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posted on February 7, 2013 by
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Assistance for military members – what is “dryhootch”?

What unique service is available to provide assistance for military members returning home?  I recently attended a presentation that touched me and opened my eyes to the unique challenges our military members face when returning home to civilian life.  Most of us have family members that have either served our country, are currently serving, or will be serving in the future.  Family members on the home front are raising families and running households alone, wondering if and when their loved ones will return, and adjusting to a new state of “normal.”

The media has made us aware of the difficulty most veterans have obtaining jobs when they return home.  However, the thirty-year-old recent veteran that shared his personal story brought awareness to bigger issues – the emotions involved with the transition home.  Many veterans have a hard time detaching from military life and joining civilian life which can lead to Posttraumatic stress disorder (PTSD).  In order to cope with PTSD many turn to the use of alcohol and drugs resulting in financial distress, divorce or even suicide.   Fortunately there is an organization that offers help.

Dryhootch of America is veteran to veteran peer counseling.  The organization was created by a group of Vietnam veterans who wanted to help the Iraq/Afghanistan generation of vets with reintegration issues, in addition to helping vets from all eras.  As stated on their website, www.dryhootch.org, “surviving the war is just the beginning.”    The services they provide range from coping with PTSD, addiction, and survivors of suicide, to finding housing and employment.  Most of all, they offer support.

Right here in Milwaukee, in the Milwaukee County War Memorial, is the dryhootch headquarters.  They have two coffee shops in Milwaukee: 1030 E. Brady Street and 4801 W. National which allow the public to experience a great cup of coffee and support the organization.  Give it a try and help our military members adjust to life back home!  Want to know more?  Visit www.dryhootch.org.  Want to donate?  Donations are accepted on their website or at the coffee houses.

Filed Under: Military
posted on February 7, 2013 by
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Beware of IRS Tax Scams & Protect Your Tax Identity

IRS tax scams and tax return identity theft are a growing problem.  In 2011 the IRS processed about 145 million returns.  As of May 16, 2012, the IRS had pulled 2.6 million returns for possible identity theft.  Their current inventory of identity theft cases is more than 450,000 and they estimated that identity-theft related fraud accounted for approximately 1.5 million tax returns in excess of $5.2 billion.  Investigators found a single address that was used to file 2,137 tax returns for $3.3 million in refunds.  These are astonishing numbers!

Thieves are using personal information, such as names and Social Security numbers, without permission to commit fraud on tax returns in order to claim refunds or other credits to which a taxpayer is not entitled.  These thieves typically file early in the tax season before you do which allows them to receive a refund before you file the real return.  When you file the real return it will be flagged for review which make take months to straighten out.

How are thieves obtaining this personal information?  The most common ways include email or telephone phishing and dumpster diving.

How can you protect yourself from IRS tax scams?

Never discard tax returns, bank records, credit card receipts or other records containing personal and financial information. Shred these documents!  You can purchase a shredder for your home for under $30 or look for banks and other institutions in your community that offer shred fests.  Never take action on an email that appears to be sent by the IRS.  Some taxpayers receive email messages allegedly from the IRS advising them that they are under investigation or have a refund pending with a link to proceed.  The IRS does not send unsolicited, tax account related emails and never asks taxpayers for financial information, including PINs and passwords, via email.

Have you seen any form of IRS tax scams?  Leave a comment below to let us know what you’ve seen.

Source:  Stopping Tax Identity Theft, February 2013 Journal of Accountancy  http://journalofaccountancy.com/Issues/2013/Feb/20126507.htm

Filed Under: Identity Theft Tagged With: ,
posted on January 28, 2013 by
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The New 3.8% Medicare Tax

Beginning in 2013 the new 3.8% Medicare Tax will apply to certain individuals, estates and trusts.  The new tax will apply to “net investment income” which includes:  capital gains, interest, dividends, and other gross income from trades or businesses that are passive activities.   Note that gross income from active activities, tax-exempt income and distributions from retirement plans* are excluded from this tax.

For individuals, the additional 3.8% tax applies to the lesser of:

  • Net invesment income -OR-
  • Modified Adjusted Gross Income (AGI) in excess of $250,000 if married filing jointly or $200,000 if unmarried

For trusts, the tax applies to the lesser of:

  • Undistibuted net investment income -OR-
  • Adjusted Gross Income (AGI) in excess of $11,950

*NOTE:  Even though the 3.8% Medicare Tax does not apply to retirement plan distributions, it’s possible that the distributions may increase your AGI enough to subject you to the 3.8% Medicare Tax on your net investment income.  If you are retired and taking distributions from your portfolio, we can help you determine the most tax-efficient way to use your portfolio.  Contact Us to learn more.

Filed Under: Tax Updates
posted on January 26, 2013 by
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What are the new long-term capital gain (and “qualified” dividend) rates?

What are the new long-term capital gain rates (and “qualified dividend) rates in 2013?  The 0% and 15% rates remain in place for taxpayers not exceeding the following thresholds:

  • $450,000 if married filing jointly
  • $400,000 if unmarried
  • $11,950 for estates & trusts

For those exceeding these thresholds the long-term capital gain rate is now increased to 20%.  Note that “qualified” dividend tax rates continue to be taxed at long-term capital gain rates, and therefore, follow these same rules.  But there’s more…a future post will explain the new 3.8% Medicare tax.

Filed Under: Tax Updates
posted on January 25, 2013 by
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What are the new ordinary income tax rates?

For most of us the individual income tax rates will stay the same.  The 10%, 15%, 25%, 28%, 33% and 35% tax brackets were made permanent.  However, a 39.6% tax bracket was added for those taxable income levels above:  $400,000 if single, $450,000 if married filing jointly, $425,000 if filing as head of household and $225,000 if married filing separate.  Fiduciary (estates and trusts) taxpayers reach the 39.6% bracket at just $11,950.  Click here to learn more about how Direction Financial Management can help you navigate through these changes.

 

Filed Under: Tax Updates
posted on January 21, 2013 by
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2013 Annual Limits Relating To Financial Planning Released

The College for Financial Planning has posted the 2013 figures relating to tax rates, retirement plan contribution limits, Medicare premiums, Social Security limits, education credit eligibility and more.  Check out the details here.  If you need help determining how these changes relate to you Contact Us.

Filed Under: Tax Updates
posted on January 15, 2013 by
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New Medicare Tax is Here (0.9%)

What is the new Medicare tax?  Historically the Medicare payroll tax has been 2.9%. It applies only to earned income, which is wages you are paid by an employer, plus tips. You’re responsible for 1.45% of the tax, and it’s deducted automatically from your paycheck. Your employer kicks in the other 1.45%.

Under the new tax provision beginning in 2013, high-wage earners will owe an additional 0.9% on earned income above the thresholds mentioned above. So, for example, if you are an individual filer whose Modified Adjusted Gross Income (MAGI) will be $225,000 in 2013, you will pay a 1.45% Medicare tax on the first $200,000, then 2.35% (1.45% plus 0.9%) on the next $25,000. Your employer will be required to withhold the extra 0.9% once your wages pass the $200,000 threshold for individuals.

Beginning in 2013 the new 0.9% Medicare tax will be applied to wages and self-employment income in excess of $250,000 if married filing jointly and $200,000 if unmarried.  If you file quarterly estimated tax payments be sure to include this additional tax in your estimates.  Want to learn more?

Filed Under: Tax Updates
posted on January 10, 2013 by
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Payroll Tax Holiday is Over

You may notice your paychecks are a little smaller this month.  This is due to the expiration of the payroll tax holiday.  The Social Security component of payroll and self-employment tax increases by 2% beginning January 1st.  This means the employee’s share of payroll tax is now 6.2% instead of 4.2%.  Self-employment tax is now 12.4% instead of 10.4%.  These taxes apply to wages or self-employment income up to $113,700 (Social Security limit).

Filed Under: Tax Updates
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