FBAR filing deadline is rapidly approaching

EXPATRIATE TAX – U.S. residents with $10,000 or more in foreign bank accounts must file a Report of Foreign Bank and Financial Accounts by the end of the month or risk substantial fines.

The FBAR (Report of Foreign Bank and Financial Accounts) is due the year after the year that the $10,000 threshold in met. The FBAR due date cannot be extended and failure to file an FBAR may result in civil and/or criminal penalties. Considering a Tax Professional? For no obligation free consultation contact us today!
ABA Tax Accounting
info@abataxaccounting.com
651-621-5777
http://www.abataxaccounting.com
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Published in: on June 26, 2013 at 12:50 pm  Comments (1)  
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Is federal income tax withholding required on deferred compensation payments?

Yes. If the distribution is an eligible rollover distribution, 20% withholding is required, unless the distributee chooses to make a direct rollover. For distributions that are not eligible for rollover, nonperiodic distributions are subject to withholding at a flat rate of 10%, while the withholding on periodic distributions is the amount that would be withheld if the distribution were wages paid to an employee for the appropriate payroll period. With regard to distributions that are not eligible to be rolled over, the participant may make an election to waive withholding. This election is not available for eligible rollover distributions. Considering a Tax Professional? For no obligation free consultation contact us today!
ABA Tax Accounting
651-621-5777 After Hours: (612)424-1540
info@abataxaccounting.com
http://www.abataxaccounting.com/smallbusinessaccounting.php
http://www.abatax81.blogspot.com
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NET INVESTMENT INCOME TAX: WHAT YOU NEED TO KNOW

Income Tax Service For Small Businesses – Now that the 2012 tax season is over, it’s time to focus on tax planning for 2013. One of the most significant tax changes this year is the Net Investment Income Tax (NIIT), which went into effect on January 1, 2013 as a result of health care reform enacted in 2010. Here’s what you need to know.

WHAT IS THE NET INVESTMENT INCOME TAX?
The Net Investment Income Tax is a 3.8% tax on certain net investment income of individuals, estates, and trusts with income above statutory threshold amounts, referred to as modified adjusted gross income (MAGI).

WHAT IS INCLUDED IN NET INVESTMENT INCOME?
In general, investment income includes, but is not limited to: interest, dividends, long and short term capital gains, rental and royalty income, non-qualified annuities, income from businesses involved in trading of financial instruments or commodities, and passive business activities such as rental income or income derived from royalties.

WHAT IS NOT INCLUDED IN NET INVESTMENT INCOME?
Wages, unemployment compensation, operating income from a nonpassive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends, and distributions from certain Qualified Plans are not included in net investment income.

INDIVIDUALS
Individuals whose modified adjusted gross income exceeds $250,000 (married filing jointly) or $200,000 (single filers) are taxed at a flat rate of 3.8% on investment income. Net Investment Income Tax is paid in addition to other taxes owed and threshold amounts (e.g. $200,000 for single filers) are not indexed for inflation.

Non-resident aliens are not subject to the tax; however, if a non-resident alien is married to a US citizen and is planning to file as a resident alien for the purposes of filing “married filing jointly” tax return, there are special rules. Please consult us if you have any questions.

Because investment income is generally not subject to withholding, taxpayers should be aware that the NIIT might affect tax liability for the 2013 tax year. In addition, it’s possible that even lower income taxpayers not meeting the threshold amounts could be subject to the tax if they receive a windfall such as a one-time sale of assets that bumps their MAGI up high enough.

Give us a call if you are expecting a windfall this year. We’ll help you come up with a strategy such as an installment sale, minimizing AGI, or figuring out the best timing for sale, that will help you to avoid or minimize taxes when you file your 2013 return next year.

SALE OF A HOME
The Net Investment Income Tax does not apply to any amount of gain excluded from gross income for regular income tax purposes ($250,000 for single filers and $500,000 for a married couple) on the sale of a principal residence. In other words, only the taxable part of any gain on the sale of a home has the potential to be subject to NIIT, providing the taxpayer’s income is over the MAGI threshold amount.

ESTATES AND TRUSTS
Estates and Trusts are subject to the Net Investment Income Tax if they have undistributed net investment income and also have adjusted gross income over the dollar amount at which the highest tax bracket for an estate or trust begins for such taxable year. In 2013, this threshold amount is $11,950.

Special rules apply for certain unique types of trusts such a Charitable Remainder Trusts and Electing Small Business Trusts, and some trusts, including “Grantor Trusts” and Real Estate Investment Trusts (REIT) are not subject to NIIT at all.

It should be noted that non-qualified dividends generated by investments in a REIT are considered taxable income and taxed at ordinary tax rates. As such, they may be subject to the Net Investment Income Tax.

If you need guidance on the topic of Net Investment Income Tax and estates and trusts, don’t hesitate to call us.

REPORTING AND PAYING THE NET INVESTMENT INCOME TAX
Individual taxpayers should report (and pay) the tax on Form 1040. Estates and Trusts report (and pay) the tax on Form 1041.

Individuals, estates, and trusts that expect to pay estimated taxes in 2013 should adjust their income tax withholding or estimated payments to account for the tax increase in order to avoid underpayment penalties. For employed individuals, NIIT is not withheld from wages; however, you may request that additional income tax be withheld. Call us if you need assistance with this.

Wondering how the new tax affects you? Give us a call. It’s never too early to start tax planning!
ABA Tax Accounting
651-621-5777 After Hours: (612)424-1540
info@abataxaccounting.com
http://www.abataxaccounting.com/smallbusinessaccounting.php
http://www.abatax81.blogspot.com
http://www.abataxaccounting.wordpress.com

Published in: on June 10, 2013 at 5:14 pm  Leave a Comment  
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Do you have Payroll Tax Problems?

Payroll Tax Problems – The IRS views failing to pay payroll taxes as the cardinal sin of tax delinquency because a large portion of the payroll taxes are your employees’ withholdings. Not paying your company’s payroll taxes is tantamount to stealing your employees’ money in the eyes of the IRS.

As a result, penalties for failing to pay your payroll taxes and filing your payroll tax returns on time are much more severe than other types of penalties. They can drastically multiply the amount you owe in a very short time.  

If you are behind on paying payroll taxes for your company, WATCH OUT!!! The IRS is extremely aggressive pursuing collection of this type of tax. They would rather seize your business assets, close you down, sell your assets at auction, and put you out of business than allow you to continue amassing additional payroll tax liabilities.  

If you are behind on your payroll taxes, DO NOT meet with the IRS on your own. How you answer their initial questions can determine whether you stay in business or not. It is critical you hire a professional representative who knows how the IRS operates. Get a Free Consultation on how to resolve your payroll tax problems.

ABA Tax Accounting

651-621-5777 After Hours: (612)424-1540

info@abataxaccounting.com

http://www.abataxaccounting.com/smallbusinessaccounting.php

www.abatax81.blogspot.com

www.abataxaccounting.wordpress.com

Published in: on June 7, 2013 at 5:05 pm  Leave a Comment  
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