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PP&D

ACCOUNTING SERVICES, INC.
CERTIFIED PUBLIC ACCOUNTANTS
263 MAIN STREET ● WOODBRIDGE, NJ 07095 TEL 732 636-4400 ● FAX 732 636-0444

www.ppdaccounting.com
Joseph R. Petrucelli, CPA/CFF/CGMA, FCPA, CVA, MAFF, PSA, CFE Timothy E. Piotrowski, CPA/CFF, CMFO, PSA Licensed in: New Jersey and New York Members of: AICPA, NJSCPA, NYSSCPA, NACVA, ACFE, FCPAS, IBA

Note: All information is for informational purposes and does replace you contacting the proper tax professionals in the preparation of your income tax return. These are for reference and information purposes only and do not represent a full and complete list. American Taxpayer Relief Act (ATRA) Tax Tips Bush Tax Credits were continued with the exception of a new 39.6% tax bracket in addition to existing 10,15,25,28,33,35 brackets. Married couples making $450K, HH $425K, Unmarried $400,000 and FS $ 225,000. Marriage tax penalty in full force $400,000k for a single person to hit top bracket in only $450 for married. Planning: Live with the person better off for tax purposes. Capital Gains Starting 2013 (ATRA) the top rate for capital gains raised to 20% (Aligned with the new 39.6% tax rates). Planning: Do not sell short term hold for one year (12 months triggers the capital gains rate). Where possible make sure dividends are qualified (domestic corporations generally). Some dividends are ordinary income (credit unions, mutual insurance companies, as example) Ordinary Losses and Capital Gains where possible. Max $3,000 a year loss unless you have capital gains, unused losses can be carried forward indefinitely.

New 3.8% Medicare surcharge on net investment income The IRS released proposed regulations delving into the details of this new additional tax. The tax applies to the “net investment income” for those earning more than $200,000 (single filers) / $250,000 (joint filers ($125,000 for married separately) see the (marriage penalty continues), to the extent that “net investment income” exceeds those thresholds. This will also apply to the net investment income of trusts over thresholds. One of the difficult aspects of this tax is understanding what is and is not “net investment income. Examples of Net Investment Income – Taxable interest, dividends, net taxable capital gains on investment, net income from rental property. Not included as Net Investment Income - Wages or self-employment income, distributions from pensions, gains from the sale of your business assets, nontaxable gains excludable under the sale of your residence ($250,000 single and $500,000 (No marriage penalty as the single is doubled).

PP&D
ACCOUNTING SERVICES, INC.
CERTIFIED PUBLIC ACCOUNTANTS
263 MAIN STREET ● WOODBRIDGE, NJ 07095 TEL 732 636-4400 ● FAX 732 636-0444

www.ppdaccounting.com
Joseph R. Petrucelli, CPA/CFF/CGMA, FCPA, CVA, MAFF, PSA, CFE Timothy E. Piotrowski, CPA/CFF, CMFO, PSA Licensed in: New Jersey and New York Members of: AICPA, NJSCPA, NYSSCPA, NACVA, ACFE, FCPAS, IBA

Additional Medicare Tax Single Individuals staring in 2012 that earned more than $200,000 will pay an additional .09% to the existing 1.45% for a total of 2.35% and married individuals that exceed $250,000 ($125,000 id filed separately). Note: Unlike the FICA ($113,700 in 2013 and $117,000 in 2014 limits) portion of the wages there is no cap on the Medicare wages. Same thresholds Single $200,000 and married $250,000 ($125,000 if separately), the marriage penalty continues. Child Care Credit remains at $1,000. ATRA made it permanent for 2013 and subsequent years. Medical itemized deduction in 2013 Limitation of Adjusted Gross Income remains at 7.5%, the 7.5 % will be increasing to 10% with some exceptions to people who are age 65. Planning: If medical needed try to get all medical in the same year .Pay for services as they are only deductible when paid as cash basis taxpayers. Flexible Spending - which reduces salary is capped at $2,500 in 2013 with the lose it or use that carries a 2 and half months grace period after the year end. Personal exemption ($3,900) Phase out is $300,000 for married couples ($150,000 filing separately), $275,000 for head of household, $250,000 for unmarried. Marriage penalty in full force $300,000 married verse $250,000 single). Each $2,500 in excess of the thresholds is reduced by 2% until phased out ($1,250 for married couples filing separately). Mileage Allowance: 2013: Business $.565 cents per mile, Medical $.24 cents per mile, Charitable $.14 cents per mile and Moving $.24 cents per mile. 2014 Business $.56 cents per mile, Medical $.235 cents per mile, Charitable $.14 cents per mile and Moving $.235 cents per mile. Standard Deductions Single $6,100, Married (Qualified Widower) $12,200, Married Filing Separately $ 6,100 and Head of Household $ 8,950. Note: If Blind or over 65 additional Single $1,500, Married (Qualified Widower) $1,200, Married Filing separately $ 1,200 and Head of Household $ 1,500.

PP&D
ACCOUNTING SERVICES, INC.
CERTIFIED PUBLIC ACCOUNTANTS
263 MAIN STREET ● WOODBRIDGE, NJ 07095 TEL 732 636-4400 ● FAX 732 636-0444

www.ppdaccounting.com
Joseph R. Petrucelli, CPA/CFF/CGMA, FCPA, CVA, MAFF, PSA, CFE Timothy E. Piotrowski, CPA/CFF, CMFO, PSA Licensed in: New Jersey and New York Members of: AICPA, NJSCPA, NYSSCPA, NACVA, ACFE, FCPAS, IBA

Teachers (Kindergarten through grade 12) in 2013 still get a $250 above the adjusted Gross Income line calculation or what we call adjustments for gross income (Before we arrive at the Adjusted Gross Income used to calculate most limiting deductions like the 7.5% medical limitation). Same sex marriage IRS uses the “Celebration Approach” regardless of the state view, people will be viewed for federal purposes as married including for gift and estate purposes. More people subject to marriage penalty. Cancellation of Debt (Form 982) on a principle resident is excluded up to 2 million in 2013. Insolvency can also lead to debt exclusion regardless if primary residence). Estate and Gifts - ATRA permanent puts the 5 Million after 2012 and any doubt as to it remaining in force to bed and will be inflationary adjusted. The 2013 exclusion inflationary adjusted amount is $5,250,000. The gift exclusion for 2013 is $14,000 for each done (receiver of the gift).

Obama Care Update To sign up for Obama Care find your State's health insurance marketplace, sign up, and then enroll. You have until March 31st at the latest to enroll in a plan to avoid owing the per-month fee for not having health insurance in 2014! Detailed directions for signing up and details on fees, exemptions and enrollment periods can be found at http://obamacarefacts.com/obamacare-sign-up.php Anyone can sign up for Obama Care's marketplace, but if you have access to insurance through your employer, qualify for Medicaid, CHIP or Medicare, or make over 400% of the Federal Poverty Level ($23,850 for family of 4) you won't have access to cost assistance like tax credits for lower premiums or cost assistance subsidies for lower out-of-pocket costs. The final deadline to sign up for health insurance is March 31st, 2014. If you sign up for the marketplace by March 31st, 2014 but can't enroll in time you can get an Obama Care extension until mid-April.

PP&D
ACCOUNTING SERVICES, INC.
CERTIFIED PUBLIC ACCOUNTANTS
263 MAIN STREET ● WOODBRIDGE, NJ 07095 TEL 732 636-4400 ● FAX 732 636-0444

www.ppdaccounting.com
Joseph R. Petrucelli, CPA/CFF/CGMA, FCPA, CVA, MAFF, PSA, CFE Timothy E. Piotrowski, CPA/CFF, CMFO, PSA Licensed in: New Jersey and New York Members of: AICPA, NJSCPA, NYSSCPA, NACVA, ACFE, FCPAS, IBA

Note: All information is for informational purposes and does replace you contacting the proper tax professionals in the preparation of your income tax return. These are for reference and information purposes only and do not represent a full and complete list.

Last Minute Tax Preparations 1) If you do not have all your tax documents, file an extension early and make sure to pay the taxes due. The extension of time is only for filing not paying. 2) If you owe still file, the penalties are worse if you fail to file. You can make payment arrangements to avoid significant penalties and interest later. File and pay Taxes on Time 3) Select the right tax preparer, you get what you pay for. If they guarantee refund, are seasonal set ups and other suspicious type set ups, there not for you and you should verify they are registered. 4) Beware of Identity theft which has become a major problem. If you have been a victim of identity theft the IRS requires you to notify and use Form 14039. 5) Make sure you choose the correct filing status. 6) Make sure you are claiming the proper personal and dependency exemptions. 7) Anything you are deducting that is questionable make sure you can document, it is you that is signing under the declaration of perjury, not the preparer. And will pay if the IRS audits you. Charitable, goodwill boxes, take pictures, get receipts. If you have illegal income it’s taxable and if you have expenses related to the income you can deduct them. 8) Math errors, make sure that you add everything and that there are no mathematical errors, simple transposing, or extra zeroes when typing, be careful. A simple mistake and the IRS has to contact you to correct. 9) 1099’s, make sure you pick up all the income. Any 1099 regardless of the type is reported to the IRS and will be of record. If you not sure you can request a transcript form the IRS (Form 4506T) and see what 1099’s they have on file as well as W-2’s, K-1’a and other informational type filings. Do not forget illegal income is taxable. 10) Make sure your preparer is registered with the IRS and has a valid PIN and that all the proper forms are included with the filing of the return (Schedule “A” for itemizing, Schedule “B” for interest and dividends and so on). IRS Number 1-800-829-1040 Website: www.irs.gov Note: IRS recently announced people are calling taxpayers as collectors, make sure you verify that you actually owe money before falling victim to this type of scam. We had a client that this happened to when we called the number and we asked if they were the IRS they hung up.