Benjamin Franklin said that there were two things inevitable in life: death and taxes. And the nice thing about death is that there are no elections. Though there are debates.
2012. The year started out with the country deeply divided between Democrats, Republicans and the undecided. 2.6 Billion dollars later. The country was deeply divided between Democrats and Republicans. It was worth 2.6 billion dollars to get the undecided to disappear. Maybe next year I’ll become undecided. General
Petraeus and General Anderson were featured on the new reality show:
“Generals Gone Wild.”
The Committee to Take Hurricanes more seriously has suggested Hurricane Sandy should have been named Hurricane Sandra or Sanford.
Karl Rove might have become an endangered species.
Twinkie has lost its twinkle.
Mitt Romney became the first presidential candidate to cheat on his taxes so he could pay more taxes than he should legally. He did this by not counting all of his charity or any business deductions. Ironically, he did this to prove that the rich are paying their full share. So maybe the tax rates don’t need to change. The rich just need to do their taxes and then pay extra.
Actor Angus T. Jones called his show “Two and a Half Men” “filth.” And that no one should watch it. After much negotiation the show is now called “Two Men and a Minister.”
After the first presidential debate, one in three Democrats went into therapy. The other 2/3 were seen mumbling throughout the planet.
Kathryn Bigelow’s new film came out. “Zero Dark Thirty” is about the decade long hunt for Osama bin Laden. The Judd Apatow movie about turning 40 should have been called “Zero Dark Forty.”
In 2012, nine million people suffered from identity theft. By the year 2025, everyone will be someone else.
Comedian Janeane Garofalo discovered that she was accidently married to producer Rob Cohen for twenty years. She had a good laugh about this, until the IRS informed her that she should have filed Married Filing Separately for twenty years. The thing that she was most angry about is that he forgot her birthday.
The Republicans have renamed their party Republicano.
The Book of Mormon closed in November in Washington.
HIGHLIGHTS AND LOWLIGHTS:
For the first time in 30 newsletters, we start off with a disclaimer. If the Mayan calendar is right and it did predict the Kennedy assassination, The Compromise of 1876 and Chevy Chase’s quitting “Community”, and the world will come to an end on December 21, 2012. The highlights of the tax rules and strategies that follow can be ignored. The ultimate Black Friday.
As we look over the fiscal cliff, nothing is really certain. Taxes in California have already gone up. In 2013, the sales tax rate will go up by ¼%. If you’re planning on buying a Mazarati, plan to do so by the 31st of December. Papa John’s suggests that you just eliminate ¼% of the tip.
California also has raised their tax rates for the almost wealthy and wealthy for 2012. The new rates will be 10.3% for those who have taxable income $250,000 as a single person and $500,000 as a married person. The rates continue up to 12.3%. Taxpayers who earned in the new higher rate should adjust their withholdings or send in estimated taxes. Call us if you have this problem. We can’t help if you just want this problem.
No matter what happens with the Obama and Boehner secret talks, the top rate on gains and dividends will rise in 2013. There is a new 3.8% Medicare surtax. This 3.8% tax boosts the top rate on capital gains and dividends to 18.8%. This will effect singles with an adjusted gross income above $200,000 and couples over $250,000. And there will probably be another raise in tax rates for capital gains in 2013. This is a tax on investment income: interest, dividends, capital gains, annuities, royalties and passive rental income. Selling stocks in 2012 may help your tax situation. Now may be a good time to convert your IRA into a Roth, if you were planning to do it anyway. To understand these secret talks, see the movies “Lincoln” and “Wreck-it Ralph”.
While waiting for the secret talks to come into fruition, people may come up with fun deductions to pass the time. Unfortunately, the deduction for letting the fire department torch your house and then deducting it as a charitable deduction may not work unless you can show that your house decreases in value.
Better pay those medical bills now. The medical limitation will change in 2013 from 7 ½ of your income to 10%. Those of you suffering from Fiscal Cliff Syndrome may want to pre-pay your psychiatric bills.
Thinking about retiring? Don’t quite understand Social Security? Morningstar, the investment research firm, discusses two strategies for maximizing lifetime benefits. They do not discuss how the government has raided it for other projects and now is surprised that it may be running out of money. Check out
Morningstar.com.
Starting in 2013, there will be a new .9% Medicare tax increase on self-employed income and wages when one’s adjusted gross income is as an individual over $200,000 or a married couple over $250,000. Marriage sometimes comes at a heavy price.
Remember if you have offshore assets of at least $10,000 it must be reported. There is no tax for having these assets. There is only penalties for not disclosing them So far the IRS has collected over $5 billion from 34,500 taxpayers who voluntary disclosed this. They have not said how much they have collected from the ones who did not volunteer.
H.S.A. health plans can save you money. Starting in 2013, a single person can contribute up to $3250 and a family up to $6450. They lower your taxable income by this amount.
Giving a lot of money to charity but worried about possible limitations on charitable deductions in 2013? Maybe a charitable fund would work for you. You can put your 2012 donation into the fund and distribute it as you want throughout any numbers of years.
As I keypunch this, I keep checking with the internet to see if there are tax law changes. Nothing yet. Remember all rumors are untrue and you should ignore them unless they turn out to be true.
Charity begins with the receipts. If you have a single cash contribution of $250 or more, you must have a written acknowledgment. The receipt should be contemporaneous. It should say that there were no goods or services given. For example, giving to Scientology is deductible but seeing the movie about its founder, The Master, isn’t. Popcorn is never tax deductible.
Going over the fiscal cliff with an electric car? Great deductions for electric vehicles. This credit runs through 2014. The minimum credit is $2500 and tops ofat $7500, depending on battery capacity. There are still solar credits for your home. It seems like President Obama and John Boehner have had so many “secret” talks that rumors are flying. Nothing sexier than tax policy talks.
We will e-mail you a tax update once something or everything gets settled.
L.A. Tax Service is 30 years old. In people’s years it seems like only five. We’re ready to start our 31st tax season and our team is stronger than ever. When we started our business at the end of 1982, The Federal Reserve interest rates were 11.50%, gas was 91 cents per gallon and the average new car was $7,983. The Terrorist Carlos the Jackal was running rampart in France, the first issue of USA Today was published, the Cold War hadn’t thawed, a severe recession began in the United States and most importantly Scott Fahlman first suggested the use of Smiley or emotiocon as a way of expressing emotion in an email 🙂 It was in this atmosphere that L.A. Tax Service was born. ☺
Dom is our office manager. She was basically our first full time employee. We hired her just out of her mother’s womb and she has the nickname of Dom the Jackal. Carlos the Jackal would still be on the loose if he had the same guile as Dom.
Patty Alvarez is our emotiocon. Somehow in the midst of e-filing, billing and coordinating the tax filing, she is always smiling. There is a lot of humor in the tax world.
In 1982, Nataliya Shur was living in the Ukraine. She had one dream. Freedom. The freedom of working at L.A. Tax Service. In 1982, she didn’t know what the words “tax or service” meant. But when the Berlin Wall fell, she headed west. Eventually she ended up running our computers, our accounting and keeping all of our secrets.
Viky Zelaya is our perfect receptionist. She speaks four languages if you count taxspeak as a language. She’s so sweet that she comes with a warning label.
Natasha Shumakova would read Tolstoy as a young Belarus woman. She especially enjoyed his novel: “War, Peace and Taxes.” She only later she discovered that the title was shortened when translated into English. After working here for a year doing accounting, she finally discovered that we had nothing to do with War or Peace.
L.A. Tax Service has their own kids. Aaron Rubenstein E.A. has been working here three years and Beth Eisenstein CPA has just started. I guess being thirty was a good age to have children.
So I wish all of you a wonderful holiday. Today is the 20th of December. If it’s the last day of the planet, I’ll see you on the other side. Remember that you can take your deductions with you.