Taxes 2012... NOW WHAT??

Well, we can be sure that nothing stays the same.  However, it is time to consider what might happen regarding taxes this year.  In fact, without congressional action, most of the tax rate reductions and exemptions enacted since the Economic Growth and Tax Relief Reconciliation Act of 2001 will expire.

Below are a few examples of the changes that will occur at year-end if Congress takes no action.

• Individual income tax rates will increase with the expiration of the changes made by the Economic Growth and Tax Relief Reconciliation Act of 2001 and the Jobs and Growth Tax Relief Reconciliation Act of 2003,
• The estateWell, we can be sure that nothing stays the same.  However, it is time to consider what might happen regarding tax exemption will revert from $5,120,000 to $1,000,000 per person. In addition, tax rates will increase to a maximum of 55% and the election to use a deceased spouse’s unused exclusion from estate tax will expire,
• For married couples filing joint tax returns and qualifying widows and widowers, the alternative minimum tax exemption will revert from $74,450 to $45,000,
• An additional 2% tax on self-employment income will occur due to the expiration of the Social Security tax relief enacted with passage of the Middle Class Tax Relief and Job Creation Act of 2012,
• The option to fully expense the purchase of fixed assets (i.e. bonus depreciation) under Internal Revenue Code (IRC) section 168(k) will expire,
• IRC section 179 deduction will be reduced from a maximum of $139,000 to $25,000 and the phase-out threshold will be reduced from $560,000 to $200,000, and
• Many temporarily extended tax provisions will expire December 31, 2012, including but not limited to the increased dependent care credit, refundable credit for prior year minimum tax liability and exclusion from gross income for discharge of indebtedness on the principal residence.

In addition to expiring tax provisions, as a result of passage of the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act of 2010, the Medicare tax rate will change. For example, the Medicare tax rate on earned income exceeding $200,000 ($250,000 for couples filing a joint income tax return) will increase from 1.45% to 2.35%. In addition, net investment income will generally be subject to a 3.8% additional tax to the extent AGI exceeds $200,000 ($250,000 for couples filing a joint tax return) effective January 1, 2013.

Though these examples are not all inclusive of what to be aware of, these are some major considerations. 

OVERCONFIDENT???

Well, I had not intended to write a blog today (and it is a long one), but I must share my experience in hopes that you are alerted to the pervasiveness of today's fraudulent activity.

I recently received two emails from a major national bank.  One said that I had changed my email address.  The other said that I had added a payee to my online banking account.  The problem is that I do not have an online account at this major national bank.  While I share an account there with my mother, my mother does not use online banking... in fact, she does not use the computer!!!! 

I called the number on the email and the phone representative could not help me because he could not verify my identity.  I did not know the answers to the verification questions.  Go figure!  I mean, I don't even use the account!!!  So, I went to this major national bank's branch - emails in hand  - to find out what was going on!

The gentleman that assisted me (unfortunate for him) verified my identity and checked my mother's account which appeared to be intact and not compromised.  He suggested that a customer probably made a mistake in keying in their email address.  He went on to say that the "department" that handles this kind of situation would be contacted to remedy the situation.  I told him that was fine, but I was not leaving until I was assured that MY IDENTITY had not been compromised. 

He called the “department” that handles this kind of situation and gave them my email address.  The "department" verified that my name was not on the account that was linked to my email address and told him that they would revert the email address. I said that was fine, but not good enough.  I wanted to know who was using my email address, though I knew he could not give me a name. 

He explained that he could not give out information regarding customers, but in an effort to assure me (I think), he said I did not have a personal profile with this major national bank and went on to say that this major national bank’s server is very secure.   He made a point of the fact that the emails I received were sent from this major national bank's server.  Though I appreciated his effort in assuring me, his comments still were NOT GOOD ENOUGH.

I explained that hackers have the ability to infiltrate governmental servers and this major national bank's server was not immune to being hacked.  He stated that this major national bank's server could not be infiltrated.  I said that though he was confident in this major national bank's internet server's security - I was not.

I reminded him of the fact that I received two emails from this major national bank’s server and I do not have online banking with this major national bank.  And, I reiterated that I am on my mother's account and therefore this major national bank has my personal information. 

I said he did not know the capabilities of hackers and I really needed some kind of confirmation that the situation was remedied.  I even mentioned the absolute mess that my daughter experienced a couple of years ago when her identity was stolen.  He said I should receive an email from this major national bank stating that my email address was removed from their customer's account.  Really???  How will this major national bank contact me once they remove my email address?  Hummmm...
 
I wonder if he knew that the Atlanta Journal and Constitution ran an article about an email breach on yesterday (4/4/11) and a front page alert today (4/5/11) about email addresses being exposed over the weekend - involving and identifying more than one major national banking institution.  Yesterday's article can be viewed at http://www.ajc.com/business/targeted-nature-of-email-897268.html.

Now, I hope that this major national bank's server has not been compromised... but it is really troubling that the online payee "I" added to "MY" online bank account is one of the financial institutions mentioned in the AJC articles.  Coincidental?  I don't know, but what I do know is that I will personally go back to this major national bank to revisit this situation! 

And, though I check my real online bank accounts daily, I will now check them twice a day!  You should too!!!   In addition, you should follow the guidelines mentioned in the AJC's articles to protect yourself from fraudulent emails!  In fact, if you do not already have access to your credit reports, establish an account with freecreditreport.com and add the alert feature that notifies you of any activity from the three credit reporting agencies, TransUnion, Equifax and Experian!

I think the bank representative I met today may be overconfident regarding this major national bank's server security.  Or, maybe he was trying to quelch my paranonia regarding identity theft.  Or, maybe he is just not aware of the pervasiveness of hackers in 2011!

BE AWARE!!!

BEWARE OF SCAREWARE!!!

Have you ever received online advertisements and/or security warning pop-up windows saying that your computer data is not secure?  I have on numerous occasions.  I thought it was strange because I have a legitimate security software program on my computer that does continuous check ups and maintenance - so I did not understand how I could or would have a data security issue??!!!

Well it turns out that I did not have a "data security issue".  The numerous warnings actually were scareware scams!  Needless to say, I am very glad I had security software already installed on my computer!

Scareware scams use fear (data not secure) to prompt you to purchase a malicious program so that  hackers can cause financial havoc that could have devastating repercussions for years!  Be aware that the fake security software programs are very sophisticated and sometimes have names similar to legitimate security products.  

This is how SCAREWARE works...

• It warns you that your data is not secure and prompts you to purchase a "security" software program - using your credit card information to make the purchase. 
• Once the program is installed, the hackers can gain access to your personal files and habits. 
• As a result, the hackers can steal identities, transfer money from bank accounts, make fraudelent charges on credit cards and much, much more!

But there is MORE... ever heard of "ransomware"?  Me either.  It is not as common as fake security software, but it is a growing scareware threat.  This type of scareware exhorts money from its victims.  Yes... these programs might tell you that you are committing a crime or threaten to remove a user's access to a program or file if a fee is not paid!

RANSOMWARE works like this...

• If you use peer-to-peer programs, the malware will pretend to scan for copyright violations and then pop up a warning that stolen material was found on the computer.  It gives you the option of going to court or paying a fine!  If you don't pay, it will eventually lock up the desktop!
• It can hold personal files "hostage" by encrypting them and rendering them inaccessible to the owner.  Then the software demands payment of a fee or purchase of a product to unlock the hijacked files.

Scareware is a very lucrative business across many different countries.  So, the next time (if ever) you get a "WARNING" pop-up advertisment, for anti-virus software or copyright violations, check it out first!  Go to 411-spyware.com to learn more about scareware and ransomware BEFORE making an online purchase.

Taxes 2010!

Welcome Back!

Last week we talked a little about protecting yourself and your business from fraudulent activity.  Let’s take a quick look at Taxes 2010!

We had some late breaking tax law changes in 2010 and the IRS is playing reprogramming catch up.  Having said, taxpayers that file Schedule A (itemized deductions), and claim Higher Education Tuition and Fees Deduction, and Educator Expense Deduction may need to delay filing their 2010 tax returns until the later part of February.

First-time homebuyers may be eligible for a tax credit if the home was contracted on or before the end of April and closed by Sept. 30, 2010.  Take note that special filing and documentation is required.  Also, if you have not owned a home in recent years you may be eligible for the credit!  In fact, long-time residents of the same main home may qualify for the credit under certain conditions!!

Did you make qualified energy efficient improvements or purchases to/for your home in 2010?  If so, we can help you get up to the $1,500 maximum energy tax credit for improvements and 30% of the costs of purchases.   By the way – qualified plug-in electric vehicles’ minimum credit amount is $2,500.  We can help with that too!

Earned income tax credit (EITC) has temporarily been increased for taxpayers with three or more qualifying children. The temporary maximum EITC for is $5,657.  If your earnings were impacted by today’s economic conditions you may qualify.

Speaking of children, taxpayers who cannot take full advantage of the child tax credit because the credit is more than the taxes they owe may receive a payment for some or all of the credit not used to offset their taxes. It is a refundable credit, which means taxpayers may receive refunds even when they do not owe any tax.

The maximum adoption credit increased to $13,170 per child and it is now refundable!  So, even no tax is owed, you will enjoy the benefit of a refund.  Let us help you maximize this credit if you adopted a child in 2010.

Moving on – literally – the 2010 standard mileage rate is now .50 cents.  And the standard mileage rate for the cost of operating your car for medical reasons or as part of a deductible move is 16.5 cents per mile.

Yes – current economic conditions have been detrimental for some taxpayers!  In fact, we know that many have lost their homes due to foreclosure.  If your mortgage debt was partly or entirely forgiven in 2010, you may be able to claim special tax relief.  We can help you wade through the considerations and requirements.

You or a family member may be eligible for a tax credit of 80% of qualified health insurance premiums!  Let’s see... Did you lose your job because of trade with foreign countries and you are a TAA recipient?  Or, was your benefit plan terminated without sufficient money to pay all benefits and the PBGC is now the trustee of the plan?  If so, the Heath Coverage Tax Credit (HCTC) may benefit you!

You know, sometimes individuals are imposed with tax liabilities due to deficiencies caused by their spouse (or former spouse).  There are three different types of innocent spouse relief depending on the circumstances. 

Also, keep in mind that you can convert a regular IRA into a Roth IRA.  Yes, tax liabilities would be incurred, but future gains would be tax free.  May be something to really consider…

So -  there have been quite a few changes and there are many considerations that effect your tax position – only a few are mentioned here. The most important consideration is making sure your tax preparer is qualified and ethical.  You know… like Merian L. Callaway CPA LLC!  We are willing and ready to provide the tax services you need. 

Tax season has started…  we can be contacted by phone, email, Twitter and Facebook…

Peace and Blessings,

Hello 2011!

OK - Now is the time to implement those controls and systems that you may have put off for days, weeks and years – whether personally or in your business!  For example…

Does your business have a policy that addresses the handling of fraudulent activity?  Well, wait a minute… does your business have a listing of what constitutes fraudulent activity?  No… let’s break it down a little further… how would your business detect fraud?  Are there guidelines that set the limitations on divulging company information on telephone calls?

Ok, that a small peak at the business side… What about your personal identity (PI) protection?  For example…

Do you review your credit reports?  Do you receive credit alerts?  Do you think about the ramifications before giving out your PI information?  Hummm, let’s see… Do you know how your PI is managed when you purchase on credit, rent equipment or apply for store credit?  Do you ask? 

Just a few questions to get you thinking about how much money a business can lose by not effectively implementing internal and compliance controls to deter  improper activity by employees, vendors and suppliers. 

And, how individuals do not think about how providing personal identity information can result in identity theft - and the subsequent grueling task of cleaning up one’s credit report.  Keep in mind that with the influx of the internet usage it is imperative that individuals be very selective in submitting any information online.  That includes job applications, higher education schemes, “You Have Just Won” schemes… anything that require you to provide name, address, age, date of birth, social security number, etc. 

Think about it and contact us when you are ready to set up your business controls and learn of the pitfalls of not protecting your personal identity.

Next week, taxes….  Peace and Blessings...

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