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Although the American Taxpayer Relief Act (ATRA) reduced uncertainty by permanently extending many of the tax cuts first enacted in 2001 and 2003 (Bush era tax cuts) there are dozens of provisions originally due to expire at the end of 2011 or 2012 that were temporarily extended until the end of 2013. Those which will expire on December 31, 2013 include the following:

    • State and Local Sales tax – Taxpayers can elect to deduct state and local sales taxes in lieu of state and local income taxes.
    • Mortgage insurance premiums – Allowed to be taken as qualifying residence interest payments
    • IRA Distributions to Charity – Tax free distributions, up to a maximum of $100,000 per taxpayer from IRA’s to US public charities by taxpayers aged 70 plus 6 months or older, have been allowed as an alternative to take an itemised deduction.
    • First year expensing of qualifying assets – The $500,000 limit for the immediate expensing of qualifying assets (non-real property-tangible assets purchased during the year) costing no more than $2,000,000 will reduce to $25,000 with phase out starting at $200,000.
    • Deduction for tuition and fees – expires as of December 31, 2013.
See the exhaustive outline of changes here:

Many Early Tax Filers Still Waiting for Refunds

Taxpayers claiming education credits on Form 8863 encountered their first delay when the IRS said it wouldn’t be able to start processing the forms until mid-February because it needed to update its systems. Then, on March 12, the IRS said several tax software providers erroneously filed more than 600,000 returns containing the 8863 form –resulting in delays of up to six weeks from the date they were filed.

That meant most of these filers were expecting refunds by the end of March or beginning of April at the latest.

But since then, hundreds of angry comments have been posted on Facebook and other online tax forums from filers who claim they still haven’t received their refunds.



NEW: Home Office, Medicare Tax – 2013

Under new IRS rules, taxpayers will be able to use a simple formula based on the size of their home offices. The streamlined method, available for 2013 returns, lets taxpayers deduct $5 per square foot, up to a maximum of 300 square feet, or $1,500.


There is a 0.9% increase in the Medicare tax on wages and self-employment income….S-Corp pass thru may be included.

Taxable fringe benefits—such as personal use of a company car or airplane—are subject to the 0.9% tax for employees.



Taxman plays doctor

“……. The extent to which one is eligible for federal subsidies to buy insurance, and the penalties for failing to comply with the mandate, will both be determined using one number: the adjusted income reported to the Internal Revenue Service this year…..” story


Is a Self Directed IRA right for you ?

I recommend you take a look at our SD IRA page on

This can be an excellent way to roll existing retirement funds or use future IRA deposits to make hands on real estate investments. You pick the property and we broker the buy/sell activities. We have many professionals in the referral network to assist if/when needed from setup with a MI based trustee to CPA’s, property inspectors, etc.

If you want to enter the market but don’t have free funds outside of retirement accounts, this may be a good option for many – especially if you are younger/ have a % to set aside for this type of investing/ or are interested in property with a bit of knowledge regarding repairs and care of homes.


Mileage Rates for 2013

Beginning on Jan. 1,

the standard mileage rates for the use of a car, vans, pickups or panel trucks will be

  • 56.5 cents per mile for business miles driven,
  • 24 cents per mile driven for medical or moving purposes, and
  • 14 cents per mile driven in service of charitable organizations.

Fiscal Cliff notes

  • Mortgage debt relief has been extended for another year. See Sec. 202 of the bill.
  • the Bush tax cuts — which have been temporary since 2001 — permanent for couples’ income below $450,000 and individuals’ income below $400,000. For income above those levels, the Bush tax cuts have expired
  • class monday…..more to come

End of 2012 tax moves.

…Big unknowns include the top rates on long-term capital gains and qualified dividends, both now 15%. The rate on gains could hit 23.8% or more, and the rate on dividends could be as high as 43.4%.

  • Write next semester’s tuition checks before year end.
  • Prepay state taxes.
  • Accelerate medical expenses. The threshold for deducting these expenses, now 7.5% of adjusted gross income (10% for AMT payers), rises to 10% next year for most taxpayers.

Be Ready for Higher Capital-Gains Tax Rates


September 15, 2012 09:32 p.m.

The current top rate of 15% is set to expire on Dec. 31 and revert to 20%, unless Congress acts. Will you sell your appreciated stocks ?


To take a deduction, receipt MUST say this !

CAUTION: No longer can you take deductions with “receipts for stuff I gave”.

A thank-you note can be a good enough record, as long as it includes the sentence: “No goods or services were received in exchange for the contribution.”



The Health Care enforcers are coming ! – On your dime.

  1. Thousands of New IRS Agents Hired to Enforce Obamacare – Infowars…

    Jul 3, 2012 – Kevin Brady, a Texas Republican, warns that the IRS will hire up to 16,500 new enforcers in the coming months to go after citizens who do not

  2. Not a Tax: IRS to Hire Thousands of New Agents to Enforce – Breitbart

    Jul 7, 2012 – In 2010, House Ways and Means Committee Republicans issued a report saying the IRS may need as many as 16500 additional auditors,

  3. IRS looking to hire thousands of tax agents to enforce health care…/irs-looking-to-hiring-thousands-of-armed-tax-age…

    Mar 22, 2010 – Top IRS officials have been working with Democrats on Capitol Hill to determine how the agency will enforce President Obama’s new health


4 tax breaks for parents – going going…

“Many lower-income parents could see their tax bills jump by thousands of dollars next year if nothing is done to stop a series of tax breaks from expiring January 1.

Unless Congress takes action before the end of the year, four important credits for families — The Child Tax Credit, Earned Income Tax Credit, Child and Dependent Care Credit and the American Opportunity Credit — will revert back to previous levels.

If this happens, many families will be worse off by hundreds — or even thousands…”  story

ps, you might want to go to college asap


The Tax Side of the Fiscal Cliff

You already saw on the news last night the head of the International Monetary Fund note that the US is at the edge of a “Fiscal Cliff” and pulling down the world economy. You also heard that the average American w/ earnings of about $40k will pay $2000 MORE in taxes for 2013.  All this will bring … according the the IMF speaker, a new wave of great recession: “2%+ and 2%- = 0%, the math speaks”

This may be a good year to get out and vote folks.

follow the story


6 million Americans will face a tax penalty under health law

— significantly more than first estimated— ( surprise )




IRS faces lawsuit

..”These licensing requirements impose a substantial burden on small tax preparation businesses and independent tax return preparers, many of whom prepare taxes on a part-time or seasonal basis,” IJ’s attorneys argued in a statement. “Many of these independent preparers and small businesses will have to either stop preparing taxes or raise their prices……



Audit Warning Signs

1. Income drops.

2. Overlook a 1099.

3. Work for yourself.

4. Losses from a hobby.…business “must be entered into and conducted with the reasonable expectation of making a profit.”

5. Home office (or car) expenses.




Access Your MI Tax Information

Check My Income Tax Info. Banner


IRS estimate: 17 percent of taxes owed went unpaid

IRS estimates that 17 percent of taxes owed were not paid, leaving $450 billion underpayment  more

( i.e. …. hold on to your wallets and document everything ! )


Michigan Tax Law changes 1/1/2012


New legislation does not apply to returns thru April 2012, but returns that are due in April 2013.

Be aware of the following:

  • Tax rates
    • The rate remains at 4.35 % for tax year 2012.
    • For 2013 and each tax year thereafter the rate is 4.25%.
  • Personal exemption set at $3,700 (same as under current law) and will be indexed to inflation beginning in 2013.
    • Repeals special exemptions for seniors. & unemployment compensation greater than 50% of adjusted gross income (AGI).
    • Special exemption for disabled and exemption for disabled veterans – unchanged.
    • Phases out certain pension and retirement income subtractions based on date of birth.
  • Repeals
    • certain miscellaneous deductions (political donations; prizes won in state-regulated bingo, raffle, or charity games; charitable gifts from retirement plans).
    • the $600 deduction for children 18 and under.
    • Non-refundable Credits: for city income taxes, public contributions, credit for contributions to homeless shelters, food banks, and community foundations, automobile donations, college tuition and fees, reduces the Earned Income Tax Credit from 20% to 6%, excess adoption expense credit, stillbirth credit.
  • Changes the homestead property tax credit as follows:
    • Household income is replaced by total household resources which excludes losses from business, rentals and royalties and also excludes net operating losses.
    • Available only for homes with taxable value of less than $135,000.
    • For senior claimants: Full credit of 100% if total household resources are $21,000 or less and reduced by 4% for each additional $1,000 in total household resources until $30,000 is reached. For total household resources of $30,000 to $41,000 senior claimants receive 60% of the credit.
    • All other claimants are eligible for 60% of the tax credit. Credit phase out begins at $41,000 of total household resources and is reduced by 10% for each $1,000 increase. Complete phase-out at $50,000.
    • Alternative credit for eligible service person/veteran is still available.

Home Office refresher

Many folks work from their homes.

If the office is qualified, you may deduct up to $24,000 for the cost of computers as well as a share of heating, cooling, and maintenance expenses of the home. To qualify, the home office must be an area used exclusively for business activity, and it must be the principal location used to conduct business or meet with customers.

The IRS is very strict in granting the home office deduction and has disallowed the deduction when it determined that a taxpayer kept personal correspondence in the same area used for the business.

If you are furnished another office you are not allowed to take home-office deductions. Review IRS Publication 587.


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