Tax Tips
Do You Make Over $200,000? Avoid Getting Hit With the 3.8% Medicare Surtax
Back in 2010, Congress enacted a 3.8% surtax to cover the cost of health care reform that takes effect in 2013 no matter what lawmakers do on the Bush tax cuts. The betting right now is that this will not be delayed when Congress agrees to extend the expiring tax breaks. So as you contemplate our year-end tax planning, keep the surtax in mind…it could make a difference.
The 3.8% tax levy boosts the top rate on capital gains and dividends to 18.38% for high-income individuals. It hits singles with modified adjusted gross income above $200,000 ($250,000 for married couples). The surtax is on the lower of the filer’s net investment income or the excess of modified AGI over the threshold amounts.
Consider selling appreciated assets in 2013 (residence, rental properties, vacation homes, stocks, etc.). If you’re planning a Roth conversion, doing it this year may be advantageous. Deferring compensation beyond 2012 may not be a good idea if doing so pushes your income above the thresholds. These strategies are much different that before where you would generally want to defer income recognition to the next year (after all, why pay taxes now when you can pay them later). However given the 3.8% surtax, it just may not make sense to defer the income for many individuals.
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Summer Camp – Child Care Tax Deduction
Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return. (more…)
Read Full Post | Make a Comment ( None so far )IRS Targets Foreign Bank Accounts
With limited exceptions, every American citizen and resident … with a direct or indirect ownership or control over a foreign financial account at any time during 2009 … could be subject to late filing penalty of $10,000 … or if the IRS recommends criminal prosecution … additional penalties up to $500,000 and 10 years in prison. There are few exceptions! Ouch! (more…)
Read Full Post | Make a Comment ( 1 so far )Tax Consequences of Cancellation of Debt, Foreclosures, Repossessions and Abandoments
Just when you thought it couldn’t get any worse. Now you find out there are tax consequences related to your foreclosure or pending foreclosure on the property or properties you own.
Not so fast! In many cases there are debt relief provisions that may possibly exclude you from taxes associated with giving up, abandoning or the foreclosure on property you own. More than ever, its important that you understand your rights and underlying tax laws that may relate real estate losses you may have. The tax laws are fairly complex and will usually require professional help from a licensed CPA or experienced tax preparer.
Read Full Post | Make a Comment ( None so far )Big Brother’s Watching (So Is the Tax Man)
Scary, isn’t it! Certainly in poor taste given that this comes from the tax collecting authorities in Pennsylvania. The ever increasing technological surveillance of taxing authorities is upon us. Given those circumstances and that your 2010 tax returns may not be considered for examination sometime in 2013, now is the time to reconsider what you reported and whether or not you want to have someone else take a second look! At the very least, who you will be using to prepare your tax returns next year and what you can do this year to help minimize your tax burden.
Read Full Post | Make a Comment ( None so far )Three New IRS Tax Reporting Rules Will Help to Identify Tax Cheats
Three new reporting requirements will significantly change the landscape as we know it for the identification and examination of federal tax reporting errors and omissions. (more…)
Read Full Post | Make a Comment ( None so far )$1,000 New HIRE Tax Credit
The Hiring Incentives to Restore Employment (HIRE) Act became law on March 18, 2010. Its purpose is to stimulate employers to hire more employees (more…)
Read Full Post | Make a Comment ( None so far )Tax Treatment of Adoption Expenses
Of the family-related “life events” with significant implications for taxes, adoption of a child ranks among the potentially most expensive. Most readers of Adoptive Families who answered the magazine’s request to report the costs of a completed adoption gave figures between $25,000 and $30,000 (more…)
Read Full Post | Make a Comment ( 9 so far )Documenting the First-Time Homebuyer Credit
To help stimulate the economy and the market for home sales, in 2008 Congress enacted a refundable tax credit for first-time homebuyers. IRC §36, First-time Homebuyer Credit provided eligible individuals with a maximum credit of $7,500 (more…)
Read Full Post | Make a Comment ( 5 so far )Auditors Crack Down on ‘Independent Contractors’
(CNNMoney.com) — If your business uses independent contractors, get ready for new scrutiny. Hoping to boost tax revenue, the IRS and many state governments are cracking down on how companies classify their workers. (more…)
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