Bailey & Thompson Tax & Accounting
 

The tax profession is undergoing major changes. Preparer registration, increased penalties, disclosure statements, more frequent audits, not to mention the incredible amount of tax law changes the past few years, make it a challenging and somewhat exciting time to be in business.  We thank all of you who have been good clients for years and some for even decades.  We’re looking forward to hearing from you again soon.  

During the tax filing season, our office hours are 8:00am to 7:00pm, Monday through Friday, and 9:00am to 5:00pm on Saturday.  Please note that if your return has not changed much since last year you can drop your tax information off any time during office hours.  If we have any question we will call you. If you need to discuss it with one of us please feel free to contact us.

There were tax cuts enacted in 2001 (EGTRRA) and 2003 (JGTRRA) were extended by the Tax Relief Act of 2010, many of the extended provisions are due to expire at the end of the 2011 or 2012 tax year. This uncertainty over the fate of the expiring tax provisions makes tax planning a challenge.

 

Individual income tax provisions that were extended through 2012 by the Tax Relief Act of 2010 include:

 

  • Reduced marginal tax rates of 10, 15, 25, 28, 33, and 35 percent
  • Lower rates of zero- and 15-percent for capital gains, dividends and certain property held for more than five years
  • Marriage penalty relief for taxpayers filing joint returns
  • Repeal of exemption and itemized deduction phaseouts
  • Various education-related incentives including (1) exclusion from income and employment taxes for employer-provided education assistance; (2) exclusion from income for National Health Service Corps Scholarship and Armed Forces Scholarship programs; (3) student loan interest deduction; (4) Coverdell Education Savings Accounts contribution limit and related provisions; and (5) American Opportunity Tax Credit (AOTC).
  • Amendments made to the child tax credit by EGTRRA, including the increased credit amount of $1,000 per qualifying child
  • Child and dependent care credit enhancements, including the increased maximum credit percentage of 35 percent, higher income limits, and increased maximum amount of qualifying expenses
  • Increased maximum amount of the earned income tax credit and broader AGI phaseout ranges for taxpayers with three or more qualifying children

 

The following tax incentives, including some that were new with EGTRRA and others that were introduced when the Tax Relief Act of 2010 was enacted, are available in 2011.   Barring further extension by Congress, they will not be available for 2012:

 

  • Payroll tax cut for employees and self-employed individuals – extended until 02/29/12
  • Tax-free IRA distributions to charity
  • Increased (to 100%) exclusion for sales of qualified small business stock
  • Above-the-line deduction for higher education tuition costs
  • Above-the-line deduction for certain out-of-pocket classroom expenses
  • Deduction for state and local general sales taxes in lieu of state and local income taxes
  • Mortgage premium insurance deduction
  • Plug-in conversion credit for vehicles converted from standard to plug-in electric drive motor vehicles
  • Residential energy property credit for qualified energy efficient improvements and expenditures
  • Increased AMT exemption amounts for individuals
  • Nonrefundable tax credit offset of your entire regular and AMT tax liability

 

As you may know, regulations governing basis and sales reporting by securities brokers were finalized early in 2011. What you may not know is that you have the right to choose the method that is used to determine your stock or other security's basis. If your broker uses the average basis method, you may affirmatively elect that method also. However, you may change from that method to another at any time during the year; for example, you may choose to specifically identify stock on a sale-by-sale basis. Alternatively, you may authorize your broker to select a basis determination method for you as allowed under general agency principles. The basis determination rules can be complicated, but they provide you with some flexibility in determining the gain or loss when you sell your securities.

 

TAX SEASON IMPORTANT ACCOUNCEMENTS:

  • Please contact the office if you wish to receive a tax organizer. Your tax organizer includes information from your 2010 tax return which is helpful to gather the necessary tax.
  • If you wish to have a tax appointment, please call soon so we can best accommodate your schedule needs.
  • Please answer the questions included in your organizer, verify that your personal information is correct and provide us with up-to-date contact information.
  • The engagement letter, when signed by you, authorizes us to prepare your tax return. Please include it with your organizer or sign it when you come by the office.
  • The IRS matches information returns (1099’s, 1098’s, W2’s, K-1’s etc.) with amounts reported on tax returns.
  • Contact us as soon as you decide you require an extension. We will not prepare an extension if we do not hear from you prior to the tax return due date.
  • Filing an extension greatly reduces the amount of penalties you will owe on any unpaid tax liability. It is best to pay your estimated tax liability with your extension.          
  • We do accept credit cards (Visa, MasterCard, American Express and Discover) to expedite payment processing for our clients. We expect full payment at the completion of your tax return.
  • Referrals are always welcome.
  • Privacy laws require us to protect your information from your unauthorized release. Our privacy policy and record retention policy can be found on our website.

 

APRIL 10th - WE NEED YOUR PERSONAL TAX RETURN INFORMTION

In order to allow adequate time to prepare your tax return, we need your tax return information in our office before April 10th (in the case of corporations, March 1st). This is to make sure that your return is not hurried or rushed leading up to the deadline.  For returns received on or after April 10th, an automatic six month extension will probably be necessary.    

 

Thank you for your continuing confidence in our services.  As always we look forward to helping you navigate the tax changes smoothly. We invite you to contact us at your earliest convenience to set an appointment.   Also, should you have any questions or need directions to our office, please do not hesitate to call us at (501) 562-7679 or email us at tax@baileythompson.com.

 

Bailey & Thompson Tax & Accounting PA