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2013 Tax Storm

2013 Tax Storm. Changes brought on by the Affordable Care Act (“Obamacare”). 2013 Estimated Tax Payments Beware!. Based upon 2012 Safe Harbor = OK regarding penalty Big differences to taxability of income in 2013 and large increases if you have: Capital gains Dividend income

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2013 Tax Storm

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  1. 2013 Tax Storm Changes brought on by the Affordable Care Act (“Obamacare”) Farmer&FirstPC,CPA's12.3.13WarrenRI

  2. 2013 Estimated Tax Payments Beware! • Based upon 2012 • Safe Harbor = OK regarding penalty • Big differences to taxability of income in 2013 and large increases if you have: • Capital gains • Dividend income • Income over $250,000 (3.8% Surtax on investment income and .9% levy on wages Farmer&FirstPC,CPA's12.3.13WarrenRI

  3. Talk to your Advisors Farmer&FirstPC,CPA's12.3.13WarrenRI

  4. Itemized deduction Phase Outs • Phase out of personal exemption • Phase out of itemized deductions (Schedule A) • In excess of $250,000 for a single person • In excess of $300,000 for a married filing joint couple Farmer&FirstPC,CPA's12.3.13WarrenRI

  5. Writing a larger check to Uncle Sam How much will I owe????? Farmer&FirstPC,CPA's12.3.13WarrenRI

  6. Request Investment Income Statements Now • Dividend and Capital Gain income are likely since the market had a good year Farmer&FirstPC,CPA's12.3.13WarrenRI

  7. Your CPA and Financial Advisor Do a year-end projection Farmer & First have been reaching out to our clients for the last few weeks to schedule appointments We’ve sent out checklists of possible factors that will have an impact on your 2013 taxes Sign up for our newsletter www.farmerfirstcpas.com Farmer&FirstPC,CPA's12.3.13WarrenRI

  8. 2013 • Some high earners may no longer be subject to AMT • If so, you’d want to pay your 4th Qtr. state tax payment before 12/31 • This will increase your itemized deductions • Possibly increase charitable contributions What to do? Farmer&FirstPC,CPA's12.3.13WarrenRI

  9. Small Businesses, ask about the Health Insurance Credits Bad news – not many actually qualify or benefit in any way. The computations tend eliminate potential candidates. Farmer&FirstPC,CPA's12.3.13WarrenRI

  10. C-Corporations • Check estimated taxes • Safe harbor 100% of last year (but not -0-) OR • Safe harbor 100% of current year’s tax • Expecting an NOL for 2013? • May wish to accelerate some of early 2014 income • OR defer some 2013 deductions • Exception: “large” corporations ($1million of taxable income or more) Farmer&FirstPC,CPA's12.3.13WarrenRI

  11. Corporate Year-End Planning • Accrual basis business can take a 2013 deduction for some bonuses not paid till 2014. An accrual basis corporation can take a deduction for its current tax year for a bonus not actually paid to its employee until the following tax year if (1) the employee doesn't own more than 50% in value of the corporation's stock, (2) the bonus is properly accrued on its books before the end of the current tax year, and (3) the bonus is actually paid within the first 2 — months of the following tax year (for a calendar year taxpayer, within the first 2 — months of 2014). Farmer&FirstPC,CPA's12.3.13WarrenRI

  12. Making the most of the domestic production activities deduction. Businesses can claim a domestic production activities deduction under Code Sec. 199 to offset income from domestic manufacturing and other domestic production activities. The Code Sec. 199 deduction equals 9% of the smaller of— a. The taxpayer's "qualified production activities income" or QPAI, for the tax year, or b. The taxpayer's taxable income (modified adjusted gross income, for individual taxpayers), without regard to the Code Sec. 199 deduction, for the tax year. Farmer&FirstPC,CPA's12.3.13WarrenRI

  13. State of Rhode Island • Sales Tax exemption effective 12/1/2013 • For artists, writers, etc. • Obtain sales tax exemption certificate • RI department of revenue • http://www.tax.ri.gov/ Farmer&FirstPC,CPA's12.3.13WarrenRI

  14. “If your dreams don’t scare you, they’re not big enough.” Capital One 360 Farmer&FirstPC,CPA's12.3.13WarrenRI

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