TRKM News

Payroll tax cut extension

2011-12-28T11:22:00.000-07:00

December 22, 2011, the House and Senate agreed to temporarily extend the payroll tax cut. For the first two months of 2012, a 4.2% Social Security tax continues to apply to workers' pay.

Qualified parking and employer-provided transit benefits

2011-11-15T11:18:00.002-07:00

For 2011, an employee may exclude up to $230 a month of qualified parking and up to $230 for employer-provided transit and vanpooling benefits.

Payments to caregivers deductible as medical expenses

2011-07-14T14:09:00.001-06:00

The Tax Court has held that payments made to caregivers for providing physician-ordered assistance and supervision to a patient suffering from dementia qualified as long-term care services and were thus deductible amounts paid for medical care.

Information Reporting Rules

2011-07-08T14:09:00.002-06:00

The latest attempt to expand the information reporting rules for businesses was retroactively repealed by Congress for being too burdensome. Businesses, including rental property owners, do not need to furnish 1099-Misc forms to suppliers from which they purchase more than $600 worth of merchandise.

2011 Mileage Rates Revised

2011-06-23T11:08:00.004-06:00

The Internal Revenue Service announced on June 23, 2011 an increase in the standard mileage rates for the final six months of 2011. The rate will increase to 55.5 cents a mile for all business miles driven from July 1, 2011 through December 31, 2011. This is an increase of 4.5 cents from the 51 cent rate in effect for the first six months of 2011. The new six-month rate for computing deductible medical or moving expenses will also increase 4.5 cents to 23.5 cents a mile, up from 19 cents for the first six months of 2011. The rate for providing services for charitable organizations is set by statute, not the IRS, and remains at 14 cents a mile.

MEDICARE

2011-06-08T11:19:00.002-06:00

If you plan to delay receiving social security benefits because you are working, you should sign up for Medicare three months before reaching age 65, regardless of when you reach full retirement age. Otherwise, your Medicare medical insurance, as well as prescription drug coverage, could be delayed and you could be charged higher premiums.

Two bonus depreciation deductions for one expenditure

2011-06-02T14:53:00.004-06:00

When otherwise eligible MACRS property or computer software is acquired via a Code Sec. 1031 like-kind exchange, both the carryover basis and the excess basis, if any, of the acquired property are eligible for bonus depreciation. It does not matter if bonus depreciation was claimed on the old property.

Medicare Premiums - Self-employed health insurance

2011-05-24T14:32:00.003-06:00

The IRS has changed its mind on whether self-employed individuals can deduct Medicare premiums as part of their above-the-line deduction for health insurance on From 1040. In the past, the agency said that was a no-no. In 2010 the agency says it's okay. If you missed the write-off on your 2010 return file an amended return to claim the break and get a tax refund for any amount you overpaid.

Small Business Health Care Tax Credit

2010-12-09T15:56:00.000-07:00

Included in the Affordable Care Act enacted in March, the small business health care tax credit is designed to encourage small businesses to offer health insurance coverage to their employees. It is specifically targeted to help small businesses that primarily employ moderate- and lower-income workers.

2011 Mileage Rates

2010-12-07T12:01:00.003-07:00

Beginning on January 1, 2011 the standard mileage rates for the use of a car will be $.51 per mile for business miles driven, $.19 per mile driven for medical or moving purposes and $.14 per mile driven in service of charitable organizations.

Group Term Life Insurance Fringe Benefit

2010-10-28T14:24:00.003-06:00

An employer can generally exclude the cost of up to $50,000 of group term life insurance from the W-2 wages of an insured employee. The employer must include in employee's wages subject to social security and Medicare taxes the cost of group term life insurance that is more than the cost of $50,000 of coverage, reduced by the amount the employee paid toward the insurance.

Capital gains tax rate

2010-09-20T11:30:00.002-06:00

The maximum 15% rate on qualified dividends and long-term capital gains now in effect is scheduled to expire at the end of this year under the sunset provisions of the Jobs and Growth Tax Relief Reconciliation Act of 2003. Barring congressional and presidential action, maximum rates of 39.6% and 20% will go into effect for dividends and long-term capital gains, respectively, for 2011 transactions.

Strategies for a surviving spouse designated as beneficiary of decedent's IRA

2010-08-05T11:18:00.001-06:00

A surviving spouse who is a designated beneficiary of a deceased spouse's IRA must decide whether to roll it over into his or her own IRA, or leave the IRA in the deceased spouse's name. If the surviving spouse is younger than age 59 1/2, the rollover election could have a significant disadvantage: Once the spouse elects to roll over the decedent's IRA into his or her own IRA, pre-age-59 1/2 withdrawals from that IRA generally will be subject to the 10% penalty tax on top of regular income taxes.

2010 ROTH CONVERSION

2010-06-28T09:08:00.002-06:00

Converting to a ROTH generally makes sense if you expect to be in the same or higher tax bracket in retirement and you can pay the tax bill with other funds. Taxes are due when filing your 2010 tax returns or you can elect to defer the tax and report 50% of the conversion amount on your 2011 returns and the balance on your 2012 returns. Keep in mind tax rates are expected to increase in 2011 so delaying the payment of taxes may not pay off.

Federal Alternative Minimum Tax

2010-06-24T11:16:00.001-06:00

The federal alternative minimum tax (AMT) has its own set of forms, rates, rules and brackets. Some of the more common AMT triggers are substantial deductions claimed for state income taxes, dependent exemptions, and interest on home equity loans used for purposes other than home improvement.

Medicare tax on investment income

2010-05-13T12:38:00.000-06:00

For tax years beginning after 12/31/2012, a 3.8% tax will apply to net investment income of higher income taxpayers. The tax for individuals is 3.8% of the lesser of (1) net investment income or (2) the excess of modified adjusted gross income over the threshold amount.

Hiring Incentives to Restore Employment (HIRE) Act

2010-04-01T08:33:00.000-06:00

The HIRE Act provides employers with an exemption from the employer’s 6.2% share of social security tax on wages paid to qualifying employees, effective for wages paid March 19, 2010 through December 31, 2010.

Employee may contact IRS directly about missing Form W-2

2010-02-18T08:40:00.001-07:00

An employee may contact the IRS directly if an employer is not cooperative in providing a new or corrected Form W-2. The IRS will then send a letter to the employer, asking the employer to give the Form W-2 to the employee within ten days.

American Opportunity Credit

2010-02-05T08:58:00.002-07:00

The American Opportunity credit modifies the existing Hope Credit for tax years 2009 and 2010. A credit of up to $2,500 is allowed for qualified education expenses. The credit is: 100% of the first $2,000 of qualified expenses and 25% of the next $2,000 paid.

40% of this credit is refundable.

Haiti Earthquake Relief

2010-01-29T17:07:00.002-07:00

Taxpayers may claim a charitable contribution deduction on their 2009 tax return for cash donations made for the relief of victims in areas affected by the January 12, 2010 earthquake in Haiti. These contributions must be made by March 1, 2010 and are limited to cash contributions.

Social Security Numbers May Be Truncated

2009-12-01T09:17:00.001-07:00

The IRS recently launched a pilot program to help combat identity theft. For calendar years 2009 and 2010, filers of 1099 series forms may truncate a payee's Social Security Number or Employer Identification Number to just the last four digits. The filer must still report the full identification number on forms sent to the IRS for processing.

Making Work Pay Credit

2009-10-21T08:41:00.000-06:00

In 2009, the making working pay credit is the lesser of (1) 6.2% of an individual's earned income, or (2) $400 ($800 for a joint return). It is phased out for higher income taxpayers.

$8,000 First-Time Homebuyer Credit

2009-09-18T10:03:00.000-06:00

The first-time homebuyer credit is a refundable tax credit equal to the lesser of 10% of the purchase price of a principal residence or $8,000. To qualify for the credit, the taxpayer must complete the purchase of an eligible home before December 1, 2009.

Gift Taxes

2009-08-21T15:41:00.002-06:00

To avoid income and estate taxes, shift your income or assets to other family members with lower brackets and wealth. Avoid gift tax by limiting gifts to $13,000 per person this year. ($26,000 if your spouse agrees.)

2009 IRA CONTRIBUTION AMOUNTS

2009-08-11T12:46:00.002-06:00

The contribution limits for 2009 are: $5,000. IRA owners age 50 or older can make an addtional $1,000 "catch-up" contribution. The deadline to contribute to an IRA is April 15 after the end of a tax year.