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Individual & Business Tax Update
“The Hardest Thing in the Worldto Understand is Income Taxes.”                - Albert Einstein
Today’s Topics American Tax Payer’s Relief Act of 2012 California Proposition 30 Hot IRS Audit Areas for Individuals & ...
American Taxpayer’s Relief Act of 2012 Individuals  o 39.6% tax rate for top earners  o Top capital gains rate – 20%  o P...
American Taxpayer’s Relief Act of 2012 AMT Exemption permanent – indexed for inflation o Single: $50,600 o MFJ: $78,750
American Taxpayer’s Relief Act of 2012 Individual Credits – Ext’d thru 2017  o American Opportunity  o Enhanced Child Cre...
American Taxpayer’s Relief Act of 2012 Business  o 50% bonus & $500k §179  o Other provisions
American Taxpayer’s Relief Act of 2012 Bonus & §179 (for 2012 & 2013)  o $500,000 §179  o Qualified real estate - §179 an...
California Proposition 30 Income Tax increases (retro. 2012)   Up to 12.30% Sales tax Statewide rate to 7.50%  (Increas...
Hot IRS Audit Areas Schedule C  o Reasonable & justifiable  o Underreporting income  o Overreporting deductions  o Contin...
Hot IRS Audit Areas Home office deduction  o Beg. 2013 – optional safe harbor     method    • Pass one of the home office...
Hot IRS Audit Areas Pay S corporation Wages  o No one works for free  o IRS - Pay yourself a salary, pay payroll    taxes...
Hot IRS Audit Areas Employee vs. Contractor  o Do you instruct or supervise the     person while he or she is working?  o...
Hot IRS Audit Areas Other Areas:  o Large charitable contributions  o Business meals, travel and ent.  o 100% business us...
 Questions / Comments
OCJamaat-Biz Tax Update 2012/2013
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OCJamaat-Biz Tax Update 2012/2013

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OCJamaat-Biz Tax Update 2012/2013

  1. 1. Individual & Business Tax Update
  2. 2. “The Hardest Thing in the Worldto Understand is Income Taxes.” - Albert Einstein
  3. 3. Today’s Topics American Tax Payer’s Relief Act of 2012 California Proposition 30 Hot IRS Audit Areas for Individuals & Small Businesses Questions
  4. 4. American Taxpayer’s Relief Act of 2012 Individuals o 39.6% tax rate for top earners o Top capital gains rate – 20% o Payroll tax back up to 6.2% o AMT Exemption made permanent o Certain Individual Credits – Ext’d
  5. 5. American Taxpayer’s Relief Act of 2012 AMT Exemption permanent – indexed for inflation o Single: $50,600 o MFJ: $78,750
  6. 6. American Taxpayer’s Relief Act of 2012 Individual Credits – Ext’d thru 2017 o American Opportunity o Enhanced Child Credit o Enhanced EITC
  7. 7. American Taxpayer’s Relief Act of 2012 Business o 50% bonus & $500k §179 o Other provisions
  8. 8. American Taxpayer’s Relief Act of 2012 Bonus & §179 (for 2012 & 2013) o $500,000 §179 o Qualified real estate - §179 and 15 year depreciation o Bonus at 50%
  9. 9. California Proposition 30 Income Tax increases (retro. 2012)  Up to 12.30% Sales tax Statewide rate to 7.50% (Increase of .25%)
  10. 10. Hot IRS Audit Areas Schedule C o Reasonable & justifiable o Underreporting income o Overreporting deductions o Continuous losses year over year o Consider the benefits of incorporating
  11. 11. Hot IRS Audit Areas Home office deduction o Beg. 2013 – optional safe harbor method • Pass one of the home office tests • $5 per sq. ft. up to 300 ft. (max. $1,500 deduction) • $5 in lieu of other expenses
  12. 12. Hot IRS Audit Areas Pay S corporation Wages o No one works for free o IRS - Pay yourself a salary, pay payroll taxes on that salary o “Reasonable salary”
  13. 13. Hot IRS Audit Areas Employee vs. Contractor o Do you instruct or supervise the person while he or she is working? o Can the worker quit or be discharged (fired) at any time? o Is the work being performed as a part of your regular business?
  14. 14. Hot IRS Audit Areas Other Areas: o Large charitable contributions o Business meals, travel and ent. o 100% business use of a vehicle o Passive losses
  15. 15.  Questions / Comments

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