Tax implications of bitcoins (and traditional alternative currencies)

BY: THOMAS S. GROTH, ESQ (find Thomas on twitter! @tsgESQ)

I’ve decided that I want to be a Millionaire.  So I am going to buy one bitcent (cBTC), and I’ll be all set.  Sure, a bitcent is worth roughly $1 in U.S. fiat money (and rising my bitcoin ticker app now pegs the bitcoin to 137.90 USD), but that bitcent is worth a cool MILLION in satoshis! Say that with me, one million sa-TOSHE- ees.

(For a our first introductory article on what bitcoin is and one potential regulatory hurdle (the FBAR), please see our article here.)

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4 Reasons why it may be a bad idea to file an extension to file your tax return

By: Michelle D. Wynn. Esq.

We are nearing the due date for 2012 individual tax returns. Many people right now are likely trying to decide whether to invest the time now, when they are already very busy and their CPAs/Accountants/Tax Attorneys/Tax Preparers are very busy, to rush to get their 2012 return completed or to just file an extension and put it off until later.

The benefits of filing an extension (download Form 4868 tax return extension here) pretty much go without saying: You get more time to get all of your tax preparation materials together. You get the choice to have your tax preparer prepare your return during the down-time between the April filing deadline and the October filing deadline to work on your return, which will likely mean that they have more time, energy, and focus when working on your return. Additionally, if you are receiving a K-1 from an S-Corporation, Partnership, or Estate/Trust, you may not have received your K-1 yet. You have more time to gird your loins for the bill imposed by your tax bracket.

However, there can be substantial problems associated with filing your extension. Here are some of the most common that we have encountered:

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Yesterday I posted on all the new tax increases for 2013, and for those looking for all of the ObamaCare tax increases for that have gone into effect, and are schedule to go into effect, here is a list of the 20 ObamaCare tax increases, courtesy of Americans for Tax Reform. 

And a new tax stock photography. Ouch.

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Great piece from the Morning Jolt newsletter by Jim Geraghty (sign up here) at the National Review consolidates all the income tax increases, for 2013, including the new tax brackets along with the ObamaCare tax increases set to take effect:

1. Payroll Tax: increase in the Social Security portion of the payroll tax from 4.2 percent to 6.2 percent for workers. This hits all Americans earning a paycheck-not just the “wealthy.” For example, The Wall Street Journal calculated that the “typical U.S. family earning $50,000 a year” will lose “an annual income boost of $1,000.”

2. Top marginal tax rate: increase from 35 percent to 39.6 percent for taxable incomes over $450,000 ($400,000 for single filers).

3. Phase out of personal exemptions for adjusted gross income (AGI) over $300,000 ($250,000 for single filers).

4. Phase down of itemized deductions for AGI over $300,000 ($250,000 for single filers).

5. Tax rates on investment: increase in the rate on dividends and capital gains from 15 percent to 20 percent for taxable incomes over $450,000 ($400,000 for single filers).

6. Death tax: increase in the rate (on estates larger than $5 million) from 35 percent to 40 percent.

7. Taxes on business investment: expiration of full expensing the immediate deduction of capital purchases by businesses.

Obamacare tax increases that took effect:

8. Another investment tax increase: 3.8 percent surtax on investment income for taxpayers with taxable income exceeding $250,000 ($200,000 for singles).

9. Another payroll tax hike: 0.9 percent increase in the Hospital Insurance portion of the payroll tax for incomes over $250,000 ($200,000 for single filers).

10. Medical device tax: 2.3 percent excise tax paid by medical device manufacturers and importers on all their sales.

11. Reducing the income tax deduction for individuals’ medical expenses.

12. Elimination of the corporate income tax deduction for expenses related to the Medicare Part D subsidy.

13. Limitation of the corporate income tax deduction for compensation that health insurance companies pay to their executives.

UPDATED FOR INFLATION INDEXES: 2013 IRS Federal Tax Rate Brackets for all four individual filing statuses.

The IRS has released the finalized 2013 IRS Federal Tax Brackets Rates in IRS-Revenue-Procedure 2013-15. These rates are final and adjusted or inflation.

We have provided a one-page PDF 2013 IRS FEDERAL TAX BRACKET RATES FINALIZED for all four individual filing status for reference and sharing.

If you don’t wish to download the PDF, you can just view the updated tax brackets below.

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BY: MICHELLE D. WYNN, ESQ.

When can I file my 2012 tax return?

2013 Tax Brackets: The obvious and not so obvious tax increases

ANALYSIS AND COMMENTARY BY: Thomas S. Groth, ESQ (@tsgESQ)

RIP “Bush Tax Cuts” welcome to the world, “Obama Tax Cuts.”

Plus hidden tax increases for low income workers

Most of the Bush tax cuts came back from the dead. But others remain 6 feet under.

UPDATE: Here are finalized 2013 Federal Income Tax Rate Brackets for Individuals indexed for inflation Read More…

BY: THOMAS S. GROTH, ESQ (@tsgESQ)

More employment taxes; more tax problems

Well, that didn’t take long.  The IRS has already released guidance (Notice 1036) alerting employers to the changes they will need to make in payroll withholding for 2013.

This increases create an additional burden for employers. The increases in taxes will increase non-compliance. And failure to make deposits of employment taxes, is, of course, one of the most serious actions a business can make, at least according to the IRS. Payroll tax problems, the IRS treats most severely. First the IRS will look to shut down a business, and then the IRS may look to assess the trust fund penalty, so that those responsible are personally assessed for any unpaid trust fund taxes.

First up is the additional 2% employee portion of the payroll tax.  Yes, every working American will be paying more taxes in 2013.  Any employees making over $200,000 will have an additional 0.9% withheld from their paychecks for the Medicaid contribution tax (aka the Obamacare tax).  Every single dollar of ordinary income was already subject to a total of 2.9% with no cap (1.45% on both the employer and employee side), and that hasn’t changed.

Employers are urged by the IRS to make the adjustment as soon as possible.  For most tax payers – the result will be a 3%-5% reduction in take-home pay.  But if employers don’t make the change until they are required to do so (not later than February 15th), they will have to make up for over a month of underwithholding in “a subsequent pay period.”  They must make up the difference no later than March 31, 2013.  So yes, almost everyone’s taxes went up in 2013 – thanks Washington!  The worst part, though, is the upfront financial pain that will be inflicted on many as a result of the government’s delay in passing the fiscal cliff legislation.

So, what are the “Percentage Method Tables for Income Tax Withholding” for 2013? Read More…

BY: THOMAS S. GROTH, ESQ 

What to do if you haven’t gifted away enough money

I’ve been hearing this question in various circles from lawyers and laymen alike – Was it a mistake for people to make big gifts in 2012? 

The reason they are asking this question: 

The Senate and House approved the “American Taxpayer Relief Act of 2012″ last night in an effort to keep our country from going over a “fiscal cliff.”  As part of that deal, Estate and Gift Tax exemptions that were set to drop from $5.12 Million to just over $1 Million, are now preserved “permanently.” That is, one of the chief motivators for people to make gifts in 2012 has turned out to be a false alarm.

Nothing like a lively Senate Debate on important issues.

 

 

 

 

 

 

 

So now people are asking if Estate Planners and tax attorneys jumped the gun by encouraging people to plan before 2012 came to an end.  Did the crystal ball malfunction? Was bad advice given as a result?

In almost all cases, the answer to these questions is a resounding “no.”  In this article, I’ll give four reasons why the answer is no, and I will discuss what someone considering making a gift should do.

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BY ANTHONY E. PARENT, ESQ.

The four most important facts about the 2013 Tax Brackets

Oh what has Congress bought for us

With little time to make the fancy downloadable charts that we love to do here at the IRSmedic World HQ, everyone is wondering, what is happening? I took a quick look at the source material, H.R.8 — American Taxpayer Relief Act of 2012  (BILLS-112hr8eas) and came up with the four most important this  is what you need to know about the 2013 IRS tax brackets.

UPDATE: Here are finalized 2013 Federal Income Tax Rate Brackets for Individuals indexed for inflation

I need something to cheer me up. Cause Boehner et al  isn’t doing it for me

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