Which Tax Extensions Will Affect Your 2014 Return?

Are You Ready for Your 2014 Taxes? Although many people might answer yes to that question, the fact is taxpayers can only do so much as long as Congress is dragging its feet on several expired tax extenders. The fact that these extenders are still sitting in limbo is nothing new. It happens almost every year, but time is running out to vote on them, which can be frustrating for taxpayers.

Congress extended several laws from 2013 into 2014, which was helpful to a lot of people. Now those same lawmakers need to decide which laws will stay and which laws will go. According to the Expiring Provisions Improvement Reform and Efficiency (EXPIRE) Act Committee Report several tax provisions are under review for extension. They include:

  • Tax-free distributions for charitable purposes from an individual retirement plan
  • Mortgage debt forgiveness
  • Deduction for state and local general sales taxes
  • Mortgage interest premiums deduction
  • Credit for energy efficient improvements of existing home
  • Deduction for higher education expenses
  • Expense deductions for elementary and secondary school teachers

How Congress decides to vote on these important deductions and credits could have a big impact on many taxpayers’ returns. Meantime, the fact that these are still in limbo makes it difficult to plan for the rest of the year. However, at GROCO we can help you get ready for the tax season no matter what. Just give us a call at 1-877-CPA-2006 or click here to contact us online.

 

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NBA Stars Losing Hefty Amounts of Their Salary to the Taxman

Just about everyone knows that professional athletes make a ton of money. Whether you agree with athlete salaries or not, the fact is those hefty numbers you always see reported when an athlete signs a new deal aren’t really all that they’re cut out to be. Oh sure, they are making a lot of money, but they are also paying quite a large tax bill. In some cases, that bill can put a huge dent in their actual earnings.

According to a new report, when determining whom the highest paid NBA player is, it depends on which numbers you use. Kobe Bryant earns more than any other NBA player, coming in with a salary of $23 million this year. However, if you look at his tax bill, which is estimated at $11.4 million, then his actual take home pay is only $12.1 million. That means he is paying close to half of his salary to the taxman.

Several factors played a role in determining these tax numbers, including where a player lives, and where he plays both his home and road games. Road games play a big role in the equation because some cities enforce the so-called “jock-tax” on individuals who come to the area to work. Pro athletes schedules are easy to track, so these cities can easily implement this tax.

There’s no question that NBA players are well compensated for their services, but remember, most players are giving a huge percentage of their income back in taxes, thus reducing how much they actually take home by a large portion. Of course, these tax numbers are an estimate and there are certain measures these players can take to help reduce their tax bill. So they might be able to take more home than estimated.

Likewise, if you need help finding the all of the best ways to save on your tax bill, then contact. GROCO today.

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Congress Not Looking to Pass Internet Sales Tax Anytime Soon

Ever since the Internet became a worldwide sensation, there have been those who think it should be taxed, especially Internet sales from state to state. Taxing the Internet would be a huge source of extra revenue for the government, but for those who use the Internet to shop (which is just about everyone these days), those taxes would be a real headache.

However, the latest attempt at taxing the Internet may not be going anywhere. That’s because the Main Street Fairness Act, a bill that would allow state and local governments to charge and collect taxes on Internet sales from companies that are located in another state, has run into a brick wall in Congress. The bill already passed the Senate in May of 2013, but so far Congress has not jumped on board.

Even though the bill will not be moving forward this year, according to Speaker of the House John Boehner, proponents of the bill could always bring it up again next year, but it would have to start over fresh in Congress.

Those who oppose the bill claim that it will be another tax on consumers who use the Internet to shop. Plus, for those companies who sell online, the price to set the system up to collect those taxes would be costly.

For now, though, taxing the Internet is still just an idea and not a reality. The debate will assuredly rage on in Congress, but whether or not it ever becomes a reality is still to be determined. Meanwhile, you can contact GROCO at any time for all of your tax planning needs by clicking here.

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IRS Is Carefully Watching Bitcoin and Other Cyber Currency

Big Brother is watching. Always watching. In this case, Big Brother is the IRS and you might be surprised what they’re looking into now. Although, when it comes to the IRS, nothing should surprise us.

Have you ever heard of Bitcoin? It’s one of a handful of virtual currencies that making buying and selling things in the digital age much easier. Essentially, virtual currencies are exactly that: virtual. They are not tangible, their value can fluctuate constantly and they only exist in cyberspace. But that’s not stopping the IRS from taking a closer look at how it can regulate them.

That’s because it appears that virtual currencies could be a new way for tax evaders to hide money “overseas.” Simply put, virtual currencies, like Bitcoin, offer secrecy with no trail to follow. That’s why the IRS has created a team of special agents to focus on tracking these virtual currencies. So if you’re trying to hide money through Bitcoin, beware.

To use Bitcoin you have to have a virtual wallet, as well as public addresses and private keys. What many people who use Bitcoin don’t know is that every transaction they make with Bitcoin is added to a record book known as a block chain. That means to review these transactions the IRS only has to access the block chain. It then follows that chain back to the public address that was used for the original Bitcoin transaction. The IRS then uses whatever measures it takes to link the address to the identity of the user.

That means using these virtual currencies may not actually be as secretive as users thought they were. So if you’re using one or more of these types of currencies, then as always beware of the taxman.

 

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Successful Investing With Taxes in Mind

There are many ways to earn money, but no matter how you get your income the IRS wants its piece of the pie. That includes any gains you make from your investments when you sell them. Although everyone does have to pay tax on their gains, you shouldn’t give the IRS any more than what you’re legally obligated to pay 

With that in mind there are some strategies you can implement to be a tax-conscious investor. Contributing to a tax-differed retirement plan is a great way to save money. Although you will eventually have to pay tax on the income, you can accumulate a significant amount.

Another option is to consider tax-exempts. These are not for everyone, but if done right these investments can in some cases provide an investor with more gains than the after-tax return from a taxable investment would.

Mutual funds are another type of investment that can pay big dividends, but they must pay out their gains every year. That means unless you have losses from other stocks to offset those gains, you will need to pay taxes on them.

Anyone can invest, but not everyone knows how to invest wisely when it comes to taxes. If you would like to learn more about how to become a tax-conscious investor, then click here, or contact us at GROCO today. We can help you make wise investing decisions when it comes to your taxes. Call 1-877-CPA-2006 or click here to contact us online.

 

Helpful Deduction Tips for Collectors

Are you a collector? Have you ever wondered if you could donate the items you collect to a charity auction for tax break purposes? If you are considering this scenario, there are some things you should know.

The first thing you need to make sure of is that the charity you are considering is actually a qualified charity. Not all organizations qualify with the IRS for a charitable deduction. Make sure you check the list before you make your donation.

Another important step is to get your collectibles appraised before you make the donation. This can help you get the true value for your donation, which can mean a bigger tax break.

Next, you need to find out if your donation will actually produce any tax benefits for you. Charitable deductions are limited to 30 percent of your AGI, if they are capital gain property and you donate them to a publicly supported charity. On the other hand, if you donate to a private organization, the deduction amount drops to only 20 percent.

 Donating collectibles, like artwork for example can be a good way to get a few more deductions and save yourself a little more money on your tax bill. If you have any questions or need more clarification, then you can learn more by clicking here. You can also contact us at 1-877-CPA-2006.

 

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Which Tax Breaks Will Be Restored for 2014?

It seems like every year at this time the conversations start to creep up in the media regarding which tax breaks will be renewed and which breaks will get the permanent axe. This year is no different as Congress already let more than 50 such tax breaks expire at the end of 2013. Now the fate of those tax breaks is in the hands of lawmakers yet again and the fate of your tax return could be hanging in the balance. Among those 50+ breaks are several individual breaks that help a lot of taxpayers. Whether or not they are renewed could have a significant affect on your return for 2014. Some of the tax breaks include:

  • State and local sales tax deductions
  • Tax-free distributions from an IRA for charitable purposes for taxpayers over 70 1/2-years-old.
  • Mortgage insurance premiums deduction
  • Enhanced rules for donating real property for conservation

These are just some of the many breaks that are sitting in limbo. Meanwhile, many businesses are already loathing the uncertain status of other tax breaks such as the research and development tax credit and bonus depreciation.   Even if Congress does get its act together and renews most or all of these tax breaks the delay in doing so could also delay the beginning of the 2015 tax-filing season. That can be a pain for everyone. Most insiders believe that it’s just a matter of time before Congress gets it done, but when that will happen is still anyone’s guess.   I any case, you can start preparing for your taxes by contacting GROCO now. Call 1-877-CPA-2006 or click here to set up an appointment online.

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Make Sure You Report All of Your 1099 Income

With the job market continually fluctuating, it seems that more and more people are creating their own jobs. Whether it’s starting your own company, doing some extra business on the side, or working as a freelance private contractor, a growing number of individuals are earning self-employment income.

 The extra income is surely nice, whether it’s to help make ends meet or to add a little more cash to your savings. However, with all that extra income, you have to be sure you are reporting it. Failing to do so can cost you with the IRS.

 Even though you won’t get a W2 for this kind of income, you still need to report it. You should receive a Form 1099-MISC from anyone with whom you do $600 or more of business in a given year. Even if a company doesn’t send you a Form 1099 you are still responsible to report that additional income. Likewise, if you earn less than $600 that doesn’t mean you don’t have to report that income; it just means you won’t get a 1099 for it.

If you are self-employed then you will need to use a Schedule C with your Form 1040 when you file your taxes. You are also responsible for the 15.3 percent self-employment tax. There are a lot of questions and concerns when it comes to self-employment and the forms that go with it. We can help you with all your tax planning and tax filing needs, so give us a call today at 1-877-CPA-2006, or click here.

 

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Another Senator Says It’s Time to Go After the Wealthy

We all know that death and taxes are two certainties in life. However it seems that we should probably add the argument that the wealthy should pay more taxes to that list of certainties. According to reports, Senator Bernie Sanders of Vermont recently shared his views on a progressive tax for billionaires and multi-millionaires.

According to Mr. Sanders, the current U.S. tax system is not doing enough to tax the wealthy. In a recent speech at an AFL-CIO convention Sanders reportedly said that the country’s billionaires should be paying their fair share of taxes. Mr. Sanders also expressed the need for the country’s tax system to correct the wealth inequality in America.

 So how does Mr. Sanders think that these issues should be resolved? He is taking aim at the extremely wealthy. According to Mr. Sanders, taxing the top .25 percent of the richest Americans is the best and fairest way to minimize wealth inequality. He also believes that by going after the country’s wealthiest individuals, the United States would be able to pay for investments in education and infrastructure, as well as reduce the nation’s $17 trillion debt.

 However, despite his arguments, other research shows that Mr. Sanders might be completely wrong. According to a recent study by the American Enterprise Institute, making the extremely rich pay more taxes is not nearly as effective as cutting spending when it comes to reducing the national debt.

 

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Ask Yourself These Key Questions When Planning Your Estate

Almost no one can choose when he or she will die, but everyone can choose how his or her assets will be handled when that time comes. It’s really just a matter of having a current and effective estate plan in place before you go.

Estate planning is a wide subject with many aspects; and its so much more than just have a will in place. While having a will is certainly a smart move, there are many other things people should consider as part of their estate plan. Let’s take a look at some of the important questions you should be asking yourself in regards to your estate plan.

  • Is your planning up to date?
  • Do you currently have a will?
  • Have you planned your entire estate?
  • Do you have the right trustee and executor in place?
  • Is it time to consider a living trust?
  • Do you already have a buy-sell agreement in place for your business?

These are obviously some very important aspects to consider for your estate plan. You can click here to learn more about these questions and others, as well as more about the experience and expertise we can provide.

If you need help planning for your estate, then contact us at GROCO. We have the knowledge and awareness to help you prepare for your loved ones’ future without you. Just call us today at 1-877-CPA-2006 or click here to get in touch with us online.

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