Author Archives brooke

Federal Due Date is Tuesday April 17, 2012!

For those of you paying into the federal government be sure to meet the extended deadline of this Tuesday April 17th. Payment must be postmarked by this date.

For those of you who do not want to fight the crowd at the post office, click here to pay your federal tax liability online!

2012 Federal Tax Brackets

Here’s a quick rundown of what the Federal income tax brackets are expected to look like in 2012:

Tax Bracket Married Filing Jointly Single
10% Bracket $0 – $17,400 $0 – $8,700
15% Bracket $17,400 – $70,700 $8,700 – $35,350
25% Bracket $70,700 – $142,700 $35,350 – $85,650
28% Bracket $142,700 – $217,450 $85,650 – $178,650
33% Bracket $217,450 – $388,350 $178,650 – $388,350
35% Bracket Over $388,350 Over $388,350

And here are a few related points:

  • The personal and dependency exemption will rise to $3,800
  • The standard deduction for married filing jointly will rise to $11,900
  • The standard deduction for singles will rise to $5,950

Looking ahead, last year’s fighting resulted in a two year extension  of the Bush-era tax cuts, which means that they’re currently set to expire  at the end of 2012. As for what 2013 has in store for us, your guess is  as good as mine.

Identity Theft Crackdown Sweeps Across the Nation; More than 200 Actions Taken in Past Week in 23 States

The Internal Revenue Service and the Justice Deparmtent today announced the results of a massive national sweep cracking down on suspected identity theft perpetrators as part of a stepped- up effort against refund fraud and identity theft.

Working with the Justice Department’s Tax Division and local US Attorney’s offices, the nationwide effort targeted 105 people in 23 states.

To read more, click here.

New Partnership = New bmp, CPA location!

Change… it’s all about change.

The tax code changes. Those making the tax code change. Businesses change. Processes change. Prices change.

Now for the final change (that I can control) for the tax season… Exit Hawk Realty in North Liberty and bmp, CPA have joined forces to bring expert professionals in taxation and  commercial and residential real estate for anyone in the Corridor. All in one stop shop located at 710 Pacha Parkway , Suite 3 in North Liberty – home of Exit Hawk Realty.

The new partnership is effective immediately!

I am looking forward to seeing you at this new location!

IRS faces surge in identity theft tax fraud

The Internal Revenue Service is grappling with a surge in identity theft-based tax fraud as scamsters take advantage of web-based resources including electronic filing.

Identity theft cases, in which criminals obtain living or deceased people’s names and Social Security numbers to defraud the government, ranked No. 1 on an annual “Dirty Dozen” list of tax scams the agency released Thursday. The IRS called ID theft one of the most complex threats it handles.

The IRS estimates 404,000 people were victimized by identity theft tax fraud from mid-2009 to the end of 2011.

Click here for the full article.

Problems with IRS e-filing system could delay tax returns

MILWAUKEE- You could be waiting quite a while to get your federal tax refund.A new system, called Modernized e-File, was supposed to make everything faster but isn’t working right. Friday, the IRS asked preparers not to use it at all. And that means it could take extra time for your refund to find its way to you.Tax season is tough enough, and now, there’s another hurdle. The IRS e-filing system isn’t working as well as they hoped, and it’s causing delays in your refund. In some cases, by weeks.”They have experienced about 40 percent of the returns, they had a delay,” said Brenda Spencer of Liberty Tax Service.The IRS system has been trying Modernized e-File for years, but this year was the full blown launch. It still accepts your return, but can’t process it as fast as promised. Another problem: checking your return status.”It’s literally called ‘where’s my refund’, it supposedly has no information about where your return is at or when your refund is expected,” said CPA Norman Wahn.TODAY’S TMJ4 reports that just because you can’t see your tax return on the IRS website, doesn’t mean it isn’t there and it doesn’t mean your money isn’t coming.”As long as it shows up on our site, on our system, everything’s OK,” said Brenda Spencer of Liberty Tax Service.In the meantime, their message isn’t to be worried, it’s to be aware — as Brenda Spencer says, “You can’t count your money until you get it.”

 

Source: http://www.msnbc.msn.com/id/46392246

New rule puts a wrinkle in figuring taxes on stock sales

Most of you have investments and the belief that all tax documents are required to be reported to you by January 31st. Not always the case…

Those letter in the mail stating your investment tax documents have been delayed is actually something we’ve expected all year long.

Here’s why…

As surprising as it sounds, investors have long been trusted to use the honor system when it comes to reporting the size of their gains and losses to the IRS when they sell an investment.

But all that changes now, due to the passage of the Emergency Economic Stabilization Act of 2008. For the first time, the annual tax forms investors receive, called the 1099-B, from their brokers will contain dramatic changes. Beginning with the just-completed 2011 tax year, it’s up to brokers to track how much investors paid for stocks that were sold and report that information directly to the IRS. This so-called cost basis is what determines how much tax investors pay.

Click here for the full article.

Warren Buffet Tax Rate

Mention the ‘Warren Buffet’ rule and you will immediately get an opinion from everyone.

For educational purposes, let me introduce you to two tax rates.

Marginal Tax Rate

The marginal tax rate is the federal income tax rate that will be applied to any additional income that you might receive. For example, if your marginal tax rate is 28%, the next $100 of additional income that you earn will result in $28 of additional tax.

During your tax appointment, ask me for your marginal tax rate! Then ask me the amount of additional income you can make before jumping into the next tax bracket.

 

Effective Tax Rate

The effective tax rate is the actual percentage of your total income that you pay in federal income tax.

During your tax appointment, ask me for your effective tax rate…it’s typically lower than your marginal tax rate!

When people refer to Warren’s Buffet’s tax rate – they are referring to his effective tax rate! Compare his to yours when we meet during this tax season!

 

Personal income rises in December

Personal income increased $61.3 billion, or 0.5 percent, and disposable personal income (DPI) increased $47.1 billion, or 0.4 percent, in December, according to the Bureau of Economic Analysis.

Personal consumption expenditures (PCE) decreased $2.0 billion, or less than 0.1 percent.  In November, personal income increased $7.4 billion, or 0.1 percent, DPI decreased $4.1 billion, or less than 0.1 percent, and PCE increased $11.4 billion, or 0.1 percent, based on revised estimates.

Real disposable income increased 0.3 percent in December, in contrast to a decrease of less than 0.1 percent in November.  Real PCE decreased 0.1 percent, in contrast to an increase of 0.1 percent.

Private wage and salary disbursements increased $29.1 billion in December, in contrast to a decrease of $1.4 billion in November.  Goods-producing industries’ payrolls increased $10.8 billion, in contrast to a decrease of $6.5 billion; manufacturing payrolls increased $7.4 billion, in contrast to a decrease of $6.2 billion.  Services-producing industries’ payrolls increased $18.3 billion, compared with an increase of $5.1 billion.  Government wage and salary disbursements increased $0.4 billion in December; government wages and salaries were unchanged in November.

What is income?

No matter what the weather report says, each new year brings a flurry of information returns. These forms report the income you received during the prior year, and the size of the paper blizzard is partly due to the definition of “gross income” in the federal tax code.

That definition encompasses all income earned anywhere in the world, including cash and non-cash receipts from sources such as bartering, discharge of debts, and illegal activities.

In addition, you probably noticed there’s no reference to amount. So, although you might not get an information form for amounts under specified limits — the familiar $600 figure for Form 1099-MISC, for example — that income is reportable on your tax return.

Despite the broad nature of the term, not everything you receive is considered gross income. For instance, rebates, refunds, and purchase price adjustments are specifically excluded. Gifts, inheritances, and proceeds from life insurance policies are other familiar exclusions.

However, in contrast to gross income, exclusions tend to be narrowly defined. An illustration: While proceeds from life insurance policies are generally not taxable to you as a beneficiary, interest earned on the proceeds typically is.

States may have different rules on what’s includable and excludable when calculating income.

Give us a call or email us at info@bmp-cpa.com  if you have questions about the tax effect of your receipts during 2011. We’ll help you dig out the answers.