CRI Articles: Individual Tax

The CPAs of CRI know that planning for tax savings requires strategy. CRI's team of tax compliance and tax consulting professionals is ready to help you decide your next move - either before or after you review this individual tax information.

Two Options for Higher Education Tax Credits
Students continue to graduate high school and head for college during a recession. Additionally, many adults choose to return to school or take additional educational courses. Did you know that there are two federal tax credits available - the American Opportunity Credit and the Lifetime Learning Credit - to offset higher education costs for taxpayers and their dependents?

Rental Real Estate Property Tax Advantages
Rental real estate offers tremendous tax advantages and tax planning opportunities. With rental real estate, taxpayers can depreciate property far exceeding their actual investment, deduct interest on borrowed capital, exchange rather than sell properties to defer tax on gains, use installment sales to defer tax on sales, profit from preferential rates on long-term capital gains, and generate positive cash flow with depreciation deductions that effectively turn the actual income into tax losses.

Reminder: Current Major Changes to Gift and Estate Taxes
It's been discussed before, but it's worth repeating that the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 has far-reaching implications for taxpayers beyond the retention of the Bush-era tax cuts. The law completely changed the gift and estate situation for many people. The gift tax is a federal tax on large financial gifts that has two exclusions - annual and lifetime - that protect some gifts from being taxed.

IRS Standard Mileage Rates for 2012 Mostly Unchanged
The Internal Revenue Service announced the optional standard mileage rates for 2012 that businesses can use to deduct the costs of operating a vehicle for business, charitable, and medical or moving purposes. The rates remain mostly unchanged since the mid-year adjustment effective on July 1, 2011.

Time for 2012 IRS Cost-of-Living Adjustments
It's time to consider the impact of the 2012 cost-of-living adjustments recently released by the IRS. These are automatic adjustments built into the tax law, but they don't always result in increases. With inflation now a little higher than it has been, some amounts that haven't risen in recent years are increasing for 2012 and others are increasing by larger sums. Still, there are many amounts that will stay the same as they were for 2011.

Tax Bracket: Knowledge is Power
When author and lawyer Sir Francis Bacon wrote in the 1500s that "knowledge is power," he may not have realized this axiom would apply to the arena of personal taxes over 500 years later. When taxpayers accurately understand their tax situations, they have the power to make decisions that capitalize on tax advantages while minimizing liabilities. And that's planting the seeds for a successful financial future.

Homeowner Tax Breaks: Running Toward Energy Credits
Imagine if the IRS supplemented your home-improvement budget by offering tax credits for the upgrades you've wanted to make but have been putting off. Would that knowledge make you want to run out and start those renovations right now? Well, put on your running shoes because the federal government has a tax credit program for certain energy-efficient upgrades for homes. Best of all, not only can these upgrades count toward tax obligations with the IRS, but they can also reduce your monthly electric bill.

Strategic Moves: Tax Planning for 2011 Year-End
The key to successful strategy is planning your moves in advance and responding to any changes. As the end of the year approaches, CRI recommends applying these principles by reviewing your tax situation and assessing any potential actions needed prior to December 31st to reduce your tax bill. Many opportunities are available this year that may significantly reduce your taxes, but 2011 also presents some unique challenges.

Say "I Do" to Tax Relief
Marriage, by nature, involves a fair amount of sharing: property, money, children, and - of course - tax return liabilities. In fact, filing taxes jointly can provide many benefits. But it can also create some problems since both spouses are jointly and individually liable for the federal taxes that are owed. This rule applies even if one spouse earned most or all of the income, claimed improper deductions/credits, committed tax fraud, and even if the couple later divorced.

Change in Rules: Estate Tax Filing Deadlines for 2010 Estates
In mid-September, the IRS supplied relief for estates of people who died in 2010 by increasing the potential benefits of filing for an estate tax return extension and extended the filing deadline for opting out of estate tax. For people who died in 2010, executors have a choice: They can allow the estate tax to apply, or they can opt-out and apply the modified carryover basis rules.

IRS Hot Buttons for Individuals
Remember the golden rules you followed in grade school? Follow the rules, stay out of trouble, and (above all else) try not to draw attention to yourself.   These same guidelines can help you when considering how to avoid an IRS audit. Especially since issues with the IRS often have greater consequences than writing, "I will pay all of my taxes" 100 times on the blackboard. So if you want to avoid unwanted scrutiny from the IRS, take note of the below IRS hot buttons.

Don't Leave Designated Beneficiaries to Chance
Most of us would not knowingly gamble with our life's savings and gains, but sometimes we inadvertently do just that. How and when? Under the law, the names designated as beneficiaries on individual bank, brokerage, retirement, and other financial accounts take precedence over a will. Therefore, to ensure an individual's wishes are followed, it's important to often update beneficiaries to match on all documents.

IRS Provides Guidance on Estate Tax Election for People Who Died in 2010
Not sure which direction to take with the estate tax basis allocation? The IRS recently issued additional provisions for estate taxes of those who passed in 2010. Details include guidelines for allocating basis increases among assets under the carryover basis rules, as well as establishing the timing and manner of the election.

Oh The Places We Will Go...and Hopefully Deduct
As summer comes to a close, many individuals are eyeing business trips as an opportunity for a little R&R, as well. So now is a great time to check and ensure that you are staying within the tax rules for business travel as you mix-in some personal time. Why? Coloring outside of the lines into a "gray area" over an extended period of time can add up to later problems in the form of back taxes, penalties, and/or interest.

Icing on the Inheritance Cake
The good news for heirs is that any inherited assets are not included in income for federal tax purposes. For the most part, it's all proverbial "icing on the cake." There are a few states that have a state tax on the inheritance that you receive, but it's typically a very low rate for close relatives and is not imposed on the surviving spouse.

Filing Extensions: What You Need to Know
Sooner or later - regardless of planning - the need to file a tax extension will happen for many people. Whatever the reason, we have outlined a few tips to remember if (and when) your time arrives.

Tired of Paying Taxes in April? Strategize Withholdings
Planning and strategy do often pay off - as long as you're the one on the outside looking in! So if you are accustomed to owing the tax man in April, there may be a simple solution: choose to withhold additional taxes from your paycheck.

For related, timely tax details, be sure to also visit the individual tax section of CRI's Blog.