Tax Changes for 2013

Originally Posted By:  Greenstein, Rogoff, Olsen & Co., LLP

There are a number of tax issues to report that may affect you in 2013. Several are related to recent legislation passed by Congress, the American Taxpayer Relief Act of 2012, which was signed by President Obama on January 1, 2013:

    • Individuals with taxable income above $450,000 (married filing jointly)/$400,000 (filing as single) have a federal tax rate of 39.6 percent on income over those amounts, and a 20 percent maximum capital gains rate. Below these amounts, the regular income tax rates will not increase from the 2012 tax rates for most taxpayers. (See below for additional taxes under the Health Care Act that may apply.)
    • The 20 percent capital gains rate will apply only to the extent that a taxpayer’s income exceeds the thresholds above for the 39.6 percent tax rate. Below that income threshold, the 2012 15 percent capital gains rate, or lower, for low-income levels, continue to apply.  Read More

2014 Tax Season to Start Later Following Government Closure

2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations Resume

WASHINGTON–The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4. Read More

Fraud by Partnerships’ Advisers Cannot be Imputed to Partners

On October 11, 2013, Kenneth S. Savell at Bloomberg BNA wrote, that the Court of Federal Claims recently found that, although a partnership’s tax returns included false or fraudulent items resulting from transactions fraudulently structured by the taxpayers’ advisers, the advisers’ fraudulent intent did not trigger the statute of limitations extension in §6501(c)(1) where the taxpayer partners themselves had no fraudulent intent. In BASR P’Ship v. United States, No. 10-244 (Fed. Cl. 9/30/2013), the Court of Federal Claims concluded that the legislative history of §6501(c)(1) supported the view that it is the taxpayer who must possess the intent to evade tax.  Read More

How Will Obamacare Affect Your Small Business?

By Bill Losey Retirement Solutions.

Increased costs or savings in years to come? What do the federal health care reforms mean for your company? Will they lead to thousands of dollars in extra costs and more paperwork? Or will federal subsidies make this a “game changer” for small companies that have struggled to provide insurance plans?

If you employ 50 or more, you will face a major choice. Businesses with 50 or more employees will have a choice beginning in 2014: they can sponsor a health plan for 100% of their workers (even those signed up for government-subsidized health insurance) or pay $750 per worker in penalties to the federal government. Read More

Tax Report: Income Tricks Under Fire

By Laura Saunders at The Wall Street Journal

Call it a one-two punch.

The Internal Revenue Service has won its second clear victory in three years over a tax-cutting maneuver available to—and used by—millions of small-business owners.

In 2010, an Iowa federal court slapped down a popular move in which small-business owners underpay themselves in order to minimize Social Security and Medicare taxes, while taking compensation in other ways. On appeal, the Eighth Circuit affirmed the decision.  Read More

3 Basic Financial Statements You Need to Keep Track of Your Money

By Small Business Administration (SBA)

Who keeps track of your business numbers? It’s easy to just say, “I’m a craftsperson and I know my craft and that’s all I need to know. I’ll just hire someone to take care of the numbers for me.”

The truth is, if you are in charge of making decisions about your business, then you need to understand the basics of accounting and what each of the financial reporting statements you receive as a small business owner means. In other words, even if you let someone else keep the books for you, you need to understand the meaning behind the math.

Here are a few reasons why you have to keep accurate books; and you’ll notice that tax reporting is at the bottom of the list. Keeping accurate books will help you:

  • Price your products accurately.
  • Know if you’re making or losing money—in general and on specific jobs.
  • Know your cash flow—both in the short and long term—and work with bankers and investors.
  • Let the tax agencies know how you’re doing.

The important thing in accounting is to not let the terms and formatting of the financial information intimidate you. All you need to remember is that you need three basic financial statements to keep track of your money: Read More

Small businesses, IRS notices and the tax gap – repeal 6050W

A recent article in the Wall Street Journal noted that about 20,000 small businesses (out of millions of them) received notices (Letter 5036) from the IRS that they may have under-reported their income (“Small Business in IRS Sights,” 8/9/13). The article includes quotes from some small business owners rightfully upset that the IRS presumes they have under-reported their income and makes them take the time to explain (again – they already did this on their original filed return) what their gross receipts are. Read More

IRS Offers New Penalty Relief and Expanded Installment Agreements to Taxpayers under Expanded Fresh Start Initiative

The failure-to-pay penalty is generally half of 1 percent per month with an upper limit of 25 percent. Under this new relief, taxpayers can avoid that penalty until Oct. 15, 2012, which is six months beyond this year’s filing deadline. However, the IRS is still legally required to charge interest on unpaid back taxes and does not have the authority to waive this charge, which is currently 3 percent on an annual basis.

Even with the new penalty relief becoming available, the IRS strongly encourages taxpayers to file their returns on time by April 17 or file for an extension. Failure-to-file penalties applied to unpaid taxes remain in effect and are generally 5 percent per month, also with a 25 percent cap. Read More

Still Owe Taxes on Prior Returns? What to Do Now

July 9, 2013 8:30 am  – J.K. Lasser

The IRS reports that about 3.8 million people who filed their 2011 income tax returns failed to pay the balance due and, as of September 30, 2012, there were 11.5 million delinquent taxpayers (for taxes from 2011 and earlier years). Fortunately, the IRS expanded its Fresh Start Initiative to help delinquent taxpayers settle up. Here are some of your payment options to help you meet your tax obligations without incurring liens or other adverse collection actions.

Request a payment extension

If you need short-term help and expect to be able to pay what you owe within a few months, ask the IRS for a 120-day extension of time to pay your taxes. However, if you wait too long and the IRS sends you a final notice of its intent to levy on your assets, you’ll only be able to get a 60-day extension. Read More


Watch Out for 2013′s Top Tax Refund Scams

By Emily Patterson as posted in the Better Business Bureau

Tax season is here, and that means tax scams are back in full swing. Keep a look out for these top three ways that scammers prey on unsuspecting taxpayers.

Stolen Social Security Numbers: 

Looking forward to a tax return check this year? So are scammers! Scammers use stolen social security numbers and other personal information to file for tax returns for unsuspecting victims.

This scam is more prevalent than ever. Last year, the IRS saw an 80% increase from 2011 in the number of victims. And they are expecting the scam to be just as prevalent in 2013.Victims frequently don’t even know that a return was filed for them until they receive an IRS notice in the mail about it.  Read More


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