Flexible spending accounts (FSAs) allow taxpayers to set aside pre-tax dollars to pay for out-of-pocket medical expenses. The drawback has been the fact that unused amounts each year are forfeited. Plans could provide a 2½ month grace period to use up unspent set-asides.
Now a change announced by the IRS adds more flexibility to these accounts. Plans can be modified by employers to allow up to $500 of unused amounts to be carried over into the following year. Health FSAs cannot have both the old 2½ month grace period and the $500 carryover; they can have one or the other (or neither).
Call our office if you have questions.
*December 17 - Due date for calendar-year corporations to pay the last installment of 2012 estimated income tax.
*December 31 - Last day to set up a Keogh retirement plan for 2012. Deductible contributions for 2012 can be made any time up to the filing deadline for your 2012 return.
*December 31 - Deadline to complete 2012 tax-free gifts of up to $13,000 per recipient.
*December 31 - Deadline for paying expenses you want to be able to deduct on your 2012 income tax return.
Your children may need to file a 2013 income tax return. A return is needed if wages exceeded $6,100, the child had self-employment income over $400, or investment income exceeded $1,000. If the child had both wages and investment income, other thresholds apply. Contact us for more information or filing assistance.
Nearly every company, large or small, has to file Form 1099-MISC with the IRS and send a copy to recipients by January 31, 2014.
You use Form 1099-MISC to report miscellaneous payments to nonemployees. This includes fees for services paid to independent contractors, such as consultants, lawyers, cleaning services, and others. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example).
For details or filing assistance, contact our office.
Those taxpayers filing Form 5695 (Energy Credit), Form 4562 (Depreciation), and Form 3800 (General Business Credit) will not be able to file until late February or possibly not until March. Apparently a large percentage of taxpayers in this group typically file later in the season because they have more complex returns.
The IRS must complete the updating of forms and computer programming and testing before it is ready to accept any filings either on paper or electronically. The IRS said that taxpayers will receive refunds faster by e-filing and using direct deposit.
If we can be of assistance to you in preparing any of your 2012 tax filings, please contact Dugan & Lopatka, CPAs at (630) 665-4440.
*SOCIAL SECURITY TAXES. Employee's share will increase to 6.2% after 2012, up from 4.2%.
*INCOME TAX RATES. 2012 rates of 10%, 15%, 25%, 28%, 33%, and 35% will change to 15%, 28%, 31%, 36% and 39.6% for 2013.
*CAPITAL GAINS. Maximum long-term rate will increase from 15% to 20% after 2012.
*DIVIDENDS. Top 15% rate will be eliminated; dividends will be taxed as ordinary income with a top rate of 39.6%.
*CHILD TAX CREDIT. Current $1,000 credit per qualifying child will be reduced to $500 after 2012.
*AMT. Exemption amounts will be $33,750 for singles, $45,000 for couples.
*ESTATE TAX. Top 2013 rate will increase to 55% (up from 35%); exclusion amount will be reduced to $1,000,000 (down from 2012 amount of $5,120,000).
*DEDUCTIONS & EXEMPTIONS. After 2012, higher-income taxpayers will again lose a portion of itemized deductions and personal exemptions.
*DEPRECIATION. Section 179 expensing limit will be reduced to $25,000, with a total qualifying property limit of $200,000, down from 2012 levels of $139,000 and $560,000 respectively. 50% bonus depreciation will expire.
*EDUCATION. Education savings account contribution limit will be $500, down from 2012 limit of $2,000. Expanded American Opportunity Credit will expire and be replaced by prior Hope Credit.
*TAX EXTENDERS. These tax breaks expired at the end of 2011: Teachers' classroom expense deduction, state and local sales tax deduction, tax-free charitable IRA distributions for those 70½ and older, higher education tuition deduction, business R&D credit, and 15-year depreciation for leasehold improvements and restaurant property.
Stay tuned. Congress and President Obama may agree to extend or revise some or all of these provisions. We'll keep you informed.
Dugan & Lopatka is one of the largest public accounting firms in the Chicago area, but one of the only large CPA firms to specialize almost exclusively on privately-held, small and mid-sized businesses.
There is a noticeable difference between the level of service and personal attention provided by accounting firms that serve privately-held small and mid-sized businesses. The small accounting firms lack the depth of staff, experience and expertise found at Dugan & Lopatka. The large accounting firms won’t dedicate their best people to small and midsized businesses and the partners are generally only involved for client billings. Small and mid-sized businesses are not their target market.
Dugan & Lopatka is dedicated to serving small and mid-sized, closely-held companies. Our clients can readily see that difference in our innovative ideas, the rewards we bring to them from having a great deal of experience working with companies like yours and through the quality and timeliness of our work.