Archive for Individual

Tax Brackets, Deductions, And Exemptions For 2016

More than 50 tax provisions, including the tax rate schedules, and other tax changes are adjusted for inflation in 2016. Let’s take a look at the ones most likely to affect taxpayers like you.

The tax rate of 39.6 percent affects singles whose income exceeds $415,050 ($466,950 for married taxpayers filing a joint return), up from $413,200 and $464,850, respectively. The other marginal rates–10, 15, 25, 28, 33 and 35 percent–and related income tax thresholds–are found at IRS.gov.
The standard deduction remains at $6,300 for singles and married persons filing separate returns and $12,600 for married couples filing jointly. The standard deduction for heads of household rises to $9,300, up from $9,250. Read More

Written by | Posted in 2016 Tax Changes • 2016 Tax update • Individual • Tax Provision/Tax Reporting

Tax Changes For 2016: A Checklist

As the New Year rolls around, it’s always a sure bet that there will be changes to current tax law and 2016 is no different. From health savings accounts to retirement contributions and standard deductions, here’s a checklist of tax changes to help you plan the year ahead.

INDIVIDUALS

 
For 2016, more than 50 tax provisions are affected by inflation adjustments, including personal exemptions, AMT exemption amounts, and foreign earned income exclusion.For 2016, the tax rate structure, which ranges from 10 to 39.6 percent, remains the same as in 2015, but tax-bracket thresholds increase for each filing status. Standard deductions and the personal exemption have also been adjusted upward to reflect inflation. For details see the article, “Tax Brackets, Deductions, and Exemptions for 2016,” below. Read More

Written by | Posted in 2016 Tax Changes • 2016 Tax update • Individual • Tax Planning • Tax Tips

FATCA 2015 Roundup: It’s All Serious Business!

TaxConnections Member Manasa Nadig

A lot has been written about the Foreign Account Tax Compliance Act {FATCA} in the past year. As this year comes to a close and I write up this post, I wanted to give you all, my dear readers a synopsis at your finger-tips, a round-up, if you will of some major FATCA events for 2015:

1. FBAR Deadlines Changed:

On July 31, 2015 President Obama signed the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 into law, which modified the due date of several key forms for Americans with foreign income and Americans living abroad. That includes the Report of Foreign Bank and Financial Accounts, or Form 114, colloquially known as the FBAR.

Any U.S. person with a financial interest in, or signatory authority over, foreign financial accounts must file the FBAR, if at any time, the aggregate value of their relevant foreign account or accounts exceeds $10,000. An account over Read More

Written by | Posted in FATCA • FBAR • Federal • Income Tax • Individual • International • OECD • OVDP • Tax Planning

Personal Services Provided In The United States

Individual contractors from Canada providing services in the U.S. in the capacity of self-employed individuals or utilizing their Canco should be aware that depending on the number of days present and percentage of U.S. gross business income, Article V, paragraph 9 of the Canada/U.S. Tax Treaty may deem them or Canco to have a permanent establishment in the United States. This stems from the 2007 Protocol that in this respect was effective commencing in 2010.
Since 2010, this means that income will be subject to U.S. taxation requiring the filing of U.S. federal and possibly State returns, however foreign tax credit is available on the Canadian tax return.

Previously, independents had to demonstrate that they were not carrying on business in the U.S. through a Read More

Written by | Posted in Canada • Individual • Tax Tips

Are Tips Taxable?

Mandatory tips and gratuities are generally subject to sales tax in California when:

• An amount is automatically added to the bill without first consulting with the customer after the meal is served. Think about group meals, banquets, etc. Generally when serving more than 8 at one table in one ticket.

• The customer and the business agree to a suggest tip amount before the service or event. Think preplanned gathering, education meeting with a meal, conference, etc.

• Menus, brochures, ads, or other materials state that tips, gratuities, or service charges will automatically be Read More

Written by | Posted in Individual • Sales/Use Tax

2015: Year End – Tax Planning For Individuals, What To Expect!

It’s November! I am always surprised by it’s arrival and the realization that it’s year-end tax planning time. The shortened day-light hours seem to make that certain without a doubt. So let’s roll-up our sleeves, get down to work and fine-tune possible last-minute strategies for lowering your 2015 tax bill.

Tax Brackets: Let’s take a quick look at the 2015 tax brackets, you will see from the table below that the top tax rate of 39.6% will apply to incomes over $$413,200 (single), $464,851 (married filing jointly and surviving spouse), $232,426 (married filing separately), and $439,000 (heads of households):

The 3.8% net investment income tax and/or the 0.9% Medicare surtax will also apply if you Read More

Written by | Posted in Income Tax • Individual • Retirement • Tax Deductions • Tax Planning

Cybersecurity: Keep Them Virtual Doors Locked Please!

October has been established as National Cyber Security Awareness Month by the Dept. of Homeland Security, to especially educate individuals and small business owners about cyber security. No better time to talk about Cyber Security I thought!

It has been a busy summer over here at MN Tax Solutions LLC. I was taking stock of our big challenges from the 2015 tax season and so I thought I should share some of the important lessons we learnt from it. No matter how many times we say this, it cannot be said enough- It is imperative to take regular stock of your “cyber-security health”! Just like you would go to the doctor for regular check-ups!

What are your best cyber-security practices? What are the types of threats you could face? Read More

Written by | Posted in Individual • Small Business

Married To A Nonresident Spouse?

In this day and age, with businesses going global and worldwide travel being so easy, it is becoming more and more common to see marriages occurring between a U.S. citizen/U.S. resident alien and a resident of another country. These marriages trigger significant tax consequences.

U.S. resident aliens are individuals who have become permanent U.S. residents but are not U.S. citizens. To be classified as a U.S. resident alien, the individual must be a “green card” holder or meet a “substantial presence test” that is based on time spent in the U.S in the current and prior two years. For U.S. income tax purposes, a resident alien is treated the same as a U.S. citizen and is taxed on worldwide income. Read More

Written by | Posted in Individual • Tax Tips

Tax Rules on Charitable Contributions

As most people are aware, contributions to qualified not-for-profit organizations can be deducted on your income tax return. In order to get a tax benefit, however, you must have enough deductions to itemize rather than taking the standard deduction.

The IRS has some restrictions and guideline for charitable contributions. First, in order to take any charitable contribution, you must have a receipt from the organization, detailing the amount of the contribution and a statement that you received nothing in return. There is a new rule on this. Previously, any contribution of less than $250 did not have to be evidenced by a receipt. Now, a contribution of any amount requires one.   This also means that if you pay the church $10 for a book that you purchase from the church, this is not a deductible contribution, as you have received $10 in value in return. In short, you cannot Read More

Written by | Posted in Individual • Non-Profit Tax

Non-Cash Charitable Contribution Rules May Be Changing

Under current tax law, a donor may deduct fair market value for certain non-cash contributions of a capital asset to IRS qualified tax-exempt organizations.  This provision in the law has been a great benefit to organizations as well as donors.

For example, assume a taxpayer owns a capital asset such as a tract of unimproved land.  The land has a cost basis to the taxpayer of $10,000 but its fair market value is $50,000.  If this land has been owned by the taxpayer for more than 12 months, he or she gets a deduction equal to the fair market value when donated to an IRS qualified tax-exempt organization. So the taxpayer gets a $50,000 deduction for an asset costing him or her $10,000 and does not pay any tax on the appreciated amount. Read More

Written by | Posted in Individual • Non-Profit Tax

October 15 Extension Due Date Rapidly Approaching

If you could not complete your 2014 tax return by the normal April filing due date, and are now on extension, that extension expires on October 15, 2015, and there are no additional extensions. Failure to file before the extension period runs out can subject you to late-filing penalties.

There are no additional extensions, so if you still do not or will not have all of the information needed to complete your return by the extended due date, please call the office so that we can explore your options for meeting your October 15 filing deadline.

If you are waiting for a K-1 from a partnership, S-corporation, or fiduciary return, the extended deadline for those returns was September 15. So, if you have not received that Read More

Written by | Posted in Individual • Tax Planning

Family Courts Don’t Always Pay Attention to Federal Tax Law

All too often, family law courts make rulings that are contradictory to federal tax law, causing confusion and inequity in divorce actions since family court rulings cannot trump federal tax law.

An issue for divorced parents is who gets to claim the children for tax purposes. Federal tax law provides that the parent with physical custody claims the child unless that parent releases the exemption to the other parent. Frequently, family courts award physical custody to one parent and the tax exemption to the other. To make matters worse, the courts assume that the exemption deduction will provide a financial benefit to the non-custodial parent. Then the court adjusts child support accordingly, leaving the non-custodial parent with two unpleasant surprises when filing his or her tax return: the Read More

Written by | Posted in Federal • Individual
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