The Dove Firm PLLC

“Portability” is the big word legislators use for sharing.   The Tax Relief Act of 2010 introduced portability, which allowed for the first time the transfer of a deceased spouse’s estate tax exemption to their surviving spouse.   This allowance of sharing was set to expire at the end of 2012, but was extended along with the $5 million exemption (adjusted up to $5.25 million for inflation).   While many breathed a sigh of relief with this news, some experts began speculating that the Obama administration may begin to eliminate some estate planning techniques which have been characterized as “tax loopholes” for the wealthy.   No one knows for sure what will happen in the future, but going over your estate planning options with your attorney now while things are relatively calm can give you some peace of mind.  

We all safely made it past the end of 2012 without falling off the fiscal cliff.  So, many are asking, what exactly happened?  And what sort of deal was made to avoid that ominous cliff?  Here are just a few of the tax-related points that found their way into the deal and that may affect you and the taxes you pay: The number one point is that the payroll tax did go up, as expected.  There never seemed to be any doubt that it would.  Wage earners are now contributing another 2% of each paycheck via the social security tax.  This has already gone into effect and you have probably noticed a difference in your 2013 paychecks. Another point that won't affect as many taxpayers is that the estate tax exemption remains at $5 million (plus even a little more for inflation).  The estate tax rate, however, did increase from 35% to 40%, but keep in mind that only affects estates worth over $5 million.  Finally, the limits on the tax brackets were adjust...

The tax on wages consists of two portions:   the employer's share and the employee's share.   These can each be further broken down into portions for Medicare, federal income tax withholding, and social security.   The Medicare tax rate is 1.45% for each, the employee and the employer.   The federal income withholding portion is the federal income tax withheld for the employee.   This portion is considered to be held "in trust" for the employee and this is where the "Trust Fund Recovery Penalty" may be applied.   (For more information about the Trust Fund Recovery Penalty, see The Dove Firm's website .)     The social security portion is where the tax increase comes into play.   For 2012, the employee tax rate for social security is 4.2%.   This was instituted in 2011 as a compromise for the discontinuance of the Making Work Pay credit.   (The decrease in funding to the Social Security program for the past two years wa...

It may be interesting to see if Spain tries to close the loophole found by this theater .    The Quim Marce in Bescano, Spain, has stopped selling theater tickets, which are subject to a 21 percent sales tax, and now sells carrots, which are taxed only at 4 percent. 

As tax preparation season begins, make sure your return preparer is compliant with new IRS requirements.   If you are using a CPA, attorney, enrolled agent, or any employee supervised by one of the above, your preparer has met the IRS requirements, so long as they are in good standing with their licensing agency and have renewed their Preparer Tax Identification Number (PTIN).   If you are instead using a non-licensed preparer, they have until the end of 2013 to take and pass a Registered Tax Return Preparer competency test.   See the IRS website for more information about the new requirements and the test.   One key difference between the licensed preparers (CPAs, attorneys, and EAs) and the non-licensed preparers is noticeable only after your return is filed:   licensed preparers have unlimited practice rights before the IRS, while non-licensed preparers can represent clients only in certain circumstances.  

The current estate tax rate is 35% with a $5 million exemption.   That is all set to change in 2013, with the rate jumping to 55 percent and the exemption dropping to $1 million.   While there is still hope that Congress will do something before the end of the year to avoid such dramatic changes, some fiscal cliff talks have turned to the estate tax as the solution, leaving many Americans wondering if their estates could be affected by the changes.   If you have questions about your current estate plan, or need to set up an original estate plan, speak with a knowledgeable estate planning attorney about your options.

I will confess that I am not very tech savvy.   I have, however, found a few helpful apps that even I can manage:   One app that I have used for a while now is from Mint.com.   It started out as just a website that my husband and I used to get a snapshot of all our accounts.   It lets you link to your bank accounts, credit card accounts, anything you can see online.   Once I found the app, I had all of that information right at my fingertips.   It also lets you create a budget and has a bill reminder feature.   The IRS has its own app, IRS2Go, which I have not used very much, but does have some useful information, like contact numbers for the IRS and new articles on irs.gov.   It also includes a tool that is supposed to let you check your refund status.   An app that I believe is helpful to small businesses is Snap Payroll.   This tool lets you put in your employees' gross pay and calculates the amount of withholding require...