Tag Archives: taxes

GSR5620 - Womens-1

"Joggings" Are Happening AND are Actually Pretty Cool

While it may not be socially acceptable to take a jog in jeans, one of the trends for men and women this fall/winter season is bending the rules.

Jog jeans, a unique fusion of not only style and comfort but of design and denim, are the perfect medium for anyone deciding which pair to wear: sweats or jeans.

What’s really outstanding about the new trend is how the look and feel is achieved. Died in an indigo wash, and then designed with signature denim details, the jog jean surpasses past trends like “jeggings.” As much as the exterior looks and feels like denim, the soft sweat knit fabric on the inside makes for a notable difference.

One variation of the trend can be found at G-Star Raw located in Scottsdale Fashion Square Mall.

The GSR 5620 for men and women mixes classic sweat details at the hem and wait with G-Star Elwood denim pocket details.

taxes

Taxes and The Defense of Marriage Act

In their recent decision, the Supreme Court found that a portion of the Defense of Marriage Act (DOMA) violated the equal protection clause of the Fifth Amendment of the US Constitution as applied to same sex couples legally wedded under state law.

The decision means that same-sex married couples will now enjoy many federal tax-related benefits, including income tax, estate & gift, tax-free fringe benefits, and more.  Employers may need to prepare for major changes in the treatment of employees in same-sex marriages.

Federal Tax Consequences

Couples legally married in states recognizing same-sex marriage are now required to file married-filing-jointly or married-filing-separately tax returns, and enjoy the benefits of such filing statuses, regardless of if their state of domicile recognizes their marriage.  In fact, due to the fact that law was not changed, but was instead ruled unconstitutional, legally wed same-sex couples who previously filed using the “single” filing status may be required to file amended tax returns using these statuses.  Due to the modified tax brackets, the married couple may now be subject to the “marriage penalty,” resulting in an increases income tax liabiliyt.

Married couples will be subject to modified threshold and AGI floors for items such as medical expenses, ceilings on capital losses, thresholds on itemized deductions, personal exemptions as well as the new investment income tax.  Phaseouts will change for American Opportunity Tax Credit and Lifetime Learning Credits, Coverdale Education Savings Account, and IRA withdrawals for education.

Estate & Gift

Same sex couples will now be eligible for the unlimited asset transfers allowed between spouses (previously limited to 14,000).  Additionally, the enhanced portability provisions of the estate tax are now available for a serving spouse.

Employee Benefits

Many employee benefit plans recognized “domestic partners” and provide benefits to the partner.  However, under the unconstitutional DOMA law, these benefits were taxed to the recipient because there was no legal exclusion.  Post-DOMA, benefits provided under pre-tax plans such as §125 Cafeteria Plans are now non-taxable.

Social Security Benefits

Same-sex couples are now eligible for survivor benefits (if qualified) and divorced couple benefits are also now available.

Effective Dates

Since the law was considered to be unconstitutional, the tax benefits were theoretically always available.  However, due to statute-of-limitations issues, same-sex spouses will not likely be able to claim refunds for years prior to 2009.

State Tax Issues

20 states and the District of Columbia have laws recognizing same-sex marriage, unions, or domestic partnerships (37 have laws expressly restricting them).  Couples who marry in a ‘recognition’ state that move to or reside in ‘non-recognition’ states have significant tax consequences.  They will be considered married for federal tax purposes, and unmarried for state purposes.

Aaron Blau, EA, CPA, is a Fellow of the National Tax Practice Institute and vice president  of The Blau Company, Ltd. Contact him at aaron@blauco.com.

Three Things Building Owners Need To Know To Reduce Their Taxes - AZ Business Magazine June 2010

Despite Fiscal Cliff deal, taxes will rise for most

While the tax package that Congress passed New Year’s Day will protect 99 percent of Americans from an income tax increase, most of them will still end up paying more federal taxes in 2013.

That’s because the legislation did nothing to prevent a temporary reduction in the Social Security payroll tax from expiring. In 2012, that 2-percentage-point cut in the payroll tax was worth about $1,000 to a worker making $50,000 a year.

The Tax Policy Center, a nonpartisan Washington research group, estimates that 77 percent of American households will face higher federal taxes in 2013 under the agreement negotiated between President Barack Obama and Senate Republicans. High-income families will feel the biggest tax increases, but many middle- and low-income families will pay higher taxes too.

Households making between $40,000 and $50,000 will face an average tax increase of $579 in 2013, according to the Tax Policy Center’s analysis. Households making between $50,000 and $75,000 will face an average tax increase of $822.

“For most people, it’s just the payroll tax,” said Roberton Williams, a senior fellow at the Tax Policy Center.

The tax increases could be a lot higher. A huge package of tax cuts first enacted under President George W. Bush was scheduled to expire Tuesday as part of the “fiscal cliff.” The Bush-era tax cuts lowered taxes for families at every income level, reduced investment taxes and the estate tax, and enhanced a number of tax credits, including a $1,000-per-child credit.

The package passed Tuesday by the Senate and House extends most the Bush-era tax cuts for individuals making less than $400,000 and married couples making less than $450,000.

Obama said the deal “protects 98 percent of Americans and 97 percent of small business owners from a middle-class tax hike. While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country.”

The income threshold covers more than 99 percent of all households, exceeding Obama’s claim, according to the Tax Policy Center. However, the increase in payroll taxes will hit nearly every wage earner.

Social Security is financed by a 12.4 percent tax on wages up to $113,700, with employers paying half and workers paying the other half. Obama and Congress reduced the share paid by workers from 6.2 percent to 4.2 percent for 2011 and 2012, saving a typical family about $1,000 a year.

Obama pushed hard to enact the payroll tax cut for 2011 and to extend it through 2012. But it was never fully embraced by either party, and this time around, there was general agreement to let it expire.

The new tax package would increase the income tax rate from 35 percent to 39.6 percent on income above $400,000 for individuals and $450,000 for married couples. Investment taxes would increase for people who fall in the new top tax bracket.

High-income families will also pay higher taxes this year as part of Obama’s 2010 health care law. As part of that law, a new 3.8 percent tax is being imposed on investment income for individuals making more than $200,000 a year and couples making more than $250,000.

Together, the new tax package and Obama’s health care law will produce significant tax increases for many high-income families.

For 2013, households making between $500,000 and $1 million would get an average tax increase of $14,812, according to the Tax Policy Center analysis. Households making more than $1 million would get an average tax increase of $170,341.

“If you’re rich, you’re almost certain to get a big tax increase,” Williams said.

fiscal

Avoiding the fiscal cliff

The Obama administration and House Republicans have unveiled their opening offers in talks to avoid the so-called fiscal cliff. Details are scant but the White House estimates its plan would carve $4.4 trillion from the deficit over the coming decade, including previously enacted cuts ($1 trillion) and savings from reduced costs for overseas military operations ($800 billion), as well as interest payments on the national debt ($600 billion).

House Republicans say their plan would cut deficits by $2.2 trillion over 10 years, but they don’t claim previous cuts, war savings or interest costs toward that total. Both plans would block automatic spending cuts set to hit the economy in January and renew Bush-era tax cuts set to expire at the end of the month.

The two plans both draw upon ideas from 2011 talks between President Obama and House Speaker John Boehner, including a secret plan by top Obama aide Rob Nabors that was made public by author and Washington Post writer Bob Woodward.

Here are the highlights of all three approaches:

TAXES

Obama: Increase taxes by $1.6 trillion over 10 years, raised by permitting tax rates on individual income exceeding $200,000 and family income over $250,000 to return to Clinton-era levels of 36 and 39.6 percent, up from 33 and 35 percent now. Increase taxes on dividend income and reduce the value of deductions and exemptions for those earning above $200,000 and 250,000. Renew the 2 percentage point payroll tax holiday or a similar tax cut for workers. Return taxes on large estates to 2009 levels. Permits tax reform to replace the existing code so long as it maintains the $1.6 trillion tax hike.

House GOP: Increase taxes by $800 billion over 10 years, raised through a comprehensive overhaul of the tax code that would curb various unspecified tax breaks while lowering tax rates overall. Extend all expiring Bush-era tax cuts on income, investments, married couples and families with children. Maintains the estate tax at current, more generous levels exempting estates up to $5.1 million from tax and sets a top rate of 35 percent. Permits payroll tax cut to expire.

Obama 2011: Raise taxes by $1.2 trillion over 10 years through overhauling the tax code along similar lines advocated by House Republicans, including lowering each tax rate by reducing tax breaks and deductions.

HEALTH CARE

Obama: Cut $350 billion over 10 years from federal health care programs Medicare and Medicaid, including lower Medicare drug costs and other cost curbs on health care providers.

House GOP: Cut $600 billion over 10 years. Includes unspecified cuts to health care providers and assumes an increase in the eligibility age for Medicare and increased Medicare costs for higher-income beneficiaries.

Obama 2011: Cut $360 billion over 10 years, including at least $250 billion from Medicare, in part through savings from raising the eligibility age and increased premiums for doctors’ visits and the Part D prescription drug program.

OTHER SPENDING CUTS

Obama: Cut the deficit by $250 billion through other spending cuts and new fees. Options include requiring federal workers to contribute more to their retirement, cut farm subsidies, increase airline security fees, overhaul Postal Service operations, and increasing fees on some enrollees in the military’s Tricare health care plan. Leaves in place existing “caps” on agency budgets passed by Congress each year.

House GOP: Deficit cuts of $300 billion through such cuts and fees from miscellaneous programs. Cut another $300 billion over the decade from agency operating budgets.

Obama 2011: Cut $200 billion from such programs. Several items on the list have been subsequently used to pay for other legislation.

GOVERNMENT INFLATION MEASURE:

Obama: No proposal.

House GOP: Reduce deficits by $200 billion over 10 years by replacing the current inflation adjustment for Social Security and income tax brackets with a less generous “chained CPI” that, on average, is 0.3 percentage points less than the current measure. Doing so would reduce Social Security cost-of-living increases and cause a greater portion of taxpayer income to be taxed at higher rates.

Obama 2011: Apply less generous inflation measures to both Social Security and tax brackets, but boost benefits for the oldest Social Security beneficiaries with low incomes.

NEW SPENDING

Obama: $200 billion in new economic “stimulus” initiatives, including payroll tax cuts, continued write-offs of business equipment purchases, extended unemployment benefits, help for borrowers “under water” on their mortgages, and new spending on infrastructure.

House GOP: No proposal.

Obama 2011: $43 billion to extend unemployment benefits to the long-term jobless.

DEBT LIMIT

Obama: Permit the president to obtain increases in the government’s borrowing cap, currently set at $16.4 trillion, without approval by Congress.

House GOP: Retain longstanding requirement that debt limit increases be enacted by Congress.

Obama 2011: Immediate unspecified increase in the debt limit and additional increase not subject to congressional approval.

Green tax incentives 2010

Go Green With Government Tax Incentives


The increased cost of energy, the country’s dependence on foreign oil and the environmental impact of current energy use have inspired many companies to “go green.” Federal and state governments are expanding tax credits, tax incentives and grant programs to create economic incentives to help companies produce and/or use energy from renewable sources. Here are a few tips to help your company “go green.” As with all tax advice, be sure to consult with an expert as these laws are subject to various limitations, phase-outs and other nuances.

Federal incentives and credits for general businesses

  • Energy-efficient commercial business deduction – Businesses can deduct up to $1.80 per square foot of space in new or existing buildings where they install interior lighting, HVAC or hot water systems.

  • Business energy investment tax credit – A 10 percent credit (for geothermal, microturbines or combined heat and power systems) or a 30 percent credit (for solar, fuel cells or small wind turbines) for alternative energy property designed to generate power for the taxpayer’s own use.

  • Alternative motor vehicle credit - A tax credit of up to $2,400 for the purchase of a qualifying fuel cell, hybrid, advanced lean burn technology or alternative fuel vehicle. There are various phase-outs depending on the make and model of the vehicle.

  • Plug-in electric vehicle credit - A credit of up to $7,500 (depending on type of vehicle) for consumers, including businesses and individuals, who purchase or lease and place in service a qualifying plug-in hybrid vehicle.

  • Qualified reuse and recycling property - Businesses can take the equivalent of bonus depreciation for qualified reuse and recycling property that otherwise would not qualify. The machinery or equipment must be used exclusively to collect, distribute or recycle qualified reuse and recyclable materials.

  • Fringe benefits for employees – Bicycle commuters are now allowed a $20 per month fringe benefit exclusion and the transit fringe benefit exclusion has been increased to $230 in 2009.


Federal incentives for specific manufacturers and developers

  • Energy-efficient appliance credit - Provides manufacturers of appliances a credit for the production of energy-efficient clothes washers ($75–$250), dishwashers ($45–$75) and refrigerators ($50–$200).

  • Energy-efficient new homes credit – Provides homebuilders and developers a credit of up to $2,000 for newly constructed homes that meet certain energy-efficiency standards.

  • Alcohol fuel (ethanol) producer credit - Businesses can take a 60 cent per 190-proof gallon credit for alcohol produced for use as a fuel or to be blended into fuel. An additional 10 cents per gallon small ethanol producer credit is available, as is a higher credit rate for cellulosic biofuel.

  • Biodiesel and renewable diesel credit - Provides up to a $1.00 per gallon credit for qualifying biodiesel and renewable diesel, similar to the ethanol credit. The incentive may be taken as an income tax credit, an excise tax credit or as a payment from Treasury.


Arizona-specific incentives

  • Renewable energy operations credit - Arizona enacted a refundable corporate income tax credit for qualified investment and employment in expanding or locating qualified renewable energy operations in Arizona.  The credit is available for tax years beginning on or after December 31, 2009 through December 31, 2014. The credit is 10 percent of the capital investment in projects meeting minimum employment requirements.


  • Pollution control equipment credit - Taxpayers may claim an income tax credit for 10 percent of the purchase price of property used in the taxpayer’s business to control pollution.  The credit applies to certain qualifying equipment that reduces the pollution resulting from the taxpayer’s operations in Arizona.  The maximum credit that a taxpayer may claim is $500,000 per tax year.

  • Ken Garrett is a partner and the tax practice leader in the Phoenix office of Grant Thornton, LLP. For more information, please contact Ken at 602.474.3456 or at ken.garrett@gt.com