TaxEsqBlog -by Ronald J. Cappuccio, J.D., LL.M.(Tax)

3% personal and 2% Corporate Overpayment Rates IRS has announced that the interest rates for tax overpayments and underpayments for the calendar quarter beginning Apr. 1, 2013, will remain the same as for the first quarter of 2013. For noncorporate taxpayers, the rate for both underpayments and overpayments for the second quarter of 2013 will remain unchanged at 3%. The 3% rate also applies to estimated tax underpayments for the second quarter in 2013. For corporations, the overpayment rate for the second quarter of 2013 will remain at 2%. Corporations will receive .5% for overpayments exceeding $10,000. The underpayment rate for the second quarter of 2013 for corporations will be 3%, but will be 5% for large corporate underpayments. Interest factors for daily compound interest for annual rates of 0.5% are published in Appendix A of Rev Rul 2012-32. 

IRS Issues Annual Advice on Missing Form W-2's Each year, the IRS issues annual advice on actions a taxpayer should take when the taxpayer has not received his or her Form W-2. IRS Website (2/8/13). According to the IRS, if a taxpayer has not received his or her Form W-2, the taxpayer should: (1) Contact the employer. Ask the employer or former employer to send the W-2 if it has not already been sent. Double check that the employer has the correct address. (2) Contact the IRS. After February 14, a taxpayer can call the IRS at 800-829-1040 if the taxpayer has not yet received his or her W-2. The IRS will require the following information: (i) the taxpayer's name, address, social security number and phone number; (ii) the employer's name, address and phone number; (iii) the dates the taxpayer worked for the employer; and (iv) an estimate of the taxpayer's wages and federal income tax withheld in 2012, based on the taxpayer's final pay stub or leave-a...

Employers - are you stuck with "Obamacare" Obamacare  is a disaster for employers that have low wage employees. Frankly, many companies will need to change how they conduct business in order to stay competitive . Number of Employees Does your business have emough employees to be subject to the pay-or-play  Obamacare tax? This is called the  shared responsibility requirement forcing employers to pay a huge penalty or provide health insurance. 50 Employee Requirement. The simple definition is employers with 50 or more full-time equivalent workers. Unfortunately, this is only a partial answer. The tricky term,   full-time equivalent (FTE) covers employees who average 30 hours per week .  Note: the normal 40 hour per week definition for full time is not applicable .  The time period is the prior year . Since the mandate begins in 2014, the year 2013 controls the determination of the number of employees. There are some exceptions for sea...

Relatives as Dependents You can  take exemptions for qualifying relatives.   Rule: A relative does not have to live with you and there is no age requirement. Support: First, you must be supporting the qualifying relative . Qualifying Relative:  In order to be a qualifying relative, the person must: Have earned less than $3,800 in gross income or unemployment benefits for the year 2012 Have received more than half of their support from you.  This does not have to be cash payments. It can be food, clothing, shelter, education, medical and dental care, recreation and transportation.  To calculate if the relative meets this test:   add all of your expenses for them; subtract   welfare, food stamps. government benefits and earnings. Be a U.S. resident or citizen, or a resident of Mexico or Canada Not be married filing jointly Qualifying relative s could be your: child parent sibling stepparent stepsibling half sibling grandpare...

You cannot claim your child as a dependent if: You are being claimed as a dependent by someone Your child is married and filing a joint tax return (unless he/she is filing just to claim a refund of withheld tax and isn't taking a personal exemption) Your child is not a resident of the U.S., Mexico or Canada Your child is over 19 and not a full-time student Your child is 24 or older on December 31 of the tax year Your child provided more than half of his or her own support Your child did not live with you for half the year, 183 days or more. Note: the exception to this rule -  illness, education, business, vacation or military services, or the child was born or died during the year You are separated or divorced, and your child spends more time at your ex-spouse's home.

Roth IRA Rollovers For the past few years, plans with designated Roth accounts could allow an individual to roll over an amount from a non-Roth account into the individual’s designated Roth account in the same plan, but only amounts the individual could have had distributed from the plan, usually because the individual had attained age 59½ or had severed from employment, according to the IRS. Beginning in 2013, The American Taxpayer Relief Act of 2012, or ATRA, allows a 401(k) plan can permit this type of rollover for an amount that is not eligible for distribution at the time of the rollover, such as an amount in an individual’s regular (pre-tax) elective deferral account when the individual is not eligible for a distribution from that account. A similar expansion applies to 403(b) plans and governmental 457(b) plans. The amendment to the in-plan Roth rollover rules was made by ATRA. The IRS said it anticipates issuing guidance later this year about the expanded in-plan Roth rollover...

Well-drafted contracts  prepared by your tax and business attorney can provide protection for the parties signing it. Contracts determine rights and obligations. Yet, many businesses enter into transactions with poorly written contracts or contracts with "boilerplate" or "standard" provisions that are not favorable to them.  There is no such thing as a "standard" contract! In some cases, business owners and managers make deals with no written contracts at all. When disputes occur, they are forced to rely on memory and find that verbal contracts are difficult to prove in court. Remember, an oral contract may be enforceable it is just difficult to prove.     Those signing contracts sometimes overlook important provisions, including clauses that lay out the "choice of law" and "venue." These clauses determine what law applies and the location where disputes related to the contract will be resolved. You don't want the inconv...