Real Estate Investors & Brokers
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Tax Advisors provide year round income tax preparation and tax planning for individuals and small to medium size businesses. Our team of professionals will work with you on creating specific strategies tailored to maximize your tax deductions. Tax Advisors can also assist you in identifying financial planning opportunities, help you create a budget or work with you on choosing a correct business entity.
Our firm specializes in individual, business and Real Estate investment returns. Tax Advisors will prepare your income tax returns at a very competitive rate and relieve you of anxieties associated with tax filing. We can file your current or back year taxes for any state including multi-state and part-year residency. Your tax returns will be filed electronically (e-filed) and, if desired, available refunds will be directly deposited into your bank account.
We recognize the importance of filing an accurate tax return while paying the minimum tax allowed by law. Keep more of what you earn. Contact Tax Advisors today and receive a free no-obligation consultation with one of our tax professionals.
Real Estate Investors & Brokers
Employee Stock Options
On December 19, the President signed the Tax Increase Prevention Act of 2014 (HR 5771), which extends most of the expiring provisions through December 31, 2014. Here is a list of the extensions:
The bill also will adjust, for inflation, failure-to-file and failure-to-pay penalties for tax returns required to be filed after December 31, 2014.
The law also includes the ABLE Act, which provides a new type of tax-advantaged savings plan for disabled individuals. (New IRC §529A) They are closely modeled after IRC §529 Qualified Tuition Plans.
The tax return filing season will begin January 30 for most taxpayers, not on January 22 as originally planned. This means that January 30 is the first day they will accept e-filed returns. Although they will accept paper-filed returns before that date, they will not begin processing them until then.
The IRS also announced that the processing date for returns containing certain forms will be delayed until “late February or into March.” Two of the more common forms on the list are Form 4562, Depreciation and Amortization (Including Information on Listed Property), and Form 8582, Passive Activity Loss Limitations
The House and Senate voted today to extend the payroll tax cut and unemployment benefits, while also avoiding a Medicare fee cut for doctors for the rest of the year. President Obama has promised to sign the legislation, which means Americans will continue to receive bigger paychecks through the rest of the year.
Cancelation of debt should generally be reported as an income on your tax return, but luckily there are three exceptions:
For purposes of relief under the cancellation of debt income rules, you are insolvent if the total of all of your liabilities was more than the fair market value (FMV) of all of your assets immediately before the cancellation. For purposes of this calculation, your assets include the value of everything you own liabilities include the entire amount of recourse debts (debts that you are personally responsible for but not guaranteed with specific collateral, like your credit cards), the amount of nonrecourse debt (secured debt, like a mortgage).
If under the tax laws, you were insolvent immediately before the cancellation of debt, you would not include that canceled debt in income. Generally, your canceled debt would be reported to you on a form 1099-C. Of course, the lending institution or bank which issued you the form 1099-C does not know that you qualify for an exception so you are going to have to let the IRS know why you are not including the amount of that 1099-C in income for tax purposes. You do this by completing a federal Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. The IRS also offers Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals) to assist you with the insolvency calculations.
Earned Income and adjusted gross income (AGI) must each be less than:
Tax Year 2010 maximum credit:
Investment income must be $3,100 or less for the year.
About 77 percent of U.S. tax-payers received a refund on 2009 returns, averaging $2,994 each.
Social Security benefits are taxed depending on your total income from all sources. Here is how to calculate how much of your Social Security benefits is taxable.
Provisional income is your total worldwide income, including tax-exempt income, plus half of your Social Security benefits.
The following base amounts are used in figuring your taxable Social Security:
New Tax Relief/Job Creation Act of 2010 bill extends Bush-era tax cuts, provides payroll tax relief, and reinstates the estate tax.
The bill extends these provisions, which had expired on December 31, 2009:
(Note: the additional standard deduction for property tax was not extended.)
The bill provides an AMT patch. The exemption amounts for 2010 and 2011 are:
In addition, nonrefundable personal credits can be applied against AMT for two more years.
Here is a partial list of extensions of current law (these changes are effective through 2011 unless otherwise noted):
The Act reduces the employee-share of the OASDI portion of Social Security tax from 6.2% to 4.2% for wages earned in calendar year 2011, up to the taxable wage base of $106,800. This reduction applies to all wage earners and self-employed individuals with no reduction for income (i.e., no AGI phase-outs).
The Act provides the following business incentives:
Many business energy incentives were extended, and the individual credit for energy efficiency improvements was also extended. However, the amount allowed returns to the pre-2009 lifetime limit of $500 (rather than the 2009/2010 maximum of $1,500).
The federal estate tax exemption is increased to $5 million with a maximum rate of 35% for 2011 and 2012. For decedents dying in 2010, the executor may elect to use the $5 million exemption and 35% rate, or the no estate tax and carryover basis provisions under EGTRRA.
If the tax cuts are allowed to expire at the end of the year, stock dividends will be subject to a much higher tax.
Right now, the tax on stock dividends typically is a maximum 15%. But if the Bush tax cuts expire and we revert to previous levels, dividends would be subject to an income-tax rate of as much as 39.6%. For instance, if the cuts were to expire, a married couple filing jointly with $100,000 in taxable income would be in the 28% tax bracket – the rate prior to the tax cuts – and would be subject to that rate on dividends.
There is talk that the tax cuts may only be extended for families earning less than $250,000 a year, or individuals earning less than $200,000. If that happens, then those earning more than that amount might be subject to a higher dividend tax.
If you would like details on provisions that affect you, please contact us.
The Hiring Incentives to Restore Employment (HIRE) Act of 2010, created two new employer tax benefits to reward organizations for hiring and retaining unemployed or part-time workers.
Payroll tax exemption – provides employers with an exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees, effective for wages paid from March 19, 2010 through December 31, 2010.
New hire retention credit – in addition, if the employee stays on for a full year, the business will also be eligible for a tax credit of up to $1,000.
As of August 4, FTB has received 31,460 applications. Because some of the applications are invalid or duplicates, FTB will continue to accept them through August 15, to ensure that enough valid applications are received to properly allocate the full $100 million of tax credit. FTB estimates that it can award approximately 17,500-20,000 credit certificates to unique and valid applicants. However, once the funds are exhausted, any remaining applications will be denied.
The State is providing $100 million in tax credits to first-time home buyers. The credit will be allocated on a first-come, first-served basis using the date and time stamp on the fax submission, until the money is exhausted. The tax credit is available to those who purchased a qualified principal residence and did not own one during the last three years. This credit is five percent of the purchase price or $10,000, whichever is less. Taxpayers must claim the credit on their tax return in equal amounts over the following three tax years.
To apply, the buyer must complete and fax an FTB Form 3549-A, Application for New Home / First-Time Buyer Credit, along with the final settlement statement. It must be faxed to FTB within two weeks (14 calendar days) after the close of escrow. The fax number is 916.855.5577.
Taxpayers must receive a certificate of allocation from FTB to claim the tax credit on their California personal income tax return. FTB expects to send the allocation certificates over the next few months starting in August.
California homebuyers still have time to qualify for the state’s other $100 million home tax credit for the purchase of a new home. The New Home Credit is available for taxpayers who purchase (close escrow) a new home on or after May 1, 2010, and before August 1, 2011, as long as they enter into an enforceable contract executed before January 1, 2011. The seller must certify that the home has never been previously occupied.
The FTB has updated their website to include information about mortgage debt relief for taxpayers who sold their principal residences through a short sale in 2013.
According to an IRS Information Letter dated September 19, 2013, the IRS determined that California taxpayers who sell their principal residences for less than what is owed through a short sale do not incur COD income. The FTB guidance confirms that California will follow this treatment.
The FTB clearly states that the IRS guidance is limited to California short sales only, and that the IRS guidance did not specifically address other types of real estate transactions, such as non-judicial foreclosures and mortgage loan modifications.
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Today's tax laws are becoming so complex that filing even a simple return can be rather confusing. It is easy to overlook deductions and credits to which you are entitled. Even if you use tax preparation software there is no substitute for the assistance of an experienced tax professional.
Tax Advisors offer a broad range of services for individuals, small to medium size businesses and Real Estate investors. Our professionals will work with you on implementing customized tax planning strategies, help you get refunds faster and provide you and your family with timely financial advice.