TAX PRO PLUS LA

Maximize Your American Opportunity for Education Tax Benefits

The tax code provides tax credits for post-secondary (college) education tuition paid during the year for a taxpayer, spouse, or dependents. Taxpayers should make every attempt to take advantage of these benefits. The most lucrative of the credits is the American Opportunity Credit (AOTC) that provides a partially refundable tax credit for the first four years of post-secondary education.

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Mandatory Health Insurance Starts Next Month—Are You Ready?

Beginning in January, everyone, with certain exceptions, is required to have minimum, essential health care insurance. This issue has received a significant amount of press coverage recently, both negative and positive. Regardless of your opinion related to the issue, the mandatory insurance requirement, together with the accompanying penalties for not being insured, premium assistance credits, and insurance subsidies, all begin in 2014. The new marketplace, also called exchanges, where insurance policies can be purchased, have debuted already, but with mixed success. These new provisions are all part of the Affordable Care Act (sometimes referred to as Obamacare) that are being phased in over a number of years.

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Should You Be Converting Your Traditional IRA Into a Roth IRA before Year’s End?

There are two types of IRA accounts, traditional and Roth. With traditional IRAs, your contributions are generally tax-deductible when you make the contribution, and tax is not paid on earnings as they accumulate. When it is time to start withdrawing the funds, however, the subsequent distributions, including earnings, are taxable. On the other hand, while contributions to Roth IRAs are not tax deductible, earnings accumulate tax-free, and when the time comes to take distributions, all amounts distributed, including the earnings, are 100% free of tax.

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You and the New Medicare Tax

There is a new additional Medicare tax in effect for 2013 that may require year-end actions. The new tax, which is part of the Affordable Care Act, imposes an additional 0.9% Medicare (HI) tax on some higher-income taxpayers. The threshold for paying the tax is combined wages and net self-employment income of over $250,000 for married individuals and $200,000 for others. (Taxpayers who do not have wage or self-employment income—for example, retirees or those with only investment income—are not subject to this new tax, regardless of the amount of their income.)

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Your 2013 Tax Bill May Give You A Shocker

Many higher-income taxpayers are in for a shock when their 2013 income tax returns are prepared. In 2013, a significant number of tax increases, and new limitations on deductions, will impact higher income taxpayers. Before you decide that you are not a higher income taxpayer, keep in mind that your income does not just include your earnings from work—it also includes gains from the sale of property, investments, business assets, and other capital items. So if you have a significant gain from a sale, even though the gain can be attributed to many years of appreciation, it is all taxable in the year of sale, and could place you in the higher income category.

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