Rebella Accountancy | 507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236

       

 

 

Monica Rebella, CPA/IAR - President

Rebella Accountancy

 

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Feature Articles

 

- ATRA delays start to 2013 filing season; requires careful planning for retroactive and prospective provisions

- IRS introduces simplified method for claiming home office deduction

- New IRS guidance on health care employer mandate looks to 2014 start date

- How Do I? Compute the new 20 percent net capital gain rate under the new tax law?

- FAQ: What are above-the-line deductions?

- February 2013 tax compliance calendar

 

 

 

2012 Tax Year in Review - Don't Die Here - ATRA Retroactive Provisions - Home Office Deduction - Healthcare Mandate Starts in 2014 - New 20% Net Capital Gains Rate



2012 Tax Year in Review

 

2012 resolved many tax uncertainties, created others & set the stage for future tax reform.  If you like details then click here for my 17-page report on the 2012 Tax Year-In-Review.

 

Don't Die Here

 

Recently passed federal legislation increased the exemption amount before your estate pays taxes on your assets when you die.

 

The amount for 2013 is $5.25 million. This makes most of our estates tax-free when we die. Or does it?

Where you live could cost you a bundle in inheritance and estate taxies since 21 states have some form of estate taxes, inheritance taxes, or both. To make matters worse, this state tax landscape is constantly changing making it tough to stay current. Here is useful information on which states want a cut of your money when someone passes away.

8 states currently tax your inheritance. The following states charge inheritance tax: Iowa, Nebraska, Indiana, Pennsylvania, Kentucky, New Jersey, Tennessee, and Maryland. The tax rate can be as high as 20% and start with inheritance as low as $1 if you are unlucky to inherit money and live in Pennsylvania or Iowa.

Some states have estate taxes starting at lower amounts than the federal $5.25 million. Noted here are these states' estate tax exemption amount and their maximum estate tax rate (in parentheses).

 

CT:

$2 mil.

(12%)

IL:

$4 mil.

(16%)

MA:

$1 mil.

(16%)

MD:

$1 mil.

(16%)

ME:

$2 mil.

(12%)

MN:

$1 mil.

(16%)

NJ:

$675,000

(16%)

NY:

$1 mil.

(16%)

OR:

$1 mil.

(16%)

RI:

$910,725

(16%)

VT:

$2.75 mil.

(16%)

WA:

$2 mil.

(19%)

 

 

Also:

DC:

$1 mil.

(16%)

 

 

Some states match the federal exemption amount. These states match the current federal estate tax exemption, but charge their own estate tax as well.

 

DE:

5.25 mil.

(16%)

HI:

$5.25 mil

(16%)

NC:

$5.25 mil

(16%)

 

Two states charge both. New Jersey and Maryland currently charge both an estate tax and an inheritance tax.

What can you do?


1) Understand inheritance consequences. If you have a relatives mentioned in your will that live in Iowa, Nebraska, Indiana, Pennsylvania, Kentucky, New Jersey, Tennessee or Maryland, you may wish to conduct some planning activities.


2) Move before it is too late. 29 states have no estate taxes (or inheritance tax). Many of them (Florida, Texas, Alaska, South Dakota, Nevada, and Wyoming) also have no state income taxes. But prior to packing your bags, review other tax implications within your target "move to" state.


3) Set up a trust. If you live in one of the states with estate taxes, consider setting up appropriate trusts to help protect your assets from the state tax man.


4) Gifts? Remember you can also use gifts as a means of transferring some of your assets tax-free. Just make sure you understand the limits on tax-free gift giving.


5) Want more information? Visit each state's respective web site and review their estate and inheritance laws.

 


 

 

ATRA delays start to 2013 filing season; requires careful planning for retroactive and prospective provisions

 

As the 2013 filing season gets underway, some taxpayers may experience delays in filing returns and others need to revisit their returns because of the passage of the American Taxpayer Relief Act (ATRA) on January 1, 2013. Late tax legislation always complicates tax planning and filing and 2013 is no exception. ATRA extended many popular tax incentives for individuals and businesses retroactively to January 1, 2012. This means that qualified taxpayers may claim them on their 2012 returns filed in 2013. ATRA also made many changes that take effect in 2013, which will require careful planning as this year unfolds.  For the rest of this article click here.

 

IRS introduces simplified method for claiming home office deduction

 

The IRS has announced a new optional safe harbor method, effective for tax years beginning on or after January 1, 2013, for individuals to determine the amount of their deductible home office expenses (IR-2013-5, Rev. Proc. 2013-13). Being hailed by many as a long-overdue simplification option, taxpayers may now elect to determine their home office deduction by simply multiplying a prescribed rate by the square footage of the portion of the taxpayer's residence used for business purposes.   For the rest of this article click here.

 

New IRS guidance on health care employer mandate looks to 2014 start date

 

Under the new health care law, starting in 2014, "large" employers with more than 50 full-time employees will be subject to stiff monetary penalties if they do not provide affordable and minimum essential health coverage. With less than eleven months before this "play or pay" provision is fully effective, the IRS continues to release critical details on what constitutes an "applicable large employer," "full-time employee," "affordable coverage," and "minimum health coverage." Most recently, the IRS issued proposed reliance regulations that provide employers with the most comprehensive explanation of their obligations and options to date.   For the rest of this article click here.

 

How Do I Compute the new 20 percent net capital gain rate under the new tax law?

 

Beginning in 2013, the capital gains rates, as amended by the American Taxpayer Relief Act of 2012, are as follows for individuals:   For the rest of this article click here.

 

FAQ: What are above-the-line deductions?

 

An above-the-line deduction is an adjustment to income (deduction) that can be taken regardless of whether the individual taxpayer itemizes deductions. The adjustment reduces the taxpayer's adjusted gross income (AGI). These adjustments are also sometimes called deductions from gross income, as opposed to itemized deductions that are deducted from AGI. An above-the-line deduction is taken out of income "above" the line on the tax form on which adjusted gross income is reported.   For the rest of this article click here.

 

February 2013 tax compliance calendar

 

As an individual or business, it is your responsibility to be aware of and to meet your tax filing/reporting deadlines. This calendar summarizes important tax reporting and filing data for individuals, businesses and other taxpayers for the month of February 2013.  For the rest of this article click here.

 


 

   

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To read this & my other articles online go to www.MyDentalCPA.com or www.RebellaCPA.com and click on the Newsletter section.

 


 

As always you can call me at 714-619-0667 if you have any questions about investing, retirement or any other tax & accounting related issues. 

 

Regards, Monica Rebella, CPA/IAR

President, Rebella Accountancy

 
Disclaimer:  The opinions contained herein are not intended to be investment advice or a solicitation to buy or sell any securities. With any investment you should carefully consider the investment objectives, potential risks, management fees, and charges and expenses before investing.  Past performance is not a guarantee of future results. The investment return and principle value of any investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost.

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Monica Rebella, CPA/IAR | President - Rebella Accountancy | Certified Public Accountants
507 E. First Street, Suite A | Tustin, CA 92780 | Phone: 714-619-0667 | Fax: 714-544-0236
Email: mrebella@rebellacpa.com | www.RebellaCPA.com | www.MyDentalCPA.com