Bulletins
At Kosmatka Donnelly & Co. we want to you get answers to your questions quickly and efficiently. That’s why we’re keeping you updated on the latest financial and accounting news and information right from this page. Check back for new articles and links often.
2013 1st Quarter Federal Tax Developments (Click here to read more)
April 15 has come and gone but it’s not time to stop thinking about taxes and strategic tax planning opportunities. Since the start of 2013, there have been many new federal tax developments, which will impact tax planning for this year and beyond. As 2013 unfolds, many changes made to the Tax Code by the American Taxpayer Relief Act of 2012 (ATRA) take effect.
New 3.8% Medicare Tax on Net Investment Income (Click here to read more)
The IRS has issued much-needed guidance on the new 3.8% Medicare tax on net investment income. The guidance comes in the form of proposed reliance regulations (which means taxpayers can rely on them until further notice) and some FAQs (which are posted on the IRS website).
Student Financial Aid - The Basics (Click here to read more)
College financial aid is money provided by colleges, governments, organizations, and businesses to help students pay college expenses. This money is characterized as either self-help aid or gift aid. It is awarded based on either need or merit.2012 Taxpayer Relief Act - Businesses (Click here to read more)
As 2012 ended, the national debate focused on the expiration of the Bush-era tax cuts and the so-called fiscal cliff. On January 1, 2013, Congress passed, and President Obama signed the next day, the American Taxpayer Relief Act. The new law includes some valuable business tax incentives. Many of these business tax incentives are temporary so taxpayers have a limited window in which to maximize their potential tax savings.
2012 Taxpayer Relief Act - Individuals (Click here to read more)
On New Year’s Day 2013, Congress passed a far-reaching new law intended to avert the so-called fiscal cliff. The American Taxpayer Relief Act, signed into law by President Obama on January 2, 2013, impacts every taxpayer. Not only does the new law make permanent reduced income tax rates for most taxpayers, it extends either permanently or temporarily a host of other tax incentives. At the same time, the new law creates valuable tax planning opportunities.
Qualified Charitable Contributions from IRAs (Click here to read more)
If you’ve reached 70˝, the just-passed fiscal cliff legislation allows you to make cash donations to IRS-approved charities out of your IRA. These so-called Qualified Charitable Distributions (QCDs) were allowed in the past, but the privilege expired at the end of 2011. The new law retroactively resurrects QCDs for 2012 and extends them for 2013. As you will see, they can be a tax-smart deal. Here’s what you need to know.
Protect Yourself from Email and Online Fraud (Click here to read more)
While online communications and banking have made life more convenient in many ways, it has also opened the door to new kinds of crime perpetrated by criminals from around the world. Living in a small community like ours at one time gave us a layer of protection from "big city" criminals. No more. Criminals from across the globe are reaching out to steal your identity and assets. Be informed, be aware and protect yourself and your assets.
Top 10 Reasons NOT to Plan for Retirement (Click here to read more)
You probably read or hear about some “Top Ten” list nearly every day. But take a moment to read this one. This list is different, and probably not the kind of list you’d expect a Financial Advisor to write.
Year-end Tax Planning for Mutual Fund Investments (Click here to read more)
While mutual funds have certain advantages, they don’t always yield the greatest tax results for investors who hold them in taxable accounts. With some advance planning, however, you can achieve better tax outcomes. Around the end of the year—which is where we are right now—the tax planning payoff can be significant.
Recognizing Capital Gains This Year (Click here to read more)
Right now, the maximum federal tax rate on long-term capital gains is 15%. Absent Congressional action, starting next year, the maximum rate on long-term capital gains will increase to 20%. Starting in 2013, there will also be a new 3.8% Medicare contribution tax that will apply to the lesser of (1) net investment income (including capital gains) or (2) modified Adjusted Gross Income (AGI) in excess of $200,000 ($250,000 for married filing jointly; $125,000 for married filing separately). All this means that wealthy taxpayers may well pay a 23.8% tax rate on their garden-variety long-term capital gains starting in 2013.
Year end – Time to Tighten Internal Control and Prevent Fraud (Click here to read more)
Year end is a busy time in most businesses. Tax planning so that tax burdens can be evaluated and strategies developed to kept taxes as low as possible, determine if bonuses can be paid and how much, evaluate whether fixed assets should be purchased now or delayed into the future and many other decisions. It is a time to look at use of money and future financial needs of the organization.
Year-end Tax Planning Challenges (Click here to read more)
Year-end planning will be more challenging than normal this year. Unless Congress acts, starting in 2013, individuals will see higher tax rates across the board and a number of popular deductions and credits will be gone. Estate and gift tax rates will be higher as well. Additionally, a number of popular deductions expired at the end of 2011 and won’t be available for 2012.
Depreciation and the Secton 179 Deduction (Click here to read more)
If you are planning on buying business assets such as computers, software, office equipment or other tangible business property, you may want to consider purchasing before year end to take advantage of some potentially expiring deductions.
Top Five Gifts Without Tax (Click here to read more)
Let’s look at ways to make gifts that comply with the numerous gift tax rules and yet allow the recipient to get the maximum benefit of your generosity.
Banks Hit With Massive Cyber-Attacks: Is Your Money Safe? (Click here to read more)
Cyber-security specialists reported that cyber-attacks on U.S. banks escalated last week, overpowering some of the most sophisticated computer defenses of U.S. banks. These attacks, known as "Distributed Denial-of-Service," (DDoS) flooded bank websites with traffic, rendering them unavailable to consumers and disrupting transactions for hours at a time. Previous denial-of-service attacks have been covers for looting bank accounts and stealing customers’ or employees’ personal information. There is no evidence so far that the latest attacks have included theft, but the full extent of the damage may not be known for weeks or months.
Red Flags of Identity Theft (Click here to read more)
It is estimated that every 3.5 seconds someone in the United States has their identity stolen. Usually the victim has no idea their identity has been stolen until after the fact. Many view this as an ‘online’ only problem. While phishing scams, Trojans, and other forms of cybercrime are a factor there are also low tech means of identity theft such as a stolen wallet or purse or someone digging through garbage.
Top Five Education Deductions (Click here to read more)
September is the month we turn our focus back to school and education. If you have a child heading off to college, don't miss out on these five education related tax benefits.
Simple Anti-Fraud Measure: Free Credit Reports (Click here to read more)
With identity theft and fraud seemingly running rampant, it is imperative that consumers and business owners are vigilant in protecting themselves. One easy, but important tool in catching identity theft is the Free Credit Report.
Top 10 CPA Suggestions For August (Click here to read more)
Having clean books will contribute to the accuracy of your tax return and possibly save you headaches with the IRS should you ever be audited. The following steps can help set you on your way to tidy QuickBooks bookkeeping practices.
Is the Time Right to Consider a Free Tax Exchange? (Click here to read more)
We have seen very few tax free exchanges in this time of depressed real estate values. But soon this condition should reverse, making it worthwhile to consider exchanging real estate in order to defer the gain into replacement property
Now May Be a Good Time for Stock Redemption Deals--Before Tax Rates Go Up (Click here to read more)
Through the end of this year, the so-called Bush tax cuts are locked in place. However, unless Congress and the President take action, individual federal income tax rates will increase in 2013. Here is what is scheduled to happen after 2012 in the context of high-income C corporation shareholders.
Reconsidering Those Desktop Purchase Price Allocations (Click here to read more)
When a taxpayer acquires real property consisting of multiple classes of depreciable and non-ciepreciable assets, the purchase price must be allocated in proportion to the fair market value of the assets acquired. Accordingly, when a taxpayer purchases something like a building, rental property, or farm, there is a need to allocate the purchase price to the non-depreciable land and to the depreciable buildings and other improvements, such as drainage tile or irrigation systems.
Substantiating Charitable Contributions (Click here to read more)
One of the most popular tax deductions for individuals is the one allowed for donations to charitable organizations—from the local church or synagogue to the Red Cross and various other national organizations. Unfortunately, over the last several decades, this deduction has also been among the most abused. Thus, perhaps it is not surprising that Congress has responded to the problem by regularly enacting more rules around documenting donations.
Planning for Potentially Higher Taxes on Investment Income (Click here to read more)
Now for the bad news: starting in 2013 (which will be here before we know it), all or part of a high-income individual's net investment income will get socked with an additional 3.8% "Medicare contribution tax" unless our Washington politicians take action.
The information you provide to us via the Organizer can help us prepare a more accurate return and put a completed return in your hands more quickly. Read our Top Ten Tax Hit List to find out if you are missing anything important in the preparation of your return.
Bonus Depreciation & Section 179 More Valuable Than Ever (Click here to read more)
Some super-favorable depreciation provisions have a limited shelf life that may dictate placing eligible assets in service by no later than 12/31/11. If assets are just sitting around in a warehouse as of year-end, rather than actually having been placed in service, you will lose depreciation deductions you may be counting on.
Deductions for Heavy SUVs and Trucks (Click here to read more)
As you probably know, the 2010 Tax Relief Act provided bigger depreciation deductions for business assets. In fact, under Section 179, businesses can expense up to $500,000 of depreciable business assets acquired during 2011, with any remaining basis fully deducted using the 100% bonus depreciation.
Transactions Between Partners and Partnerships (Click here to read more)
The tax treatment of transactions between partners and partnerships is an ongoing source of confusion. No wonder! The rules are sometimes complicated and counterintuitive. In this Part 1 of our primer on partner/partnership transactions, we will try to dispel some of the confusion.
Year-end Tax Planning (Click here to read more)
As we approach year-end, it’s again time to focus on last-minute moves you can make to save taxes—both on your 2011 return and in future years. Before we get to specific suggestions, here are two important considerations to keep in mind.
Advice for Professional Startups (Click here to read more)
When one professional service provider or a group of professional colleagues decide to go into business for themselves, there are a host of significant legal and tax implications to consider. These range from choosing the best type of entity for the new practice, to setting up a qualified retirement plan, to taking advantage of year-end tax planning opportunities. This release highlights some key issues that are likely to affect professional startups.
Tax Credits for Energy-efficient Home Improvements (Click here to read more)
The Internal Revenue Code includes two different tax credits for energy-saving home improvements. The rules for one of the credits have changed significantly for the worse since 2010, and that credit is scheduled to expire on 12/31/11. The other credit, which covers more exotic and expensive improvements, is still generous. Here's what you need to know to cash in on the credits this year.
Importance of Updating Beneficiary Designations (Click here to read more)
Most of us have more than enough to do. Thus, it’s no surprise that we may let some important things slide until tomorrow or the next day or... whenever. A recent U.S. Supreme Court decision reminds us that sometimes “whenever” never gets here and the results can sometimes be tragic.
Mid-Year Tax Planning (Click here to read more)
Thanks to the extension of the so-called Bush tax cuts through 2012, the current federal income tax environment remains favorable. Now is the time to take advantage because we don't know what tax rates will be in 2013 and beyond.
Benefits and Rules of Qualified Small Business Corporation (QSBC) Stock (Click here to read more)
Are you getting ready to form a new business or reorganize an existing business? This letter summarizes the special tax advantages available to shareholders who sell stock in qualified small business corporations (QSBCs).
Which Is Better--100% Bonus Depreciation or Section 179 Deduction? (Click here to read more)
Taxpayers who acquire assets for use in their trade or business or for a rental activity this year have a very good chance of writing off the entire cost this year, thanks to 100% bonus depreciation plus very generous Section 179 deduction limits.
S Corporations--Look Out for Increased IRS Focus (Click here to read more)
In a report released by the Government Accountability Office (GAO) several months ago, it concluded that 13% of S corporations paid inadequate wages to shareholders—resulting in an estimated $23.6 billion in net underpaid compensation. With wages (but not S corporation distributions) subject to employment taxes, it is easy to see the incentive to minimize wages to shareholders and instead distribute funds as distributions.
2010 Tax Relief Act (Click here to read more)
On December 17 the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (the 2010 Tax Relief Act) was signed into law. It inlcudes many taxpayer friendly provisions for both individuals and businesses. This letter summarizes the changes we think will affect the most taxpayers.
When Transferring Assets to a Low-risk Family Member Can Save the Day (Click here to read more) (pdf file)
For many people, liability insurance is the primary method of asset protection. However, low coverage limits, liberal policy exclusions, insolvent insurance companies, and/or exorbitant premiums insurance coverage can sometimes leave high-risk/high-wealth individuals (e.g., a surgeon or business owner) exposed and in need of additional protection from creditor claims. One simple and inexpensive method for protecting assets in such a case is for the high-risk person to transfer (retitle) property to a low-risk family member.
Tax Benefit to Employers Hiring New Workers (Click here to read more) (pdf file)
Two new tax benefits are now available to employers hiring workers who were previously unemployed or only working part time. Employers who hire unemployed workers this year may qualify for a 6.2 percent payroll tax incentive. Employers may claim the payroll tax benefit on their federal employment tax return beginning with the 2010 second quarter filing. In addition, for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker on their 2011 income tax returns.
