOO LOW
Demand that the company identify the language in your homeowners' policy that served as the basis for denying your claim or offering so little.

HOW/WHERE DO I COMPLAIN
1. Complain to more senior staff in the insurance company
2. Complain to your state insurance department.
3. See a lawyer.
WHAT ISN'T COVERED IN THE HOMEOWNERS' POLICY?
Homeowners' policies do not cover flood, earthquake, tree removal (except when the tree damages the house) or food spoilage from power failures. Some insurers use an "anti-concurrent-causation" clause in their policies that, insurers allege, removes coverage for wind damage if a flood happens at about the same time.

For more information contact the Consumer Federation of America.