Author Archive
Tax Tips … Charitable Donations
Posted by: | CommentsDid you make a donation to a charity this year? If so, you may be able to take a deduction for it on your 2010 tax return.
Here are the top 10 things the IRS wants every taxpayer to know before deducting charitable donations.
- Charitable contributions must be made to qualified organizations to be deductible. You can ask any organization whether it is a qualified organization and most will be able to tell you. You can also check IRS Publication 78, Cumulative List of Organizations, which lists most qualified organizations. IRS Publication 78 is available at IRS.gov.
- Charitable contributions are deductible only if you itemize deductions using Form 1040, Schedule A. Read More→
Tax Tips for Recently Married Taxpayers
Posted by: | CommentsAre you getting married this summer? If you recently got married or are planning a wedding, the last thing on your mind is taxes. However, there are some important steps you need to take to avoid stress at tax time. Here are five tips from the IRS for newlyweds to keep in mind.
- Notify the Social Security Administration Report any name change to the Social Security Administration, so your name and Social Security Number will match when you file your next tax return. Informing the SSA of a name change is quite simple. File a Form SS-5, Application for a Social Security Card, at your local SSA office. The form is available on SSA’s website at www.socialsecurity.gov, by calling 800-772-1213 or at local offices.
- Notify the IRS If you have a new address you should notify the IRS by sending Form 8822, Change of Address. You may download Form 8822 from IRS.gov or order it by calling 800–TAX–FORM (800–829–3676).
- Notify the U.S.Postal Service You should also notify the U.S. Postal Service when you move so it can forward any IRS correspondence.
- Notify Your Employer Report any name and address changes to your employer(s) to make sure you receive your Form W-2, Wage and Tax Statement, after the end of the year.
- Check Your Withholding If both you and your spouse work, your combined income may place you in a higher tax bracket. You can use the IRS Withholding Calculator available on IRS.gov to assist you in determining the correct amount of withholding needed for your new filing status. The IRS Withholding Calculator will even provide you with a new Form W-4, Employee’s Withholding Allowance Certificate, you can print out and give to your employer so they can withhold the correct amount from your pay.
2010 CA Income Tax Rate Schedules Adjusted
Posted by: | CommentsFiling requirement thresholds, the standard deduction, and certain credits were adjusted along with income tax brackets based on the inflation rate of 0.9 percent, as measured by the California CPI for all urban consumers from June 2009 to June 2010. Last year California had a deflation rate that measured 1.5 percent.
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2010 Amounts
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2009 Amounts
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Standard deduction for single or married filing separate taxpayers
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$3,670
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$3,637
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Standard deduction for joint, surviving spouse, or head of household taxpayers
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$7,340
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$7,274
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Personal exemption credit amount for single, separate, and head of household taxpayers
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$99
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$98
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Personal exemption credit amount for joint filers or surviving spouses
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$198
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$196
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Renters Credit is available for single filers with adjusted gross incomes
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$34,722 or less
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$34,412 or less
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Renters Credit is available for joint filers with adjusted gross incomes
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$69,443 or less
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$68,824 or less
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More information about the 2010 tax rates and exemptions and other tax matters is available at ftb.ca.gov.
Same-Sex Marriage in California
Posted by: | CommentsUPDATE … August 16, 2010
Federal Court delays August 18, 2010 date for same-sex marriages in CA.
August 12, 2010
The Northern United States District Court of California lifted the temporary ban on same-sex marriages. This means that same-sex marriages will be legal in California beginning August 18, 2010, while the ruling that Proposition 8 is unconstitutional is appealed to the higher courts.
For income tax purposes, California treated all same-sex married couples who were married prior to the ban the same as registered domestic partners (RDPs). It appears that the same rules will apply to all same-sex couples who marry. This means that community property rules will apply, and they will file as married for California purposes, even though they must file as single for federal purposes.
Nonbusiness Energy Property Credit
Posted by: | CommentsThinking about making some energy saving improvements to your home this summer? Taking some energy saving steps now may lead to bigger tax savings next year.
IRS has provided the following list of things you should know about the Nonbusiness Energy Property Credit:
- The new law increases the credit rate to 30 percent of the cost of all qualifying improvements and raises the maximum credit limit to $1,500 claimed for 2009 and 2010 combined.
- The credit applies to improvements such as adding insulation, energy-efficient exterior windows and energy-efficient heating and air conditioning systems.
- To qualify as “energy efficient” for purposes of this tax credit, products generally must ……….. Read More→
If Bush Tax Cuts Expire …
Posted by: | CommentsFor example, the more children a family has, the more its taxes will increase because the child tax credit will drop from $1,000 per dependent child to $500. Married couples will be affected differently than single families as the so-called marriage penalty will also return if the tax cuts are not extended.
Source: Newsmax.com
Bush Tax Cuts – To Extend or Not to Extend?
Posted by: | CommentsAs November elections near, some Democrats are signaling for the first time that the party might scale back plans to permanently extend Bush-era tax cuts for the middle class.
One example of allowing the Bush Tax Cuts to expire on December 31, 2010 would look like this:
Marriage and Taxes
Typical tax liability for various taxpayers for tax year 2011
| If Bush tax If cuts are | |
| cuts expire extended |
Married, two earners, two children $ 7,235 $ 5,383
earning $85000/yr
Single, no, children, $60,000/yr 8,236 7,484
Single, no children, $150,000/yr 29,962 26,996
Married, two earners, two children, $150,000/yr 22,776 19,268
Married, two earners, no children, $300,000/yr 64,181 61,292
Married, two earners, no children, $500,000/yr 130,210 123,900
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For Democrats, one possible path would be to extend the cuts for six to 12 months, avoiding the difficult political questions raised by the issue in a lame-duck session after the mid-term election.
Now several Democrats (not including Nancy Pulosi) have articulated that a short extension of the Bush Tax Cuts is a possibility. It isn’t just deficit politics driving the discussion, but political reality on Capitol Hill. Lawmakers are fatigued from the ambitious legislative agenda pushed since Mr. Obama took office, and there is little appetite for taking on yet another sensitive issue.
Military Tax Tips
Posted by: | CommentsSummer is a busy time for everyone, but particularly for military members and their families. Whether it’s moving to a new base or traveling to a duty station, members of the military have many obligations that could impact their tax situation. Read More→
Tax Benefits for Job Seekers
Posted by: | CommentsDid you know that you may be able to deduct some of your job search expenses on your tax return?
Many taxpayers spend time during the summer months updating their résumé and attending career fairs. If you are searching for a job this summer, you may be able to deduct some of your expenses on your tax return. Here are six things the IRS wants you to know about deducting costs related to your job search. Read More→
Tips for Students with a Summer Job
Posted by: | CommentsSchool’s out and many students now have a summer job. Some students may not realize they have to pay taxes on their summer income. Here are some tips the IRS wants everyone to know about income earned while working a summer job. Read More→
New “Wealth Taxes” May Affect You
Posted by: | CommentsThe Health Care Bill that Congress passed in March includes two new taxes intended to help pay for this bill. Specifically, an extra 0.9% levy on wages for couples earning more than $250,000 ($200,000 for singles) and a new 3.8% tax on investment income on those same people (technically, people with “adjusted gross incomes” above those amounts).
Each tax signals a radical change in policy. For workers, the extra 0.9% levy puts a progressive element in what used to be a totally flat tax. The 3.8% tax on investment income will basically apply a “payroll” tax to unearned income. FICA taxes for Social Security and Medicare will apply to both your wages and your investment income.
While many details remain unclear and the Internal Revenue Service hasn’t issued any guidance, here are preliminary answers to the most important questions taxpayers are asking. Read More→
Child Care Expense – Summertime
Posted by: | CommentsSummertime Child Care Expenses May Qualify for a Tax Credit
Did you know that your summer day care expenses may qualify for an income tax credit? Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation. Those expenses may help you get a credit on next year’s tax return. Here are five facts the IRS wants you to know about a tax credit available for child care expenses. Read More→
Limitations on Home Mortgage Interest Deductions
Posted by: | CommentsNOTE: This information is only current through the publication date (June 22, 2010), as changes after that date may have occurred.
The IRS reminds taxpayers that interest deductions on home mortgages are limited, including limitations for home acquisition and home equity indebtedness.
There is one limit for loans used to buy, build, or substantially improve a residence — called home acquisition debt. There is another limit for loans secured by a qualified residence but used for other purposes — called home equity debt. Internal Revenue Code Section 163(h) (3) provides guidance for the limitations on the home mortgage interest deduction.
The law allows taxpayers to deduct interest on two categories of indebtedness secured by their residences. Acquisition indebtedness is used to acquire, construct, or substantially improve a residence, and cannot exceed $1,000,000. Home equity indebtedness is any debt other than acquisition indebtedness and cannot exceed $100,000. Read More→
Home Buyer Credit – Update
Posted by: | CommentsFederal homebuyer credit extended (7-1-2010) … BUT …
Congress has extended the first-time homebuyer’s credit until October 1, 2010, but only for buyers who had a written binding contract to purchase a principal residence prior to May 1, 2010. (H.R. 5623) The extension allows homebuyers who were unable to close by the original July 1 deadline extra time to receive the credit because lenders were unable to complete paperwork in a timely manner. The President is expected to sign the legislation.
The federal credit is NOT available for buyers who purchase a residence on or after May 1, 2010.
Source: Spiedell
AZ – Tax Law Change
Posted by: | CommentsA change in Arizona’s withholding tax rates and base takes effect on July 1, meaning that all employees are required to fill out a new withholding form by that date.
The new Arizona withholding tax table is based on a percentage of gross taxable wages. Until now, Arizona’s withholding had been based on a percentage of an employee’s federal tax withholding.
Employees can find the new filing form A-4 online at: www.azdor.gov/forms/withholding.aspx.
The new tax law also applies to those who are receiving an annuity or pension. They should complete a revised Arizona Form A-4P and send it to the payor of the annuity or pension.
Ref: AZ – Senate Bill 1185 (Laws 2009, 1st Reg. Session, Chapter 2)
Taxpayers with AGI of $1 Mil or more …
Posted by: | CommentsThe CA Franchise Tax Board (FTB) announced that they have erroneously assessed underpayment penalties for some taxpayers with AGI of at least $1 million who did not pay 90% of their tax during 2009, a new requirement effective for years beginning on or after January 1, 2009.
While these taxpayers may not use the prior-year safe harbor, they are not subject to the underpayment penalty if, in the prior year, the taxpayer: (1) had a liability of $500 or less ($250 for married filing separately); and (2) made all payments in the prior year through withholding. (R&TC §19136(c)(2))
If the penalty should not have been assessed because taxpayer meets these two tests, taxpayer should contact their tax preparer or call the FTB Tax Practitioners’ Hotline at (916) 845-7057 to request abatement.
Registered Domestic Partners’ Income
Posted by: | CommentsRegistered Domestic Partners’ Income … Is Community Property
A California registered domestic partner must report one-half of the community income, whether received in the form of compensation for personal services or income from property, on his or her federal income tax return.
Example: Bob & Joe are registered domestic partners in California. Bob’s wages for the year are $80,000. Joe’s wages for the year are $60,000. Bob and Joe are each required to file Federal income tax returns and each must report half of the total of the wages, i.e. $70,000 [(80,000 + 60,000) X 50% = 70,000].
Source: Office of Chief Counsel, Internal Revenue Service.
Chief Counsel Advise (CCA) Memorandum Number: 201021050
Release Date: 5/28/2010
Testimonials
Posted by: | CommentsJan provided service and response that was second to none. No waiting 3 weeks without any word as I experience with past Accountant. The tax summary that was delivered as well was extremely helpful.
I had concerns initially that having taxes done in California while I reside in Texas may be a problem, turned out this was completely unfounded. Everything went fine without a single issue and in far better time than I would have thought.
Brian A.
Katy, Texas
New “Refundable” Credit 2014
Posted by: | CommentsAfter December 31, 2013 …
Individuals between 100% and 400% of federal poverty level will qualify for refundable tax credit (“premium assistance credit”) to offset exchange-purchased health insurance premiums.
“Shared Responsibility Penalty” – 2014
Posted by: | CommentsAfter December 31, 2013 …
“Shared Responsibility Penalty” assessed against taxpayers who do not have health coverage. Penalty is phased in over 3 years starting in 2014 at $95 per individual ($285 per family); in 2015 at $325 per individual ($975 per family); and in 2016 at $695 per individual ($2085 per family).
Employer Health Insurance Penalty – 2014
Posted by: | CommentsAfter December 31, 2013 …
Employers with at least 50 full-time employees may be subject to penalty if not providing health insurance coverage to employees.
New Investment Income Tax – 2013
Posted by: | CommentsAfter December 31, 2012 …
New 3.8% Medicare tax assessed on net investment income of individuals, estates, and trusts with income over $200,000 Single and $250,000 Married Filing Joint.
Medicare Premium Increase 2013
Posted by: | CommentsAfter December 31, 2012 …
Medicare premium increases by 0.9% for taxpayers whose AGI (Adjusted Gross Income) exceeds $200,000 Single and $250,000 Married Filing Joint.
FSA Contributions Limit 2013
Posted by: | CommentsFor tax years aftger December 31, 2012 …
FSA contributions limited to $2,500.
Medical Expense Deduction 2013
Posted by: | CommentsFor tax years after December 31, 2012 …
Medical expense deduction increases to 10% after 2012, after 2017 for people 65 or older.
Employer-Sponsored Health Coverage 2011
Posted by: | CommentsCost of employer-sponsored health coverage must be shown on W-2 … but is not yet taxable to the taxpayer.
FSA, HSA, HRA, and MSA 2011
Posted by: | CommentsFSA, HSA, HRA, and MSA qualified distributions include withdrawals for prescription drugs and insulin only, no over-the-counter drugs.
Home Sales – Medicare Surtax 2013
Posted by: | CommentsIf you plan on selling your primary home at a substantial gain, take note.
High profit sales AFTER 2012 can trigger the special 3.8% Medicare surtax. Starting in 2013, the new health care law imposes a 3.8% levy on investment income of singles with adjusted gross income (AGI) over $200K and marrieds above $250K. The surtax is levied on the smaller of the filer’s net investment income or the excess of AGI over the thresholds. Capital gains are treated as investment income. Thus, if the surtax will hit you after 2012 and Read More→
Form 1099 Required … 2012
Posted by: | CommentsAfter December 31, 2011 …
Information reporting is required for payments of $600 or more for property or services to a non-tax-exempt corporation.
Tax Q&A BLOG
Posted by: Jan Lindsley | Comments (0)Individual Income Tax
The purpose of this BLOG is to answer any specific Individual Income Tax questions you might have.
But first … CLICK ON either Fed Tax News and/or CA Tax News, on the navigation bar above, for up-to-date information on the latest tax law changes for 2010 (or 2009), as you may find your answer there.
No Luck?! Then, enter a keyword in the search box on the top right of this screen to see if that provides the information you want/need.
Still nothing? Then CLICK ON the number in parenthesis following the word “Comments” above (or below) i.e., Comments (0) – click on the (0), start scrolling, and at the bottom you will find a “Leave a Reply” comment box. Submit your question there and I promise to get back to you with a response as quickly as I can. ;-D