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December 28, 2013
Tax Season Starts Jan. 31
Tax Season Starts Jan. 31
Tax Preparers without EITC Checklists to Be Penalized
Tax Preparers without EITC Checklists to Be Penalized
The Internal Revenue Service is warning tax preparers who do not send a Form 8867, “Paid Preparer's Earned Income Credit” Checklist,” with the tax returns they file for clients who claim the EITC that they are subject to a $500 penalty per return.
The Internal Revenue Service is warning tax preparers who do not send a Form 8867, “Paid Preparer's Earned Income Credit” Checklist,” with the tax returns they file for clients who claim the EITC that they are subject to a $500 penalty per return.
December 21, 2013
2013 Retirement
Traditional IRA Contribution Limit
- Age 49 & younger $5,500
- Age 50 & older $6,500
Roth IRA Contribution Limit
- Age 49 & younger $5,500
- Age 50 & older $6,500
Simple IRA Contribution Limit
- Age 49 & younger $12,000
- Age 50 & older $2,500
Traditional IRA Deduction Limit
If Your Filing Status Is...
| Then You Can Take... | |
|---|---|---|
| single or head of household |
$59,000 or less
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a full deduction up to the amount of your contribution limit.
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more than $59,000 but less than $69,000
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a partial deduction.
| |
$69,000 or more
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no deduction.
| |
| married filing jointly orqualifying widow(er) |
$95,000 or less
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a full deduction up to the amount of your contribution limit.
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more than $95,000 but less than $115,000
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a partial deduction.
| |
$115,000 or more
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no deduction.
| |
| married filing separately |
less than $10,000
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a partial deduction.
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$10,000 or more
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no deduction.
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December 20, 2013
2013 Updates
Personal Exemptions: $3,900
Standard Deduction: MFJ $12,200 HOH $8,950 Single & MFS $6,100
Child Tax Credit: $3,000
American Opportunity Credit: $2,500
Earned Income Credit:
Standard Deduction: MFJ $12,200 HOH $8,950 Single & MFS $6,100
Child Tax Credit: $3,000
American Opportunity Credit: $2,500
Earned Income Credit:
| 0 Kids | 1 Kid | 2 Kids | 3+ Kids | |||||
| Earned Income | $6,370 | $9,560 | $13,430 | $13,430 | ||||
| Max Credit | $487 | $3,250 | $5,372 | $6,044 | ||||
| Phaseout (Single or HOH) | $7,970 | $14,340 | $17,530 | $37,870 | $17,530 | $43,038 | $17,530 | $46,227 |
| Phaseout (MFJ) | $13,310 | $19,680 | $22,870 | $43,210 | $22,870 | $48,378 | $22,870 | $51,567 |
December 18, 2013
2013 Tax Bracket
| Adjusted Gross Income | Tax Rate | |||
| $ - | $17,850.00 | 10% | ||
| $17,850.00 | $72,500.00 | 15% | ||
| $72,500.00 | $146,400.00 | 25% | ||
| $146,400.00 | $223,050.00 | 28% | ||
| $223,050.00 | $398,350.00 | 33% | ||
| $398,350.00 | $450,000.00 | 35% | ||
| $450,000.00 | & Higher | 39.6% | ||
December 17, 2013
Three Year-End Tax Tips to Help You Save
Although the year is almost over, you still have time to take steps that can lower your 2013 taxes. Now is a good time to prepare for the upcoming tax filing season. Taking these steps can help you save time and tax dollars. They can also help you save for retirement. Here are three year-end tips from the IRS for you to consider:
1. Start a filing system. If you don’t have a filing system for your tax records, you should start one. It can be as simple as saving receipts in a shoebox, or more complex like creating folders or spreadsheets. It’s always a good idea to save tax-related receipts and records. Keeping good records now will save time and help you file a complete and accurate tax return next year.
2. Make Charitable Contributions. If you plan to give to charity, consider donating before the year ends. That way you can claim your contribution as an itemized deduction for 2013. This includes donations you charge to a credit card by Dec. 31, even if you don’t pay the bill until 2014. A gift by check also counts for 2013 as long as you mail it in December. Remember that you must give to a qualified charity to claim a tax deduction. Use the IRS Select Check tool at IRS.gov to see if an organization is qualified.
Make sure to save your receipts. You must have a written record for all donations of money in order to claim a deduction. Special rules apply to several types of property, including clothing or household items, cars and boats. For more about these rules see Publication 526, Charitable Contributions.
If you are age 70½ or over, the qualified charitable distribution allows you to make tax-free transfers from your IRAs to charity. You can give up to $100,000 per year from your IRA to an eligible charity, and exclude the amount from gross income. You can use the excluded amount to satisfy any required minimum distributions that you must otherwise receive from your IRAs in 2013. This benefit is available even if you do not itemize deductions. This special provision is set to expire at the end of 2013. See Publication 590, Individual Retirement Arrangements (IRAs), for more information.
3. Contribute to Retirement Accounts. You need to contribute to your 401(k) or similar retirement plan by Dec. 31 to count for 2013. On the other hand, you have until April 15, 2014, to set up a new IRA or add money to an existing IRA and still have it count for 2013.
The Saver’s Credit, also known as the Retirement Savings Contribution Credit, helps low- and moderate-income workers in two ways. It helps people save for retirement and earn a special tax credit. Eligible workers who contribute to IRAs, 401(k)s or similar workplace retirement plans can get a tax credit on their federal tax return. The maximum credit is up to $1,000, $2,000 for married couples. Other deductions and credits may reduce or eliminate the amount you can claim.
For more on all these topics, visit the IRS.gov website.
Additional IRS Resources:
- Tax Topic 305 – Recordkeeping
- Exempt Organizations Select Check tool
- Publication 526, Charitable Contributions
- Publication 590, Individual Retirement Arrangements (IRAs)
- 401(k) Plans
- Tax Topic 610 – Retirement Savings Contributions Credit
IRS YouTube Videos:
IRS Podcasts:
December 9, 2013
AICPA Insights - BITCOIN
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Alternative Currency Could Change Financial Landscape
In celebration of the AICPA’s 125 anniversary last year, we produced a powerful retrospective called Evolution of a Profession. The six-minute video traced the accounting profession’s changes from its origins 8,000 years ago through the present day.
Within that evolution were the notions of currency and exchange. Over time, society has changed the various ways goods and services are purchased. Hard as it may be to believe, at one point the primary currency was clams. The same is true of livestock, land and spices. All eventually gave way to something else as our forms of money have been “refined” over and over again.
Bitcoin Timeline
Four years ago, a new alternative currency emerged and the accounting profession needs to watch how it develops going forward. It’s a virtual currency known as Bitcoin. Dozens of virtual currencies exist but Bitcoin has garnered the most attention. The news media has been covering the currency in earnest since the spring, including its growing acceptance among businesses and even a foreign university.
What does that mean for our profession? First, if Bitcoin were to become a mainstream currency option, firms would have to consider clients using Bitcoin as a form of payment for services, and a business might want to accept Bitcoins for purchases of its products.
More broadly, how might financial statement preparation and assurance on those statements need to adapt? Bitcoin is not only a currency, it is also a commodity – one with a finite supply (currently 12 million units and continually increasing to a maximum of 21 million units). Therefore, depending on the demand for it at any given time, its value could fluctuate wildly – even within the same day. In 2013 alone, a single Bitcoin unit was valued at less than $20 and hit a high of more than $1,000 in late November. So, how would a CPA value that money, and is it even an asset? And since Bitcoin largely operates through online exchanges, it functions outside of the traditional banking system, where balances and transactions can easily be confirmed. In terms of taxes, the Internal Revenue Service has said Bitcoin transactions could fall under several categories: property, financial instrument, foreign currency or barter.
Recently, regulators and lawmakers have been taking steps toward acknowledging the reality of digital money.
 Critics say Bitcoin's infrastructure is insecure and hackable. It already found itself in trouble after the government recently seized the accounts of Bitcoin's largest exchange for misrepresenting the full extent of its financial operations. Shortly thereafter, the same exchange registered as a money services business with the Treasury Department’s Financial Crimes Enforcement Network – a step toward compliance with U.S. anti-money laundering rules.
Proponents tout Bitcoin's instantaneous transactions, nominal fees and encryption safety aspects and say that it's here to stay – especially after it recently announced a partnership with the gift card app, Gyft. Those gift cards can be used at Brookstone, Lowe’s, Gap, Sephora, GameStop, Nike, Marriott, Burger King and many more.
Ultimately, consumers will decide whether Bitcoin gets accepted in the marketplace. However, the government’s interest, coupled with growing momentum among businesses and investors, does pose a question to the accounting profession. Is Bitcoin a new, acceptable form of money? More importantly, are we ready if it is?
Barry Melancon, CPA, CGMA, President and CEO, American Institute of CPAs.
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December 3, 2013
IRS to Employers: Hire Veterans by Dec. 31 and Save on Taxes
If you plan to hire soon, consider hiring veterans. If you do, you may be able to claim the federal Work Opportunity Tax Credit worth thousands of dollars.
You must act soon. The WOTC is available to employers that hire qualified veterans before the new year.
Here are six key facts about the WOTC:
1. Hiring Deadline. Employers hiring qualified veterans before Jan. 1, 2014, may be able to claim the WOTC. The credit was set to expire at the end of 2012. The American Taxpayer Relief Act of 2012 extended it for one year.
2. Maximum Credit. The tax credit limit is $9,600 per worker for employers that operate a taxable business. The limit for tax-exempt employers is $6,240 per worker.
3. Credit Factors. The credit amount depends on a number of factors. They include the length of time a veteran was unemployed, the number of hours worked and the amount of the wages paid during the first year of employment.
4. Disabled Veterans. Employers hiring veterans with service-related disabilities may be eligible for the maximum tax credit.
5. State Certification. Employers must file Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit, with their state workforce agency. They must file the form within 28 days after the qualified veteran starts work. For more information, visit the U.S. Department of Labor’s WOTC website.
6. E-file. Some states accept Form 8850 electronically.
For more about this topic, visit IRS.gov and enter ‘WOTC’ in the search box.
Additional IRS Resources:
- Work Opportunity Tax Credit Extended
- Work Opportunity Tax Credit - Frequently Asked Questions and Answers
- Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit
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