Intro: Tax preparers should be aware of new changes in the tax code. CPA Doug Zandstra breaks a few of the more notable changes down for us:
New taxes could cause late payment penalties
Because of the new additional Medicare tax and the new surtax on unearned income, more taxpayers may face a penalty for underpayment of estimated tax. Safe harbor provisions allow taxpayers to either pay 90% of prior liability or 100% of current liability to avoid penalty. A new tax does not excuse a taxpayer from the penalty if it is assessed.
If you do expect to be subject to the new tax, the best thing to do before the end of the year is to do a projection to assess the impact, and if necessary, make an additional estimated payment.
There is some discussion in the tax industry of rolling over retirement distributions and such, but the most effective tax planning is proactive planning, not reactive tax planning.
Contact your CPA to assist you with the computation and to explain the rules and provisions of the new tax.
2013 Tax Credits Are Expected To Expire, Not be Renewed
As we are moving towards the end of the year, there are a number of tax provisions that normally get “extended”. On December 4, David Kamp of the House Ways and Means committee, indicated that a number of provisions will simply not be extended.
Here are a few of the more more common provisions that are expected to expire.
- Are you a school teacher? above-the-line deduction for certain expenses of teachers has been 250.00
- Do you have less than 20% equity in your mortgage and are required to pay for mortgage insurance premiums deductible as qualified interest
- Research and experimentation credit for business
- Bonus depreciation;
- Employer wage credit for activated military reservists;
- Special expensing rules for film and television production;
- 15-year straight line cost recovery for qualified leasehold, restaurant, and retail improvements;
- Credit for construction of energy efficient new homes;
- Credit for energy efficient appliances