THE PROBATE & PUMPERNICKEL LUNCHEON

A Continuing Education Forum For Attorneys and CPA's

LOCATION: The Francis- 1262 N. Palm Avenue, Sarasota, FL 34236

DATE: May 23, 2013

TIME: 11:45 AM- 1:30 PM

TOPIC: Some Federal Income Tax Issues Frequently Affecting Elderly Clients

PRESENTED BY: Fredric C. Jacobs, Esq. L.L.M.--Bach & Jacobs, P.A.

Respond  on or before May 19, 2013.  Call Lisa Aaron, Probate and Pumpernickel Coordinator, at 561-803-2007. The above qualifies for CLER and/or Board Certification Credits.

Posted by Fredric C. Jacobs, Esquire-Sarasota, FL

Yes, a child can deduct medical expenses they paid on behalf of their parent (even if the parent doesn't qualify as one of their dependents, doesn't live with them and has a gross income that exceeds $3,800 for tax year 2012) if the child provided over half of the parent's total support during the tax year. Assuming that the child paid more than 50% of their parent's total support during this tax year, then the medical expenses paid on the parent's behalf in excess of 7.5% of the child's Adjusted Gross Income (AGI) are deductible on the child's individual income tax returns as itemized deductions.

If you need legal advice for estate planning, Asset Protection Planning, or tax planning, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

Bach & Jacobs, P.A.

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

Learn a bit about what we can do for you.

Posted by Fredric C. Jacobs, Esq. Sarasota, FL

For tax year 2013, the IRS announced annual inflation adjustments for over two dozen tax provisions.

• The annual exclusion for gifts is $14,000 for 2013, up from $13,000 for 2012.
• The amount used to reduce the net unearned income reported on a child’s tax return subject to the “kiddie tax,” is $1,000, up from $950 for 2012.
• The foreign earned income exclusion will now be $97,600, up from $95,100 in 2012.

Details on these inflation adjustments and others such as the low-income housing credit, the dollar limits for high-deductible health plans and other amounts can be found in Revenue Procedure 2012-41, which was published in Internal Revenue Bulletin 2012-45 on Nov. 5, 2012.

For more information on your tax return, visit www.irs.gov. Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The VOW to Hire Heroes Act of 2011 made changes to the Work Opportunity Tax Credit (WOTC). The Act added two new categories to the existing qualified veteran targeted group and made the WOTC available to certain tax-exempt employers as a credit against the employer’s share of social security tax. The Act allows employers to claim the WOTC for veterans certified as qualified veterans and who begin work before January 1, 2013.

The credit can be as high as $9,600 per qualified veteran for for-profit employers or up to $6,240 for qualified tax-exempt organizations, but the amount of the credit will also depend on a number of factors, including the length of the veteran’s unemployment before hire, the number of hours the veteran works, and the veteran’s first-year wages. The amount of the credit for qualified tax-exempt organizations may not exceed the organization’s employer social security tax for the period for which the credit is claimed.

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The IRS offers many ways for taxpayers, practitioners and stakeholders to engage in Open Government to help build transparency, participation and collaboration in government operations.

The IRS is making it easy for you to take part in Open Government by:

• Providing more meaningful and easy-to-find information about how the IRS works,
• Soliciting your ideas to help develop effective policy and
• Partnering with other government agencies and private institutions.

If you want to get involved, there are many ways for you to help. Check out the forums, webinars, sessions and information sources to see how you can participate in Open Government today.

In establishing a system of transparency, IRS offers several ways that taxpayers, practitioners and stakeholders can participate and collaborate with the government including in person, on the phone and on the Web.  Visit www.irs.gov for more details.

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

Long-term care expenses quickly add up, but it is good to know that many long-term care expenses can be deducted from your taxes. Under the tax code, expenses for medical care may be claimed as an itemized deduction if they exceed 10 percent of adjusted gross income. The definition of medical expenses includes the cost of long-term care if a doctor has determined you are chronically ill. "Chronically ill" means you need help with activities like eating, going to the bathroom, bathing, and dressing, or you require substantial supervision due to a severe cognitive impairment.

For more information on your tax return, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

After you file your taxes, you will have many records that may help document items on your tax return. You will need these documents should the IRS select your return for examination. Here are five tips from the IRS about keeping good records.

1. Normally, tax records should be kept for three years. 
2. Some documents — such as records relating to a home purchase or sale, stock transactions, IRA and business or rental property — should be kept longer.
3. Records you should keep include bills, credit card and other receipts, invoices, mileage logs, canceled, imaged or substitute checks, proofs of payment, and any other records to support deductions or credits you claim on your return.
4. For more information on what kinds of records to keep, see IRS Publication 552, Recordkeeping for Individuals, which is available on the IRS website at http://www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
   
   

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. Exchanges will operate in every state and the District of Columbia. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit. The credit also can be paid in advance to a taxpayer’s insurance company to help cover the cost of premiums. On May 18, 2012, the IRS issued final regulations which provide guidance for individuals who enroll in qualified health plans through Exchanges and claim the premium tax credit, and for Exchanges that make qualified health plans available to individuals and employers.

The portion of the law that will allow eligible individuals to use tax credits to purchase health coverage through an Exchange is not effective until 2014.

Exchanges will offer individuals a choice of health plans that meet certain benefit and cost standards. The Department of Health and Human Services (HHS) administers the requirements for the Exchanges and the health plans they offer. Additional information about the Exchange can be found at www.healthcare.gov and in IRS REG-131491-10 issued on Aug. 12, 2011.

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, this fact sheet explains the rules for determining if an activity qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to $30 billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity?

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

June 2012

Taxpayers should be on the lookout for a new, email-based phishing scam now circulating that targets Department of Defense military members, retirees and civilian employees. The email appears to come from Defense Finance and Accounting Services and displays a .mil email address. The email states that those receiving disability compensation from the Department of Veterans Affairs (VA) may be able to obtain additional funds from the IRS. Email recipients are then asked to send various VA and IRS documents containing their personal and financial information, such as copies of VA award letters or their income tax returns, to an address in Florida.

The information on these documents is then used by the scammers to commit identity theft. Typically, identity thieves use someone’s personal data to empty the victim’s financial accounts, run up charges on the victim’s existing credit cards or apply for new loans, credit cards, services or benefits in the victim’s name.

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The Virtual Small Business Workshop is available on CD and online to help new small business owners understand and meet their federal tax obligations.

Small business workshops, designed to help the small business owners understand and fulfill their federal tax responsibilities, are held at various locations throughout the country. Workshops are sponsored and presented by IRS partners specializing in federal tax.

Workshop topics vary from a general overview of taxes to more specific topics such as recordkeeping and retirement plans. Although most are free, some workshops have fees paid directly to the sponsoring organization, not the IRS.

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

For your tax advice needs, please contact our office for an initial consultation.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

If you pay someone to prepare your tax return, the IRS urges you to choose that preparer wisely. Taxpayers are legally responsible for what’s on their tax return even if it is prepared by someone else. So, it is important to choose carefully when hiring an individual or firm to prepare your return.

Check the preparers’ qualifications and history.  Inquire about their fees and if they offer electronic filing.  Make sure the tax preparer is accessible and that you provide him or her with all receipts and records to prepare your return.  Never sign a blank return and review the entire return before you sign it.  Make sure the return includes the tax preparers tax identification number (PTIN) before signing. 

You can report abusive tax preparers to the IRS on Form 14157, Complaint: Tax Return Preparer. Fill it out or order by mail at 800-TAX FORM (800-829-3676). The form includes the address where it should be mailed.

For more information, visit www.irs.gov. 

Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

Identity theft occurs when someone uses another’s personal information without their permission to commit fraud or other crimes using the victim’s name, Social Security number or other identifying information. When it comes to federal taxes, taxpayers may not be aware they have become victims of identity theft until they receive a letter from the IRS stating more than one tax return was filed with their information or that IRS records show wages from an employer the taxpayer has not worked for in the past.

If a taxpayer receives a notice from the IRS indicating identity theft, they should follow the instructions in that notice. A taxpayer who believes they are at risk of identity theft due to lost or stolen personal information should contact the IRS immediately so the agency can take action to secure their tax account. The taxpayer should contact the IRS Identity Protection Specialized Unit at 800-908-4490. The taxpayer will be asked to complete the IRS Identity Theft Affidavit, Form 14039, and follow the instructions on the back of the form based on their situation.

Taxpayers looking for additional information can consult the Taxpayer Guide to Identity Theft or the IRS Identity Theft Protection page on the IRS website.

Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

Bach & Jacobs, P.A.

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The IRS offers many ways for taxpayers, practitioners and stakeholders to engage in Open Government to help build transparency, participation and collaboration in government operations.

The IRS is making it easy for you to take part in Open Government by:

• Providing more meaningful and easy-to-find information about how the IRS works,
• Soliciting your ideas to help develop effective policy and
• Partnering with other government agencies and private institutions.

If you want to get involved, there are many ways for you to help. Check out the forums, webinars, sessions and information sources to see how you can participate in Open Government today.

In establishing a system of transparency, IRS offers several ways that taxpayers, practitioners and stakeholders can participate and collaborate with the government including in person, on the phone and on the Web.

For more information, please visit www.irs.gov, open government initiative.

Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

Bach & Jacobs, P.A.

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile www.bachjacobs.com

IRS Taxpayer Assistance Centers (TAC) are your source for personal tax help when you believe your tax issue cannot be handled online or by phone, and you want face-to-face tax assistance. Taxpayer Assistance Centers are closed for all Federal Holidays. Please be advised that you may be asked to provide valid photo identification and a Taxpayer Identification Number, such as a Social Security Number, to receive services.

To view a list of all Taxpayer Assistance Centers in your state, go to www.irs.gov, contact your local IRS office and click on the map or state links.  To search for the Taxpayer Assistance Center closest to you, enter your 5-digit ZIP Code into the Office Locator.

Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

Bach & Jacobs, P.A.

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

Under the Middle Class Tax Relief and Job Creation Act of 2012, workers will continue to receive larger paychecks for the rest of this year based on a lower social security tax withholding rate of 4.2 percent, which is two percentage points less than the 6.2 percent rate in effect prior to 2011. This reduced rate, originally in effect for all of 2011, was extended through the end of 2012 by the Temporary Payroll Tax Cut Continuation Act of 2011.

No action is required by workers to continue receiving the payroll tax cut. As before, the lower rate will have no effect on workers’ future Social Security benefits.  The reduction in revenues to the Social Security Trust Fund will be made up by transfers from the General Fund.

Self-employed individuals will also benefit from a comparable rate reduction in the social security portion of the self-employment tax from 12.4 percent to 10.4 percent. For 2012, the social security tax applies to the first $110,100 of wages and net self-employment income received by an individual.

For more information, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile

www.bachjacobs.com

The IRS Tax Counseling for the Elderly Program offers free tax filing assistance to individuals who are age 60 or older. The Revenue Act of 1978 authorizes this cooperative agreement by providing grants to eligible agencies and organizations to provide tax support to elderly taxpayers.

The funds are used by organizations to reimburse volunteers for their out-of-pocket expenses; including transportation, meals, and other expenses incurred by them in providing tax counseling assistance at locations convenient to the taxpayers.

Tax return preparation assistance is provided to elderly taxpayers during the usual period for filing Federal income tax returns, which is from January 1 to April 15 each year. However, the program activities required to ensure that elderly taxpayers receive efficient and quality tax assistance can be conducted year-round.

For more information on your tax return and tax filing deadlines, visit www.irs.gov.  Please contact our office for an initial consultation if you need legal advice.

Fredric C. Jacobs, Esquire, Board Certified Tax Law

240 S. Pineapple Avenue, Suite 700

Sarasota, FL 34236

941-906-1231

941-954-1185 facsimile www.bachjacobs.com