If you have any clients that are affected by the Defense of Marriage Act (DOMA) please be aware that the IRS now recognizes all same-sex marriages nationwide.
If a same-sex couple is legally married in a state that recognizes same-sex marriage, the couple will be treated as married for all federal tax purposes. This is true even if the couple resides in a state that does not recognize same-sex marriage.
IMPACT. Legally-married same sex couples
must file as married filing jointly or married
filing separately for the entire 2013
tax year. For earlier tax years still open by
the statute of limitations (generally 2010,
2011 and 2012 returns), these couples
have the option to file an amended return
to reflect their married status. In an unusual
twist based on the effective date of the
guidance, legally-married same-sex couples
who have not yet filed their 2012 returns
have a limited time to file as unmarried
taxpayers. If they file on or after September
16, 2013, they must file as married. In
addition, employers, employees and plan
administrators will need to sort out withholding,
pre- and after-tax benefits, retroactive
benefits, and refund opportunities.
If you know of a JMF client that might be affected by this please contact them as the September 16 deadline is almost here.
For much more information please read this:
At this time we are not sure how Alabama will apply this law for state of Alabama income tax returns. State law has no effect on Federal income tax returns.
The Alabama Accountability Act of 2013 signed into law earlier this year, provides Alabama state income tax credits for both:
This post will focus on the second Alabama tax credit listed above, the one for donations to qualifying scholarship-granting organizations.
This new Alabama tax credit is available for donations to qualifying scholarship-granting organization (SGOs). .
Individual taxpayers are limited to an Alabama tax credit of the lesser of $7,500, or their actual donation (a maximum of $7,500). Corporate taxpayers are allowed a credit equal to 100 percent of their donation. For all donors, the amount of the credit that can offset Alabama taxable income is limited to the lesser of 50% of their Alabama income tax liability or the amount of the allowable credit.
For individuals, their Alabama tax liability must be $15,000 or more in order to get the full benefit of the tax credit in the year the donation is made. However, any limited portion of an allowable credit may be carried over for up to three tax years.
Credits may only be claimed once.
The federal tax effect is zero for individuals, unless the taxpayer is subject to the alternative minimum tax (AMT). The amount that is donated should provide a federal income tax deduction, subject to normal federal limitations. Keep in mind that any donated amounts that are eligible for an Alabama tax credit will reduce state income taxes. So for federal tax purposes, the state income tax deduction will likely decrease by the same amount that the charitable deduction increases. In other words, there may be no net change in Federal taxes for taxpayers that choose to make a donation to an SGO. For some taxpayers, who are pay alternative minimum taxes (AMT) on their Federal tax returns, the donation may reduce their AMT liability. For individuals who pay AMT, this reduction in Federal tax could be approximately $2,000, depending on the amount donated, the amount eligible for the state tax credit and the amount of AMT liability.
Organizations that wish to become an SGO must apply to the Alabama Department of Revenue (ADOR). Beginning August 1, 2013, the ADOR will notify qualified SGOs that they are included on a list of organizations approved to accept qualifying scholarship donations. There is a maximum of $25,000,000 in annual tax credits for this program.
Alabama Accountability Act of 2013
For a current list of SGOs maintained by the ADOR click here:
Scholarship Granting Organizations
For a current list of qualifying schools click here:
There may be a sense of urgency for taxpayers who wish to make these donations, as once the maximum of $25,000,000 in tax credits has been allocated, donations will not be eligible for the tax credits.
To make a donation that is eligible for the Alabama tax credit, taxpayers will need to reserve their tax credit by signing up with the Alabama Department of Revenue using the My Alabama Tax system (MAT). Click here for instructions:
Alabama Accountability Act Guidance
This summary is intended to provide an overview of the potential tax effects of making a donation under the Alabama Accountability Act of 2013. It should be noted that by making these donations, taxpayers in Alabama will be re-directing some of what they would have paid in state income taxes to fund scholarships for private schools. In Alabama, after deducting for the cost of collections and refunds, nearly all state income taxes go to the Alabama Education Trust Fund, to fund public schools.
Before making these donations, we recommend that all clients and friends consult with their tax advisor and contact the school and organization to which they wish to make a donation.
On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, allowing the United States to avert the so-called “fiscal cliff,” which would have triggered automatic tax increases and spending cuts. Among its provisions, the new law extends credits for the lower and middle class, raises taxes on top earners and ends a payroll tax cut.
Our 2013 Tax Pocket Guide provides a concise chart of the most common tax rates for individuals and businesses. This guide can help you estimate your 2013 taxes. In addition, we can help you create a strategy to minimize taxes for the coming year, as well develop a long-term tax strategy to benefit your retirement, family and heirs.
JamisonMoneyFarmer CPAs are always here to answer your tax questions, provide tax planning advice and keep you informed of any new legislation that may impact your personal or business situation. Please contact us at 205-345-8440 or email@example.com if we can be of assistance.
Access the 2013 Tax Pocket Guide here.
As if it is not enough to have to face the grief of losing a loved one, there are so many other administrative tasks set in motion by someones death that must be taken care of. From collecting the information needed to document the contents of the decedent’s estate, all the way through to distribution of the assets to the heirs, this process can be a long one. Quite often, the path seems too difficult to traverse. We hope that you can use this handy guide as a road map in navigating through the administration of the estate, and we are here to provide any assistance we can.
January – Get Organized for Tax Time
1) Set up a file (or box) for your 2012 taxes. Put a label on it and drop in your Form W-2 and 1099s as they come in the mail.
2) Open the envelope with your JMF organizer. Please use the organizer as a guide to make sure you have everything that you had last year. The JMF organizer is much shorter this year and it is easy to use. Using the organizer will help us help you save taxes. Please put the organizer in your 2012 tax file to give to JMF.
3) If you think you will be getting a refund and you would like your refund direct deposited be sure to note in your organizer if the bank account is the same as last year. If your bank account has changed or we do not have it on file include a void check or check photocopy for the account you would like the refund deposited.
4) Sign the Foreign Financial Asset statement that we sent to you in the mail and put it in your 2012 file.
5) Locate those charitable donation receipts for amounts of $250 or more and put them in that 2012 file.
6) Take a look in your checkbook to see if you paid any estimates we set up for you last year & make a note of how much & when you paid them.
7) Put March 25, 2013 on your calendar. Please mail or bring your tax documents to your JMF accountant before that date or let us know if you prefer to get an extension.
8) Now is a good time to also start a file for 2013 (you can put those charitable donation receipts in there all year long).
“Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Judge Learned Hand – 1934