Nov 172015

tax planning 2Also called the unearned income Medicare contribution tax or the net investment income tax; this tax impacts more taxpayers than you might think. This tax applies to individuals, estates and trusts. You should note that this tax is a surtax so it is a second level of taxation in addition to the regular taxes that Americans have been paying.

The surtax is calculated as 3.8% of the lesser of your net investment income or the excess of the modified adjusted income over a threshold of $250,000 for joint filers and surviving spouses. ($125,000 for married folks filing separate returns and $200,000 in all other cases.) The surtax also applies to a trade or business in certain instances such as where there is passive activity or where a business sells financial instruments or commodities.

As the tax year draws to a close, taxpayers with income subject to the 3.8% should be attempting to minimize, through deferral, their net investment income or modified adjusted income. If you would like assistance with your year end tax saving strategy, please contact one of our attorneys at Ourednik Law Offices.

Sep 282015
International Financing for Green Cards?

Many U.S. businesses get their funding from local banks or private U.S. investors.  Sometimes, however, there is an opportunity to get financing from abroad on more advantageous terms.  One such opportunity was recently illustrated in a recent Wall Street Journal article.  The article describes U.S. real estate developers receiving funds from foreign investors in exchange for green cards.  When such an opportunity arises, certain U.S. income tax implications should be considered as part of the deal.  In my first blog, I will discuss these tax implications as related to U.S. businesses. When a U.S. business receives funds from a foreign More…

Aug 312015
The Kiddie Tax - Part One

The Kiddie Tax – Part One Internal revenue code section 1(g) taxes unearned children’s income as if it belonged to the parents. This is known as the Kiddie tax. This income is taxed at the parents’ tax rates. Generally, the Kiddie tax rules apply to income of any child who is under age 18, turns 18, or is a full-time student who turns 19 – 23 before the end of the year. Generally, children’s income is taxed as follows. The tax on the income of a child who is subject to the “Kiddie tax” rules is the greater of: A. More…

Mar 132014
Common Mistakes Made by Taxpayers with Form 1099

Tax season has now arrived, and taxpayers are hurrying to get their returns completed in time.   However, for those who receive Form 1099, they need to take certain precautions because making mistakes can cost them a significant amount of money.  Below are three traps that many taxpayers who receive Form 1099 fall into. Mistake 1:    Forgetting to watch your mail-Taxpayers who receive Forms W-2 typically are careful to watch for this form in the mail.  However, many taxpayers who receive Form 1099 are often careless by not      watching out for it.  These taxpayers should be sure to watch out for More…

Feb 192014
2014 Tax Savings Tips

As tax season approaches, most taxpayers are concerned about finding ways to decrease their taxable income.  Utilizing these tax sheltering tips can help taxpayers save a significant amount of money on the amount of taxes that they owe.  Here are three simple ways to reduce your taxable income: 1.    Utilize Retirement Plans – Of course retirement vehicles are important in terms of  planning for retirement; however, they are also beneficial for saving on taxes as well.  They can reduce the amount of business and personal taxes owed.  In some instances, business owners may defer taxes on $50,000.00 of income per More…

Jul 232013
What to do if You Get a CP21B or CP21C Notice From the IRS

Whenever you get a notice from the IRS, the first thing to do is read it! And read it carefully. After doing so, if you agree with it, there is no action required for either of these notices. In either case, these notices indicate that you’ve requested changes to your tax return and the IRS has agreed to those changes. The difference in the two forms is whether or not you’ll be receiving a refund because of those changes. A CP21B is an indicator that you will receive a refund, and a CP21C shows that you will not receive a More…

Jul 152013
Have You Received a Notice From the IRS?

One of the scariest moments is going to the mailbox and finding a notice from the IRS. The worst thing to do is to throw it in a pile and ignore it, hoping it will go away. When you open it, you may find a notice in your favor. Perhaps you miscalculated your return and overpaid or if you asked for a change on your return they may have granted it. One the other hand, you may be receiving a notice that you’re up for an audit, or as they say, a notification of examination. Since 2001, the IRS has More…

Jun 072013
4 Business Lessons You Can Teach Your Student/Employee This Summer

If you’re hiring a student as an employee this summer, the best lesson you can give them is how the business world works. This lesson will go well beyond the summer they spend with you and might even help them understand the ways of the world. Here are 4 tips to help you teach your student: When you have your new student complete their W-4, explain to them that employers use this form to figure out how much federal income tax to withhold from worker’s paychecks. If the student is receiving tips as part of their income, encourage them to More…

May 182013
6 Ways to Make Your 2013 Tax Season Easier

No one likes unplanned tax surprises, especially when you owe. Now is the time to start your tax planning for next year by  looking at these 6 areas: 1. The first thing on your tax planning to-do- list is to make sure you have a qualified tax professional or CPA. If not, this is the time to start shopping for one. Take your time to make an informed decision and once you have selected a qualified tax professional, they can guide you down the tax planning path. a good tax professional can give you tax tips and while you are ultimately responsible More…

Mar 202013
Are you thinking of setting up a business?

If you are a serious entrepreneur, start your business out right by talking with an attorney about the many facets involved ins tarting your venture. With only 1% of businesses surviving the first five years, you want to start out, not only on the right foot but, with the biggest advantage you can. First, if you don’t have a business plan, a qualified attorney can write one for you. Your business plan is a road map for financing, goals and even how your business will be managed. Do you know whether to set up your business as an S-Corp. C-Corp More…