Archives For 2012

Tax-related issues took center stage in 2012. Between the drawn-out fiscal cliff negotiations, Romney’s 47% comment, the persistence of the Occupy movement, updated rules from the IRS and the presidential election, there was no shortage of tax talk. The talk becomes reality for Americans tomorrow (Jan. 30, 2013), when the IRS officially begins the 2012 tax filing season. In this post, we outline the highlights, predictions, changes, opinions and other worthy information on the 2012 tax filing season.

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It’s that time of year again!  And 2012 may be the last year that the status quo rules for charitable deductions are in place.  The fiscal cliff is all but sure to bring a bundle of higher taxes, capped or nixed deductions, etc., so enjoy re-distributing your wealth like you normally would while you still can!  Below is an infographic from H&R Block, outlining the basics on charitable giving.  See the IRS’ tips for deducting charitable contributions for additional information.

Happy Giving!

IG - Charitable Giving-F

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

The Bush Tax Cuts have been the spotlight of fiscal cliff negotiations. Sure, there are plenty of other bargaining chips on the table, but none is more spoken of than what to do with the expiring 2001/03 Bush era tax cuts. It’s not a yes/no debate, either; with President Obama winning re-election only one thing is certain – they will expire for some income earners, or no deal. The question then is for what income thresholds, for how long, and what specific deductions should be rid of and for whom. Amidst this negotiation is the larger question of what effect different plans will have on the economy, and the answer is something both sides use to support their arguments.

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After the IRS’s success with UBS and its new regulations coaxing secrets from foreign banks, it is no wonder many Americans have come forward to disclose foreign accounts and assets. After historic 2009 and 2011 voluntary disclosure programs, the IRS announced a third program that is still gathering participants.

More globally, the IRS is implementing FATCA, something the Obama administration feels strongly about. Despite significant foreign criticism, the system is changing the face of global financial reporting and disclosure.

The IRS and Justice Department have coupled the option of amnesty with the threat of punishment and are making examples of those who are not making amends. The latest example involves a British lawyer arrested on arrival at JFK. His alleged crime was helping wealthy Americans hide $10 million in Swiss accounts.

Federal authorities arrested Michael Little on charges for participating in an 11-year tax fraud scheme. Little may have assumed he had nothing to fear, believing that residing in England made him exempt to US tax law.

His alleged crimes date to August of 2001. Upon the death of a client named Seggerman, Little met with the deceased’s descendants at a New York hotel. Explaining there was $10 million of undeclared money, Little advised family members how to hide it from the IRS.

He allegedly suggested ways to send money to the U.S. without alerting the IRS, including travelers checks, art, and jewelry deals. With secrecy befitting a military operation, they used code words for communicating:

  • “FDA” for the IRS;
  • “Beef” for money;
  • “Lbs” for units of $1,000;
  • “Small” for Michael Little;
  • “Moxly” for the Swiss lawyer;
  • “Leaky” was the Seggerman Family matriarch;
  • “BG” was a New Jersey accountant;
  • “Rusty nail” was a trust; and
  • A “Refrigerator” was an account to hold or transfer funds.

Mr. Little’s alleged scheme went on between 2001 and 2008. He even had a New Jersey accountant prepare false and fraudulent individual and corporate tax returns, the government claims. Little also allegedly sent millions surreptitiously to the U.S using several of his suggested techniques to avoid the IRS. He allegedly arranged a sham mortgage to allow one family member to access approximately $600,000 in overseas assets.

Although Little lives primarily in England, he maintains a residence in New York. He was charged with one count of conspiracy, carrying a maximum sentence of five years. Suzanne Seggerman previously pled guilty to conspiracy to defraud U.S. taxing authorities and to subscribing to false individual tax returns. She awaits sentencing.

This is surely not the last time we see these types of cases as the U.S. enforcement efforts continue to grow in reach and strength.

JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.

2012 Tax Rate Card

January 26, 2012 — 1 Comment

How taxing will taxes be this year? Here are the 2012
Individual, corporate and estate and trust income tax rates,
Estate tax rates,
Capital gains tax rates
Standard deduction and personal exemption amounts
FICA rates and MACRS percentages
Social Security earnings limitations for retired workers
Contribution limits for various retirement plans

AMT rates, exemptions and phaseouts
HSA contribution limits
Long-term care insurance deduction limits
Coverdell ESA contribution limits and phaseouts
Section 179 expensing limit and phaseout threshold
Depreciation classes, methods and 200% DB schedules
Social Security benefits.

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Good news, there are now two extra days to file federal income tax returns (April 17) because of the weekend and Emancipation Day. However, this should not deter a taxpayer from preparing their returns in a timely manner. The chance of errors on their returns significantly increases when waiting until last minute to file them with the IRS and the faster a return is filed, the faster a refund is obtained. The IRS has made new accommodations to tax returns this year that may ease the whole process for the individual taxpayer.

The IRS Free File program is a completely free electronic tax return system that has been instituted this year. In order to be eligible, the taxpayer must earn under $57,000 or less annually (which covers 70% of taxpayers). However, if he/she earns more or prefers an alternative method of filing his/her tax returns, there are plenty of other options to choose from. Some notable programs such as Turbo Tax and H&R Block at Home offer some free programs depending on the simplicity of the returns or first-time usage. Further, senior citizens, military personnel, and low-income households may be eligible for free tax preparation around their respective communities.

This year, the IRS will accept all e-filed tax returns, regardless of what program was used. However, the IRS has become increasingly stricter regarding the Preparer’s Tax Identification Number (PTIN) on the returns. Be sure there is a PTIN on the returns prior to filing.

Some are other key issues to note are taxpayers that converted their traditional retirement accounts to Roth accounts in 2010. They were given the option of spreading the tax payments over 2011 and 2012, thus the final payment on their Roth is due this year. Furthermore, stockbrokers must report how much investors paid for their common stocks to determine how much an investor owes or deducts based on profit or loss.

J.D.Katz, P.C. encourages everyone to file his or her tax returns in the most effective manner possible and with plenty of time to spare.