Varley Law Office PLC

Varley Law Office PLC
201 NE 2nd ST, Stuart, Iowa 50250; (515) 523-2456

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Saturday, January 04, 2014

Tax Time 2013

_____Now is the time to take stock of 2013, at least financially, by gathering your income and deduction records in preparation for filing your annual tax returns. The primary changes in tax law this year are the new taxes designed to help fund the Affordable Care Act. If you owe either of these taxes, congratulations—it means you are in the top 10% of income earners in the United States of America. If you have earned income in excess of $200,000 as a single person or over $250,000 as a couple filing jointly, you will pay an additional 0.9% tax on the excess toward the medicare system (single payer health care coverage for the elderly and disabled). If you have adjusted gross income in excess of those thresholds, you will pay an additional 3.8% tax on the smaller of your net investment income or the excess of your adjusted gross income above those levels. In this area, that tax will apply primarily to individuals who sold farmland and realized a large capital gain. Speaking of capital gains, the maximum tax rate on capital gains increased from 15% to 20% for 2013, but that is still just a hair over half of the maximum income tax rate on earned income, which is still 39.6%.

_____In the depreciation arena, for 2013, you can still expense up to $500,000 on up to $2,000,000 of eligible purchases, but this year (2014) you can only expense up to $25,000 on up to $200,000 of eligible purchases (IRC §179).

_____As was the case last year, you must have a contemporaneous written receipt for donations totaling over $250 to a particular charity. Also, I cannot prepare your tax return if you hold any assets outside of the United States. Identity theft continues to be a problem. Please do not send any documents by e-mail that contain social security numbers or bank account numbers, unless they are password protected. I am in the process of setting up a secure online drop box and will send you details if you e-mail me.

_____IRS requires mileage logs for vehicles with business use; standard mileage rates for 2013 are:

###############Federal *******Iowa
Business: . . . . . . . . . . 56.5¢/mi. . . . 56.5¢/mi.

Medical & moving: . . . 24¢/mi. . . . . 24¢/mi.

Charitable: . . . . . . . . . 14¢/mi. . . . . 39¢/mi.

_____You are required to send a Form 1099 to any individual, partnership or LLC that you paid $600.00 or more for services, rent or interest. Payments to cooperatives, banks and other corporate entities are excluded. Wages in excess of $150 in any quarter require the filing of Forms W-2 and W-3. If you would like us to prepare these forms, you will need to provide us with the information before January 25, 2014.

_____If you have questions on any of the above or other tax matters feel free to call, e-mail, or stop in. When you have your records ready you may let us know and we will set up an appointment that is convenient for you. Evening or Saturday appointments can be arranged.

_____Best Wishes for the New Year!

Pursuant to U.S. Treasury Regulations, you are hereby advised that any federal tax advice included in this communication is not intended or written to be used, and cannot be used, to avoid any U.S. federal tax penalties or to promote, market, or recommend to another party any transaction or matter. For further information, see IRS Circular 230.

1 comment:

Unknown said...

I like the idea of review past taxes a few years later. I usually start throwing paperwork away after I finally submit everything, but that's not the best way to evaluate your money habits and accounting. Constantly evaluating past years will save you money in the future, whether as a business or an individual. http://www.jjlaw.ca/