Tax Matters

Tax Matters

Telephone: 949-515-2862 | Fax:

New Requirements for 2012

January 10, 2013

We hope that 2012 has been a happy and prosperous one for you and your family. Both the IRS and the California Franchise Tax Board have new requirements and this means we may need documents and information we have never needed in the past. Here is a list of new information we will need from you to prepare your tax returns.
Sales of Stock and Securities: If you sold stock or securities through a broker, the broker will issue you a 1099-B. This form is intended to report all the details of each sale, including the sales price and cost basis (usually what you paid for the stock). This requirement is new and the form provided by the broker will not yet capture all sales. Most of our clients have provided excellent details of their stock activities, in many cases providing us with their own spreadsheets. Please continue to do so but also please provide us copies of any 1099-Bs and all other information included by the brokerage firm.
Merchant Charges, 1099-Ks:  Those who are in business, who are landlords, or who sell merchandise online will likely receive a new form — Form 1099-K. This form reports credit card or other merchant payments (PayPal, for example). Be on the lookout for this new form and please provide us with any 1099-Ks you receive.
Foreign Accounts:  The reporting requirements for assets held overseas are increasing and the penalties for failure to report them are becoming increasingly harsh. Not all foreign holdings must be reported. If, for example, you hold stock in a foreign company through a U.S. broker, those holdings do not have to be separately reported. However, if you hold any other types of foreign assets, including bank accounts and securities accounts, please let us know. If you have any doubt as to whether any of your assets are foreign, please discuss those assets with us.
Use Tax: California requires payment of use tax if you purchase goods out of state that are used, consumed, or stored in California, when no sales tax is collected on the purchase. Most such purchases are made over the Internet or by mail order from out?of?state sellers. Taxpayers who don't hold a California Seller's Permit have the option of reporting the use tax on their California income tax returns.
You have the option of totaling all such purchases and we will compute the use tax. Your second option is a "Lookup Table." If all of your purchases were under $1,000 each, we can use a Lookup Table to compute your tax.   The table is based on your income. If your Adjusted Gross Income is $75,000, for example, your Use Tax is $37 based on the Lookup Table. If your purchases are both over and under $1,000, you may total just the purchases that are over $1,000 and we can compute the use tax on those and use the lookup tables for the small purchases.
Please take extra care in preparing your documentation so we can do the best possible job to find new tax benefits that are hidden in the law and protect you from more aggressive audit programs and larger penalties.

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