Newsletter 2012
Newsletter 2012
Misc
Misc
Print Full ArticleLast Reviewed: Jan 2013
Last Modified: Jan 2013
Foreign Asset and Income Reporting
We want to remind our clients again that IRS has ramped up its reporting requirements for assets held overseas. The penalties for failing to report foreign assets and income are severe, but, as long as you are reporting taxable income from foreign locations correctly and comply with the annual information reporting requirements there is nothing to fear about owning foreign assets. The rules for reporting foreign income are designed to eliminate double taxation (taxation by two jurisdictions), so this should not be a concern.
Retirement Planning
We are asked many times during the year "what can I do to save on my taxes." The answer is almost universally "make the largest deductible retirement account contribution you can." By doing so, you can save on taxes and build your asset portfolio for retirement at the same time. Saving for retirement is easier for employees who are able to participate in a 401-K plan. For individuals working without access to a 401-K or for self- employed individuals the traditional IRA is frequently the best alternative. Self-employed individuals also have retirement plans specifically designed for small businesses available to them which have higher contribution limits. If you are not using one of these tools to save for retirement we welcome your questions about how to get started. Traditional IRA contribution amounts increase for 2013 to $5,500 with an additional $1,000 contribution available if you are over age 50.
Mileage Rates
IRS has published the mileage deduction rates for 2013. Business use of a vehicle is deducted at 56.5 cents per mile; a deduction of 24 cents per mile is available for medical and moving expenses and charitable miles are deducted at 14 cents per mile.
Gift and Inheritance Tax Update
The fiscal cliff law changes make the $5 million estate tax exemption amount permanent with adjustments for inflation (for 2013 the exemption amount is $5,250,000). The maximum estate tax rate is now set at 40%, up from 35%. There is no mention of gift tax changes in the material available at the time of this writing so we assume the gift and estate tax exemption amounts continue to be aligned. This creates gifting opportunities (see below) that we lost for a few years under prior legislation setting a lower exemption amount for lifetime gifts.
Oregon still does not add life-time gifts to the taxable estate. With the federal exemption over $5 million for 2013 this gives estates with total assets below this amount the opportunity to escape both estate and gift taxation by making life-time gifts to reduce the estate below $1 million (Oregon's exemption amount). Making substantial gifts of this nature should be approached with caution and only done after consulting an estate planning attorney and tax professional.
The annual gift tax exclusion amount has increased to $14,000 for 2013.
Granite Point's Online Presence
We recently finished a major upgrade to our web site - we are now mobile optimized! This means our website should now be readable on any screen size, so check us out at www.granitepointtax.com on your iPad, Android, Kindle, or whatever you are using to surf the web these days. Other new features include a 1099-Misc questionnaire for business owners, a New Clients' resource page, and a "Hot Topics" feature to direct your attention to any burning issues.
Information Security and Privacy
To address client information security and privacy issues, we maintain a high level of security for our office premises, adhere to established security protocols and continue to use our SecureDrawer service for the receipt and distribution of information electronically. We struggle with the inconvenience of using more passwords and the burden of wading through online menus just like everyone else, but we encourage all clients to avoid sending sensitive information through e-mail and instead use a secure web portal. If we have not already created a SecureDrawer account for you and you would like to utilize this free service, please call us - we will gladly set this up for you!
Thank You
Our business exists and thrives because of your continued loyalty and patronage. Each year our client base grows in all areas of practice, mostly through client referrals and the help of other professionals in our community. We strive to earn client loyalty by providing good service, investing in the best supporting software available, staying current on all new tax legislation and offering a broad base of tax, accounting, payroll and other related services at reasonable cost. We are also aware that, as hard as we may work to improve the services we offer, it is still a client's choice that brings them to us and keeps them coming back each year and for this we thank you.
