It is my responsibility, as a Tax Attorney and CPA in Atlanta, Georgia to stay up-to-date with upcoming tax changes. I recommend that you plan now for the tax changes coming in 2013. Below is part II of the tax changes and you can review part I of this tax alert to be more prepared.

#3. An increase in Medicare tax on certain wages. The amount of Medicare tax you pay on wages and self-employment income is scheduled to go up next year. When you’re single and your wages are greater than $200,000, your employer will withhold an additional 0.9% of Medicare tax from your paycheck. Are you self-employed? The tax applies when net self-employment income exceeds the threshold. The income threshold is $250,000 for married couples.

Planning move: If you’re self-employed, review the way your business is organized. While you always want to pay yourself a reasonable amount of compensation, some entity types can allow for flexibility in the timing of wages or salary.

#4. A new Medicare tax on unearned income. You probably associate Medicare tax with earned income – that is, the 1.45% tax your employer deducts from your pay. But a provision in the 2010 health care laws extends the Medicare tax to certain unearned income, beginning in 2013. The new surtax is a flat rate of 3.8%, and will apply to interest, dividends, capital gains, annuities, royalties, and rents. It kicks in when your AGI exceeds $250,000 (for married filing jointly). When you file as single, the AGI threshold is $200,000.

Planning move: Consider adding tax-exempt bonds to your portfolio. The interest is not subject to the new tax. Roth conversions and selling assets with capital gains may also be a wise move in 2012.

Many other tax law changes are expected in 2013. Timely planning is essential for preserving tax- saving opportunities. Please give us a call to discuss strategies to put in place now to maximize your benefits.

What’s the summertime forecast? From a tax perspective, the outlook calls for planning now to prepare for changes gathering on the horizon – specifically, provisions currently expected to take effect in January 2013. Here are four new rules to think about during your mid-year tax review.

1. A decrease in tax-free contributions to your flexible spending account. Starting in January 2013, the maximum you can contribute to your FSA will be $2,500. In addition, the “use it or lose it” feature of FSAs means you won’t be able to carry any 2012 excess remaining in your account into 2013 (unless your plan provides a 2½ month grace period for using prior-year funds).

Planning move: Schedule elective medical procedures during the last half of 2012.

2. An increase in the threshold for claiming the itemized medical expenses deduction. Do you itemize? For 2012, you can claim a deduction on your federal income tax return for qualified medical expenses that exceed 7.5% of your adjusted gross income (AGI).

Beginning in 2013, if you’re under age 65, your medical expenses will have to exceed 10% of your AGI to be deductible. This is the same percentage applied to qualified medical expenses when calculating the alternative minimum tax.

Planning move: Review your itemized deductions for 2012 to determine whether accelerating or delaying deductions makes the most sense for you. What to keep in mind: phase-outs and other limitations to itemized deductions that were in effect in prior years, as these may return in 2013.

Part II of this blog post will be published soon so come back soon to review more 2013 changes.

The deadline of April 17, 2012 to file your tax return or request an extension has come and gone. Now What?

Interest and penalties add to the total amount you owe, so the sooner you file, even if you can’t pay all or some of the taxes due, the less you will owe. The IRS will deny a request for an extension that is filed after midnight on April 17. However, you should still file your tax return, even if it’s late.

Penalties and interest will usually be added to any tax you owe. The late filing penalty is normally 5 percent per month, or part of a month, based on the unpaid balance, up to a maximum of 25 percent. If the tax return is more than 60 days late, the minimum penalty is $135 or the balance due, whichever is less.

A late payment penalty, normally one-half of one percent per month, may also apply, along with interest, currently at the rate of 3 percent per year, compounded daily.

 Business owners focus a lot of attention on building better products. When their products are hot, the company does well, despite other shortcomings. Certainly, new and better products are essential, but focusing on building a better business – one that readily adapts to change and quickly responds to crisis may be even more important.

How can you build a better business? Consider the following strategies.

Manage capital needs.

• Growing businesses have an appetite for capital. Two ideas for managing capital are outsourcing some processes and managing existing capacity more effectively.

Identify the right product and customer mix.

• Having the products customers want at the time they want them and in the number, color, location, and quantity they need, is a challenge. Get continuous feedback from customers to help you get your mix just right.

Actively develop and maintain a network that keeps you in the mind of suppliers, present customers, and future customers.

• Every business has an opportunity to distinguish itself by doing something better than its competitors. Providing the best service, shortest cycle time, most variety, or best quality requires procedures that can deliver every day to every customer. Improving your processes to deliver what no competitor is delivering to customers is a key strategy in building a better company.

Use your employees wisely.

• Encourage sharing of knowledge and skills. Continuously develop and train people. Measure individual performance and reward achievement and good ideas.

Building a better business requires more than a good product. Take the steps necessary to make sure your business will thrive in an ever-changing world.

What are you going to do with your federal income tax refund this year? Instead of spending the money on things you don’t really need – like a bigger flat screen TV or the latest smart phone – you might put a sizeable refund to better use. Here are a few suggestions.

• Pay down debt. 

Improve your overall financial situation by reducing the amount of any outstanding debts beginning with high-interest rate credit card balances.

• Contribute to an IRA. 

For 2012, you can contribute up to $5,000 ($6,000 if you’re age 50 or over) to any combination of traditional and Roth IRAs. Contributions to a traditional IRA may be wholly or partially tax-deductible, while Roth IRAs can provide tax-free payouts in the future.

• Save for your children’s education.

Investigate the options, such as tax-favored Section 529 plans.

• Build an emergency fund. 

Set aside some money that will be available in case of emergencies.

Contact Atlanta Tax Attorney and CPA, Jeffrey Gartzman, at Gartzman Law Firm for more tax relief support.

Millions of Americans owe back taxes to the Internal Revenue Service. If you are among them, it’s time to come clean and get tax help before the IRS takes action to collect your tax debt.  The best way to come out a winner against the IRS is to arm yourself with a reputable tax professional who will provide effective and experienced legal counsel, and fight for your rights as a taxpayer.

It doesn’t matter why you’re in arrears, whether you’re bad at math, suddenly unemployed, or the victim of an unscrupulous spouse or business partner. The only thing the IRS is interested in is collecting unpaid back taxes or full tax debt owed – however they can. Once they have you in their sight, not only do they want their tax money, but you will be charged penalties and interest that can double or triple your original debt. The IRS may have little interest in your specific circumstances. They are adept at using whatever tactics necessary to hound, threaten and take legal action to collect back taxes owed.

Sounds hopeless, doesn’t it?

It isn’t. A seasoned, ethical tax professional has the training and experience to guide you through this quagmire with your dignity and bank account in good shape. They are intimately familiar with the ins and outs of the 70,000+ page tax code, and their loyalty lies squarely with the client. The government has a big gun in the IRS. You deserve to bring an equally effective weapon when you get called to the OK Tax Corral.

There are many types of tax professionals.

CPA (Certified Public Account) vs. Tax Preparer
You’ve probably gone crawling on your knees to a Certified Public Accountant or tax preparer more than once in April. If so, then you know that these are folks who prepare your taxes correctly (and, one hopes, advantageously) and help keep you out of trouble with the IRS. A tax preparer may have little to no training, or he may be a retired CPA who knows there’s plenty of work during the April rush. However, a CPA is a licensed professional who has fulfilled training and examination and work experience procedures and hopefully is a member in good standing with their state society of CPA’s and state licensing board.

Enrolled Agent
There are also enrolled agents. According to the IRS web site, “An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers, before the Internal Revenue Service. Enrolled agents, like attorneys and certified public accountants (CPAs), are unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can practice before.” Enrolled agents must pass a rigorous examination and have a track record of practical experience.

Tax Attorney
Finally, a tax attorney is a licensed legal professional who understands tax law and taxpayer legal rights. Typically they have a broader and more detailed perspective of your tax problems and other legal problems. In addition to a law degree (JD), many tax attorneys have an undergraduate degree in tax accounting or business. Some tax attorneys also have a graduate degree, such as Master of Laws (LLM), a Master’s in Business Administration (MBA), or specialized accounting certification as a Certified Public Accountant (CPA). They should have extensive experience and connections in order to keep abreast of changes in tax law, federal and state tax policy. Tax attorneys may know the IRS lawyers and IRS agents in your local district and understand the proper legal channels at the IRS locally and federally. They should be members in good standing with their state bar association. They will probably cost the most, but will probably deliver the best results.

If you’ve ever tried to tame your insomnia with late night television, you’ve probably seen commercials for companies promising they will help you negotiate your back tax debt with the IRS for nothing or pennies on the dollar. You may also have heard that some nationally known TV advertisers who handle IRS problems have been investigated and sued by their State Attorney General’s offices for allegedly swindling clients. Fortunately, these national TV advertisers represent the minority of tax professionals. A good tax attorney is worth his or her weight in gold, and there are a lot of ways to separate the wheat from the chaff.

Your State Bar Association has a list of attorneys in your area who are in good standing. However, you need to find those that handle tax matters. If you already have a relationship with a family lawyer or some other kind of attorney, you can ask him or her for a tax professional recommendation. Once you have a preliminary list, go to your state’s attorney general’s web site and the Better Business Bureau and research them. You can also do a general Internet search to see if any of the candidates have specific complaints against them. Ignore the individual flamers; look for patterns of complaint, rather than one or two disgruntled apples.  Remember there are two sides to every story.

Contact the tax professional for an initial phone or office discussion to see whether they can and want to handle your unique problem. Ask about their attorney fees.  Ask them about their experience and success rate with your type of issue and generally what sort of outcome you can expect.

If they claim they eat the IRS for breakfast and none of their clients ever have to pay the government a cent, run for the hills. You owe the IRS money. Unless you are in a coma or deemed Currently Not Collectible, you will not get off scot free. Make your peace with that. What your tax professional can do is help negotiate for you to pay only what you owe, on terms that hopefully won’t cripple you.

Depending on your particular issue, a good tax attorney or other tax professional can smooth the way to freedom from the IRS. The calls will stop, the collection letters will stop and you’ll be able to sleep through the night again. Normally you can’t buy that kind of peace of mind, but a tax attorney can provide it.

About Jeffrey S. Gartzman, Atlanta Tax Attorney and Certified Public Accountant
Jeffrey S. Gartzman is an accomplished Atlanta tax attorney and CPA who has been practicing tax law in Atlanta for nearly 30 years. He will help you resolve IRS and state tax problems, find tax relief and settle tax debt. Jeffrey S. Gartzman is a former IRS Taxpayer Education Program instructor. He is also an accredited Personal Financial Specialist with the American Institute of CPAs.

Most people don’t realize that taxpayers who owe just $5,000 in IRS back taxes are automatically subject to an IRS lien filed at your local county courthouse, unless you get a Georgia tax attorney to deal with your tax debt before the IRS does.

I recently read an article on MSNBC in which IRS watchdog and National Taxpayer Advocate Nina E. Olson told Congress, “By filing a lien against a taxpayer with no money and no assets, the IRS often collects nothing, yet it inflicts long-term harm on the taxpayer by making it harder for him to get back on his feet when he does get a job.”

What is an IRS lien?

If you owe IRS back taxes, the federal government can put a lien on your personal or business property to secure liability – and seize your property. IRS liens are on the rise and at their highest rate since the mid-1990’s. Last fiscal year the IRS filed 1.1 million liens on people with unpaid back taxes.

Seek local Atlanta tax relief from an IRS lien with an Atlanta tax attorney

In response to Olson’s report, the IRS said taxpayers are given numerous opportunities to pay their IRS tax debt or file for IRS payment plans. Without the legal counsel of a tax attorney, many people may not understand how to find qualified Atlanta tax resolution help or take advantage of tax relief to prevent a lien.

An IRS installment agreement, also called a payment plan, is one tax relief option an Atlanta tax attorney will explore with you. Taxpayers can face staggering interest on top of the tax debt, and steep IRS penalty fees. Deal with delinquent tax returns or back taxes with a tax attorney on your side for the best possible outcome to a tax debt situation. Your tax attorney will communicate directly with the IRS and make sure you’re not missing deadlines to apply for an extension or other opportunities to dampen the threat of an IRS lien.

If you are facing an IRS lien, an experienced tax attorney is your best bet to protect your rights as a taxpayer, and to negotiate with the IRS on your behalf. Timing and efficient action is critical to surviving an IRS lien or collection of back taxes. Talk to an Atlanta tax attorney today.

Jeffrey S. Gartzman has 28 years of experience as a CPA and Atlanta tax attorney. He has helped countless taxpayers facing IRS liens and dealing with IRS back taxes collection tactics. An IRS lien situation is time-critical, so if you owe back taxes contact the Gartzman Law Firm today at (770) 939-7710 or online at Gartzman Tax Law.