Subscribe to "It's Taxing"
“Taxing” is a word synonymous with “onerous” and “wearing.” Bond Beebe, Accountants & Advisors, have created a user friendly blog called “It’s Taxing” to inform and educate our clients and business associates on timely topics related to tax, estates, accounting and finance. We hope our blog answers your questions and alleviates the heavy burden and anxiety related to understanding complicated tax laws and related matters.
On Friday, May 17, 2013, the Maryland Court of Appeals denied the comptroller’s motion for reconsideration in Brian and Karen Wynne, et al v. Comptroller of Treasury. The original ruling was in favor of the taxpayer, allowing taxes paid to another state to count as a tax credit against the income taxes paid to a Maryland County.
The ruling is still standing in favor of the taxpayer, although the effective date is on hold, allowing Maryland time to petition the U.S. Supreme Court.
Stay tuned for additional guidance from Maryland and for more updates on this court case. For more information on how this may affect your tax return, view our previous post.
This week has gotten off to a heartbreaking start with the damage inflicted by the Oklahoma tornadoes. The sheer scope of the devastation and loss is hard to imagine and many of us are eagerly looking for ways to help, no matter where we live.
As you consider a charitable donation to help those affected by the tornadoes, there are some tax considerations to keep in mind. While the tax aspect is certainly not the most important factor – charitable giving is important regardless of tax benefits – it is helpful to know the rules if you are planning to claim the deduction. It is also important to do your homework and make sure you avoid the inevitable charity scams that are (unfortunately) sure to come.
Here are some items to keep in mind:
The IRS has issued details (IR-2013-51) about their planned 2013 furloughed days scheduled for May 24, June 14, July 5, July 22, and August 30. During these times IRS offices, toll free lines, the Taxpayer Advocate Service, and taxpayer assistance centers will be closed.
IRS has published Notice 2013-24 that allows a waiver of the .5% late payment penalty for anyone who files an extension, has underpaid their tax and was affected by the delay in release of certain IRS forms. Taxpayers must demonstrate “reasonable cause” and make a good faith effort to pay the proper amount with their extension even if they aren’t sure what the actual amount should be. So filing an extension with no payment when you owe $100k may not demonstrate good faith.
A recent tax court decision, Kureck v. Commissioner, T.C. Memo 2013-64 (Feb. 28,2013), highlights the danger faced by many taxpayers utilizing independent contractors in their businesses. The taxpayer in this case (Kurek) was a sole proprietor contractor specializing in home renovation. He hired approximately 30 part-time workers on a project by project basis. None of the workers were engaged full-time by Kureck. Each worker was paid weekly based on the percentage of work completed on a particular job. The workers set their own work schedules and provided their own small tools. The taxpayer purchased the materials and provided any large equipment needed for the jobs.
While many taxpayers are currently focused on preparing the proper forms and compiling supporting documents and receipts, there is another important tax-related consideration - identity theft. As Bond Beebe Principal John Merchant explains in his recent post at BBForensic, tax identity theft is growing. Perpetrators use stolen identities to file a tax return with an overpayment and then deposit the refund into a false account. Sadly, victims are not limited to living taxpayers; often these schemes use information from recently deceased individuals.
With the fiscal-cliff deal being reached on the last day of 2012, the IRS announced that it was going to delay the opening of the 2012 tax-filing season until January 30, 2013. Along with this delayed start, there has also been a delay in the release of several of the forms that are used in the preparation of tax returns. Some of the delayed forms commonly used include: Form 4952 (Deprecation & Amortization), Form 8863 (Education Credits), and Form 8582 (Passive Activity Losses). These delays combined with brokerage firm 1099’s usually being delivered to taxpayers around February 15th, means that many taxpayers could be filing their tax returns later than normal this year.
Tucked into the recent “Fiscal Cliff” bill (the American Taxpayer Relief Act of 2012) was a provision allowing an individual to convert amounts in their 401(k) plans to a Roth 401(k). Previously, an individual could only convert amounts that were otherwise available to withdrawal from their 401(k), meaning after leaving their job, retiring, or reaching age 59 ½. Under the new rules, as long as Roth contributions are offered by the employer’s 401(k) plan, employees can convert amounts while still employed, and at any age.