It's not too late to cut
your 2012 tax bill. Prior to December 31st:
Increase your 401(k)
and 403(b) contributions if you haven't been contributing at the
maximum rate all year. This year you can put up to $17,500 into
your 401(k) or 403(b) plan. Anyone 50 or older by December 31st
can put away an additional $5,500. Contributing to a 401(k) or
403(b) plan at work is one of the best tax shelters available to you
during your working years. (You might also start thinking about
setting your 2014
retirement savings goals too.)
If you’re self-employed, consider setting up a Solo 401(k)
by 12/31. A Solo 401(k) plan lets a self-employed person hit the
$51k retirement plan max with less income than a SEP IRA, and also
allows a person aged 50 or older to put away $56.5k into a retirement
plan for 2013.
Take a look at your
withholdings and instruct your employer to withhold additional taxes
if you haven’t had enough taxes withheld during the year to avoid
getting hit with an underpayment penalty. (Take a look at the
IRS' Withholding Calculator to set your withholdings for 2014.)
Consider selling your
investments held in non-retirement accounts that have decreased in value
since your capital losses can offset other capital gains realized during
the year (including from your mutual funds). Excess losses can
then be used to offset up to $3,000 of wages and other income.
Make sure to wait at least 31 days before buying back a security sold at
a loss, or the IRS will disallow the loss under the "wash sale" rules.
Consider selling your
investments that have increased in value if you are in the lowest tax
since the capital gains rate for you will be 0%. You can then buy back those
securities, and the "cost-basis" will be the higher amount. This
strategy will save you taxes down the road when you sell these
securities. Just make sure that the capital gains realized don't push you
out of the 15% tax bracket, or you'll be taxed on those gains that fall
outside that bracket at 15%.
Send in your January 2014 mortgage payment early enough so it will be processed prior to
12/31/13. By sending in your payment a few weeks early, you can
deduct the interest portion of that payment a full year earlier.
Clean out your closets
and donate your clothing and household items to a charitable
since "non-cash" contributions are deductible if you itemize.
Don’t forget to get a receipt. And you should make a
list of each
item donated, along with its condition, and snap a few photos as
well. Remember, only donations
of clothing and household items in "good condition or better" qualify
for a deduction. (To track what you donate, download our
Non-Cash Contribution Worksheet -
Excel Version or the
For gifts of money,
making your donation by credit card before December 31st allows you to
deduct the donation on this year's return, even if you don't pay your
credit card bill until 2014. And you always have the option of
donating appreciated investments to charities. You get to claim your
donation based on the value of the assets donated, without paying any
capital gains taxes on the appreciation. (Use this IRS tool to
confirm a charity as legitimate.)
Pre-pay your projected
state tax shortfall if you'll be itemizing your deductions and not
subject to the alternative minimum tax. Due to the higher tax
rates enacted for 2013, there is a better chance that you won't get hit
by the AMT this year.
Pre-pay and pay off
your medical bills if your total
medical expenses exceed 10% of
your income and you itemize. Please note that this threshold
remains 7.5% for people over the age of 65 while the threshold for everyone
increased from 7.5% to 10%.
always, evaluate whether you'll save any taxes by postponing 2013 income or deductions into 2014 or
by accelerating 2014 income or deductions into 2013.
Got questions about year-end tax planning? If so, please
contact the closest
The IRS warns
that schemes that fraudulently use the IRS name, logo or Web site clone to
to gain access to consumers’ financial information in order to steal their
identity and assets is on the rise. Below is a telephone scam that
unfortunately tricked one of my firm's clients and cost her about $5k
earlier this year.
WASHINGTON — The Internal
Revenue Service today warned consumers about a sophisticated phone scam
targeting taxpayers, including recent immigrants, throughout the country.
Victims are told they owe money to the IRS and it must be paid promptly
through a pre-loaded debit card or wire transfer. If the victim refuses to
cooperate, they are then threatened with arrest, deportation or suspension
of a business or driver’s license. In many cases, the caller becomes hostile
“This scam has hit taxpayers in nearly every state in the country. We want
to educate taxpayers so they can help protect themselves. Rest assured, we
do not and will not ask for credit card numbers over the phone, nor request
a pre-paid debit card or wire transfer,” says IRS Acting Commissioner Danny
Werfel. “If someone unexpectedly calls claiming to be from the IRS and
threatens police arrest, deportation or license revocation if you don’t pay
immediately, that is a sign that it really isn’t the IRS calling.” Werfel
noted that the first IRS contact with taxpayers on a tax issue is likely to
occur via mail
Other characteristics of
this scam include:
Scammers use fake names and IRS badge numbers. They generally use common
names and surnames to identify themselves.
Scammers may be able to
recite the last four digits of a victim’s Social Security Number.
Scammers spoof the IRS
toll-free number on caller ID to make it appear that it’s the IRS
Scammers sometimes send
bogus IRS emails to some victims to support their bogus calls.
Victims hear background
noise of other calls being conducted to mimic a call site.
After threatening victims with jail time or driver’s license revocation,
scammers hang up and others soon call back pretending to be from the
local police or DMV, and the caller ID supports their claim.
If you get a phone call from
someone claiming to be from the IRS, here’s what you should do:
you know you owe taxes or you think you might owe taxes, call the IRS at
1.800.829.1040. The IRS employees at that line can help you with a
payment issue – if there really is such an issue.
If you know you don’t
owe taxes or have no reason to think that you owe any taxes (for
example, you’ve never received a bill or the caller made some bogus
threats as described above), then call and report the incident to the
Treasury Inspector General for Tax Administration at 1.800.366.4484.
you’ve been targeted by this scam, you should also contact the Federal
Trade Commission and use their “FTC
Complaint Assistant” at FTC.gov. Please add "IRS Telephone Scam" to
the comments of your complaint.
Taxpayers should be aware
that there are other unrelated scams (such as a lottery sweepstakes) and
solicitations (such as debt relief) that fraudulently claim to be from the
The IRS encourages taxpayers
to be vigilant against phone and email scams that use the IRS as a lure. The
IRS does not initiate contact with taxpayers by email to request personal or
financial information. This includes any type of electronic communication,
such as text messages and social media channels. The IRS also does not ask
for PINs, passwords or similar confidential access information for credit
card, bank or other financial accounts. Recipients should not open any
attachments or click on any links contained in the message. Instead, forward
the e-mail to
More information on how to
phishing scams involving the IRS is available on the genuine IRS
dentists, psychologists, and other healthcare professionals can often times save
some taxes by deducting their unreimbursed professional expenses. Check out this
presentation to learn about a variety of professional expenses commonly deducted
by doctors in the U.S.
type of retirement plan makes the most sense for your practice? Check out this presentation on the most common retirement plan options available to
practice owners. You'll also learn why it makes sense to set up and begin to max
out your retirement plan savings as soon as possible.
"million dollar metrics" presented in this video will provide general dentists
with valuable insight to help improve their practice management. General
dentists can learn which metrics to generate to gauge how their dental practice
is doing, and then compare those metrics with other general dental practices,
including those practices from the sample that collected one million dollars or
more during 2012.
increase revenues and profits at your practice by implementing a Simple
Incentive Bonus System. For short we call this SIBS. We've seen a lot of clients
implement bonus system similar to the one presented in this video who saw
immediate positive results within their practice.
Presentations on QuantiaMD:
We also have four three-minute multi-media podcasts, including insightful poll questions,
available only on QuantiaMD:
Editor's note: Please don't ask us why. Sometimes there are things in a person's
brain that just need
to come out. Please remember that we are tax accountants first, and I
don't even know where comedian would come on this list.
For 2013, the standard deduction for a single individual is $6,100 and
for a married couple is $12,200. A person will benefit by itemizing once
allowable deductions exceed the applicable standard deduction. Itemized
deductions include state and local income taxes (or sales taxes), real estate
taxes, mortgage interest, charitable contributions, and unreimbursed employee
For 2013, the personal exemption is $3,900.
Individuals will claim a personal deduction for themselves, their spouse, and
The maximum earnings subject tosocial security taxes is $113,700
for 2013, increasing to $117,000 for 2014.
The standard mileage rateis $.565 per business mile as of
January 1, 2013, up one cent from $.555 per mile since July 1, 2011.
The maximum annual salary deferral into a 401(k) plan or a
403(b) plan is $17,500 in 2013 and 2014, up from $17,000 in 2012. And if
you'll be 50 or older by December 31st, you can contribute an extra $5,500 into
your 401(k) or 403(b) account that year.
The maximum annual contribution to your IRA is $5,500 for
2013 and 2014, up from $5,000 in 2012. And if you turn 50 by December 31st,
you can contribute an extra $1,000 that year. You have until April 15,
2014 to make your 2013 IRA contributions.
In a shocking development, the IRS recently
announced that they will be honoring the FICA tax refunds submitted by
residency programs and individual doctors. The catch is that only FICA
taxes paid prior to 4/1/05 qualify.