Tag Archives: raleigh tax preparation

Should you be filing FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR)?

by: Brittany Craig

According the to the IRS’ FBAR guidance[1], theforeign currency list of U.S. persons who may be required to report their foreign bank and financial accounts annually to the United States Treasury include, but is not limited to the following who have a financial interest or signature authority in a foreign account or asset:

  • U.S. citizens
  • Resident aliens
  • Trusts
  • Estates
  • Certain domestic entities

The Department of the Treasury indicates that if the aggregate value of all foreign account(s) or asset(s) is at least $10,000 in U.S. dollars at any time during the calendar year, then the maximum value of the financial account(s) maintained by a financial institution physically located in a foreign country should be reported.

While the reporting threshold is $10,000, some U.S. persons may choose to report their foreign bank and financial account(s) even if they are below the aforementioned threshold in an effort to instill good faith with the Department of Treasury.

Form 114 must be received by the U.S. Department of Treasury no later than June 30, via FinCEN’s BSA E-Filing System.  Note, this report is not filed with a federal tax return and there are no extensions of time.  In addition, if the report is not filed on time non-willful penalties may be up to $10,000 and willful penalties may be up to the greater of $100,000 or 50% of account balances.  Criminal penalties may apply, too.

Our tax department is incredibly knowledgeable about miscellaneous forms and other tax issues.  Please feel free to contact our office for more information.

Brittany ([email protected]) is a tax senior at Langdon & Company LLP.  She has experience in tax planning for a variety of clients including corporate and pass-through to individuals.

[1] http://www.irs.gov/pub/irs-utl/IRS_FBAR_Reference_Guide.pdf

Affordable Care Act: Additional Taxes – Effective 2013

by Lee Bowman 

In addition to the healthcare mandates that become effective in 2013, there are two new taxes within the Act that begin in 2013 to help offset the costs of the healthcare act.  They are the 3.8% Net Investment Income Tax and the .9% Medicare Tax on wages and self-employment income.

Net Investment Income Tax:  The 3.8% net investment income tax will only affect taxpayers when their modified adjusted gross income (AGI) exceeds $250,000 for married filing jointly taxpayers and surviving spouses; $200,000 for single taxpayers and head of household filers, and $125,000 for married taxpayers filing separately.  If you claim the foreign earned income exclusion, the excluded amount will be added back to your AGI to arrive at your modified adjusted gross income.

Net investment income includes interest, dividends, royalties, annuities, rents and net gains from property sales.  Wages and net income from an active trade or business are not included in net investment income. Tax-exempt bond interest is excluded from the 3.8%  net investment income tax.  If your modified AGI exceeds the above amounts, you will be subject to the 3.8% tax which will be applied to the lesser of 1) your net investment income for the year or 2) the excess of your modified AGI for the tax year over your threshold amount.  This tax will be in addition to the income tax that applies to that same income.

When selling your primary residence, you may be able to exclude up to $250,000 of net gain or up to $500,000 for MFJ taxpayers.  This excluded gain will not be taxed.  Gain in excess of those exclusions may be taxed.  Distributions from Roth IRAs are excluded, however distributions from regular IRAs will be included in your modified AGI but is not subject to the 3.8% net investment tax, ut could cause other income to be subject to the 3.8% tax.  When making estimated income tax payments, taxpayers must include the 3.8% net investment income tax in their estimated payments in order to avoid a penalty.

Please note that the modified AGI amounts listed above will NOT be adjusted for inflation.

tax balance0.9% Tax on Wage and Self-employment Income:  The 0.9% additional Medicare Tax applies only to employees and self-employed individuals, not employers.  The tax applies to wages in excess of $250,000 for MFJ taxpayers; $125,000 for MFS, and $200,000 for all other filers.

Once an employee’s wages exceed $200,000, employers must withhold the additional 0.9% tax from their wages.  This may not be enough if the employee has another job, or if his spouse has wage or self-employment income.  The taxpayer may file a new Form W-4 with his employer to have additional taxes withheld.

Self-employed taxpayers will pay the additional 0.9% tax on their self-employment income using the same wage brackets listed above.  The 0.9% tax is in addition to the 2.9% Medicare tax on self-employment income; however, the taxpayer will not be allowed to deduct 50% of this additional Medicare tax on the front page of their return.

Because these new taxes are not inflation adjusted, more taxpayers will pay these taxes in the future.  The current Federal tax schedules can be found here.  2013 NC Income tax rate is 5.7% on all NC taxable income.

Langdon & Company LLP is full of knowledgeable tax staff that would be happy to assist you with your tax needs.    Please contact our office to get more information.

Lee Bowman ([email protected]) is a Manager in our Accounting Services practice at Langdon & Company LLP.  She has over 25 years of experience in taxation and also specializes in multi-dimensional corporate accounting across various states.

Why a Non-Profit Should Hire a CPA Firm?

The provisions of the Internal Revenue Code are complex regarding the tax treatment of non-profit donations, transactions and other recognizable events. An experienced Certified Public Accountant (CPA) is trained in the nuances of non-profit accounting and tax returns, and is capable of assisting management with recordkeeping and tax return preparation.

Utilizing a Raleigh CPA allows management to focus on day-to-day operations, and generate additional streams of income.

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Tax-Exempt Organizations May 15 Deadline

Just recently, the IRS announced that many tax-exempt organizations have a May 15 deadline that is required by law to file final reports with the IRS. If an organization has not filed their reports for three consecutive years, they may see their federal tax exemptions automatically revoked.

Read more about the article here.

Contact Langdon & Company LLP, a Raleigh CPA firm specializing in Business Services including tax services, tax consulting, audit services, accounting, transaction planning and succession planning.

Understanding Estate Tax and Gift Tax

When it comes to paying taxes, the government has several areas in which they take a portion of your assets. You pay taxes on what you earn and then you also have to pay taxes when you give money away.

Taxes can be taken out of gifts regardless of whether you give them when you’re alive or after you pass away as part of your estate. Langdon & Company LLP, a Raleigh CPA firm, will review clients documents to determine whether their stated planning objectives have been met. Below are the basics on how the estate tax and the gift tax work together.

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Certified Public Accountant vs. Tax Preparer

It’s income tax season again. Many of us get tense just thinking about filing our tax returns. Rather than stressing over preparing your own tax returns, consider seeking out professional help. There are basically a few options when it comes to completing your tax returns, including: doing it yourself, asking a friend or family member for help, paying a tax preparer or hiring a NC CPA firm. Unless you or your friends and family members are experts in current tax laws, hiring a professional is the best option. Between the tax preparer and CPA, which one should you hire?

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IRS Start Processing 2012 Tax Returns January 30

Langdon & Company LLP, provides tax services in the Raleigh area.  We provide consultation and tax services to business owners by helping to interpret tax law, raise tax related issues and provide solutions to tax problems.

Just recently The Internal Revenue Service (IRS) has announced that it will open the 2012 tax season beginning January 30, 2013. This announcement comes following the changes made by Congress on January 2, 2013 to the American Taxpayer Relief Act.

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Summary of The American Taxpayer Relief Act

On the first day of the year 2013, the United States Congress passed House Resolution 8, better known as the American Taxpayer Relief Act (ATRA) of 2012. Aside from preventing a headlong dive off the proverbial fiscal cliff, ATRA extends some of the Bush-era tax cuts and introduces new provisions that may or may not help to curb the budget deficit and stimulate the American economy.

Langdon & Company LLP have experienced Raleigh tax service professionals available who understand the tax laws and how they may impact individuals or specific businesses.

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