Wayland & Vukadinovich LLP

Named as the 2011 South Bay's

Best Tax Preparer

by The Daily Breeze 

(We're going to crow about that for as long as we can)

Happy New Year!

It's 80 degrees here in beautiful Hermosa Beach, and while the beautiful weather doesn't make it feel like it's time for tax season to begin, we've installed the software, taken the classes, laid in the paperclips and paper and are ready to do everything to make sure you pay the lowest legal tax bill. Call us for your appointment, your e-organizer or your paper organizer so that you can get that tax return done and that refund request off to the IRS! 

We're sure you've heard but brokerages, investment advisors, and banks will be sending out your 1099s this year during the January 20th - February 15th period AND you may see corrected or amended 1099s this year along with more information regarding cost basis of stocks you sold.

Watch for those important year-end forms and notices.

Looking Ahead to 2012

Certain inflation adjustments were made to various key tax numbers for the 2012 tax year.

You can now make a contribution of $17,000 to your 401k, up from $16,500 last year.

The personal exemption increases from $3,700 to $3,800.

The Social Security Administration announced that the Social Security wage base for 2012 is $110,100, up from $106,800 in 2011.

The $13,000 annual gift exclusion - however - remains unchanged.

Earn A Million, Face an Audit!

If you earn less than $200,000 a year, there's a strong chance you won't have to worry about an Internal Revenue Service audit, but if you make more than $1 million annually, the odds have been rising that you will be hearing from the tax man!

The IRS released figures in early January showing that 12% of millionaires were audited last year, up from 8% in 2010 and 6% in  2009.

The data also shows that for those making under $200,000, the rate has stayed steady at around 1% in recent years.

Overall, the IRS says it audited nearly 1.6 million of 141 million individual returns in 2011. The rate has been growing gradually and is almost double the 0.6% audited in 2001.

Only about 25% of IRS audits involve meetings between the taxpayer and agency officials - the balance of the audits involve correspondence.

If you receive an audit notice, please contact us here at Wayland & Vukadinovich LLP so that we can assist with the process.

Do You Need a Prior Year W-2 or Tax Return?

Many of us are refinancing and compiling pounds of paper to provide our friendly neighborhood bank or lender. If you are requested to provide a prior year return or W-2 that you can't locate, consider filing Form 4506-T, Request for Transcript of Tax Return, to ask the IRS for a transcript of the information on Form W-2 or 1099 or your personal return. Visit the IRS website, www.irs.gov for more information

2012 Mileage Rates

The IRS announced mileage rates for 2012:

Business miles are deductible at 55.5 cents per mile,

Medical and moving miles are 23 cents,

Charitable miles are 14 cents.

Health Savings Accounts

Each year the IRS determines the contribution limits allowed for health savings accounts ("HSAs"). Because HSAs can only be funded if an individual or family has a high deductible health plan, the contribution limits are established on that basis. The IRS just issued the 2012 contribution limits and they are higher than 2011. For individual plans, the HSA contribution is $3,100, and for family plans, the HSA contribution limit is $6,250.

When You're 66 - A Checklist for Social Security and Medicare

The oldest baby boomers will turn 66 this year, and as you may know, you can claim full Social Security benefits, while many seniors will file for Medicare when they turn 65.

Social Security

About 1/2 of all Americans file for Social Security at age 62 - the first year of eligibility, but it can be a costly mistake. Note that annual benefits will be boosted for every year that you wait, up to age 70.

You can earn an unlimited amount of income and receive Social Security benefits if you wait to take benefits at your Normal Retirement Age ("NRA"). However, earlier filers are hit with a penalty on income (like wages and self-employment income) earned over $14,640. If earnings exceed the limit, $1 will be deducted from benefit payments for every $2 earned over that amount.

Married couples need to pay attention to the interaction of both spouses' benefits. The bottom line is that it's generally beneficial for the higher-earning spouse to delay taking Social Security until the NRA or beyond.

Medicare

Although Medicare begins at age 65, enrollment is only automatic for seniors who already have begun receiving Social Security benefits. In that case, the government mails a Medicare card 3 months before the date of eligibility. To ensure that your Medicare Part B coverage start date is not delayed, you should apply 3 months before the month you turn 65.

For seniors who still are employed at age 65, Medicare is the primary payer under certain circumstances. At companies with less than 20 employees, Medicare is the primary payer, while companies will larger payrolls are the primary payers.

High income seniors pay surcharges on premiums for Part B and Part D - the surcharges are paid by individuals with $85k or more in annual income and joint filers with income over $170,000

Check out the non-profit Medicare Rights Center - they offer an excellent free online toolkit to assist with Social Security and Medicare enrollments issues.

www.medicarerights.org