tax liability

Tax

Expanded Adoption Credit

For 2012 the maximum adoption credit per eligible child is $12,650, down from $13,360 in 2011. The credit is no longer refundable and must be used as a credit against tax liability. In general, the credit is based on the reasonable and necessary expenses related to a legal adoption, including adoption fees, court costs, attorney’s fees, and travel expenses. Special needs adoptions are eligible for the full credit regardless of whether expenses are qualified.

In order to claim the credit however, your modified adjusted gross income (MAGI) must be less than $229,710. This credit is set to expire on December 31, 2012, but can be carried forward over the next five additional years until the credit is used up or the time limit expires. Moving forward, in 2013 domestic adoptions of special needs children are eligible for a tax credit of $6,000.

If you adopted a child this year, or are planning to adopt a special needs child in 2013, you may be eligible for this credit. Additionally, if you adopted a child in 2010 or 2011 and didn’t claim the refundable credit, you may be able to file an amended return. Be sure to contact us if you need assistance. We are here to help.

Accounting Business Financial Planning Quickbooks Tax

Financial Tips for October 2012

Asset Allocation Adjustments
Review the asset allocation of your portfolio. Increases and decreases in the value of your portfolio can upset the asset allocation you consider optimal. Should you shift some stock investments into or out of bond investments? Should you shift some funds into tax-free investments?

Health Spending Checkup
If your employer has a flexible spending arrangement (FSA), determine the balance left in the plan. Your plan may allow you to carry over a year-end balance for use early in the following year.

If your plan doesn’t allow unspent money to be carried over, then you may want to incur discretionary medical, dental, or optical costs prior to year-end. If you do not participate in such a plan, find out if one is available at your company. Also, find out if you are eligible for a Health Savings Account.

 

Review Budget vs. Actuals
Compare September income and expenditures with your budget. Make adjustments as appropriate to your October expenditures. Make sure you have invested your planned savings amount for September.

Estimate Your 2012 Tax Liability
Total up your taxable income, capital gains, and deductions through this date. Estimate the amounts expected through year-end. Determine where you stand, and what steps, if any, you should take prior to year-end to minimize your tax liability. Please feel free to call our office if you need help figuring this out.

Tax

Tax Due Dates for October 2012

Note: September due dates were extended to January 2013 for areas impacted by Hurricane Isaac. See article “Tax Relief for Those Affected By Natural Disasters” in this newsletter.

October 10 Employees who work for tips – If you received $20 or more in tips during September, report them to your employer. You can use Form 4070.
October 15 Individuals – If you have an automatic 6-month extension to file your income tax return for 2011, file Form 1040, 1040A, or 1040EZ and pay any tax, interest, and penalties due.

Electing Large Partnerships – File a 2011 calendar-year return (Form 1065-B). This due date applies only if you were given an additional 6-month extension. See March 15 for the due date for furnishing the Schedules K-1 to the partners.

Employers (nonpayroll withholding) – If the monthly deposit rule applies, deposit the tax for payments in September.

Employers (Social Security, Medicare, and withheld income tax) – If the monthly deposit rule applies, deposit the tax for payments in September.
October 31 Employers – Social Security, Medicare, and withheld income tax. File form 941 for the third quarter of 2012. Deposit any undeposited tax. (If your tax liability is less than $2,500, you can pay it in full with a timely filed return.) If you deposited the tax for the quarter in full and on time, you have until November 13 to file the return.

Certain Small Employers – Deposit any undeposited tax if your tax liability is $2,500 or more for 2012 but less than $2,500 for the third quarter.

Employers – Federal Unemployment Tax. Deposit the tax owed through September if more than $500.
Scroll to top