SUMMER 2012 OFFICE AND TAX UPDATE
June 06, 2012
New features from our office for your convenience Many of you already know that we had to do a major upgrade to our US tax and software system this tax season. This state of the art system has enabled us to add some new features via NetClient cS that we are very excited about!
Netclient cS uses the power of the internet to let you access our services directly from our website. It’s like a virtual visit to our office, thanks to a secure, private portal that’s created especially for you. (if you’ve ever checked your banking information or personal investments online, then you’ve accessed a portal—it’s that simple.)
• Convenient—access your information 24/7, from anywhere you have an internet connection. • Secure—enter your password-protected portal and securely access documents and software, transfer data, and exchange information with our firm. • Fast—within minutes you can access files and software, enter data, and more!
Some of the new features include:
* Tax organizers available directly for downloading, printing, or data entry. * Document presentation—need a copy of your financials or a tax return to apply for a bank loan? Or need copies of W2s? Just log into Netclient cS and view or print your information. * File exchange—retrieve and send documents we’re working on together via your portal. It’s a great way to share files quickly and securely with tough 256 bit encryption. * Account aggregation available—access the account information for your financial holdings in one convenient place and view a dynamic picture of your finances.
In addition to the NetClient addition, we are turning the office more “paperless” by implementing the latest paperless work-paper and electronic record storage technology. The first noticeable change will be the tax organizers, usually mailed on or about January 1, will instead be available in your web portal via our website. If requested, one will be mailed to your address as in the past.
Other office changes
Many clients have been asking us to email or mail copies of multiple years of various tax returns, W2s to banks and third party institutions. Some clients have asked for this multiple times within a short period, causing us to tie up staff and resources to accomplish these requests. To serve our clients in the best way possible, we always have done whatever was requested via encrypted scanning and other means. To remain competitive and cover our own costs, we must now charge a $25 per return that has to mailed or emailed. You may always retrieve your tax returns and W2s at no charge by using the new web-portal feature of Netclient CS described earlier.
Reminder- (not new) Payment is due (for appointments) at the time of services being rendered unless other arrangements are made.
Being an election year plus the stalemate in Washington makes 2012 especially difficult for tax planning. What many individuals do not understand is that if nothing is done, automatic significant tax increases will affect everyone. Some of these increases are from the “sun-setting” or expiration of earlier tax provisions. Others were enacted with President Obama’s health care mandate, nicknamed “Obamacare” by many political pundits.
- The refundable “make work pay” credit of $800 for married-filing-joint filers eliminated
- Deduction for health insurance (from self-employment 15.3%) tax for self-employed individuals eliminated
- Personal energy property credit reduced by 75%, then eliminated after 12/31/2012
- Using personal credits against AMT tax eliminated
- Above the line “teacher deduction” eliminated
Changes effective 12/31/12:
- 10% individual income tax rate bracket eliminated for all taxpayers with “Bush tax cuts” expiration
- Larger 15% rate bracket eliminated with “Bush tax cuts” expiration for all taxpayers
- Tax brackets currently 25%,28%,35% increase to 28&,31%,36%,39.6% via elimination of the “Bush tax cuts”
- Adoption credit and assistance enhancements eliminated
- $1,000 child tax credit is reduced to $500 again; eligibility reduced.
- Education credits American Opportunity $2,500 per student credit rescinded, replaced by the old Hope credit as in 2008. Only good for freshman and sophomore college yrs.
- Tax exclusion of debt discharge on a principal residence eliminated for all taxpayers (short-sale debt discharge and any mortgage “forgiveness” becomes taxable income like credit card debt forgiveness)
- Itemized deduction limits and personal exemption phase-outs reinstated increasing taxable income for adjusted gross income over $150,000
- 50% bonus depreciation eliminated
- Increased section 179 immediate depreciation limits reduced back to smaller amounts for all taxpayers
- Coverdell IRA $2,000 goes back to $500
- Capital Gains taxed at 20% instead of 15%
- Maximum Estate tax rate returns to 55%
- Increased Medicare taxes of .9% on earned income and 3.8% on all capital gains and investment income on individuals ($200K AGI), trusts ($12K) and estates.
- “Tax free” municipal bonds become taxable
- Other various taxes and regulations too numerous to mention in this space
Remember, all these new tax changes are law today-but could be changed by the President and the U.S. Congress.
Other IRS and DOR issues Both the IRS and the Massachusetts Department of Revenue (and other state revenue offices) are experiencing hiring freezes and some labor shortages. This has resulted in longer hold times and less customer service help to resolve some tax issues. Both agencies are relying more on software upgrades for such things as computer matching and reporting, resulting in more notices and correspondence audits. Some items are now matched by either agency at the moment we attempt to file a tax return electronically. On the other hand, we now have online electronic access to an IRS secure portal that helps us with tax resolution matters.
Remember, part of our business model is that of tax resolution. We handle individual and corporate/business cases for both federal and state matters. The IRS electronic portal is one of the tools we utilize to help solve tax issues.
The DUA (Mass Department of Unemployment and Training) is using a complex computer system called “Quest” to handle unemployment tax reporting, billing, and collection. Users have found this system to be rather unfriendly! Even if you use a payroll service, when you start running payroll for the first time, you must log into the system with the username and password sent to you by DUA. You should not have to do anything after that so long as your payroll service (Paychex, ADP, etc.) is listed by you as a “TPA” (third party administrator) And if everything is not followed to the letter, you will be billed even for “estimated” amounts that could be incorrect, plus interest and penalties. Call Maureen Ehwa at the office for information or help with Quest.
Remember to contact the office and schedule an appointment if you desire 2012/2013 tax planning. Regular tax appointments during January through April filled up very early this year so I encourage everyone to plan ahead.
Please have a healthy, happy, and safe summer! Don’t forget the September 15 and October 15 deadlines if you are on extension.
Very truly yours,
HENRY C KULIK, JR.
CERTIFIED PUBLIC ACCOUNTANT,LLC
114 Merriam Ave; Suite 201
Leominster, MA 01453