Trusts, Estates, and the Net Investment Income Tax

Posting by Geoffrey D. Brown, CPA, Principal

When the Patient Protection and Affordable Care Act (healthcare reform) was passed in 2010, it included a tax increase that went into effect for this tax year: a 3.8% tax on net investment income.  This increase will affect individuals, estates and trusts on the lesser of the taxpayer’s net investment income for the year or the excess of his/her modified adjusted gross income (AGI) at the following thresholds:

Individuals

Over $250,000 AGI for taxpayers […]

December 5, 2013 Accounting, Tax Read more...

GETTING ACTIVE: ACTIVE VS. PASSIVE INCOME AND THE NIIT

Billy Thomas,  CPA

In our previous post, we outlined the basics for those individuals who are subject to the 3.8% Net Investment Income Tax (NIIT) for 2013. In summary, portfolio and passive income are two categories of income subject to the NIIT. It would then seem intuitive that to avoid this additional surtax of 3.8% on net investment income, you would simply need to have income derived from a business, since income derived from a business is neither passive nor portfolio. […]

November 26, 2013 Accounting, Tax Read more...

2013 NET INVESTMENT INCOME TAX FOR INDIVIDUALS, TRUSTS AND ESTATES

Sean Urbany, CPA

In addition to the various tax increases enacted on January 1st of this year as part of the American Taxpayer Relief Act of 2012 (which averted the so-called fiscal cliff), taxpayers should note one other tax change for 2013: the 3.8% tax on net investment income. While it was actually put in place way back in 2010 as part of the health-care law, it went into effect for this year and will apply to individual returns […]

November 18, 2013 Accounting, Tax, Wealth Management Read more...

CHANGES TO FLEXIBLE SPENDING ACCOUNT USE-IT-OR-LOST-IT RULE

Posting by Billy Thomas

The IRS has released a change to flexible spending accounts (FSAs) under cafeteria plans which addresses the “Use-or-Lose” provision. Essentially, an employer can amend their cafeteria plan to allow participants/employees to rollover up to $500 of unused funds to the following year to reimburse out-of-pocket qualified medical expenses. Treasury estimates that nearly 14 million families participate in these plans, which means that a large base of taxpayers is impacted by the change.

Flexible Spending Accounts and Use-It-Or-Lose-It
Flexible […]

November 12, 2013 Tax Read more...

IRS Proposes Regulations Regarding Political Activities for 501(C)4 Organizations

The IRS is seeking to clarify what exactly is meant by “political campaign activity” for 501(c)4 organizations. On November 26, IRS and the Treasury released proposed regulations that would establish a “bright-line rule” to determine political conduct inconsistent with the 501(c)4 tax-exempt status. These proposed regulations are in response to the recent charitable organization scandal with the hope that clearer boundaries will help reduce the need for fact-intensive inquiries.

Under the tax code, 501(c)4 social welfare organizations are to be […]

November 1, 2013 Tax Read more...

Managing the IRS Audits

ISSUE
The IRS recently made an inexplicable decision to increase audits of small companies while easing up on large firms. Small businesses are perceived as being major offenders in noncompliance with tax laws because many have cash components that are not well documented and have loose employee recordkeeping procedures. So, how do you know what practices the IRS is looking for in auditing a business? How can you operate your business from a tax standpoint to keep the auditors away […]

October 28, 2013 Tax Read more...

Common Estate Planning Mistakes

Posting by Geoffrey D. Brown, CPA

October 21 – 27 is National Estate Planning Awareness Week, which is designed to raise awareness and provide education around this important financial issue. I’ve had the opportunity to help many families and family businesses preserve their legacies over the past thirty years, and, unfortunately, there are some common estate planning mistakes and misconceptions that seem to come up time and time again.

Think your assets are not significant enough to necessitate a plan? Think […]

October 24, 2013 Accounting, Tax, Wealth Management Read more...

SHUTDOWN TO DELAY START OF 2014 TAX SEASON

Scott Reddersen

As a result of the 16-day government shutdown, the IRS is already predicting a delayed start to the 2014 filing season. Citing a need to allow adequate time to program and test tax processing systems, the IRS is anticipating a delay ranging from one to two weeks. If that expectation stands, taxpayers will be able to begin filing their 2013 tax returns no earlier than January 28th, and no later than February 4th.

The delay will not postpone the deadline […]

October 24, 2013 Accounting, Tax Read more...

IRS 2014 Per Diem Rates

Brian Wynne, CPA

Before we dive in to the updated IRS per diem rates, it’s important to note how the
government shutdown is affecting IRS operations. While the IRS will not be conducting audits and refunds may be delayed, no deadlines have changed.  If your plan has a calendar year end and you are on extension for filing Forms 5500 and 8955-SSA, they are still due on October 15, 2013.  For more details regarding the effect of the shutdown on IRS […]

October 2, 2013 Accounting, Tax Read more...

IRS UPDATES 2014 PER DIEM RATES

Brian Wynne, CPA

The IRS has announced updated 2014 per-diem rates for the optional high-low substantiation method, effective October 1, 2013. Per-diem rates can be used by employers in lieu of reimbursing actual substantiated expenses for lodging, meals and incidental expenses (M&IE) while an employee is on business travel. The employee must provide simplified substantiation (time, place and business purpose) and the reimbursement is treated as made under an accountable plan (not taxable to the employee).

Notice 2013-65 announces the updated […]

October 1, 2013 Accounting, Tax Read more...