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Obama to Propose Retirement Account Cap
April 9, 2013
By Kaye A. Thomas
The Obama administration has revealed that the budget proposal to be published later this week will include a $3 million cap on retirement accounts.
April 9, 2013
By Kaye A. Thomas
The Obama administration has revealed that the budget proposal to be published later this week will include a $3 million cap on retirement accounts.
Tax Rules Extended by ATRA
January 12, 2013
The American Taxpayer Relief Act of 2012 provides “taxpayer relief” primarily by extending tax benefits that were scheduled to expire. Here is a list of the extensions that are of most interest to individual taxpayers. Changes labeled “permanent” can be altered by an Act of Congress but will not expire automatically.
(more…)
January 12, 2013
The American Taxpayer Relief Act of 2012 provides “taxpayer relief” primarily by extending tax benefits that were scheduled to expire. Here is a list of the extensions that are of most interest to individual taxpayers. Changes labeled “permanent” can be altered by an Act of Congress but will not expire automatically.
(more…)
ATRA Tax Rates for Capital Gain and Dividends
January 12, 2013
The American Taxpayer Relief Act of 2013 (“ATRA”) made important changes in the way long-term capital gain and qualified dividend income are taxed. Here’s an explanation, in Q&A format.
January 12, 2013
The American Taxpayer Relief Act of 2013 (“ATRA”) made important changes in the way long-term capital gain and qualified dividend income are taxed. Here’s an explanation, in Q&A format.
Qualified Charitable Distribution Transition Rule
January 11, 2013
The American Taxpayer Relief Act of 2012 (ATRA) extends the tax treatment of qualified charitable distributions from IRAs, so that they are available for 2012 and 2013. Because this law wasn’t enacted until January 2013, it includes a special transition rule. You can take advantage of this rule retroactively for 2012, but only if you act before the end of January 2013.
January 11, 2013
The American Taxpayer Relief Act of 2012 (ATRA) extends the tax treatment of qualified charitable distributions from IRAs, so that they are available for 2012 and 2013. Because this law wasn’t enacted until January 2013, it includes a special transition rule. You can take advantage of this rule retroactively for 2012, but only if you act before the end of January 2013.
American Taxpayer Relief Act
January 3, 2013
By Kaye A. Thomas
In a last gasp effort Congress passed legislation to avert the fiscal cliff and prevent tax increases on 98% of Americans. Key features of the American Taxpayer Relief Act of 2012 (“ATRA”) include the following:
- Existing income tax rates (including marriage penalty relief) are preserved for taxpayers with income up to $400,000 ($450,000 for couples filing jointly). A tax rate of 39.6% applies above that level.
- Qualified dividends will continue to be taxed at capital gain rates, but a 20% rate will apply to both of these beginning at the income thresholds mentioned above.
- The personal exemption phaseout and the Pease rule for reducing itemized deductions are revived, but at higher income levels than under prior law.
- The law permanently fixes the alternative minimum tax (“AMT”), eliminating the recurring need for an “AMT patch.”
- Seemingly out of nowhere, the law expands the availability of in-plan Roth conversions.
- The estate tax provisions are more generous than might have been expected, retaining the $5 million exemption and raising the rate by only 5 percentage points, to 40%.
January 3, 2013
By Kaye A. Thomas
In a last gasp effort Congress passed legislation to avert the fiscal cliff and prevent tax increases on 98% of Americans. Key features of the American Taxpayer Relief Act of 2012 (“ATRA”) include the following:
- Existing income tax rates (including marriage penalty relief) are preserved for taxpayers with income up to $400,000 ($450,000 for couples filing jointly). A tax rate of 39.6% applies above that level.
- Qualified dividends will continue to be taxed at capital gain rates, but a 20% rate will apply to both of these beginning at the income thresholds mentioned above.
- The personal exemption phaseout and the Pease rule for reducing itemized deductions are revived, but at higher income levels than under prior law.
- The law permanently fixes the alternative minimum tax (“AMT”), eliminating the recurring need for an “AMT patch.”
- Seemingly out of nowhere, the law expands the availability of in-plan Roth conversions.
- The estate tax provisions are more generous than might have been expected, retaining the $5 million exemption and raising the rate by only 5 percentage points, to 40%.
ATRA Fix for Alternative Minimum Tax
January 3, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) permanently fixes the alternative minimum tax, or AMT, indexing it for inflation and preventing it from disallowing certain personal credits. The practical effect of this fix is to maintain, and permanently preserve, the status quo. It means the impact of the AMT in future years will be essentially the same as it has been in the past.
(more…)
January 3, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) permanently fixes the alternative minimum tax, or AMT, indexing it for inflation and preventing it from disallowing certain personal credits. The practical effect of this fix is to maintain, and permanently preserve, the status quo. It means the impact of the AMT in future years will be essentially the same as it has been in the past.
(more…)
ATRA Tax Increase or Tax Cut?
January 3, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) is being described by many (including both Republicans and Democrats) as a tax increase of more than $600 billion. At the same time, from a different perspective, it’s a tax cut — and one of the largest in history.
January 3, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) is being described by many (including both Republicans and Democrats) as a tax increase of more than $600 billion. At the same time, from a different perspective, it’s a tax cut — and one of the largest in history.
ATRA Tax Rates
January 2, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) affects income tax rates for 2013 and subsequent years. These rates do not sunset, so they will not change (except for inflation adjustments) until Congress passes legislation amending the tax law.
January 2, 2013
The American Taxpayer Relief Act of 2012 (“ATRA”) affects income tax rates for 2013 and subsequent years. These rates do not sunset, so they will not change (except for inflation adjustments) until Congress passes legislation amending the tax law.
New Look at S Corp Payroll Tax
April 25, 2012
Owners of an S corporation can receive business profits in the form of wages, which are subject to Social Security and Medicare tax, or dividend distributions, which are not. Naturally they prefer the latter because of the lower tax cost. The IRS can challenge the tax treatment if wage payments are unreasonably low, particularly where business profits are highly dependent on the services or reputation of the owner. Enforcement is difficult, however, and the use of S corporations to avoid paying employment taxes appears to be widespread. Financial disclosures of presidential candidates Newt Gingrich and John Edwards indicate that both of them used this technique.
The idea of closing this loophole has been floating around for some time. For example, California Democrat Pete Stark introduced a bill called the Narrowing Exceptions for Withholding Tax Act (or NEWT Act). The idea hasn’t had much momentum, but may have taken on new life as Democrats have attached a different version of this proposal (without the snarky title) to legislation that would prevent the impending increase in student loan rates. Blocking the increase in student loan rates appears to be a popular idea that has bipartisan support, but it remains to be seen whether the cost will be funded by this particular loophole-closer.
April 25, 2012
Owners of an S corporation can receive business profits in the form of wages, which are subject to Social Security and Medicare tax, or dividend distributions, which are not. Naturally they prefer the latter because of the lower tax cost. The IRS can challenge the tax treatment if wage payments are unreasonably low, particularly where business profits are highly dependent on the services or reputation of the owner. Enforcement is difficult, however, and the use of S corporations to avoid paying employment taxes appears to be widespread. Financial disclosures of presidential candidates Newt Gingrich and John Edwards indicate that both of them used this technique.
The idea of closing this loophole has been floating around for some time. For example, California Democrat Pete Stark introduced a bill called the Narrowing Exceptions for Withholding Tax Act (or NEWT Act). The idea hasn’t had much momentum, but may have taken on new life as Democrats have attached a different version of this proposal (without the snarky title) to legislation that would prevent the impending increase in student loan rates. Blocking the increase in student loan rates appears to be a popular idea that has bipartisan support, but it remains to be seen whether the cost will be funded by this particular loophole-closer.
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CCH Gets Political?
January 4, 2013
“The new law effectively raises taxes for all wage earners (and those self-employed) by not extending the 2012 payroll tax holiday that had reduced OASDI taxes from 6.2 percent to 4.2 percent.”
We were surprised to see this statement in a release from CCH, which is generally known for highly accurate, and studiously nonpolitical, reporting of tax developments. It’s well known that the payroll tax holiday was always intended as a temporary measure that would expire when the economy was in recovery. An extension of this measure was never part of the fiscal cliff discussions leading to enactment of the American Taxpayer Relief Act of 2012 (“ATRA”).
The suggestion that ATRA was somehow responsible for terminating this measure has become a talking point for conservatives who want to pretend that the law raises taxes on middle income taxpayers. CCH dropped the ball in permitting a misleading, partisan statement in one of its normally neutral tax reports.
Tags: ATRA
Posted in Commentary, Legislation, News