How To Determine If Your Gift Is Taxable

The IRS has some information regarding gifts you make to others. The general rule is that gifts you make are taxable with the following exceptions:

• Gifts that do not exceed the annualu exclusion for the calendar year, $13,000 for 2011 and 2012. Married couples can choose to have gifts made one-half by each spouse which allows for a total gift of up to $26,000. Gift-splitting requires a gift tax return to be filed. Use Form 709.


• Tuition or medical expenses you pay directly to a medical or educational institution for someone.


• Gifts to your spouse.


• Gifts to a political organization for its use.


• Gifts to charities.

The eight tips the IRS recommends can be found here.

If you would like to consider the tax aspects of making a gift, please contact me.

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Tips For People Who Pay Estimated Taxes

The IRS provides some helpful information concerning paying estimated taxes. The main thing to remember is that you generally must pay estimates if your balance due is expected to be at least $1,000 AND your withholding and tax credits is less than the smaller of 90% of your current year's total tax or 100% of last year's total tax. For calendar year taxpayers, the due dates of estimated taxes are April 15, June 15, September 15 and January 15 of the following year.

Here is the link to the six tips from the IRS.

If you have any tax questions, please contact me.

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Health Care Tax Credit

Small businesses and tax-exempt organizations may be eligible for a valuable tax credit. The details can be found here.

In order to take the deduction on line 29 of Form 1040, you must be one of the following:

• A self-employed individual with a net profit reported on Schedule C, Schedule C-EZ or Schedule F.

• A partner with net earnings from self-employment reported on Schedule K-1 (Form 1065)

• A shareholder owning more than 2 percent of the outstanding stock of an S corporation with wages from the corporation reported on Form W-2.

The insurance must be established under your business.

If you need additional information, please contact me. Follow me on twitter.

Majority Believe America Is Overtaxed

A new Rasmussen Poll finds that a majority of Americans believe the nation is overtaxed. 56% of likely voters believe that America is overtaxed. 33% believe that America is not overtaxed. 12% are not sure.

Two years ago, 66% felt that America was overtaxed. Last year, 64% felt that America was overtaxed.

Here is the wording of the questions:

• As a nation, is America overtaxed?
  
  
• When thinking about all federal, state and local taxes, what does the average American pay in taxes as a percentage of their income…..10%, 20%, 30%, 40%, 50% or more than 50%?
  
  
• When thinking about all the services that are provided by federal, state and local governments, how much should the average American pay in taxes as a percentage of their income…..10%, 20%, 30%, 40%, 50% or more than 50%?
  
  
• Should any increase in federal taxes be approved by a vote of the American people?
  
  
• Should any changes in Medicare or Social Security be approved by a vote of the American people?

How would you respond? Do you feel Americans are overtaxed? Leave a comment.

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Approaching Deadlines

March 15th is the deadline for calendar year Corporations and S-Corporations to file their returns. Corporations should file Form 1120. S-Corporations should file Form 1120S. If additional time is needed an extension can be granted until September 15th. File Form 7004 to request a 6-month extension.

If you are seeking to be an S-Corporation for 2012, file Form 2553 by March 15th. If this deadline is missed, you will be a C Corporation, Partnership or Disregarded Entity (whatever the case may be) until 2013.

With the deadline approaching, here is a helpful link with all the due dates that will apply to small businesses.

If you have any questions about this or any other tax topic, please contact me.

IRS Podcast of Common Tax Return Mistakes

Here is a link to the IRS Podcast. The IRS reminds people that mistakes in a tax return can slow down the processing of your return. "Fewer mistakes means quicker refunds." Here is the list of items making the IRS' podcast:

• Incorrect social security numbers for filers or dependents. Double check your entry.
• Incorrect last names for filers or dependents. Make sure the names are as they appear on the social security cards.
• Incorrect filing status. There are 5 choices: Single, Married filing jointly, Married filing single, Head of household or Qualifying widow.
• Math errors. Tax software can eliminate this.
• Computational errors. If you're calculating any credits make sure you are using the correct amounts for things such as income as many credits are phased out for high-income earners.
• Incorrect bank account information. If you want direct deposit, make sure you have both the correct routing number and account number.
• Forgetting to sign the return. If you file by paper you and your spouse must sign. If you e-file, you must obtain a personal identification number to serve as the signature.

If you have any questions to this or any other entries, please leave a comment in the comment section.

20 Tax Changes You Should Know About

Investopedia has a list of 20 tax changes. The list is mostly comprised of current year amounts for things such as personal exemptions and standard mileage rates. There is a good reminder that if you made a Roth IRA conversion in 2011, all of the resulting income must be reported this year. If you made a conversion in 2010, half of the income is reported in 2011 and the rest in 2012.