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10-18-13: Government (including IRS) is Back at Work
As expected, our esteemed lawmakers crafted an 11th hour "patch" to avoid a default and re-open government for the people. I'm not going to waste your time discussing the ramifications. We've all seen this dance and we will all see it again in December.
What you need to remember is that the IRS is re-opened for business and that "critical" operations will be addressed immediately to restore order. What that means and which areas receive focus is yet to be revealed, but you can be sure tax court cases, audits, examinations, and other tax resolution-related cases will quickly resume, as will revenue-collecting services.
No word on when refunds will begin, but we will keep you posted!
10-16-13: For 2013 Tax Planning: Tax Extenders
After 2013, many popular but temporary tax incentives (known as extenders) are scheduled to expire. They include the state and local sales tax deduction, the teacher’s classroom expense deduction, the research tax credit, transit benefits parity, and many more. Some lawmakers in Congress have proposed to include the extenders in year-end comprehensive tax reform legislation, but leaders in the House and Senate have been cool to this idea. More likely, these incentives will be extended for one or two years in a year-end stand-alone bill or linked to other legislation. Our office will keep you posted of developments on the fate of these valuable tax incentives
Beware of Bogus IRS Emails
The IRS receives thousands of reports every year from taxpayers who receive emails out-of-the-blue claiming to be from the IRS. Scammers use the IRS name or logo to make the message appear authentic so you will respond to it. In reality, its a scam known as phishing, attempting to trick you into revealing your personal and financial information. The criminals then use this information to commit identity theft or steal your money.
The IRS has this advice for anyone who receives an email claiming to be from the IRS or directing you to an IRS site:
- Do not reply to the message;
- Do not open any attachments. Attachments may contain malicious code that will infect your computer; and
- Do not click on any links in a suspicious email or phishing website and do not enter confidential information. Visit the IRS website and click on 'Identity Theft' at the bottom of the page for more information.
Here are five other key points the IRS wants you to know about phishing scams.
1. The IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information;
2. The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts;
3. The address of the official IRS website is www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net, .org or anything other than .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on their site and report it to the IRS;
4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. Forward a suspicious email to phishing@irs.gov;
5. You can help the IRS and other law enforcement agencies shut down these schemes. Visit the IRS.gov website to get details on how to report scams and helpful resources if you are the victim of a scam. Click on "Reporting Phishing" at the bottom of the page.
Posted in general
The 2012 Tax Season is Approaching
How will you fare? Every taxpayer benefits from the same low rates as in 2011.
Are you a worker? You may or may not have noticed that Congress is still giving you a "payroll tax holiday" for 2012. Instead of extracting 6.2% from your paycheck for Social Security, 4.2% is being taken. If you're spending it all, you're doing your part to stimulate the economy.
Are you self-employed? The"payroll tax holiday" will also benefit you at tax time. Your self-employment tax calculation will be reduced by 2% as it was in 2011.
Are you married? You were saved once again from the marriage tax penalty for 2012.
Do you have young children? You can still benefit from the Child Tax Credit, the Earned Income Credit, and the Dependent Care Credit at the same levels as in the past.
Do you have children in college? The American Opportunity Tax Credit is still a part of your tax picture if you meet the qualifications. The credit of up to $2,500 has helped many taxpayers to finance higher education.
Are you an investor? You are still in luck. Capital gains and qualified dividends are still free of Federal tax in the 10% and 15% tax bracket and 15% in all higher brackets. Don't count on this special break after this year. The free capital gains are scheduled to end on December 31 of 2012.
Are you paying on student loans? The interest on old loans of up to $2,500 is still deductible as it was in 2011.
Did you do a 2010 Roth conversion? If you deferred the tax to 2011 and 2012, the last installment is due.
Do you pay mortgage insurance premiums? They are no longer deductible as an itemized deduction.
Did you finally buy new windows or insulation? There is no longer an energy credit.
Do you own stock in an insurance company that demutualized? Another court case has surfaced in your favor. It appears that you will someday have a basis other than 0 on your stock.
Are you self-employed and paying Medicare premiums? The IRS has finally confirmed that you can deduct these premiums as self-employed health insurance. You can also amend old open tax years to take the deduction.
Are you part of a same-sex relationship? The courts are finally deciding in your favor in many tax related situations.
Do you owe the IRS? Under its "Fresh Start" initiative, the IRS is offering:
● Failure to pay penalty relief to some unemployed individuals,
● Streamlined installment agreements to catch-up on back taxes, and ● An Offer in Compromise program that will benefit more taxpayers.
Are you a college-bound student tackling the FAFSA form? The IRS has created an automated system to help you access the data you need and minimize the time spent.
Last Updated by Leigh Van Gilst on 2012-12-20 07:50:58 AM
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Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
? 56.5 cents per mile for business miles driven
? 24 cents per mile driven for medical or moving purposes
? 14 cents per mile driven in service of charitable organizations
Safe travels to everyone!
Last Updated by Leigh Van Gilst on 2012-11-21 09:09:18 AM
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The Top 10 Things
Business Owners Don?t Know About Taxes Call 505-925-8980 to Register or go to www.nmSBDC.org Leigh Van Gilst, CPA &
Associates, LLC in coordination with the Small Business Development Center
(SBDC), will be the presenter.
Nov 16, 2012, 8:30 ?
11:30am
UNM-VC, Academics Bldg., Room 131
Cost: FREE
Last Updated by Leigh Van Gilst on 2012-11-15 10:38:55 AM
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Posted in general
For tax years beginning January 1, 2013, the tax law imposes a 3.8 percent surtax on certain passive investment income of individuals, trusts and estates. For individuals, the amount subject to the tax is the lesser of (1) net investment income (NII) or (2) the excess of a taxpayer's modified adjusted gross income (MAGI) over an applicable threshold amount.
Net investment income includes dividends, rents, interest, passive activity income, capital gains, annuities and royalties. Specifically excluded from the definition of net investment income are self-employment income, income from an active trade or business, gain on the sale of an active interest in a partnership or S corporation, IRA or qualified plan distributions and income from charitable remainder trusts. MAGI is generally the amount you report on the last line of page 1, Form 1040.
The applicable threshold amounts are shown below.
Married taxpayers filing separately $125,000
All other individual taxpayers $200,000
A simple example will illustrate how the tax is calculated.
Example. Al and Barb, married taxpayers filing separately, have $300,000 of salary income and $100,000 of NII. The amount subject to the surtax is the lesser of (1) NII ($100,000) or (2) the excess of their MAGI ($400,000) over the threshold amount ($400,000 -$250,000 = $150,000). Because NII is the smaller amount, it is the base on which the tax is calculated. Thus, the amount subject to the tax is $100,000 and the surtax payable is $3,800 (.038 x $100,000).
Fortunately, there are a number of effective strategies that can be used to reduce MAGI and or NII and reduce the base on which the surtax is paid. These include (1) Roth IRA conversions, (2) tax exempt bonds, (3) tax-deferred annuities, (4) life insurance, (5) rental real estate, (6) oil and gas investments, (7) timing estate and trust distributions, (8) charitable remainder trusts, (9) installment sales and maximizing above-the-line deductions. We would be happy to explain how these strategies might save you large amounts of surtax.
Accelerating Ordinary Income into 2012
A final opportunity that should be noted is accelerating ordinary income into 2012. Perhaps the best way to do this would be to convert a traditional IRA to a Roth IRA in 2012, if a conversion otherwise made sense. Ordinary income could also be accelerated by selling bonds with accrued interest in 2012 or selling and repurchasing bonds trading at a premium. Finally, you might consider exercising non-qualified stock options in 2012.
Last Updated by Leigh Van Gilst on 2012-11-14 06:45:40 AM
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Many people look for help from professionals when it's time to file their tax return. If you use a paid tax preparer to file your return this year, the IRS urges you to choose that preparer wisely. Even if a return is prepared by someone else, the taxpayer is legally responsible for what's on it. So, it's very important to choose your tax preparer carefully.
This year, the IRS wants to remind taxpayers to use a preparer who will sign the returns they prepare and enter their required Preparer Tax Identification Number (PTIN).
Here are ten tips to keep in mind when choosing a tax return preparer:
1. Check the preparer's qualifications. New regulations require all paid tax return preparers to have a Preparer Tax Identification Number. In addition to making sure they have a PTIN, ask if the preparer is affiliated with a professional organization and attends continuing education classes. The IRS is also phasing in a new test requirement to make sure those who are not an enrolled agent, CPA, or attorney have met minimal competency requirements. Those subject to the test will become a Registered Tax Return Preparer once they pass it. (In our firm, a CPA reviews all tax returns.)
2. Check on the preparer's history. Check to see if the preparer has a questionable history with the Better Business Bureau and check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the IRS Office of Enrollment for enrolled agents. (We've got excellent references, just ask!)
3. Ask about their service fees. Avoid preparers who base their fee on a percentage of your refund or those who claim they can obtain larger refunds than other preparers. Also, always make sure any refund due is sent to you or deposited into an account in your name. Under no circumstances should all or part of your refund be directly deposited into a preparer's bank account. (We base our fees on the forms that need to be filed, and all refunds go to you.)
4. Ask if they offer electronic filing. Any paid preparer who prepares and files more than 10 returns for clients must file the returns electronically, unless the client opts to file a paper return. More than 1 billion individual tax returns have been safely and securely processed since the debut of electronic filing in 1990. Make sure your preparer offers IRS e-file. (We e-file for FREE!)
5. Make sure the tax preparer is accessible. Make sure you will be able to contact the tax preparer after the return has been filed, even after the April due date, in case questions arise. (We are here year-round, open 8-5 M-F.)
6. Provide all records and receipts needed to prepare your return. Reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items. Do not use a preparer who is willing to electronically file your return before you receive your Form W-2 using your last pay stub. This is against IRS e-file rules.
7. Never sign a blank return. Avoid tax preparers that ask you to sign a blank tax form.
8. Review the entire return before signing it. Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it. (And if you don't understand something, ASK!)
9. Make sure the preparer signs the form and includes their PTIN. A paid preparer must sign the return and include their PTIN as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
10. Report abusive tax preparers to the IRS. You can report abusive tax preparers and suspected tax fraud to the IRS on Form 14157, Complaint: Tax Return Preparer. Download Form 14157 from www.irs.gov or order by mail at 800-TAX-FORM (800-829-3676).
Last Updated by Leigh Van Gilst on 2012-01-10 09:49:32 AM
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Are you covered by long-term disability insurance? If you ever have to take the benefits of the policy because of illness or injury, there's an easy way to make the benefits tax free - just be sure to pay the premiums yourself with after-tax dollars.
In other words, if your employer provides you with long-term disability insurance, any benefits you later get are taxable. If you pay for your premiums yourself, but have them deducted pre-tax on your paycheck, any benefits you later get are taxable.
But if you pay the premium with after-tax dollars, any benefits you later get are tax free. With benefits typically at 2/3 of your regular wages, having them be tax free makes a huge difference!
Last Updated by Admin on 2011-09-30 02:48:48 PM
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Now that tax season is over, we can take a breath and reflect on the successes and opportunities of our first year in a new building. We'd like to express our sincere appreciation to you for your business which we value immensely. We at Leigh Van Gilst, CPA & Associates want to be the best we can possibly be. We love our jobs, and we love our clients even more. It's our goal to have satisfied clients who believe we provide a great service and who feel important and respected. Because of this, we've developed a satisfaction survey and would appreciate a little of your time to answer a few questions. Don't be afraid to share what you liked, too!
http://www.surveymonkey.com/s/BHGLDZWLast Updated by Admin on 2011-09-30 02:49:27 PM
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The possibility of a government shutdown at midnight April 8 has forced the IRS to make contingency plans. This is what we know at this time:
- The April 18 filing deadline for Form 1040 returns remains in effect.
- Tax payments will be processed as usual.
- Returns filed on paper will not be processed until after the government resumes normal operations. This will delay refunds on paper filed returns.
- E-filed returns will be processed as usual with no delay in direct deposit refunds; refunds via physical checks may be delayed
- Taxpayers who have an appointment scheduled with the IRS (audit, collections, appeals or Taxpayer Advocate cases) during the period of the shutdown should assume the appointment has been canceled. These appointments will be rescheduled when normal IRS operations resume.
We will continue to keep you informed as new details are received.
Last Updated by Admin on 2011-09-30 12:26:43 PM
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So many changes have occurred in the last month. We've got a name change to Leigh Van Gilst, CPA & Associates, LLC. We've got an address change to 121A Don Diego SE in Los Lunas. And we've got new personnel. Leigh is still here, and added to our company is Debi, our accountant, and Patty, our office manager. Stop in to visit anytime! We're conveniently located just off of Main Street in the heart of Los Lunas. We're right behind the fire station. We're easy to find, have lots of parking and are in, settled and ready for the new tax filing season. Office hours for the upcoming tax season will be 7am to 6pm M-F and 9am to 3pm Saturdays. The office will be closed on Sundays. Announcements will be coming out soon for our open house. Please plan to attend! It will be on Friday, January 21 from 4-8pm. We'd love to see you!
Last Updated by Leigh Van Gilst on 2012-08-10 02:21:04 PM
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A note to all NM business owners: The gross receipts tax rate increased effective July 1, 2010. ALL gross receipts tax rates have changed due to the increase in the base rate for New Mexico. If you don't know your rate, you can look it up at: http://www.tax.state.nm.us/pubs/GrossReceiptsRates/gross_receipts_rate_sched.htm or call me if you have questions!
Last Updated by Admin on 2011-09-30 02:52:28 PM
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