Both federal and state income taxes are due on Monday April 18, 2011. April 15 is a holiday in Washington DC causing the Internal Revenue Service extend the due date until the next business day.
Dec 27
Congress has decided to leave the tax rates that have been in effect the last 10 years intact. They have, however reinstituted the estate tax with a $5 million exemption and 35% tax on remainder.
Dec 27
Effective January 1, 2011 the employee portion of FICA will be reduced by 2%. The net effect of this is a 2% increase in wages subject to Social Security. Please contact my office for more details on how to handle this.
Dec 27
The estate tax has been reinstituted effective January 1, 2011. The new tax exempts the first $5 million of your estate (10 million per couple) and the balance is taxed at 35%.
Oct 11
Oct 11
Starting January 1, 2011 tax preparers are going to be required to file all returns they prepare electronically. For 2011 it applies to preparers who prepare over hundred returns. For 2012 it applies to preparers who prepare over 10 returns. In order to stay in compliance with this law our office will file all returns electronically next year. It is likely that they will offer an opt out for individual clients We will let you know more as the IRS clarifies the new regulation.
Sep 28
President Obama signed a Bill yesterday that provides for the following:
- Zero Taxes on Capital Gains from Key Small Business Investments:Under the Recovery Act, 75 percent of capital gains on key small business investments this year were excluded from taxes. The Small Business Jobs Act temporarily puts in place for the rest of 2010 a provision eliminating all capital gains taxes on these investments if held for five years. Over one million small businesses are eligible to receive investments this year that, if held for five years or longer, could be completely excluded from any capital gains taxation.
- Extension and Expansion of Small Businesses’ Ability to Immediately Expense Capital Investments: The bill increases for 2010 and 2011 the amount of investments that businesses would be eligible to immediately write off to $500,000, while raising the level of investments at which the write-off phases out to $2 million. Prior to the passage of the bill, the expensing limit would have been $250,000 this year, and only $25,000 next year.
- Extension of 50% Bonus Depreciation:The bill extends a Recovery Act provision for 50 percent “bonus depreciation” through 2010, providing 2 million businesses, large and small, with the ability to make new investments today by accelerating the rate at which they deduct capital expenditures.
- A New Deduction of Health Insurance Costs for Self-Employed:The bill allows 2 million self-employed to get a deduction for the cost of health insurance for themselves and their family members in calculating their self-employment taxes. This provision is estimated to provide over $1.9 billion in tax cuts for these entrepreneurs.
- Tax Relief and Simplification for Cell Phone Deductions:The bill changes rules so that the use of cell phones can be deducted without burdensome extra documentation for virtually every small business beginning on their taxes for this year.
- An Increase in the Deduction for Entrepreneurs’ Start-Up Expenses:The bill temporarily increases the amount of start-up expenditures entrepreneurs can deduct from their taxes for this year from $5,000 to $10,000 (with a phase-out threshold of $60,000 in expenditures).
- A Five-Year Carryback Of General Business Credits:The bill would allow certain small businesses to “carry back” their general business credits to offset five years of taxes, while also allowing these credits to offset the Alternative Minimum Tax.
- Limitations on Penalties for Errors in Tax Reporting That Disproportionately Affect Small Business:The bill would change, beginning this year, the penalty for failing to report certain tax transactions from a fixed dollar amount to a percentage of the tax benefits from the transaction.
Sep 27
There is still no resolution as to whether the Bush tax cuts will be extended. It looks like there will not be a vote until after the Novmber elections. If they are not renewed the result will be:
Tax Cuts Expiring in 2010
- Tax Rates. The top tax rate will go from 35% to 39.6%. In addition, if nothing is done, it will mean higher taxes across the board. .
- Capital Gains. The 0% long term capital gains rate will go away. Capital gains rates will go up to 10% for lower tax brackets and from 15% to 20% for higher tax brackets.
- Dividends. Dividends will be taxed as ordinary income, with the new higher rates. Right now the dividend tax rates are 10% and 15%.
- Child Tax Credit. The child tax credit will return to $500 from the current $1,000 per child. In addition, it may not be refundable for some taxpayers.
- 529 Plans. 529 plan withdrawals will not be allowed tax free for computer or Internet access.
- Business Taxes. In addition, various business taxes will change including the payroll tax credit and section 179 expense deduction.
- Estate Taxes. Without any action, the estate tax exemption will go back to a $1 million exemption.
- Other Tax Credits. The tuition credits will be limited, as will the earned income credit.
- Mortgage Premiums. You will no longer be able to deduct mortgage insurance premiums after December 31, 2010.
The most significant of these is the hike in the capital gains rate to 20% , the elimination of the 15% rate for qualified dividends and reinstating the Estate Tax at 2001 levels.
Aug 10
The Internal Revenue Service has set up a dedicated line for people who are experiencing filing or payment hardships due to the Gulf oil spill. The phone number is 866-562-5227. It is open from 7 a.m. to 10 p.m. each weekday.
Aug 10
There has been much discussion about this due to the Gulf oil spill. Taxability of payments received are as follows(regardless of whether they are related to the Gulf oil spill or not)
Payments for Property Damage-nontaxable as long as the reimbursement does not exceed the taxpayers basis in the property
Payments for Personal Physical Injury-not taxable
Payments for Emotional Distress-taxable unless they are due to personal physical injuries or physical sickness
Payments for Loss of Income-taxable
