On Wednesday evening at the White House, President Barack Obama signed into law the Middle Class Tax Relief and Job Creation Act of 2012, H.R. 3630. On Thursday, the IRS released a revised Form 941, Employer’s Quarterly Federal Tax Return, to reflect the extended payroll tax cut. The act extends
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TOPICS / TAX
Individual income taxation
Congress passes payroll tax cut extension
On Friday, the House of Representatives and the Senate both passed a bill that will extend the reduced 4.2% Social Security tax rate through the end of the year (The Middle Class Tax Relief and Job Creation Act of 2012, H.R. 3630). The vote was 293–132 in the House and
President’s budget proposes AMT elimination, tax reform
President Barack Obama unveiled his proposed budget for fiscal year 2013 on Monday. Included in its 256 pages are several tax reform proposals, including plans to eliminate the alternative minimum tax (AMT), to repeal LIFO, and to tax dividends of high-income taxpayers at ordinary income rates. The budget estimates that
TIGTA: Revise Form 1099-R to improve taxpayer compliance
In a report released on Tuesday, the Treasury Inspector General for Tax Administration (TIGTA) recommended the IRS change its Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., to improve taxpayer compliance with reporting and paying tax on this type of income (TIGTA, Opportunities Exist
Couples who filed joint returns must now file separate powers of attorney
Starting March 1, the IRS will no longer accept old versions of Form 2848, Power of Attorney and Declaration of Representative, and will accept only the version released in October 2011. The new version of the form requires a husband and wife who filed a joint tax return to each
IRS, Labor Department proposals aim to increase retirement options and transparency
Federal initiatives designed to broaden options and increase transparency in retirement plans were announced Thursday. The IRS issued proposed regulations that would make it easier for defined benefit pension plans to offer combinations of lifetime income and single-sum cash payments (REG-110980-10). Other proposed regulations released on Thursday would relax the
Prop. regs would ease required minimum distribution rules for older retirees who purchase certain annuities
The IRS issued proposed rules (REG-115809-11) that would permit IRA participants to enter into contracts for annuities that begin at an advanced age (often called longevity annuities), using a certain amount of their account balances without having these amounts count for calculating required minimum distributions from the IRAs under Regs.
Individuals who are eligible for medical services at IHS facilities may still participate in HSAs
The IRS on Wednesday explained that people who are eligible to receive medical services at Indian Health Service (IHS) facilities are not automatically disqualified from making tax-free contributions to health savings accounts (HSAs) (Notice 2012-14). Under Sec. 223(c)(1), an eligible individual for HSA purposes is, for any month, an individual
Help clients choose the right charities
Many nonprofits operate with tight resources, and some are struggling to survive in the slow economy. Here are ways to determine if the charities your clients support are effectively governed, accountable and fiscally responsible. —By Betsy Brill (betsy@stratphilanthropy.com), MBA, founder and president, and Susan Winer (susan@stratphilanthropy.com), senior vice president–Business, both
All in the family
CPAs do their best to keep up to date with tax developments. However, much of their job involves dealing with family dynamics, requiring skills related more to understanding and communication than technical expertise. Three principles should guide practice management when families are involved: – Understand the perspective of each family
First-time homebuyer credit allowed for equitable owner
The Tax Court held that a taxpayer could claim a first-time homebuyer credit for a house he didn’t occupy or hold legal title to during the tax year. The taxpayer bore the benefits and burdens of ownership under state law, making him its equitable owner, and his intention to live
When a client leaves or loses a job
Given the continued weakness in the economy and an unemployment rate still above historic norms, now is a good time to review the financial planning issues clients face when they leave a job or are laid off. A CPA’s timely and proactive advice can have a lasting effect. Here are
Tax Court rules on homebuyer credit when former residence is being sold
The Tax Court held that a married couple’s old house, which they continued to use while trying to sell it, qualified as a principal residence, and therefore they did not meet the timing requirement to qualify for an $8,000 first-time homebuyer credit when they purchased a new house (Foster, 138
Tax filing season resources—Tax year 2011
This is the one-stop shop for all the updates you need to know for this year’s tax filing season. Find resources from the Journal of Accountancy, plus tax return checklists and tax savings tips from the AICPA, categorized by tax topic. INDIVIDUAL TAX Tax season startsJan. 16, 2012Tuesday, Jan. 17,
Statutory definition of specified notional principal contract extended through 2012
The IRS issued temporary and identical proposed regulations on dividend equivalents for purposes of Sec. 871(m) (T.D. 9572; REG-120282-10). The regulations provide guidance to nonresident aliens and foreign corporations that hold notional principal contracts providing for payments determined by reference to payments of dividends from sources within the United States.
IRS issues final regs on exclusion of damages for personal physical injury
The IRS on Friday issued final regulations relating to the exclusion from gross income for damages received on account of physical injuries or sickness (T.D. 9573). The regulations remove the requirement that damages received from a legal suit, action or settlement must be based on “tort or tort type rights”
Annual update on adequate disclosure of return positions issued
The IRS released updated guidance identifying when a taxpayer’s disclosure of an item or position in an income tax return is adequate for purposes of reducing the understatement of tax penalty and the tax return preparer penalty for understatement due to unreasonable positions (Rev. Proc. 2012-15). The IRS regularly releases
Tax season starts
Tuesday, Jan. 17, marks the start of tax season, as the IRS opens up its system to accept e-filed individual tax returns. It will also start accepting returns through its Free File program on Tuesday. Unlike last year, when the start of tax season was delayed for some taxpayers by
IRS announces third offshore voluntary disclosure program
In a press release trumpeting the successful collection of more than $4.4 billion in its 2009 and 2011 voluntary disclosure programs, the IRS announced it is starting its third program designed to help people hiding offshore accounts get current with their taxes in the U.S. (IR-2012-5). The new program, unlike
New tax provisions for 2012
With the ringing in of the new year, several new tax provisions took effect. While the list of new items does not compare with the number of tax provisions that expired at the end of 2011 (see “Many Tax Provisions Set to Expire at Year-End”), practitioners should be aware of
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