Wednesday, November 21, 2012
WHAT’S THE BUZZ? TELL ME WHAT’S A HAPPENNIN’ – WEDNESDAY EDITION
* Tax pros - check out my post “The IRS Responds” over at THE TAX PROFESSIONAL.
* Professor Annette Nellen informs us that “the fiscal cliff the federal government is facing also affects the states” in “The Fiscal Cliff and the States” at 21st CENTURY TAXATION.
* As I expected “Special Dividends Surge Fourfold as Tax Increase Looms in U.S.”, as Thomas Black tells us at BLOOMBERG BUSINESSWEEK.
“From the end of September to mid-November, 59 companies in the Russell 3000 stock index declared a one-time cash payment to shareholders, up from about 15 in the year-earlier period, according to data compiled by Bloomberg. More than a dozen said they acted because of a pending dividend-tax increase.”
* Joe Kristan’s Monday Tax Round-Up at the ROTH AND COMPANY TAX UPDATE BLOG opens with disturbing quotes from a TAX ANALYST piece -
“Asked by reporters about the AMT patch, which has caused anxiety for IRS officials preparing for the coming tax return filing season, Ways and Means Chair Dave Camp, R-Mich., responded, “I’m hopeful that we will address AMT by the end of the year.” He added that he doesn’t think a patch will be passed as stand-alone legislation.”
“Ways and Means ranking minority member Sander M. Levin, D-Mich., also expects the AMT patch and the extenders to be included in a larger deal on the fiscal cliff. ‘I think it’s preferable for everything to be put into a package. They relate to each other,’ he told Tax Analysts.”
It is hard for me to keep my promise not to whine about the idiots in Congress.
* William Perez reminds us of the effects of Congressional procrastination on tax filings in the past in “Possible Delay to Filing Season Due to Late-Passing Legislation, IRS Warns” at ABOUT.COM. Sort of a preview of what we could expect (at the very least) in the upcoming tax filing season.
“In 2007, the IRS scrambled to address the Tax Relief and Health Care Act of 2006, which extended several lapsed tax deductions. That legislation was passed both chambers of Congress by December 9, 2006, and was signed by the President on December 20, 2006. For the tax returns that year (2006), we had to manually "write in" special codes on Form 1040 and Schedule A to indicate tax breaks that were extended but weren't printed on the forms.
In 2011, the IRS delayed accepting certain tax returns until February 14, 2011. The delay was caused by the Tax Relief Act, which had passed both chambers of Congress by December 16, 2010, and was signed by the President on December 17, 2010. That legislation extended some already lapsed tax deductions, notably for the sales tax deduction, classroom expenses, and the tuition deduction.”
* Tony Nitti offers “Five Tax Planning Strategies For Minimizing The Additional 3.8% Obamacare Tax On Investment Income” at FORBES.COM.
One of the strategies is –
“Harvest stock gains, rather than losses, prior to year-end. Taxpayers have long been trained to sell loss-generating stock prior to year-end in an effort to offset otherwise taxable capital gains. In the waning days of 2012, however, you should consider selling appreciated stock, not only to lock in the soon-to-expire 15% preferential rate currently afforded long-term capital gains, but to avoid the impending 3.8% Medicare tax as well.”
Please remember that, as Tony points out –
“The 3.8% Medicare tax applies only when your modified adjusted gross income, or MAGI (unless you have foreign earned income, this will be the same as your adjusted gross income) exceeds certain thresholds: $200,000 for a single taxpayer, $250,000 for a married couple filing jointly, and $125,000 for a married couple filing separately.”
* Paul Neiffer reports “Talk Brewing of Extending the Payroll Tax Cut” at FARM CPA TODAY.
In his Tax Round-Up Joe Kristan has a good comment on this possibility (highlight is mine) –
“It seems unwise to accelerate the demise of social security by reducing funding, but wisdom isn’t found much in our political class.”
THE FINAL WORD
A recent “tweet” suggested that “20% who qualify for the EIC don't claim it”.
An interesting statistic , considering that (at least) 30% of those who do claim it do so fraudulently.