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Big Changes Coming for Investors in 2013

Long-Term Capital Gains Rates Increase – Taxpayers have enjoyed reduced long-term capital gains rates for several years as a result of the Bush era tax cuts. However, without Congressional action, which is not expected, those reduced rates will return to the higher rates in effect prior to 2003. The table below compares the current long-term capital gains rates to the anticipated rates for 2013 and subsequent years.

Taxpayer’s Regular Long-Term Capital Gains Rates
Tax Bracket Current Anticipated for 2013

15% and below 0% 10% (1)
Above 15% 15% 20% (2)

(1) 8% if held over 5 years
(2) 18% if held over 5 years

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How Long Should You Keep Your Tax Records

Generally, we keep “tax” records for two basic reasons: (1) in case the IRS or a state agency decides to question the information reported on our tax returns; and (2) to keep track of the tax basis of our capital assets so that the tax liability can be minimized when we actually dispose of the assets.

With certain exceptions, the statute for assessing additional tax is three years from the return due date or the date the return was filed, whichever is later. However, the statute of limitations for many states is one year longer than the ...

Employing a Family Member

A way to reduce the overall family tax bill is by employing family members through your business, which allows you to shift income to them and provide them with employment benefits.

· Employing your Spouse. Reasonable wages paid to your spouse entitle you to a business deduction. Although the wages are subject to income and FICA taxes, your spouse may qualify for Social Security benefits to which he or she might not otherwise be entitled. In addition, your spouse may also be entitled to receive coverage under the qualified retirement and health plans of your business, allowing ...

What is Basis

An important tax term that everyone should know is “basis”, especially if you’re in real estate. The odds are very high that you will encounter the term sometime during your lifetime, and it can have a profound impact on your tax liability.

Simply stated, “basis” is the monetary value from which a taxable gain or loss is calculated when an asset is sold. For example, you purchase 100 shares of ABC stock for $10 a share. Your basis for those shares of stock is $1,000 (100 x $10). Then, if the stock were sold for $1,500, you&...

Are You Required to File 1099s

A business that pays an independent contractor $600 or more in a year must file Form 1099-MISC. Form W-9 is used to collect the independent contractor’s data. Deadlines for issuing 2013 1099-MISCs are January 31, 2014 (to independent contractors) and February 28, 2014 (to the IRS).

If you use independent contractors to perform services for your business and you pay them $600 or more for the year, you are required to issue them a Form 1099-MISC after the end of the year to avoid facing the loss of the deduction for their labor and expenses. The 1099s for 2013 must be provided to ...