IRS TELEPHONE HOLD LONGER THAN EVER!

One other reason not to procrastinate with your taxes this year is that if you need to reach the IRS for any reason, the telephone hold time is longer than ever! Average wait on hold is 45 minutes or longer to reach an Internal Revenue Service agent. Last week I tried to call the IRS for a client and was kept on hold for 3 hours. And still there is no guarantee that your questions will be answered in that first phone call. One of the reasons could be because of all the cut backs that have occurred at the agency. I guess they're like any other business. IRS employee hours have been cut back or employees have been laid off. For those of you that have had the experience of trying to reach an agent, you already know that the series of telephone menus are ridiculous. People often get discouraged and finally hang up. If you need to reach the IRS, the best time to call is very early in the morning around 8:00 a.m. Next article will be the easiest way to reach an IRS agent.

LET'S NOT PROCRASTINATE! WHAT ARE YOU DOING?

Remember, the first day the IRS will be accepting tax returns for processing is January 31, 2014. But remember, the deadline for filing your taxes with the IRS is still April 15, 2014. The IRS gets a two week reprieve, but we don't. So, take the day to gather up all the deductions and documents you're going to need without delay. Before you know it, it'll be April 15th. But relax, take care of business and don't stress...

IF YOU NEED EXTRA CASH, READ THIS!

Tax Tip 1: For most of us our biggest New Years resolution is to get our financial house in order for the year 2014. A big help will be finding ways to make extra money for some of the extra things we might need. There is extra money sitting right under our noses when we do our spring cleaning this year by getting rid of some of your "junk" by selling it on eBay, Amazon or Craigslist. Sell your junk! I have even helped some of my clients do this. The first time I thought about this was several years ago when I picked out things around my house that I was no longer using and decided to list it on eBay. I was very shocked and surprised to find I could make a good extra $400 plus a week just by selling the junk that I no longer needed. This also branched into selling on ebay for others for a precentage of the profits. You will be surprised at what other people will buy. So instead of complaining about not making extra money for the year 2014 just sell some of your junk. That's all there is to it and depending on how well you do and if you incur any expenses this could be a very lucrative tax write off for you.
Tax Tip 2: Whatever your passion is, make extra money by showing others how to do it. For example, If you're good on the computer, or if you're good at playing the guitar, offer to teach others how to do it for a small fee. This could become very lucrative if you work at it and can become a great write off.

TAKE NOTE: NEW USA FEDERAL TAX LAWS FOR 2013 YOU NEED TO KNOW ABOUT

Tax Law Changes You Need to Know About for 2013

 Happy Tax Season!

 Congress finally nailed down some tax legislation for 2013 and beyond.

Again, These last-minutes decisions put the IRS behind when it comes to processing tax returns because the agency has to work to update its software to adjust for the new laws. Remember, last year, certain forms were delayed because of congress. This year, the IRS will not be processing tax returns until January 31, 2014. But just because the IRS is left trying to get things together, that shouldn't stop you from preparing your income tax return. Don't wait until the last minute to get everything together. Even if you can't electronically file as yet, now is the time to get your return in order so you know the news – good or bad – in advance.

Here are the new tax changes for 2013:

If you are a high-income household making more than $400,000 (single) or $450,000 (married filing joint), your tax bracket will be up to 39.6% from 35%. However, this will not affect your 2012 income tax return. Those in the new high tax bracket will also be subject to a capital gains rate of 20% - up from 15% as well as the 3.8% surcharge from the Affordable Care Act.
In a speech following the congressional vote, President Barack Obama declared that the changes pushed through will not affect 98% of Americans.

In the fiscal cliff legislation, the Pease itemized deduction phase-out is reinstated and the personal exemption phase-out will be reinstated. The thresholds are $300,000 for married filing joint, $275,000 for head of household, and $250,000 for single. This means that if you make that kind of money, you will not be allowed to take all of your itemized deductions. Your personal exemptions – another subtraction from your income before taxes are calculated – will be reduced.

Employees' net pay is also now 2% lower as the payroll tax holiday was allowed to expire. This means the full 6.2% of Social Security will now be withheld from your pay. The holiday lasted two years, and this increased percentage will help continue funding to the Social Security system. The wage ceiling on which Social Security is taxed has been increased to $113,700. Medicare tax is unlimited, but if you earn more than $200,000 an additional 0.9% will be withhold.

Congress patched the Alternative Minimum tax and adjusted it for inflation, which will keep taxes lower for the 60 million Americans that would have been affected.

While Congress did take a scalpel to some tax deductions others were left untouched and extended through 2013:

1. Discharge of qualified principal residence exclusion. Filers going through a foreclosure or short sale who may have had loan forgiveness should look into this as it will exclude most, if not all, of the forgiven amount from taxable income.
2. Educators may continue to deduct $250 in related job expenses as an adjustment to income
3. Mortgage Insurance Premiums may be deducted as mortgage interest
4. The deduction for state and local sales taxes may still be taken
5. The $1,000 Child Tax Credit, the enhanced Earned Income Tax Credit, and the enhanced American Opportunity Tax Credit will all be extended through 2017;
6. Tuition costs may be deducted as an adjustment to income
7. IRA-to-charity exclusion from taxable income remains including a special provision that allows transfers made in January 2013 to be treated as made in 2012.

Beginning on Jan. 1, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be 56.5 cents per mile for business miles driven, 24 cents per mile driven for medical or moving purposes, and 14 cents per mile driven in service of charitable organizations.

 

I'm sure that most of you have many questions and concerns in regards to taxes and deductions for this year or previous years. ***Please feel free to post your Income Tax questions to this blog or email me with your Income Tax questions and concerns at valerie.chowdhury@gmail.com and I will answer your questions within 24 hours or less***.