Expiring tax provisions 2012 (in plain English)

Fast on the heels of the election has been news about the “fiscal cliff” and several tax breaks that are set to expire at the end of 2012 if Congress does not act.

Here are a few things that may affect you:

Payroll tax reduction. The Social Security (FICA) payroll tax reduction we had for 2 years expires and will revert back to 6.2%.

Alternative minimum tax: No “patch” has been put into place. The AMT exemption will drop from $74,450 to only $45,000 meaning 27 million more Americans will be subject to AMT.

The tax on long-term capital gains (from the sales of a stock or mutual fund) will increase from 0% to 10% for lower income and from 15% to 20% for higher income.

The tax on qualified dividends will increase from 15 percent to your ordinary income rates (top rate of 39.6 percent).

The child tax credit will decrease from $1,000 per child to only $500 per child. Many of you with children under age 17 will feel this one!

The adoption tax credit: reduced to $5,000 from $12,650. The adoption tax credit will not refundable, but you can carry forward unused credit.

The American Opportunity tax credit (for college expenses) will be cut from $2,500 to $1,500 per student.

Coverdell Education Savings Accounts ( a college savings account) contributions will be limited to only $500 per student per year, not the $2,000 per student we’ve been used to.

Deduction for sate sales tax instead of state income tax is eliminated.

Deduction for mortgage insurance premiums (PMI) is a thing of the past

Charitable contributions from IRA accounts expired

For high income Americans (income over $200,000 single or $250,000 married filing joint)

  • The Medicare rate will increase to from 1.45 percent to 2.35 percent .
  • An additional 3.8% tax on investment income (interest, dividends, capital gains, rents, royalties and annuities)

The estate tax rate will revert to 55% and the exemption amount will decrease to $1 million from $5 million.

I’ve listed the tax provisions that will affect most of my clients. There are over 60 expiring tax provisions, but I focused on those affecting my clients and omitted things like: Special depreciation for cellulosic biofuel plant property or The American Samoa economic development credit! 🙂

If you think any of these expiring tax provisions may affect you, please consult your tax professional.

If you are one of my clients feel free to email or call me.

Carol Topp, CPA

Business Tips and Taxes for Writers

Interview 10/24/11 on business tips and taxes for writers

Felice Gerwitz

Join host, Felice Gerwitz and her special guest, Carol Topp, CPA.  Carol will share information about her latest book, Information in a Nutshell: Business Tips and Taxes for Writers!

If you write you won’t want to miss this segment. Carol was asked to write this book by publisher, Felice Gerwitz, to help other writer’s who struggle with the IRS rules in regard to income as an author.

Join us for this lively and informative episode!


OK, it’s not a “stimulus” plan…really?

President Obama announced the American Jobs Act.

Read some of the details here.

According to the Wall Street Journal, it’s not a stimulus plan. Really?

Mr. Obama studiously avoided calling his American Jobs Act a “stimulus” plan, a term freighted with political baggage. But it calls for tens of billions of dollars in aid to state and local governments, including cash for hiring teachers and refurbishing schools, as well as a $10 billion infrastructure bank and $50 billion for transportation projects. (Wall Street Journal, September 9, 2011)

I’d like the details on this part:

Additionally, businesses would get a full payroll tax holiday for any increase in payroll up to $50 million.

How long, how many employees, etc…? My tax clients who hire employees will want to hear more about this.

This is also interesting…$447 BILLION is “small“!

Economists have noted the relative small size of the plan and the debatable impact of a temporary cut in payroll taxes. The payroll-tax and unemployment-insurance provisions would be equivalent to about 1% of gross domestic product.

What do you think?

Amazon Battles States Over Sales Tax

from the TaxProf blog:

WSJ: Amazon Battles States Over Sales Tax

Wall Street Journal, Amazon Battles States Over Sales Tax:
Amazon.com Inc., the world’s largest online retailer, hasn’t charged sales tax in most states since its founding in 1994. And it has taken some extreme measures to keep it that way.

Among them: Staff traveling around the U.S. have been required to first consult a company map that shades each state red, yellow or green, said three people who have worked for the retailer. These people said they needed permission from managers or company lawyers before entering “red” states because a worker’s actions might trigger laws that force Amazon to collect taxes in those states.

Such steps to avoid local levies allow Amazon to undercut in-state retailers by the amount they must add in sales tax, which can exceed 8%.

A close examination of Amazon’s corporate practices, based on interviews with more than a dozen former employees and people who have done business with the Seattle company, as well as a review of corporate documents, indicates that the company believes its sales-tax policy is critical to its performance.

Credit Suisse recently estimated that if Amazon were forced to collect sales taxes in all states, it would lose as much as $653 million in sales this year, or 1.4% out of an estimated $45.5 billion in revenue. …


Like many online retailers, Amazon says it is obliged to add state and local sales taxes only on purchases from residents of states where Amazon has physical retail operations. But it also has defined retailing narrowly as selling, so related operations such as warehouses don’t put it on the hook to charge tax, company representatives have said.

Amazon said it follows a 1992 U.S. Supreme Court ruling. Legal experts say the retailer’s approach is aggressive but within the law.

In response, lawmakers in nine states have passed new legislation aimed at limiting Web retailers’ wiggle room to avoid charging sales tax. Amazon is now challenging the bills through a lawsuit and a ballot initiative. It is simultaneously redoubling its efforts to avert triggering their requirements for tax collection by retreating from states it deems unfriendly.

State and local governments nationwide this year will lose $10.1 billion to $11.3 billion in sales taxes not collected by Web retailers, estimated University of Tennessee researchers in a 2009 report.

Basics of Accounting Are Vital to Survival for Entrepreneurs

New York Times

Business Day
Published: August 3, 2011
Business owners do not necessarily need to know how to prepare a balance sheet, but they do need to know which gauges to watch.

Few people start a business because they are good with numbers. In fact, the terms “accounting” and “financial analysis” tend to put business owners to sleep or send them screaming from the room. But to run a business effectively, most owners need to have some understanding of their finances.

Eric Schultz for The New York Times

Bart Justice, owner of a paper-shredding operation, credits his business’s survival with his decision to hire an accountant.

It is, for example, entirely possible for a company to be profitable but fail anyway because it does not have enough cash coming in to pay its bills.

“It’s like a racecar that goes too fast and runs out of gas,” said Doug Tatum, a serial entrepreneur who is a visiting professor of entrepreneurship at Middle Tennessee State University in Murfreesboro. Business owners do not necessarily need to know how to prepare a balance sheet, but they do have to know which gauges to watch.

One obvious step is to work with a bookkeeper or accountant, someone who can help navigate arcane accounting and tax rules and organize your affairs. But owners should understand that accounting is not just about paying taxes or reporting results.

“Small-business owners tend to hate accounting because it’s boring,” said Brian Hamilton, chief executive of Sageworks, a company in Raleigh, N.C., that tracks financial data for privately held businesses. “The mistake they make is not thinking about how they can use certain numbers as tools to better manage where their business is headed tomorrow.”

What follows is a guide to better understanding the numbers that drive a business. As the examples make clear, even smart people with advanced degrees can become confused by accounting issues.

Read more here.

even smart people with advanced degrees can become confused by accounting issues.” So true!

Carol Topp, CPA

Audit flags and easy recordkeeping

I’ll be giving two sessions at the 2011 Ultimate Women’s Expo

Avoiding IRS Audit Flags (pre-recorded. Buy a ticket for all sessions. See below!)

Making Business Record Keeping a Breeze (live for free!)

May 19 Thursday at 2:00 PM EST

Carol Topp, CPA: Business Record Keeping a Breeze

Listen ONLINE CHAT Here or Call to listen live: 347-215-9316

Ready for a fun Virtual Women’s Convention??? One that promises to inspire you, encourage you, and equip you for your call as a godly woman? This is your event…or EVENTS! (Yep! We host regular events here just for women!)

Right there in the comfort of your home you can join us! We always have an amazing speaker line-up PLUS a Mommy Grab Bag that is completely amazing! Just imagine….

No crowds!
No makeup!
No parking!
No walking for blocks and blocks!
No expensive trips or hotel stays!
No babysitters!

Talk about FUN! This is one that you will not want to miss!

Everything is recorded live online so you can join us for each and every workshop–no conflicts with the schedule! You can listen bit-by-bit to every one of our wonderful speakers! AND! We have a WONDERFUL Membership Site available for all attendees–filled with articles, audios, and free ebooks to help you kick-off your best year ever!

PLUS! That is not all! We have the most AMAZING gifts for you from fellow writers/speakers/sponsors. They are already being added into our Membership Site, ready for you to dig into expo week. It is one of the most amazing offers ever! You will definitely want to join us!

PLUS! When you sign up! You get more!

  • Free ebooks!
  • Free bonus audios to help you get started on the right track!
  • Doorprizes and special gifts–ALL WEEK!!
  • Membership to our Ultimate Women’s Expo Membership Site–With lots of free articles, bonus Mp3 download audios, free printable planning pages, and wonderful savings from our speakers and sponsors!

Get Your Ticket TODAY!!


“Taxman” with Eric Clapton and George Harrison

In celebration of April 15, the traditional tax due tax, and April 18 the tax due date for 2011, I thought you’d like “Taxman” with Eric Clapton and George Harrison

Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman
Yeah, I’m the taxman

Should five percent appear too small
Be thankful I don’t take it all
‘Cause I’m the taxman
Yeah, I’m the taxman

(If you drive a car car) I’ll tax the street
(If you try to sit sit) I’ll tax your seat
(If you get too cold cold) I’ll tax the heat
(If you take a walk walk) I’ll tax your feet


‘Cause I’m the taxman
Yeah, I’m the taxman

Don’t ask me what I want it for
(Ah, ah, Mr. Major)
If you don’t want to pay some more
(Ah, ah, Mr. [..])
‘Cause I’m the taxman
Yeah, I’m the taxman

If I reduce it, can you sleep
(Ah, ah, Boris Yeltzin)
Get back [..] V.A.T.
(Ah, ah, Mr. Bush)
‘Cause I’m the taxman
Yeah, I’m the taxman

If you get a hat hat, I’ll tax your hat
If you get a cat cat, I’ll tax your cat
If you wipe your feet feet, I’ll tax your mat
If you walk away away, I’ll tax your [..]

Now my advise to those who die
Declare the pennies on your eyes
‘Cause I’m the taxman
Yeah, I’m the taxman.

And you’re working for no one, but me

Yes, I’m the taxman
Yeah, I’m the taxman

What happens to tax refunds if the government shuts down?

From the National Association of Tax Professionals;

Important Information Regarding the Possible Government Shutdown and its Impact on IRS Services

The possibility of a government shutdown at midnight April 8 has forced the IRS to make contingency plans.  This is what we know at this time:
  • The April 18 filing deadline for Form 1040 returns remains in effect.
  • Tax payments will be processed as usual.
  • Returns filed on paper will not be processed until after the government resumes normal operations. This will delay refunds on paper filed returns.
  • E-filed returns will be processed as usual with no delay in refunds
  • Taxpayers who have an appointment scheduled with the IRS (audit, collections, appeals or Taxpayer Advocate cases) during the period of the shutdown should assume the appointment has been canceled. These appointments will be rescheduled when normal IRS operations resume.

Business as usual for CPAs and tax preparers!

Carol Topp, CPA

Tax cheats: Single, young men

The typical American tax cheat is male, single and under the age of 45.

Tax Cheats: Single, Young and Male

CNNMoney.com reports that:

They think they are “overall better people”, but they’d take money from a child, keep the wrong change given to them by a cashier, ask a friend to pretend to be a former boss for a reference check and lie about their income to qualify for government aid.

Many of them also said they would wear an outfit once and return it, file false insurance claims, keep money they see someone drop on the floor, or lie about finding something inappropriate in their food just to get a free meal.

Carol Topp, CPA

Carol speaks to unemployed professionals

I’m a member of the Ohio Society of CPA’s Speakers Bureau and I recently spoke to a group of unemployed professionals at the Cincinnati Great Oaks Return to Work Center.

I talked about budgeting, debt, taxes, starting a business and whatever the audience wanted to discuss.

Here’s what came to me as feedback:

Hi Carol,

You are awesome!!!

Thanks you VERY much for your help. Thanks for coming to speak to the job seekers at the Great Oaks Return to Work Center Thursday.Your time and effort to put together a wonderful, useful, informative, and relevant presentation is GREATLY appreciated.

Carol, your interactive presentation was a HUGE hit. You got people really engaged and involved. You were well prepared to handle any thing that came your way and kept everyone focused on all of the topics that we all wanted to hear. You provided a LOT of useful and relevant information for people in career transition. You were “spot on” and totally understood your audience’s perspective. Huge thanks to you!!

You were the right person for us and we are so glad you were willing to help. You really made this happen for us and I cannot thank you enough.

Your presentation provided good advice for people to prepare filing 2010 returns and to prepare themselves to keep better records for 2011. All of the attendees walked away armed with information to bring more control into their lives in these economic times of uncertainty.

I hope you will accept another invitation to speak after tax time.

Thanks so much for your help.
Dana Brean>

I was so flattered to receive this note and very glad to hear what I shared was helpful.

If you would like to invite me to speak to your Cincinnati-area community group about personal finance, taxes or starting a business, please visit my speaker page and contact me.

Carol Topp, CPA