by NFS | Jan 9, 2013 | Archives
We want you to be aware of the current news regarding the filing of your 2012 tax return. The IRS announced yesterday that the start of the tax season has been delayed until January 30th. We know this is devastating news for the many taxpayers who are depending on their tax refunds.
As your tax professionals, we want to be the first to give you the real facts:
- NO ONE CAN FILE A TAX RETURN UNTIL JANUARY 30, 2013. This includes Turbo Tax, H&R Block, Liberty Tax Service, Jackson Hewitt or any other tax office. The IRS has set this date and all who provide tax software or tax preparation are subject to this change.
- IT IS EXTREMELY IMPORTANT THAT YOU DO NOT WAIT until January 30, 2013 to have your taxes prepared. We encourage all of our clients to go ahead and have their tax prepared as soon as they have all of their information together. If everyone waits until January 30th, our office could be overloaded causing long lines and frustration.
- OUR TAX SOFTWARE IS UP TO DATE AND ACCURATE. Although the IRS will not accept returns until January 30th, our software is updated and ready to go. We are permitted to prepare your return, provide a copy to you, have you sign the necessary forms and hold your return until IRS E-Filing is open. Be assured we will E-File your tax return as soon as we are permitted by the IRS.
- REFUNDS MAY BE DELAYED. At this point, we just don’t know how this delay will affect the processing of refunds. We believe it will be well after mid-February before any refunds are issued. We will do our best to keep you informed as the IRS provides updates to us.
- MAKE YOUR APPOINTMENT AS SOON AS POSSIBLE. We encourage you to call now to make an appointment that fits your schedule to be sure you don’t have to wait.
We sure appreciate your business and want you to know it’s our goal to see you through this difficult filing season. As always, don’t hesitate to call, email or stop by if you have any questions.
by NFS | Jan 8, 2013 | Archives
WASHINGTON — Following the January tax law changes made by Congress under the American Taxpayer Relief Act (ATRA), the Internal Revenue Service announced today it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30.
The IRS will begin accepting tax returns on that date after updating forms and completing programming and testing of its processing systems. This will reflect the bulk of the late tax law changes enacted Jan. 2. The announcement means that the vast majority of tax filers — more than 120 million households — should be able to start filing tax returns starting Jan 30.
The IRS estimates that remaining households will be able to start filing in late February or into March because of the need for more extensive form and processing systems changes. This group includes people claiming residential energy credits, depreciation of property or general business credits. Most of those in this group file more complex tax returns and typically file closer to the April 15 deadline or obtain an extension.
“We have worked hard to open tax season as soon as possible,” IRS Acting Commissioner Steven T. Miller said. “This date ensures we have the time we need to update and test our processing systems.”
The IRS will not process paper tax returns before the anticipated Jan. 30 opening date. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit.
“The best option for taxpayers is to file electronically,” Miller said.
The opening of the filing season follows passage by Congress of an extensive set of tax changes in ATRA on Jan. 1, 2013, with many affecting tax returns for 2012. While the IRS worked to anticipate the late tax law changes as much as possible, the final law required that the IRS update forms and instructions as well as make critical processing system adjustments before it can begin accepting tax returns.
The IRS originally planned to open electronic filing this year on Jan. 22; more than 80 percent of taxpayers filed electronically last year.
Who Can File Starting Jan. 30?
The IRS anticipates that the vast majority of all taxpayers can file starting Jan. 30, regardless of whether they file electronically or on paper. The IRS will be able to accept tax returns affected by the late Alternative Minimum Tax (AMT) patch as well as the three major “extender” provisions for people claiming the state and local sales tax deduction, higher education tuition and fees deduction and educator expenses deduction.
Who Can’t File Until Later?
There are several forms affected by the late legislation that require more extensive programming and testing of IRS systems. The IRS hopes to begin accepting tax returns including these tax forms between late February and into March; a specific date will be announced in the near future.
The key forms that require more extensive programming changes include Form 5695 (Residential Energy Credits), Form 4562 (Depreciation and Amortization) and Form 3800 (General Business Credit). A full listing of the forms that won’t be accepted until later is available on IRS.gov.
As part of this effort, the IRS will be working closely with the tax software industry and tax professional community to minimize delays and ensure as smooth a tax season as possible under the circumstances.
Updated information will be posted on IRS.gov.
by NFS | Jan 7, 2013 | Archives
National Association of Tax Professionals, Appleton, WI – Jeffrey N. Schweitzer, EPA, CEP, ATP, RTRP of Northeast Financial Strategies, Inc in Wrentham, MA has reached a personal and professional milestone in his career by passing the Internal Revenue Service’s (IRS’) Registered Tax Return Preparer (RTRP) competency exam. The award of the RTRP designation recognizes demonstrated knowledge of all aspects of federal individual taxation and assures clients that the preparer is up-to-date on the latest tax law changes and ethics requirements.
To retain the status of a registered tax return preparer, individuals must complete a minimum of 15 continuing education credits (CPEs) per year. RTRPs are also
governed under stringent rules set forth by the IRS.
If you need assistance with any taxation issue, you should seek the help of a tax professional. As a professional tax preparer and member of the National Association of Tax Professionals (NATP), Jeffrey N. Schweitzer, EPA, CEP, ATP, RTRP of Northeast Financial Strategies, Inc in Wrentham, MA, can assist you with a review of your tax history and answer questions on how taxation issues may impact your future. Please contact him at 800-560-4637 x 14 or via email at jeff@nfsnet.com.
Members of the National Association of Tax Professionals (NATP) work at offices that assist over 11 million taxpayers with tax preparation and planning. The average NATP member has been in the tax business for over 20 years and holds a tax/financial designation and/or a college degree. NATP has more than 22,000 members nationwide. Members include individual tax preparers, enrolled agents, certified public accountants, accountants, attorneys and financial planners. As a nonprofit professional association, NATP serves professionals working in all areas of tax practice through professional tax education, tax research and tax office supplies. The national headquarters, located in Appleton, WI, employs over 50 staff members. Learn more at www.natptax.com.
by NFS | Jan 2, 2013 | Archives
WASHINGTON, D.C. – The House passed a deal to avert an income tax rate increase on middle-class families on Tuesday night, following a New Year’s Eve vote by the Senate, sending the bill to President Obama for his signature.
House lawmakers voted for the bill by a 257 to 67 margin, after the Senate’s 89 to 8 vote, in a rare New Year’s Day session of a lame-duck Congress (see Senate Approves Post-Midnight Fiscal Cliff Deal, Shifting Pressure to Boehner). Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ken., worked out the final deal this week following a stalemate in negotiations between Obama and Speaker of the House John Boehner, R-Ohio.
Republican lawmakers had threatened to amend the bill with deep spending cuts to offset the tax cuts and send it back to the Senate, but with time running out before the re-opening of the financial markets on Wednesday morning, Boehner ultimately decided to allow an up or down vote on the bill.
The deal restores the top 39.6 percent rate for high-income households in effect during the 1990s. That rate would apply to single taxpayers with incomes above $400,000 and married couples with incomes above $450,000, up from 35 percent.
“Under this law, more than 98 percent of Americans and 97 percent of small businesses will not see their income taxes go up,” said Obama in a speech following the vote. He pointed out that the agreement reduces the deficit by raising $620 billion in revenue from the wealthiest households.
In addition, the agreement provides a permanent and retroactive patch for the alternative minimum tax to prevent it from ensnaring middle-class taxpayers. The bill indexes the exemption amounts to adjust them for inflation.
The capital gains tax rate would return to what it was under President Clinton, 20 percent, up from 15 percent. Counting the 3.8 percent surcharge from the Affordable Care Act, dividends and capital gains would be taxed at a rate of 23.8 percent for high-income households. These tax rates would apply to singles above $400,000 and couples above $450,000. The top capital gains rate would stay at 15 percent for lower-income taxpayers.
The agreement reinstates the Clinton-era limits on high-income tax benefits, the phaseout of itemized deductions (Pease) and the Personal Exemption Phaseout (PEP), for couples with incomes over $300,000 and singles with incomes over $250,000. These two provisions reduce tax benefits for high-income households. This sets the stage for future balanced approaches to deficit reduction, which could include additional revenue through tax reforms that reduce tax benefits for Americans making over $250,000.
The deal did not include an extension of the 20111 and 2012 payroll tax cut on Social Security tax withholding from paychecks, so most workers will see their Social Security taxes rise from 4.2 to 6.2 percent (see IRS Changes Income Tax Withholding Tables for 2013 to Reflect Expired Tax Cuts).
The agreement also raises the tax rate on the wealthiest estates from 35 percent to 40 percent, with an exemption of $5 million per person.
There is also a one-year extension of 50 percent bonus depreciation, and the extension of various tax breaks. The deal extends President Obama’s expansions of the Child Tax Credit, Earned Income Tax Credit, and the American Opportunity Tax Credit, which helps families pay for college. The agreement would extend the tax breaks for five years.
In addition, the agreement will prevent 2 million people from losing unemployment insurance benefits in January by extending emergency unemployment insurance benefits for one year.
The bill also extends renewable energy incentives and other business tax incentives through the end of next year. They include extensions of the Production Tax Credit, a key incentive for renewable energy, as well as the Research & Experimentation tax credit.
The agreement also avoids a 27 percent cut to reimbursements for doctors seeing Medicare patients for 2013 by fixing the sustainable growth rate formula through the end of next year (the “doc fix”). It also renews a price support program for the dairy industry to prevent a sharp increase in milk prices, as well as blocks a pay increase for Congress.
In addition, the bill postpones the sequester for two months, paid for with $1 of revenue for every $1 of spending, with the spending balanced between defense and domestic. The agreement saves $24 billion, half in revenue and half from spending cuts which are divided equally between defense and nondefense programs, in order to delay the sequester to give Congress time to work on a balanced plan to end the sequester permanently through a combination of additional revenue and spending cuts in a balanced manner.
Obama promised further deficit reductions would be worked out with Congress, but he indicated that he would not allow a fight over raising the debt ceiling to derail the economy, insisting he would not “have another debate with this Congress over whether or not they should pay the bills they’ve already racked up.”
However, Republicans indicated that they would push for further spending cuts. “Now the focus turns to spending,” said Boehner. “The American people re-elected a Republican majority in the House, and we will use it in 2013 to hold the president accountable for the ‘balanced’ approach he promised, meaning significant spending cuts and reforms to the entitlement programs that are driving our country deeper and deeper into debt.”
-BY MICHAEL COHN ACCOUNTING TODAY
by NFS | Jan 1, 2013 | Archives
From all of us here at NFS, Here’s to a Happy, Healthy & Prosperous 2013!!
by NFS | Dec 28, 2012 | Archives
Plan ahead. It wasn’t raining when Noah built the ark.
It would be nice to believe that health care cost increases were a temporary phenomenon. Unfortunately, that’s not the case…the cost of medical care has outpaced inflation for the past 20 years and predictions are that medical and long-term care costs will continue to escalate as much as 10% to 15% per year into the future.
The decisions we make as to how and where we live in retirement are unique to each individual or couple. The options open to us, however, are frequently determined by our financial resources…our ability to pay. This review of the various ways to pay for health and long-term care costs during retirement is offered in the hope that it will be of assistance to you as you make decisions regarding your retirement plans.
The options available to pay for medical and long-term care costs in retirement include the following:
Retiree Health Insurance Plans: If your company provides retiree health care benefits, make sure you know how much of the premium you will be required to pay, as well as deductible and co-payment requirements. Retiree health insurance plans are generally designed to coordinate with Medicare benefits. Caution: Even if your employer currently provides retiree health care benefits, there is no guarantee those benefits will be available when you retire. The escalating costs of medical care, combined with the “Baby Boom effect”…a large “bubble” of people who will make a substantial contribution to the size of the aging population… are causing employers to rethink their retiree health care plans. Some companies are requiring that retirees pay a higher share of the premiums to cover themselves, their spouses and any dependents. Other companies are implementing higher co-payments and/or deductibles. Still other companies are discontinuing retiree health insurance plans altogether.
Medicare and “Medigap” Insurance: Most people qualify for Medicare insurance when they reach age 65. Medicare helps to protect you from the costs of medical care during retirement. One fact, however, is evident…there is no “free lunch.” You will have costs related to medical care and the likelihood is that those costs will continue to increase each year.
Medicaid: Medicaid is a joint Federal and state program that helps with medical costs for some people with low incomes and limited assets. To qualify for Medicaid, federal poverty guidelines for income and assets must be met. In addition, there are state requirements for Medicaid eligibility. Medicaid is essentially a safety net for those who didn’t adequately plan for their financial needs in retirement, or who encountered unexpectedly large expenses that depleted their financial resources.
Long-Term Care Insurance: Long-term care insurance can put you in control, preserving your dignity and allowing you to select the type of facility and setting in which you want to receive long-term care services, if needed. Long-term care insurance also helps protect your personal assets, preserving them for your use or as an inheritance for your family. Suggestion: Check with your employer…your company may offer long-term care insurance as a voluntary or supplemental employee benefit!
Personal Savings: Review your retirement plan to make sure that it adequately takes into account the potential costs of medical care and long-term care in retirement. If you find a shortfall, you may want to increase your personal savings now in order to have sufficient funds available after you retire. Some experts suggest setting up a separate fund or account specifically to pay for health care needs in retirement. This approach adds focus to your plan and better enables you to assess your progress.
Home Equity: Many retired people have built up substantial equity in their homes. There are a variety of ways to tap that equity if needed to pay for health care costs in retirement, including selling the home, arranging a home equity loan or line of credit or using a reverse mortgage to supplement your retirement income.
Going Back to Work: When it comes to planning for health care needs as we age, it’s time for a reality check. It’s fine today, when our health is good, to state the intention to return to work if financial needs arise, but how many 70+-year-old people with health problems really want to be out looking for a job? In reality, planning to return to work in order to pay for health care needs during retirement isn’t so much a plan as it is a hope…a hope that we won’t face substantial health care costs as we age.
Don’t wait until it rains to start building your ark… plan ahead while the choices are still yours to make!
To view the entire NFS December Retirement Readings Newsletter, click here
Contact my office if we can help.
