Six Overlooked Tax Breaks for Individuals

Confused about which credits and deductions you can claim on your 2015 tax return? You’re not alone. Here are six tax breaks that you won’t want to overlook. Read more

Tax Related Identity Theft – A Growing Problem

In the past several years there have been a proliferation of high profile incidents involving theft of personal information at major businesses (and government!) in the US. A recent NPR story pegs the estimated number of people who have had their Social Security Number (SSN) stolen at up to 60-80 percent of all Americans! In other words, unless you are a hermit or recluse or wear a tin foil hat then chances are good your personal information is out there and exposed. This is big business for criminal enterprises and an ever increasing problem. The Government Accountability Office (GAO) recently released a report for tax year 2013 indicating approximately $30 Billion in ID theft related fraud was attempted with $24.2 Billion being “prevented or recovered”, leaving $5.8 Billion actually paid out to fraudsters. Read more

State Launches New Online Tool for Unclaimed Property

The California Controller’s Office is making it easier to claim your missing money through a new online tool. Currently, the state has more than $6.9 billion in unclaimed property belonging to approximately 24.9 million individuals. The online tool (www.calimit.ca.gov) launched in January 2014 is for claims where the property is worth less than $500 and there is only one listed owner. The process is simple and users could get a check for their unclaimed property within 14 days. For items such as unclaimed money orders, cashier’s checks, royalties, and the contents of safe-deposit boxes, the old paper process is still required. Check out the site today and see if you or a relative has any unclaimed property!

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.

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