- March 15 – 2012 calendar-year corporation income tax returns are due.
- March 15 – Deadline for calendar-year corporations to elect S status for 2013.
The 2010 health care reform legislation included several provisions that go into effect this year. Among them is the increase in Medicare taxes for taxpayers with incomes above certain levels. Here are some of the changes that could affect you.
- Medical expense itemized deduction. The 7.5% income threshold for deducting unreimbursed medical expenses increases to 10% for taxpayers under age 65. Those 65 and older may continue to use the 7.5% threshold through the year 2016.
- FSA contributions. The limit on contributions to health care flexible spending accounts (FSAs) is lowered to $2,500.
- Medicare tax on earned income. The payroll Medicare tax will increase from 1.45% of wages to 2.35% on amounts above $200,000 earned by individuals and above $250,000 earned by married couples filing joint returns. The tax increase will also apply to self-employment income exceeding the threshold amounts. [Read more…]
Every business should give serious consideration to how the company would deal with the death, disability, or departure of one of the owners. Like a will, a buy/sell agreement spells out how assets and other business interests will be distributed should an owner quit, become disabled, or die.
Without such an agreement, complications arising from ownership succession may capsize an otherwise thriving company. The remaining owners might be forced to share management and profits with unskilled or contentious outsiders. They may be embroiled in legal disputes over business assets and liabilities. A firm’s internal squabbles may spill over to customer service, resulting in lost sales. If the firm’s ownership seems doubtful or its future uncertain, creditors might accelerate collection efforts, bringing unwanted pressure on company resources. [Read more…]
The IRS is reducing the recordkeeping required for the home-office deduction, effective for 2013. Taxpayers who qualify may use a new optional deduction calculated at $5 a square foot for up to 300 square feet of an area in a home that is used regularly and exclusively for business. The deduction is capped at $1,500 a year.
Taxpayers opting for the simplified deduction cannot depreciate a portion of the home as they can under the other method. However, business expenses not related to the home, such as advertising, supplies, and employee wages are still fully deductible. This simplified option is available starting with the 2013 tax return which will be filed in 2014.
The IRS had to delay the start of this year’s tax filing season until it completed programming changes made necessary by the late passage of the American Taxpayer Relief Act of 2012 (signed into law on January 2, 2013).
Normally, farmers and fishermen are not required to make quarterly estimated tax payments if they file their tax return and pay taxes due by March 1 of the following year. The filing delay created by the new law meant that several tax forms needed by these taxpayers would not be ready on time. [Read more…]
A father can’t reduce the amount of child support he owes for his disabled adult son by the amount of Supplemental Security Income benefits the son receives, the New Hampshire Supreme Court recently ruled.
The father was required to pay $750 a month to help support his son. He argued that he was entitled to a dollar-for-dollar credit for the $450 a month in SSI benefits that his son received from the government.
But the court ruled that he wasn’t entitled to a reduction.
According to the court, SSI benefits are not the same as Social Security Disability Income (SSDI) benefits that are paid to dependent children of disabled workers. [Read more…]
A mother in California was severely injured while giving birth to triplets. The injury left her permanently brain-damaged and paralyzed. She is unable to move or to speak, and she can communicate only by blinking.
The father filed for divorce two years after the birth, and began raising the children as a single parent. The mother’s parents, who were caring for her in another state, sued on her behalf to obtain visitation for her with the children.
The father argued that the mother was too disabled to benefit from the visits, and that their young children – who hadn’t seen her in two years – could be traumatized by her condition. [Read more…]
After a divorce, which parent gets to claim the child as a dependent for tax purposes? Usually, it’s the parent with whom the child spends the most time during the year. If the other parent wants to claim the exemption, the IRS typically requires the first parent to sign a form agreeing to this arrangement.
However, one man who didn’t have a signed form took the IRS to court and won.
After a divorce in New York, the mother got primary custody, but the divorce court awarded the dependency exemption to the father. The mother promised to sign the required IRS form each year, as long as the father stayed up-to-date on his child support payments. [Read more…]
An unwed father whose child was adopted without his knowledge or consent can sue the mother and the adoptive parents for interfering with his parental rights, the Virginia Supreme Court recently decided.
Before the child was born, the father had accompanied the mother to doctors’ appointments, and the two had allegedly made plans to raise the child together. The mother had even apparently signed a form stating that the father wanted to keep the baby.
However, the mother didn’t tell the father when the baby was born. And without telling him, her parents arranged for the baby to be adopted. After the birth, the mother signed over custody rights to a couple in Utah. [Read more…]
Child support is typically based on a spouse’s income…but not all the money that a spouse happens to receive counts as “income.”
For instance, an ex-wife in Minnesota owned 20 percent of a family corporation. When she and her husband divorced, she got custody of their three children and the husband was ordered to pay child support.
Later, the corporation decided to distribute a large amount of funds to the owners so they could transfer them to a new business entity that would lend money to the corporation. As a result, the wife received $2.7 million in distributions, and immediately transferred them to the new entity. [Read more…]
In a divorce, a lot of things can be up for grabs, including a family business. But if you’re not the one who gets to keep the business, don’t assume that you can set up a competing one.
For example, when a Massachusetts couple divorced, both parties sought sole ownership of the family feed-and-grain store. The court awarded the business to the husband. The husband then asked the court to order the wife to sign a non-compete agreement, so she wouldn’t be allowed to set up a rival store and drain business from him.
The court said no, but the husband appealed, and an appeals court said the non-compete might be a good idea. [Read more…]
More and more spouses who are thinking about divorce, or who are going through the divorce process, are snooping on the other spouse. They’re looking for evidence of adultery, hidden assets, bad parenting, or other information that might give them a leg up in a divorce or custody proceeding.
“Snooping” covers a wide range of activities. For instance, it could include accessing a spouse’s private e-mail or social-networking account, looking in a spouse’s smartphone for suspicious phone numbers or texts, or digging through his or her web search history.
Some spouses have been known to use methods that are more technologically sophisticated. [Read more…]