Assured Tax

Senate Bill SB-2099 will require us to put on our 2009 1040 federal tax form all guns that you have or own. It may require fingerprints and a tax of $50 per gun.

This bill was introduced on Feb. 24. This bill will become public knowledge after it is voted into law. This is an amendment to the Internal Revenue Act of 1986. This means that the Finance Committee can pass this without the Senate voting on it at all.  The full text of the proposed amendment is on the U.S. Senate homepage, http://www.senate.gov/

You can find the bill by doing a search by the bill number, SB-2099.

The pending Congressional bill requiring gun owners to list their guns on federal income tax is both outdated and contains a good deal of misinformation. The referenced bill, “SB 2099” (the Handgun Safety and Registration Act) is not currently before Congress; it was introduced to the Senate back in February 2000 (not 2009), and it was referred to the Committee on Finance, where it languished without ever coming to a vote.That the intent of this bill was to affect nationwide registration of handguns is unmistakable.

However, It had no provisions for requiring handgun owners to list their guns on federal income tax returns.

I know a lot of clients that will become liars if this were to be enacted!

In just six months, the largest tax hikes in the history of America will  take effect.  They will hit families and small businesses in three great waves on January 1, 2011:
 
First Wave: Expiration of 2001 and 2003 Tax Relief
 
In 2001 and 2003, several tax cuts for investors, small business owners and families were enacted.

These will all expire on January 1, 2011:
 
Personal income tax rates will rise.  The top income tax rate will rise from 35 to 39.6 percent (this is also the rate at which two-thirds of small business profits are taxed).  The lowest rate will rise from 10 to 15 percent.  All the rates in between will also rise. Itemized deductions and personal exemptions will again phase out, which has the same mathematical effect as higher marginal tax rates.  The full list of marginal rate hikes is below:
 
 - The 10% bracket rises to 15%
 - The 25% bracket rises to 28%
 - The 28% bracket rises to 31%
 - The 33% bracket rises to 36%
 - The 35% bracket rises to 39.6%

Higher taxes on marriage and family.  The "marriage penalty" (narrower tax brackets for married couples) will return from the first dollar of income.  The child tax credit will be cut in half from $1000 to $500 per child. The standard deduction will no longer be doubled for married couples relative to the single level.  The dependent care and adoption tax credits will be cut.

The return of the Death Tax.  This year, there is no death tax.  For those dying on or after January 1 2011, there is a 55 percent top death tax rate
 on estates over $1 million. A person leaving behind two homes and a retirement account could easily pass along a death tax bill to their loved ones.

Higher tax rates on savers and investors.  The capital gains tax will rise from 15 percent this year to 20 percent in 2011. The dividends tax will rise from 15 percent this year to 39.6 percent in 2011.  These rates will rise another 3.8 percent in 2013.

Second Wave: Obamacare
 
There are over 20 new or higher taxes in Obamacare.  Several will first go into effect on January 1, 2011.  They include:
 The "Medicine Cabinet Tax"  Americans will no longer be able to use health savings account (HSA), flexible spending account (FSA) or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin).

The "Special Needs Kids Tax"  This provision of Obamacare imposes a cap on flexible spending accounts (FSAs) of $2500 (Currently, there is no federal government limit).  Parents of special needs children use FSAs to pay for special needs education that can easily exceed $14,000 per year.  Under tax rules, FSA dollars can be used to pay for this type of special needs education.

The HSA Withdrawal Tax Hike.  This provision of Obamacare increases the additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent.
 
 Third Wave: The Alternative Minimum Tax and Employer Tax Hikes
 
When Americans prepare to file their tax returns in January of 2011, they'll be in for a nasty surprise-the AMT won't be held harmless, and       many tax relief provisions will have expired.  The major items include:
The AMT will ensnare over 28 million families, up from 4 million last year.  Congress' failure to index the AMT will lead to an explosion of AMT taxpaying families-rising from 4 million last year to 28.5 million.  These families will have to calculate their tax burdens twice, and pay taxes at the higher level.  The AMT was created in 1969 to ensnare a handful of taxpayers.
 
Small business expensing will be slashed and 50% expensing will disappear. Small businesses can normally expense (rather than slowly-deduct, or
"depreciate") equipment purchases up to $250,000.  This will be cut all the way down to $25,000.  Larger businesses can expense half of their purchases of equipment.  In January of 2011, all of it will have to be "depreciated."

Tax Benefits for Education and Teaching Reduced.  The deduction for tuition and fees will not be available.  Tax credits for education will be limited.
Teachers will no longer be able to deduct classroom expenses.  Covered Education Savings Accounts will be cut.  Employer-provided educational assistance is curtailed.  The student loan interest deduction will be disallowed for hundreds of thousands of families.

Charitable Contributions from IRAs no longer allowed.  Under current law, a retired person with an IRA can contribute up to $100,000 per year directly to a charity from their IRA.  This contribution also counts toward an annual "required minimum distribution."  This ability will no longer be there.
 

Now your insurance is INCOME on your W2's......
 
 One of the surprises we'll find come next year, is what follows - - a little "surprise" that 99% of us had no idea was included in the  "new and
 improved" healthcare legislation .

Starting in 2011, your W-2 tax form sent by your employer will be increased to show the value of whatever health insurance you are given by the company. It does not matter if that's a private concern or governmental body of some sort.  If you're retired?  So what; your gross will go up by the amount of insurance you get.
 
You will be required to pay taxes on a large sum of money that you have never seen.  Take your tax form you just finished and see what $15,000 or
$20,000 additional gross does to your tax debt.  That's what you'll pay next year.  For many, it also puts you into a new higher bracket so it's even
worse.

Unless there is legislation to the contrary, here is the truth to the rumor email regarding the death of the 'tax cuts".


TRUE: The tax "cuts" are set to expire and will rise for the tax year starting on 1/1/2011.

TRUE: The tax rates listed on the email is correct.

TRUE: The Estate tax (death tax) will rise again for those with estates of 1 million or more.  This is a tax on your assets although you've already been taxed on it as income.

TRUE: The reduced tax on capital gains will rise and dividends will be taxed as ordinary income.

TRUE: HSA, FSA and HRA accounts will be capped and have limitations for their use. OK, this is why I get paid the big bucks - check this:

Notice 2010-59 explains that under Code Sec. 106(f), Code Sec. 220(d)(2)(A), and Code Sec. 223(d)(2)(A), an individual may be reimbursed for over-the counter medicines or drugs, so long as the individual obtains a prescription for the medicines or drugs. A prescription means a written or electronic order for a medicine or drug that meets the legal requirements of a prescription in the state in which the medical expense is incurred and that is issued by an individual who is legally authorized to issue a prescription in that state. The rules in Code Sec. 106(f), Code Sec. 220(d)(2)(A), and Code Sec. 223(d)(2)(A) do not apply to items that aren't medicines or drugs, including equipment such as crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits. These items may qualify as medical care if they otherwise meet the definition of medical care in Code Sec. 213(d)(1).


TRUE: HSA withdrawn for uses other than the proper reimbursements will be taxed as income and have a penalty of 20%

TRUE: AMT hasn't been eliminated or adjusted and will indeed trap more taxpayers than before.  This is the biggest scam in the tax code.

TRUE: Business direct expensing (section 179) has been reduced from $250k down to $25k.

MOSTLY TRUE: Teachers used to directly subtract the first $250 of classroom supplies that they paid without having to itemize their tax returns.  That will go away BUT they can claim their expenses if they itemize their deductions but there are limitations.

TRUE - BUT....:  Student loan interest and education savings will be limited.  They always have been but there are no increased amounts.

TRUE: Charitable contributions can be made from your IRA.  Not many people care about this (other than the charities)

TRUE: Your non-taxable insurance premiums (value of your insurance?) will be listed on your W-2

FALSE:  The value of your insurance will NOT become taxable income. (well not YET anyway!)

THE BOTTOM LINE:  Yeah, we're screwed!

Here's the email rumor:

Did you know that if you sell your house after 2012 you will pay a 3.8% sales tax on it?

Under the new health care bill - did you know that all real estate transactions will be subject to a 3.8% Sales Tax?

If you sell your $400,000 home, there will be a $15,200 tax.

If you Google this rumor, you'll find that although the email is generally, sort-of, not-so-much possibly, mainly false.

However, on it's face, the tax will be implemented but with certain provisions.

However, the 'fact checkers" will dismiss this tax as just a minor inconvenience to the "rich".

One of the provisions in the health care act (Patient Protection Affordable Care Act PPACA) is a new 3.8% MEDICARE tax on net INVESTMENT income starting in 2013.  However, the tax is imposed on the lesser NET income or the excess of modified adjusted gross income (AGI) over a "threshold amount" which is generally pegged at $250k for married and $125k for non-married.  If you make less that those amounts, you are safe - at least for now.

The tax is not a traditional sales tax; it's a tax that will go to the Feds as a Medicare payment.  More importantly, the tax is not just for home sales; it's for all investment income like capital gains, interest, dividends, annuities, royalties, rental income, etc.

Here's a good example regarding a sale of a personal home: a married couple with income over $250k sells their home and make a 750K profit on the sale of their residence.  They would pay a 3.8% tax on $250k (the 750k profit minus the sale of home exemption of 500k).

Every explanation that I've found of this tax increase rejects that "normal" Americans will be impacted.  A tax is a tax and I refuse to segment society as others do.

The threshold amount of 250k or 125k for non-joint filers is an artificial target.  Apparently if you earn over those amounts, you are rich and should be subject to increased taxation.  If you're happy with that logic, wait for that threshold to reach your income.

Heard around the water cooler is that Eric will be throwing his hat into the 2012 Presidential campaign

The truth is - first, I don't want a pay cut and second, this is a test to see if anyone is really reading this.

Oh, and I don't like hanging around with a bunch of jerks.