I’m sure you’ve heard on the radio, or seen it on the television – or perhaps you’ve even heard it through someone else – that social security might not be available in the years to come.  It’s really nothing to fear because despite these grim prophecies, there are many individual options available. From employer-sponsored plans to individual plans set up through your financial institution, you have a couple of plans to choose from.

While some plans reduce your overall taxable income by the amounts you put in, others give you a credit in the year of the contribution. Some even earn tax-free money when you’re ready to retire. But like the diversity of each of these plans, everyone’s tax liability is different, as well. And that is due to several factors; three of the most important being your adjusted gross income, your filing status, and whether you have a plan through an employer.

Consult with your tax advisor to see which plan you might benefit from now, and which plan you might benefit from at the time of your retirement.  But be sure to speak with a professional before going out on your own to choose a retirement plan.  In many cases, you can create a tax liability for yourself instead of doing what you might think is a tax deferred contribution towards your retirement.  One way of benefiting is to choose a plan through your employer and still be able to take a deduction for a contribution made to a Traditional IRA.  Or, you can have that same plan through your employer and not be able to take a deduction for contributing to a Traditional IRA, though you might still be able to contribute to a Roth IRA.

Because of these stipulations that are less commonly known, it is highly recommended that you speak with someone knowledgeable before making your next move – because it can be a costly one.

Well, beginning on April 1, 2012 you can expect these rules to be reinstated.

“The exemption applies only to clothing and footwear worn by humans,” according to the New York State Department of Taxation and Finance’s most recent tax publication. “It also applies to most fabric, thread, yarn, buttons, snaps, hooks, zippers and similar items that become a physical component part of exempt clothing, or that are used to make or repair exempt clothing.”

If you are a business owner that collects sales tax, please make sure you adjust your system to reflect the new exemptions that begin on April 1^st.

If you are a consumer, make sure to check your receipts to ensure that you are not being taxed on your exempt purchases.

A gift tax is a tax on transfers over one’s lifetime of property made without consideration (payments). The tax is imposed on the person making the gift and not on the person receiving it. In a calendar year, gifts that are valued over $13,000 and which are given to someone other than a spouse or charity are subject to this tax. And even though a gift ‘tax return’ must be filed on form 709, no tax is required to be paid until the taxpayer exhausts the 5 million dollar limit.

Gift tax exclusion

A taxpayer can give any amount of money, up to $13,000 per year, to as many recipients as he or she wishes, and would not be required to file a gift tax return. However, if more than $13,000 is given to any one person, the difference over $13,000 must be reported to the IRS. A married couple, conversely, can each give up to $13,000 annually to any number of recipients and not be required to file a gift tax return.

The IRS receives thousands of e-mails and phone calls a year from taxpayers who have received suspicious e-mails, phone calls, faxes or notices claiming to be the IRS.  These cyber criminals fraudulently use the IRS name and logo to lure taxpayers into thinking they are real.  The goal of these criminals is to trick you into giving them your personal and financial information, which they will use to commit identity theft or to steal your money.

How do you know if it’s really the IRS or if it’s a scam?

1.       The IRS will never ask you for detailed personal and financial information such as PIN numbers and passwords for credit cards, bank accounts, etc.

2.       The IRS does not contact taxpayers by email to request personal or financial information.

3.       The IRS website is www.irs.gov.  If it ends with something else such as .com, .org, .net, etc…. they are not the IRS.

4.       If you receive a phone call, fax or letter in the mail from someone claiming to be from the IRS, and if you are suspicious, contact the IRS at 1-800-829-1040 to see if they had contacted you.  Do not call the number from the fax or letter you received.  You can also forward any suspicious e-mails to phishing@irs.gov.

5.       If you receive an e-mail that you think is a scam, never reply to the message and never open up any attachments or click on any links.

You can help the IRS put a stop to fraud by contacting them at 1-800-829-1040, or by forwarding suspicious e-mails to phishing@irs.gov

You have worked hard for your money! Please be careful and don’t let these criminals take it away from you.

Clients ask me for suggestions about ways to increase their refund and save their hard-earned money.  You might be surprised by how many married filing joint taxpayers with two children who earn $150,000 lose the child tax credit due to phase-out rules.  Many of them have a 401(k) plan at work into which they don’t contribute a penny.  In some instances, the company they work for will match up to a certain percent – and they still don’t contribute.

If the above criteria applies to you, and you have the option to defer some of your income into an employee sponsored 401(k), do so.  You will decrease your taxable income, save for retirement and now qualify for a portion of the child tax credit.  The more you defer into your 401(k), the higher the child tax credit amount that you will qualify for.

Therefore, to give one example:  You could give a gift of $13,000 a year each to your daughter, son, mother, a friend, a cousin, your Accountant…without having to file a gift tax return.  Your spouse could do the same to the same people if you wish in the same year. Therefore, if you both gave gifts to the same people, they will receive a gift of $26,000 in that year and they can still receive gifts from more people within that year as long as it’s different people giving them the gifts.  If you go over the $13,000 a year limit per donee, then a gift tax return will be necessary to file….and our firm will be able to handle that for you.

Please contact us if you have any questions or concerns regarding Gift Tax or any other questions that we could help you with.

Tax season is starting soon, please call us to schedule your appointment or to make it more convenient for you, you could mail, e-mail, fax or drop off your taxes.  As always, we appreciate your business and greatly appreciate when you refer us to your family and friends. 

Couples married as of December 31, 2011 in NY or in any other state or country that recognizes same-sex marriage will be considered married for the entire year, which means they MUST file a NYS Joint tax return or file as Married Filing Separate.

Not to spoil the excitement, but same sex married couples will not have it easy when filing their income tax returns for 2011.  Filing taxes for same-sex spouses will be more complicated since the federal government does not recognize the marriage.  To prepare your NYS Joint Tax Return, your tax accountant will need to prepare a “dummy” federal tax return using a married filing status so that your credits, income and deductions flow correctly.  Many individuals will face higher tax preparation fees do to the complexity and time involved to file the tax returns. 

The good news is that Same-Sex couples may have some tax advantages when filing their Federal tax returns.  Some key strategies is shifting income to the spouse with the lower income or including deductions such as real estate taxes to the partner with the higher income.   This shifting of income and expenses could generate significant tax savings for both partners.  To best shift your income, consider holding your assets jointly.  Your tax advisor will carefully consider these strategies when preparing your tax returns. 

Please contact us if you have any questions or concerns.

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