February Tidbits
Caution – Bogus IRS Emails
Every year thousands of taxpayers receive emails out-of-the-blue claiming to be from the IRS. These are from scammers using the IRS name or logo to make the message appear authentic so you will respond to it and reveal your personal and financial information. The criminals then use this information to commit identity theft or steal your money. Should you receive such an e-mail: do not reply to the message, do not open any attachments and do not click on any links. Visit the IRS website – www.irs.gov to find out more about identity theft and phising scams.
Here are four key points from the IRS website about phishing scams.
1. The IRS does not initiate contact with taxpayers by email to request personal or financial information;
2. The IRS never asks for personal financial information like passwords to access information for credit card, bank or other financial accounts;
3. Do not be misled by sites claiming to be the IRS but end in .com, .net, .org or anything other than .gov. If you discover such a website that claims to be the IRS report it to the IRS;
4. If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 and report any bogus correspondence. Forward any suspicious email to phishing@irs.gov.
Safeguarding Your Refund
Whether you file electronically or on paper, direct deposit is the fastest, easiest and safe way to receive your tax refund. The IRS reports receiving thousands of checks every year from the U.S. Postal Service as being undeliverable. With direct deposit, the possibility of a lost, stolen or undeliverable refund check is eliminated and the money goes directly and quickly into your bank account.
Requests to Share Tax Information
Throughout the year, we receive requests from clients to share tax return information with third party service providers. We wanted to take this opportunity to explain why we require clients to provide written consent in order for us to accommodate this request or inleu only supply them directly to our clients .
Under Internal Revenue Service Regulations, a tax return preparer may not disclose or use a taxpayer’s tax return information without obtaining written consent from the taxpayer. These Regulations require accountants to obtain this consent when furnishing copies of a tax return to any third party, such as a bank or mortgage broker. The IRS has prescribed the format and content required for this consent. SeeTreas. Reg. § 301.6103(c)-1(e)(1). Tax preparers who fail to obtain this consent prior to disclosing or using a taxpayer’s information are subject to penalties under the Internal Revenue Code.
The Regulations provide that consent must be knowing and voluntary, follow the required form and content, set the timing requirements and other limitations, and provide a limitation on consents to disclose a taxpayer’s Social Security Number to a tax return preparer located outside of the United States.
How the 2013 Tax Increases Impact You?
In the January Newsletter we touched on the “American Taxpayer Relief Act of 2012” (the Act), that President Obama signed into law. While the changes made by the Act were better than if the tax cuts had been allowed to expire, the increases that resulted from the Act combined with increases from the Obama health care laws will result in about 77% of American households facing higher federal taxes in 2013. The below chart is an “easy to read” summary of the increases that became effective January 1, 2013, and how they compare to 2012.
2012 2013 and thereafter
| Top Margin Tax Rate
For taxable income over $400,000 (single) or $450,000 (married filing jointly) |
35.0% |
39.6% |
| Qualified Dividend Tax Rate
For taxable income over $400,000 (single) or $450,000 (married filing jointly) |
15% |
20% |
| Long-Term Capital Gains Tax Rate
For taxable income over $400,000 (single) or $450,000 (married filing jointly) |
15% |
20% |
| Medical Tax on Unearned Income
For taxable income over $200,000 (single) or $250,000 (married filing jointly) |
– |
3.8% |
| Additional Medical Tax on Earned Income
For taxable income over $200,000 (single) or $250,000 (married filing jointly) |
– |
0.9% |
| Social Security Tax Rate – Employee |
4.2% |
6.2% |
| Social Security Tax Rate – Self-Employed |
10.2% |
12.2% |
| Phase Out of Personal Exemptions
For adjusted gross income (AGI) over $250,000 (single) or $300,000 (married filing jointly) |
No |
Yes |
| Phase Out of Itemized Exemptions
For AGI over $250,000 (single) or $300,000 (married filing jointly) |
No |
Yes |
| Medical Expenses – Itemized Deduction
The threshold remains at 7.5% of AGI if the taxpayer or spouse turns age 65 before the end of the year |
> 7.5% of AGI |
> 10% of AGI |
| Estate Tax Rate
On estates larger than $5 million |
35% |
40% |
