What's My Rate? Challenges of Understanding 2013 Federal Taxes

While the American Taxpayer Relief Act of 2012 enacted January 2, 2013 brought permanency to the individual rate structure, the addition of two new taxes for 2013 and varying phase-out levels for certain rules, some high income individuals will be puzzled as to what their tax rate really is.  For example, while a single filer with over $400,000 of taxable income for 2013 reaches the top 39.6% bracket, if their next dollar of income is a capital gain or qualified dividend, it is taxed at 20%.  They would likely also be subject to the new Net Investment Income Tax so it would really be taxed at 23.8%.

For individuals subject to the new Additional Medicare Tax, they will have employment taxes reported on their income tax form. That will be something new for employees.  If they tax their total Form 1040 tax liability divided by their taxable income, they'll get a distorted number because a small portion of their total employment taxes would be included.

I've got more on this question of "what is my rate" in a short article from the AICPA Tax Insider - What's my rate?(12/12/13) - please take a look. What do you think?

Some tax complexities for summer fun

Our federal tax law just seems to get more and more complex.  The current controversy about the 501(c)(4) reviews is an example (and per TIGTA's report, this appears to go beyond complexity). We also have fairly lengthy regulations from IRS and Treasury on how to implement changes by Congress.  We also have numerous changes by the American Taxpayer Relief Act of 2012, which includes both permanent and temporary changes.

I've got a guest blog post on CPELink's blog with three suggestions for practitioner's to include on their summer agendas - click here to see the list. 

What do you think? What would you add?

Health Care Legislation and CPAs

March 2010 Health Care Law

The health care legislation enacted in March 2010 and the lengthy guidance that has been issued and is still to be issued presents a lot to know.  While there are several tax provisions that tax preparers have been focused on, there are upcoming penalties starting in 2014 and other coverage actions for employers and individuals to start evaluating this year.

I think this is something every CPA firm has to be on top of. Ideally, one person should be the "go to" person to understand the tax issues, as well as the penalty provisions (IRC 5000A and 4980H), and other employer rules. Clients will likely want objective information from their CPAs and perhaps help in running projections. Auditors will need to know if any discslosures are needed in financial statements.

I have a short article on this topic in the AICPA Tax Insider today (2/14/13) - Health care law presents new opportunities for CPAs.  Take a look.

What do you think?