Lately we’ve been surprised by how many people are thinking about filing a gift tax return without a business valuation. We’ve had a few conversations with people who are under the impression that they don’t need to attach a valuation of their business interest to the gift tax return.
Before you file your return without a valuatio (more…)
If you’re expecting a federal tax refund this year, it could be delayed. The agency reports that new anti-fraud measures could slow the refund process by approximately one week. (more…)
So it’s tax time. While that thought might conjure up images of lots of receipts in a shoe box, you don’t want to be that person. With a little preparation, you can help make your visit to your accounting professional less expensive and more enjoyable. Here are a few tips to help you prepare. (more…)
If your business has paid at least $600 in professional services or other payments in 2011, you may be subject to a new 1099 reporting requirement as you begin to file your 2011 taxes. (more…)
Employers who have erroneously treated workers as nonemployees or independent contractors now have an opportunity to get into compliance with the IRS through a low-cost, voluntary reclassification program. (more…)
The Internal Revenue Service sends millions of letters and notices to taxpayers for a variety of reasons each year. Here are some things to know if you receive one. (more…)
If you converted a traditional IRA to a Roth IRA account last year, you may be facing an account that is worth much less than when you converted it. But you might also be facing a tax bill on value you no longer have. You do have an option, but only if you act quickly – reverse your 2010 Roth conversion.
If you converted your traditional IRA to a Roth IRA last year, the transaction triggered a taxable distribution from the traditional IRA, followed by a contribution to your Roth account. That tax will be based on the value of the traditional IRA on its conversion date. That means if your account is worth less now, you will owe taxes on money that no longer exists.
How to Reverse Your Roth IRA
Thankfully, the Roth conversion regulations allowed for the ability to reverse the conversion – but only if you do so before October 17. This involves completing the proper paperwork with your IRA custodian or trustee. When properly filed, the IRS considers your account as being “recharacterized” from a Roth account back to traditional IRA status. It’s as if the conversion never happened, and your tax liability disappears.
You’ll need to amend your 2010 tax return to allow for the reversal, or adjust your 2010 return if you have filed for an extension. Your reversal of the Roth conversion this year will also trigger some additional documentation requirements for your 2011 tax return.
Reconverting to Roth
Now that you’ve lessened your tax liability on phantom income that vanished due to the market’s versatility, you might consider using the down market to your advantage. You can reconvert your now traditional IRA back to a Roth – and pay less tax on it than you would have paid last year. You must wait 30 days after the reversal to reconvert it. Reconverting your traditional IRA account to a Roth can make sense if you expect your assets to appreciate quickly.
Your tax professional can assist you in amending your 2010 tax return or adjusting your extended 2010 return. He or she can also walk you through the reporting process that will be required should you decide to reconvert your IRA.
If you have undisclosed income through offshore accounts, time is running out to voluntarily disclose it and bring your taxes current. The IRS is winding down a voluntary disclosure program that began February 8 and will end on August 31. (more…)
In a nod to higher gas prices, the IRS has increased the business mileage rate deduction to 55.5 cents per mile. The new rate becomes effective July 1 and raises the rate 4.5 cents. The deduction for medical and moving expenses also increases 4.5 cents to 23.5 cents per mile. (more…)
Recently blogger Paul Caron, a professor of law at Cincinnati College of Law, shared an IRS tax form from 1864. The form was two pages, and 10 questions. As our country considers ways to simplify our current tax laws, it may make sense to look at where and how our tax laws began nearly 150 years ago. (more…)
Corporate Headquarters 419 West High Avenue, P.O. Box 1020 New Philadelphia, Ohio 44663-5120
p. 330-339-6651 f. 330-308-9506
Copyright © 2012. All rights reserved. Rea & Associates Inc. Privacy Policy