No Tax and Money Tip This Week
There will not be a Tax and Money Tip this week. We are busily crunching tax returns and will continue next week with another Tax and Money Tip of the Week. We hope everyone is having a happy tax season.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
New Form and Rules for 2011
When you sell stocks, mutual funds or other capital assets you will still report the gains or losses on Form Schedule D when you prepare your 2011 tax return. But this year you must first show the sales activity on a new form—Form 8949 .
This new form is where you show: description of property, date acquired, date sold, sales price and cost basis. Of particular note, however, you must also check a box indicating if the long- term or short-term cost basis is (A) reported to the IRS on Form 1099-B, (B) cost basis is not reported on Form 1099-B, or (C) when you cannot check Box A or B (when proceeds are not reported on a Form 1099-B).
A separate Form 8949 should be completed, grouping all transactions by type (Box A, Box B or Box C) and also by short-term or long-term trades.
The summary information from Form 8949 then flows to the revised Form Schedule D.
This new form was created as a result of the new cost basis reporting requirements for brokers. The new Form 8949 will help the IRS better compare your reporting with the brokers, Form 1099-B statements. It also opens an easy audit target when you show asset sales where the cost basis is not reported on a Form 1099-B. Be prepared to substantiate cost basis calculations if you mark boxes B or C on Form 8949.
Check with your broker to determine if they have their basis. If not, take steps to determine the basis and update their records.
We will let you know about other tax law changes in the coming weeks.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
Don’t Forget the Education Credits and Deductions!
Our firm is in the heat of the tax season and
we are busy saving our clients money.
We already have had several tax returns in which we saved thousands of dollars for our clients by optimizing Education Credits or Deductions.
If you have a child going to college or if you or your spouse has gone back to college,
check out the archives of my Tax and Money Tips of the Week, November, 2011.
Click here:
https://taxandmoneyblog.com/2011/11/
Call us and let us help save you taxes and legally take advantage of the tax laws for you.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
On Wednesday evening at the White House, President Barack Obama signed into law the Middle Class Tax Relief and Job Creation Act of 2012, H.R. 3630. On Thursday, the IRS released a revised Form 941, Employer’s Quarterly Federal Tax Return, to reflect the extended payroll tax cut.
The act extends the 4.2% rate for the employee portion of Social Security tax through the end of 2012. It also extends certain unemployment benefits and blocks a cut in Medicare payments to doctors. The act also repeals earlier-enacted shifts in the timing of corporate estimated tax payments.
A 2% recapture tax enacted in the December legislation that extended the payroll tax cut through Feb. 29th, which effectively capped the amount of wages eligible for the payroll tax cut at $18,350, was also repealed by the act.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
Inherited IRAs- How to Contact your Senators
Last week, I encouraged all of you to write to your Senators regarding proposed changes to IRAs. Here is a link to do so from the Financial Services Institute:
http://www.bipac.net/issue_alert.asp?g=FSI&issue=highway_1813&parent=FSI
This bill would no longer permit tax deferred stretches of IRAs for beneficiaries other than a spouse, minor children, or the disabled. Adult children would only be permitted a five-year window to defer.
Overall, this bill would require beneficiaries to pay taxes on inherited IRAs over five years instead of spreading them over their lifetime. If passed, the provision would apply to deaths after December 31, 2012.
If you decide to contact your representative, follow the link above and let them know you want your inherited IRAs protected.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
Congress Considering Major Change for IRAs
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
Little publicized, effective and starting in 2013, as a part of the Patient Protection and Affordable Care Act of 2010, enacted March 23, 2010, there will be a new tax of 3.8% applied to “net investment income” in excess of $200,000 ($250,000 for married filing joint return).
Net investment income is defined as investment income less allocable expenses.
Investment income includes income from Interest, Dividends, Annuities, Royalties, Rents, and net Capital Gains from the Disposition of Property (unless property used in Trade or Business that is NOT Passive Activity).
We had done some projections for a client with a large capital gain in 2013 and beyond and will apply in those situations unless the law is changed by Congress before the end of this year. Also, the long term capital gains rate will rise to 20% in 2013.
Good tax planning will require proper timing of capital gains which could save thousands of dollars in tax.
Give us a call to discuss further how we can save taxes if you are in this situation.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
As you take some time in the coming weeks to gather up your 2011 tax information, it’s a good time to take another look at what records you should keep.
Here are some recommendations:
Keep Forever:
Keep for 3 years:
Why 3 years?
Because the statute of limitation is 3 years under which the IRS or NC Department of Revenue may change your return or you can amend your return. However, if these agencies believe that a taxpayer has underestimated their income by 25% or more, this period becomes six years. If the IRS believes you filed a fraudulent return or did not file a return at all, there is NO statute of limitations.
Therefore, never throw away your tax return copies that we always provide you. It is possible, but very difficult and time consuming to try to get copies from the governmental agencies of your past tax returns, especially old ones.
Also, when deciding what to store in a safety deposit box, keep in mind when someone dies, the safe deposit box may be sealed by taxing authorities. This action may cause problems in probating and executing the will; therefore, store original copies of the will in a fireproof safe at home as well as with your attorney.
Questions or Comments?
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week
You can add comments on the blog, call 919-847-2981, or visit our web site. We look forward to hearing from you.
Mark Vitek, CPA/PFS, CFP®
…until next week.
taxandmoneyblog.com 