Tax Planning

, , ,

Some Relief for Farmers & Fishermen

, , ,

The Internal Revenue Service announced that it will issue guidance in the near future to provide relief from the estimated tax penalty for farmers and fishermen unable to file and pay their 2012 taxes by the March 1 deadline due to the delayed start for filing tax returns.

What happened? The IRS computer systems were upended thanks to the enactment of the American Taxpayer Relief Act (ATRA) the first week of January. The ATRA affected several tax forms that are most often filed by farmers and fishermen, including the Form 4562, Depreciation and Amortization (Including Information on Listed Property). These forms will require extensive programming and testing of IRS systems, which will delay the IRS’s ability to accept and process these forms. The IRS is providing this relief because delays in the agency’s ability to accept and process these forms may affect the ability of many farmers and fishermen to file and pay their taxes by the March 1 deadline. The relief applies to all farmers and fishermen, not only those who must file late released forms.

,

Home Office Deduction Simplified... Sort of

,

Every now and then the government does actually simplify something. On Tuesday, January 15, 2013 the IRS released Revenue Procedure 2013-13 which gives you an optional method to calculate the amount of the deduction for expenses for your business use of your residence beginning with the current tax year.

As you read about this new home office deduction option, you may notice that it is very similar to the options you have for deducting business use of your automobile. One method is easy and based on a constant deduction the IRS provides the other method requires that you keep detailed records but the benefit may well be a higher deduction.

New Option Beginning with 2013

Beginning this year, 2013, you can elect to calculate your home office deduction by multiplying the allowable business square footage by $5.00. The allowable square footage is the portion of the house used in a qualified business use, but not to exceed 300 square feet. The maximum you can deduct annually under this new “safe-harbor” calculation method is $1,500. The IRS may update the $5.00 per foot allowance from time to time.

, , ,

More Than Meets the Eye

, , ,

We usually try and keep these dispatches light and entertaining. We know you'd rather read about "Tax Strategies for Somali Pirates" than, say, the latest regulations governing domestic international sales corporations. But every so often it's time to put on our serious face, and this is one of those times.

By now, of course, we all know that Congress spent their New Year's crafting a last-minute deal to avoid a "fiscal cliff" disaster. The "American Taxpayer Relief Act of 2012" extended the Bush tax cuts, permanently, for incomes up to $400,000 for single filers and $450,000 for joint filers. Ordinary income above those thresholds will be taxed at 39.6%; corporate dividends and long-term capital gains will be taxed at 20%. The Alternative Minimum Tax is "patched" for good, and the estate tax is eliminated for estates under $5 million.

If your income isn't quite that high, you may think you've just dodged a bullet. But the sad reality is, you're probably already paying more tax, even if your income is nowhere near $400,000:

, , ,

Dying to Save Taxes?

, , ,

2013 is here, and after months of post-election sound and fury, we took a quick "test leap" off the dreaded "fiscal cliff." Look out below!

By this point, we're all familiar with the income tax consequences of the cliff. The Bush tax cuts expired, as scheduled, on December 31, sending everyone's taxes up. The 2% payroll tax holiday expired at the same time, with no hope of resuscitation. The Alternative Minimum Tax (AMT), which up until this week had never been indexed for inflation, still hadn't been "patched" for 2012, meaning it would catch 27 million more Americans in its claws. There are even new Medicare taxes and a 3.8% "unearned income Medicare contribution" on earned income and investment income for individuals earning over $200,000 and joint filers earning over $250,000. (Okay, those new Medicare taxes aren't technically part of the "fiscal cliff" -- but they don't give upper-income earners much reason to cheer 2013, either!)

But the fiscal cliff also threatened some dramatic estate tax changes as w

Final Tax Thoughts for 2012

2013 is almost here, and it looks like that old Grinch is leaving a "fiscal cliff" under everyone's tree. Here are a few final thoughts to help usher in the New Year:

"There's no line on the tax return that asks 'what are you not telling us?'" -- Robert Goulder (tax attorney)

"The rich, indeed, are different from the rest of us; they have shiftier tax lawyers." -- Jim McTeague (columnist, Barron's)

,

Tax Strategies for Santa Claus

,

As 2012 draws to a close, most of us are preparing to take time off and enjoy friends and family. But there's one famous name who works harder than anyone else this time of year — everyone's favorite fat man in a red suit, Santa Claus.

When you think of Santa, you probably focus on what he gives. But have you ever thought about what he pays? You can be sure the grinches at the IRS do!

Santa is most famous for his holiday gift-giving. His "North Pole Foundation" is set up as a not-for-profit under Internal Revenue Code Section 501(c)(3). But Santa also operates a second, highly profitable business focused on licensing and endorsements. (In that sense, he's like top athletes whose off-the-field income from endorsements