Tax Tips from The Bookkeepers
- Affordable Care Act
- Health Insurance for Self Employed
- New Hiring Incentives
- Advanced Earned Income Eliminated
- Making Work Pay Credit
- 10% Tax Bracket
- Energy Saving Home Improvement Credits
- Mileage Rates
- Maximum Social Security tax
- Retirement Contributions Limits for 2010 & 2011
- Annual Gift Tax Exemption for 2010 & 2011
- Increased Start-up Expense Deduction Available
- Section 179 Expense
- Bonus Depreciation
- IRS Refunds
- High Income Phase-Out
- AMT Tax Relief
- 1099 Reporting Requirements
Tax Audits are on the rise. According to the IRS, the increased audit rates are up by a whopping 34% between 2010 and 2011 for those with over $200,000 of income. IRS has also determined California, small business Schedule C filers are the target of an increased number of audits. It is critical that taxpayers retain copies of all receipts, bank statements and tax returns. All audits typically included the need to prove all business income was reported on the tax return by providing IRS deposit detail and invoice documentation. Any faded or unreadable receipts are not valid and will not be accepted as a deduction.
Federal income tax-bracket thresholds for 2012 has increased. For a married couple filing a joint return, the taxable-income threshold separating the 15% bracket from the 25% bracket is $70,700 for this year, up from $69,000 for 2011.
The standard deduction is up slightly. For singles, the basic deduction amount for this year is $5,950, up from $5,800 last year. For married couples, it’s $11,900, up from $11,600 in 2011. There are additional amounts for those who are 65 or over, blind or both.
The amount of each personal and dependent exemption is $3,800 for 2012, up by $100 from $3,700 for 2011. The maximum amount of the earned income tax credit for low- and moderate-income workers and working families rose to $5,891 for 2012, from $5,751 in 2011. The maximum income limit for the EITC rose to $50,270 from $49,078 in 2011.
The IRS’s optional standard mileage rate for using your car for business will remain 55.5 cents this year, the same as in the second half of 2011. Drivers have a choice of using this rate or deducting certain actual expenses. But the rate for using your car for medical or moving purposes is down to 23 cents a mile for this year, from 23.5 cents in the second half of 2011. The rate for using your car to help a charity remains unchanged at 14 cents a mile.