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The IRS and the Social Security Administration recently
published some inflation-adjusted numbers for 2013. Use
these numbers as you begin your tax and financial
planning for the coming year.
* Social security taxable wage limit for 2013 will be $113,700. Retirees under full retirement age can earn up to $15,120 without losing benefits. * The threshold for unearned income a child can earn in
2013 without having the kiddie tax apply is $2,000.
* The amount that can be given each year without paying gift tax is $14,000 ($28,000 for joint gifts). * The amount that can be set aside in a health savings account is limited to $3,250 for individuals and $6,450 for families. Those 55 or older can contribute an additional $1,000. * The maximum salary deferral for a 401(k) increases in
2013 to $17,500. The catch-up limit for those 50 or
older remains unchanged at $5,500.
* The maximum IRA contribution limit increases to $5,500; the limit for those 50 or older is $6,500. * The maximum salary deferral for SIMPLEs increases in 2013 to $12,000. The catch-up limit for those 50 or older remains unchanged at $2,500. As soon as other tax numbers are finalized for 2013, I will pass them along to you. Contact my office if you have questions or wish to discuss tax planning for 2012 or 2013. |
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Unless you've been stranded on a deserted island for the
past few weeks, you know that we're facing what Federal
Reserve Chairman Ben Bernanke has dubbed a "fiscal cliff,"
resulting from the expiration of the Bush-era tax cuts
and the automatic across-the-board cuts in government
spending set for January 1, 2013.
Congress and President Obama are trying to reach an
agreement before year-end to avert the fiscal cliff.
Just how will taxpayers be affected if no agreement is
reached? Here are a few of the changes you'll see
effective January 1, 2013, if going over the cliff is
allowed to happen.
* Wages up to $113,700 will be subject to 6.2% social
security tax, up from the 4.2% rate in 2012.
* The 10% income tax rate will be eliminated, and remaining rates will top out at 39.6%, rather than the 2012 top rate of 35%. * The maximum rate on long-term capital gains will increase to 20%, up from the 2012 top rate of 15%. * Dividends will no longer have a top rate of 15%; they'll be taxed as ordinary income with a top rate of 39.6%. * The child tax credit will be reduced from $1,000 per eligible child to $500. * Higher-income taxpayers will once again lose a portion
of itemized deductions and personal exemptions.
* The contribution limit for education savings accounts will be reduced from $2,000 to $500. * The top estate tax rate will go from 35% to 55%, and the exclusion amount will be reduced from $5,120,000 to $1,000,000. * Section 179 expensing limit for business purchases will be reduced to $25,000, down from $139,000. * Unless retroactively increased, the 2012 exemption amounts for the alternative minimum tax will be $33,750 for singles and $45,000 for couples, exposing an estimated 34 million taxpayers to this tax. To discuss what tax-saving steps you might consider in the current shifting tax environment, contact my office soon. |
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Every trade or business must file information returns
(Forms 1098 and 1099) for each year that certain payments
are made to noncorporate recipients. A Form 1099 is
generally not needed for payments to corporate vendors
other than attorneys and corporations providing medical
and health care services.
The two most common information returns for most small businesses are Forms 1099-INT and 1099-MISC. Interest paid in the course of a trade or business is reported on 1099-INT when the amount paid totals $600 or more to any payee. The 1099-MISC is used to report payments of rents or services of $600 or more in any one year to a payee. Typical payees for whom you might need a 1099 would be
cleaning services, contractors, consultants, Web
designers, and professional services. Most small
businesses have at least a few nonemployees to whom
they have paid $600 or more during the year.
Failure to file returns or to include correct information can result in a fine of up to $100 per information return to a maximum of $500,000 for a small business. Information returns are to be given to payees by January 31, 2013, and copies are to be mailed to the IRS by February 28, 2013. The IRS due date is extended to April 1, 2013, for electronically filed returns. If you need help determining your 1099 filing requirements, contact my office. |
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Tax Tip of the Week: Do you know that your corporation can also make charitable contributions? Check out this article to see if it is better tax-wise to make the contributions through your corporation or personally by the end of the year.
Business Tip of the Month: Your company's balance sheet is the window to the financial health of your business. Keeping accurate data throughout the year will give you current insight into your business. Check out this article for more info. Financial Tip of the Month: Do you contribute to a Flexible Spending Account (FSA)? Now is a good time to look at your account and pay down the balance with any needed eligible medical expenses. Read this article for more information.
Fraud Alert: A cruise vacation is a great way to get away from it all. Unfortunately, the crooks and con artists will find every opportunity to scam money out of you, even on relaxing cruise! Read this article for tips on how to be aware of those things that can turn you dream vacation into a costly nightmare! |
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https://www.facebook.com/pages/Linda-L-Heineman-CPA/266124360085715?ref=tn_tnmn
Sincerely,
Linda Heineman
Linda L. Heineman, CPA
email:
linda@llhcpa.com
phone:
626-577-0979
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