PAUL’S TAX BLOG

Thinking of selling your home sometime in the next couple years? If so, consider this: In order to try and pay for all the goodies included in Obamacare, Congress created a 3.8 % Medicare surtax on investment income starting in 2013. This surtax is placed on top of the normal tax on all investment income, including capital gains, for singles with Adjusted Gross Income over $200k, or married couples with AGI over $250k. So, if you sell a home in 2013 that was a principal residence and your gain exceeds the $250k/$500k exclusion amount, any gain will likely be taxed...

While statistically speaking your chances of being audited by the IRS are very low, It is important to prepare each tax return as if you will be audited. Having proper documentation for expenses claimed and being certain to declare all income items is far more effective if you do the work when its fresh in your mind and the records are available. Waiting two or three years to put this stuff together can torpedo your chances of prevailing in an audit if you no longer remember who was at that business meal, or where you put all those receipts. Some...

The California Legislature is very adept at killing jobs and increasing unemployment, but this may be the only time that nobody will object. The Assembly has come to the rescue of one constituent who has a problem. It seems that his ex wife keeps hiring hit men to “off” the guy. Ex wife is currently in prison, but apparently she still stands to benefit financially if something unpleasant just happens to befall her former hubby. Tired of constantly looking over his shoulder, former hubby asked his assemblyman to sponsor AB 2674 which provides that when one spouse is convicted of...

Many popular tax breaks that folks have previously used to reduce their personal income taxes were either repealed or allowed to expire for 2010 and may not be around this year to help reduce your taxes. These breaks include the college tuition deduction, deductions for teaching supplies, deductions for state sales taxes, deductions for property taxes for nonitemizers, and tax free IRA payouts to charities. Further, the Alternative Minimum Tax is a huge deal this year as the exemption amounts that were used to keep many folks from being trapped by this tax have readjusted to pre-2001 levels, subjecting millions...

Coming in second place in most contests is not best, but it ain’t all that bad. Some notable exceptions: Wars, Ultimate Fighting, and the latest US News and World Report study of states that raised taxes the highest in 2009. Guess what? California had the second highest per capita tax increase in 2009 (right behind New York) with $312 per person of increased taxes last year. If that isn’t dismal enough, the study did not take into account taxes disguised as “fee” increases, or regulatory rulings that require people or businesses to incur more costs to comply with some bureaucratic...

Most folks don’t think much about taxes until around April when they start to ponder what kind of damage the IRS will inflict on them for the prior year. We encourage, beg and cajole our clients to be proactive about taxes, and in so doing we can minimize the damage and also help plan for it. Alas, some folks are just hardwired to procrastinate when it comes to this issue and do little, if any, advance prep for April 15th. However, this year advance prep will be important. In 2011, ordinary tax rates will be going up for most folks....