The South Bay Tax Report    

 October 31, 2013 

 

We hope you all had a Happy Halloween.

Halloween is a major production here in Hermosa Beach, and Mike and Gary decided to open the office for trick or treating.

After much deliberation, we decided to give away autographed copies of the Internal Revenue Code;

 they are calorie free, sugar free, and certainly can make sleeping much easier. 

Oddly, we had very few kids stop by this year.

We wonder why!

Now that October 15th has past and the last returns have been filed for the 2012 tax year, we turn our attention to 2013 and to the many tax changes that come as a result of the Obamacare legislation. We'll spend our next newsletters working through those changes. While it may seem like we're just pretty faces around here, we work diligently to stay current and provide you all the information we can about how to reduce your tax bill.

Here are questions - some real, some not-so-real, that came in this month to Wayland & Vukadinovich LLP. 

  

I blew my budget on Halloween candy. 

Where's my Federal tax refund?

Perhaps you were one of those taxpayers that waited until October 15th - the final deadline - to file your 2012 personal income tax return. 

Well, there's nothing wrong with that; 

that's why deadlines exist!

The IRS and California Franchise Tax Board generally refund your tax over-payments within two weeks of your electronic filing, but if your refund hasn't yet arrived, you can always check on the status of the refund.

The IRS has a - friendly - feature on their website named - oddly enough -

Where's My Refund

Visit www.irs.gov 

and make sure you know the amount of your refund.

California has more information available on their website -

www.ftb.ca.gov

And what about my tax refund for this year? 

How soon can I file my 2013 tax return?

Whoa, cowboy!

We're still savoring our Halloween candy and you're thinking about next year's tax refund?

Well, your good friends at the Internal Revenue Service have bad news for you.

The IRS just announced that tax-filing season has been delayed due to the recent 16-day federal government shutdown.

The IRS had been scheduled to open filing season on 

January 21st but will now begin accepting returns 

on January 28th.

The IRS Commissioner indicated that 

"Readying our systems to handle the tax season is an intricate, detailed process, 

and we must take the time to get it right."

Right......

The Internal Revenue Service emailed me asking if I wanted a $120,000 refund they are holding for me. 

Remember, Halloween candy was VERY expensive 

this year. 

What shall I do?

Do NOT click that button as neither the Internal Revenue nor California's Franchise Tax Board use email to communicate with taxpayers. Both the IRS and FTB report a significant increase in these types of emails, emails that often can infect your computer.

Do not open that email!

Now - sending dollars to your new good friend in Nigeria who emails asking for your help before he sends you $1 million is a completely different issue!!

Will my Social Security benefits increase next year?

Those of you who are drawing Social Security benefits know that this is the time of year when the Social Security Administration sets next year's cost of living increase.

Next year's 1.5% increase is the smallest since automatic adjustments were adopted in 1975. 

Benefits are based on your lifetime earnings. The more you make, the higher your benefit - to a point. 

For some who retired this year at age 66, the maximum monthly benefit is $2,533, and that person will get an increase of about $38 per month next year.

The temperature has dropped to a frigid 70 degrees here in Hermosa Beach. 

I need to make some energy saving improvements. 

Can I save any taxes by doing so?

 The IRS wants you to improve your house by making energy savings improvements, but they don't want you to do THAT much. 

You may claim a credit of 10% of your cost of certain energy savings improvements you add to your main home 

(as opposed to the other 14 homes you may own). 

This includes the cost of insulation, windows, doors and roofs. The credit has a lifetime maximum limit of $500 and you may only use $200 of his credit limit for windows.

Are there any tax law changes scheduled for next year?

That's a good question, but you know, of course, that Congress usually waits until December 31st at about 11pm to introduce, debate, and approve any tax law changes for next year, so you'll have to settle for the IRS announcement of annual inflation adjustments for 2014, and you're in luck - 

we have those numbers!

Your personal exemption will increase to $3,950 in 2014, up from $3,900 in 2013.

The standard deduction for those married, filing jointly, increases to $12,400 in 2014.

The estate tax exemption is $5.34 million, but the annual gift tax exclusion remains $14,000.

Your SEP contribution limit has increased from $51,000 to $52,000, but there has been no adjustment in your 401k contribution - it remains at $17,500 with a maximum catch-up contribution of $5,500 for those over age 50.

For Mike and Gary, the annual IRS announcement of inflation adjustments is almost as exciting as Christmas!

Should I make a gift to my child?

Well, that's a tough question.

Do you actually like your child?

Does he/she call you on Mothers/Fathers Day?

Do they take out the trash? Feed the dog/cat?

If so, you may want to consider making a gift prior to year-end.

Our good friends at the (now - back - to - work) Internal Revenue Service will allow you to gift up to $14,000 this year to each child. 

And if you are married, your spouse can also make a $14,000 gift.

That gift isn't taxable to your child, and it's not deductible for you, but it's a great, tax free, way to reduce your estate and reduce your possible estate tax bill. 

And recently-married Gina reminds us.....

This year, we'll open our appointment book on 

December 17th. 

Organizers will be available starting that day, and remember, in an effort to minimize the forests we cut down, we only send organizers to those of you who ask for one. 

If you haven't tried one of our famous electronic organizers, consider taking a walk on the wild side and ask Gina for one of them. 

You can contact her at gina@wvcpas.com - wish her well on her recent marriage!

Just one final note -

If you've not visited THE most visited website of an accounting firm located on Aviation Blvd in Hermosa Beach (okay, we know, that's a fairly small population...),

consider a visit to our new website, (fairly) full of information, pictures that don't include Mike and Gary, and links that may actually help you!

Visit it at

Wayland & Vukadinovich