THE WANDERING TAX PRO
Up-to-the-minute advice, information, resources, and, on occasion, commentary on federal and New Jersey state income taxes, and the various New Jersey property tax rebate programs, and insights and observations on tax policy and professional tax practice, by 45+-year veteran tax professional Robert D Flach.
Friday, January 31, 2014
WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’
This will be the last BUZZ until after the
end of the tax filing season.
* A client just emailed me to say that he
could not afford health coverage in 2013 and to ask how much would he be
penalized.My answer was “nothing” – the
penalty does not apply to 2013.It
begins this year – 2014.
My proposal would have also included the
requirement that any such excessive bonus must come from current earnings and
profits – so CEOs of companies with current losses could not give themselves
eventually deductible ridiculous and unjustified salary payments.
problem with a corporate tax rate reduction is the need to simultaneously
reduce tax rates on small businesses in which owners of pass-through entities
pay tax on their share of business profits on their personal returns. It makes
no sense to me to lower the top corporate rate from 35% to say 25% or so while
retaining the top individual income tax rate paid by some small business owners
proposals on automatic retirement savings for the middle-class sound fine. By
making savings easy it likely will help this group increase retirement savings
(something I thought was intentioned by the retirement savers credit). Paying
for this by taking away retirement savings tax breaks for wealthy individuals
doesn’t make sense to me.”
the old expressions—the devil is in the details—makes all the difference on
whether or not the proposals are worthy of support. We’ll all just have to
Some of the details of the “myRA” account
are provided in a White House issued “Fact Sheet”.
üIt would be a ROTH
account – no deduction going in but no tax coming out.
ü“Initial investments could be as low as $25
and contributions that are as low as $5 could be made through easy-to-use
payroll deductions.Savers have the
option of keeping the same account when they change jobs and can roll the
balance into a private-sector retirement account at any time.
ü“Savers will earn interest at the same
variable interest rate as the federal employees’ Thrift Savings Plan (TSP)
Government Securities Investment Fund.”This rate is nothing to write home about.
ü“This saving opportunity would be available
to the millions of low- and middle-income households earning up to $191,000 a
year.These accounts will be offered
through an initial pilot program to employees of employers who choose to
participate by the end of 2014.The
accounts are little to no cost and easy for employers to use, since employers
will neither administer the accounts nor contribute to them.
Any retirement savings is better than no
retirement savings.It would be good as
a starting point, with the account balance being transferred to a “regular”
ROTH account and invested in a mutual fund once it reaches perhaps $2,000.