The budget deal that Congress and President Obama struck at the beginning of the year to avoid the fiscal cliff resulted in seven tax increases. If you throw in the six tax hikes that are part of Obamacare, that means there are 13 new taxes that may have hit you in 2013.
1.) The biggest potential taxes for wage earners include: Continue reading
In our last “tax move” post, we suggested taxpayers look at all the options they have for lowering their tax bill due in 2014. Here are some more possibilities:
January house payment – Prepaying your mortgage will give you 12 months of deductible interest. The same for a vacation home. Continue reading
IF YOU WANT TO GET CREDIT FOR CHILD and DEPENDENT CARE, THE IRS NEEDS TO KNOW… If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return.
Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses. Continue reading
TAX MOVES TO MAKE BEFORE CHRISTMAS.December 31 is approaching quickly – and there are some things you can do to lower your tax bill. We encourage our clients to come in for a review, especially if there are life-situation changes. Did they marry or divorce? Is there are new child? Is there unscheduled income, or benefits. We want to look at that before the close of the year.
As part of our updates on the laws that are changing, we are sharing valuable articles for your convenience.
This article is the first of two we will bring you from one of MarketWatch of the Wall Street Journal.
Did you know you can save taxes when you rent to relatives?Want renters you know, trust, like and just happen to be related? No problem. In fact, it is actually a pretty good idea.
According to the Bradford Tax Institute, renting is still a business agreement – even if your tenant is your college-age child or your retired in-laws. As with every business agreement, this rental requires a clear understanding of what is and isn’t permitted by law. So set down the ground rules, then you can relax.
Here’s a good tip to remember when renting to relatives (it will help you escape the rental triple whammy): Charge a well-documented and market-supported fair rent to your relatives.
That way, your rental property will not get misconstrued as a second home.
Here are a few ways to prove the rent you charge is fair:
Source: Tax Reduction Letter.
Questions and Answers: 2013 Changes to the Itemized Deduction for Medical Expenses1. When do changes to the itemized deduction for medical expenses take effect?
The rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014. The change will not affect income tax returns for the 2012 taxable year that will be filed in 2013. Continue reading
Now is the time to talk with your tax preparer to understand the other 2013 changes to your itemized deductionsThe rules are changing if you plan to itemize medical deductions on your 2013 federal tax return that you will file in 2014. It does not affect income tax returns for the 2012 taxable year filed in 2013.
Beginning Jan. 1, 2013, you can claim deductions for medical expenses not covered by your health insurance that exceed 10 percent of your adjusted gross income. This change affects your 2013 tax return that you will file in 2014.
There is a temporary exemption from Jan. 1, 2013 to Dec. 31, 2016 for individuals age 65 and older and their spouses. If you or your spouses are 65 years or older or turned 65 during the tax year you are allowed to deduct unreimbursed medical care expenses that exceed 7.5% of your adjusted gross income. The threshold remains at 7.5% of AGI for those taxpayers until Dec. 31, 2016.
Beginning Jan. 1, 2017, all taxpayers may deduct only the amount of the total un reimbursed allowable medical care expenses for the year that exceeds 10% of your adjusted gross income.
2014 Inflation AdjustmentsIR-2013-87, Oct. 31, 2013
WASHINGTON — For tax year 2014, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2013-35 provides details about these annual adjustments.
The tax items for tax year 2014 of greatest interest to most taxpayers include the following dollar amounts.
Details on these inflation adjustments and others not listed in this release can be found in Revenue Procedure 2013-35, which will be published in Internal Revenue Bulletin 2013-47 on Nov. 18, 2013.
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I’m sure you know that the earlier you start Social Security, the amount you receive differs greatly across 62-66-70, considered the “key ages”.
The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.
Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.
Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.
Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer – Healthcare Law Online Resources (Publication 5093).
Visit IRS.gov/aca for more information regarding the tax provisions of the Affordable Care Act.
Mid Year Tax Questions You Need To Ask YourselfThis is a good time to take a look at your present financial picture. Has your income or withholding changed in a significant way? If you are my client – then I need to know.
√ Most new tax rules affect incomes above $200K. Will these new rules affect you? If you aren’t sure how these new rules will affect your taxes, give me a call.
√ Are you sure you are withholding enough to cover your taxes? Let’s go over your information, and make sure it is where it needs to be. If it isn’t enough, and you need to make estimated tax payments, I can help you.
√ Significant changes in your income? If so, it can have a big impact on your taxes. Don’t get fooled by the “graduated tax rate”. 10% income increase can result in a 20% increase in your taxes. Don’t wait on this, call me ASAP so we can be sure you are covered.
√ Life-Changing Events? Divorce, Marriage? New Child? All these shape how the government looks at you. If there are job changes, home sale, moves, launching a new business, loss of a job or starting a new one, these are all important events that impact your financial profile. Let me know about any of these.
√ Unscheduled Income? Unemployment benefits, social security or pension, sale of an investment property or rental …. all of these can affect your tax rate also. Let me know as early as possible so we can factor them in.
When it comes to taxes, I’m in a “need-to-know” capacity. I need to know about anything that can affect your tax rate so you aren’t caught off-guard.
Have a great Autumn!
On Aug. 13, 2013, the Department of the Treasury and the IRS issued final regulations with rules for disclosure of return information to the Department of Health and Human Services that will be used to carry out eligibility determinations for advance payments of the premium tax credit, Medicaid and other health insurance affordability programs. For additional information on the final regulations, see our questions and answers.
There are changes in Social Security. This affects everyone who is approaching retirement age.Update: Want to learn more on the latest from the Social Security Administration, see https://ssa.gov/planners/lifeexpectancy.html
Back on July 29, 2013 the Ways & Means Committee released bipartisan proposals which it stated were necessary to strengthen and protect Social Security. In an effort to engage stakeholders in a dialogue on the potential legislative solutions, the Committee is soliciting feedback. Such changes would include the controversial “chained consumer price index (CPI)”option, see Article 2141 and Article 2140.
Without action addressing the fiscal and structural challenges facing the entitlement programs, the Committee notes that Medicare will be bankrupt by 2026 and seniors will experience a 23% cut to their Social Security benefits in 2033.
As part of a bipartisan hearing series on entitlement reforms announced in April, the Committee is reviewing a variety of proposals to protect and preserve Medicare and Social Security that have been identified by President Obama, either in his budget or in other recommendations to Congress, as well as bipartisan ideas for entitlement reform from the President’s National Commission on Fiscal Responsibility and Reform (the “Simpson-Bowles Commission”) and the Bipartisan Policy Center Debt Reduction Task Force (“Domenici-Rivlin Task Force”).
Source: https://cs.thomsonreuters.com/
Use Estate Planning to protect your IRAs!
This post speaks to the IRA owner in planning the future, and how essential it is to plan your estate today. Put bluntly, “To get your estate situation the way you want it at death, you need to do your estate planning at the same time you build your asset portfolio. If you wait until you have built them, estate planning is much more difficult¹.” Continue reading
School is done and you are ready to start mapping your career. Here are a few tips for you and your parents, to keep your taxes low. Continue reading
A newsletter article by Kathryn Zdan, EA, and Managing Editor at Spidell’s, states that Boomers are retiring earlier than anticipated, but that there is a top concern about long-term care costs. Her summary is based in a survey released by the Metlife Mature Market Institute providing some interesting statistics related to how the oldest group of Baby Boomers (those born in 1946) is handling retirement.