LMGW Employees Choose Charitable Organizations to Receive Donations

In our 4^th quarter 2012 newsletter we mentioned that LMGW would be making charitable donations in lieu of mailing holiday cards in December. We did things a little bit differently and allowed our employees to choose the charitable organizations to make a donation to. LMGW then matched the employee’s donation, up to $50 per person, to each charity. Below are the charities our employees chose:

• The David Andrew “Pooh” Maddan Foundation
• Students Rising Above
• Wildlife Center of Silicon Valley
• Earth Island Institute-Save Japan Dolphins
• Saint Francis High School Alumni Class Endowed Scholarship Program
• Second Harvest Food Bank
• St. Jude Children’s Research Hospital
• Humane Society Silicon Valley
• American Red Cross – Hurricane Sandy Relief

If you are not familiar with any of the organizations listed feel free to ask us about them. Several members of the LMGW team are personally involved with the charities and would be happy to tell you about them!

Make 2012 Charitable Distributions from your IRA Now

If you are age 70½ or older and have an IRA there are two tax savings clauses in the 2012 Taxpayer Relief Act that you may want to take advantage of. First, eligible taxpayers can make a tax-free transfer from their IRA to an eligible charity by January 31, 2013 and treat the transfer as made on December 31, 2012. This strategy can help lower your Adjusted Gross Income (AGI) in future years by lowering the value of your IRA, which in turn lowers the amount of your required minimum distribution. Note the charitable distribution is limited to $100,000 per taxpayer per year. Essentially you have the ability to reduce your IRA value by $200,000 by making a $100,000 transfer by January 31, 2013 and allocating it to 2012 and then making another $100,000 transfer in February 2013 for the 2013 year. With all the tax increases and surtaxes taking effect in 2013, this can be a valuable tool to reduce your future tax liability.

A second option is for taxpayers to treat an IRA distribution received in December 2012 as a qualified charitable distribution as long as the taxpayer transfers the money to an eligible charity by January 31, 2013. This gives taxpayers a way to retroactively reduce their 2012 taxable income.

Remember, charitable IRA transfers are not included in taxable income. Additionally, a qualified charitable IRA transfer is beneficial because the charitable deduction is directly offset “above-the-line” against the IRA withdrawal. Without the charitable transfer the IRA distribution will increase your AGI, which impacts numerous other tax calculations and deduction phaseouts including how much of your Social Security is taxable, allowable deductions for charitable and medical expenses, as well as a myriad of tax credits. You must act quickly to take advantage of either, or both, of the provisions discussed above as transfers must be made by January 31, 2013 in order to qualify.

LMGW Receives Highest Rating in Peer Review Report

LMGW Certified Public Accountants, LLP has received a rating of “pass” related to the system of quality control for the accounting and auditing practice in its most recent peer review. Pass is the highest rating a firm can receive. The peer review program is dedicated to enhancing the quality of accounting, auditing and attestation services performed by CPAs in public practice. Peer reviews are required every 3 years. For our clients, this ensures that LMGW is providing the highest quality service. For a copy of our latest system review report please click the link below:

Peer Review Report – 2012

2012 Client Organizers

The attached client organier is designed to help you gather tax information needed to prepare your 2012 personal income tax return.  Click on the link below to access the client organizer.

Blank Organizer

Summary of the American Taxpayer Relief Act of 2012

On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law. The Act prevented many of the tax increases that were set to go into effect this year and extended many favorable tax breaks that would have otherwise expired. However, it also increased tax rates and put higher limitations on deductions for high-income individuals. Below is a summary of some of the key changes made by the 2012 Taxpayer Relief Act: Read more