STATISTICS OF INCOME BULLETIN NOW AVAILABLE FROM IRS

WASHINGTON — The Internal Revenue Service today announced that the fall 2012 issue of the Statistics of Income Bulletin is available. This issue features individual income tax return data for Tax Year 2010.

Nearly 143 million individual income tax returns were filed for Tax Year 2010, an increase of 1.7 percent from 140.5 million returns filed for 2009. The adjusted gross income (AGI) reported on these returns totaled $8.1 trillion, a 6.1-percent increase from the previous year.

The Statistics of Income (SOI) Division produces the SOI Bulletin on a quarterly basis. Articles included in the publication provide the most recent data available from various tax and information returns filed by U.S. taxpayers. This issue of the SOI Bulletin also includes articles on the following topics:

• Partnership Returns, 2010. For 2010, the number of partnerships increased 2.5 percent, from the previous year. The number of partners increased by 6.1 percent, from the previous year, and this number has grown 9 out of the last 10 years. Nearly half of all partnerships and more than a third of all partners were classified in the real estate and rental and leasing sector.
• Nonprofit Charitable Organizations, 2009.  For 2009, nonprofit charitable organizations (excluding private foundations) tax exempt under Internal Revenue Code (IRC) section 501(c)(3) reported $2.7 trillion in total assets and $1.5 trillion in revenue.
• Transactions Between Large Foreign-Owned Domestic Corporations and Related Foreign Persons, 2008.  The total value of nonloan transactions between large foreign-owned domestic corporations and related foreign parties totaled $1.187 trillion, a 36-percent decrease from the record high of $1.86 trillion in 2006.

NEW 2013 MILEAGE RATES!!!!

WASHINGTON — The Internal Revenue Service today issued the 2013 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.
Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

• 56.5 cents per mile for business miles driven
• 24 cents per mile driven for medical or moving purposes
• 14 cents per mile driven in service of charitable organizations

The rate for business miles driven during 2013 increases 1 cent from the 2012 rate.  The medical and moving rate is also up 1 cent per mile from the 2012 rate.
The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.
Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.
A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.
These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2012-72 contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

THE IRS AND INTERNET

The Internal Revenue Service is issuing a warning about a new tax scam that uses a website that mimics the IRS e-Services online registration page.

The actual IRS e-Services page offers web-based products for tax preparers and payers, not the general public. The phony web page looks almost identical to the real one.

The IRS gets many reports of fake websites like this. Criminals use these sites to lure people into providing personal and financial information that may be used to steal the victim’s money or identity.

The address of the official IRS website is www.irs.gov. Don’t be misled by sites claiming to be the IRS but ending in .com, .net, .org or other designations instead of .gov.

If you find a suspicious website that claims to be the IRS, send the site’s URL by email to phishing@irs.gov. Use the subject line, 'Suspicious website'.

Be aware that the IRS does not initiate contact with taxpayers by email to request personal or financial information. This includes any type of electronic communication, such as text messages and social media channels.

If you get an unsolicited email that appears to be from the IRS, report it by sending it to phishing@irs.gov.

The IRS has information at www.irs.gov that can help you protect yourself from tax scams of all kinds. Search the site using the term “phishing.”

More 2013 Increases

WASHINGTON — For tax year 2013, the Internal Revenue Service announced today annual inflation adjustments for more than two dozen tax provisions.

• The annual exclusion for gifts rises to $14,000 for 2013, up from $13,000 for 2012.
• The amount used to reduce the net unearned income reported on a child’s tax return subject to the “kiddie tax,” is $1,000, up from $950 for 2012.
• The foreign earned income exclusion rises to $97,600, up from $95,100 in 2012.

2013 Pension Plan up to $17,500.00

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2013.  In general, many of the pension plan limitations will change for 2013 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment.  However, other limitations will remain unchanged because the increase in the index did not meet the statutory thresholds that trigger their adjustment. Highlights include:

• The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan is increased from $17,000 to $17,500.
• The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $5,500.
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $59,000 and $69,000, up from $58,000 and $68,000 in 2012.  For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $95,000 to $115,000, up from $92,000 to $112,000.  For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $178,000 and $188,000, up from $173,000 and $183,000.
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $178,000 to $188,000 for married couples filing jointly, up from $173,000 to $183,000 in 2012.  For singles and heads of household, the income phase-out range is $112,000 to $127,000, up from $110,000 to $125,000.  For a married individual filing a separate return who is covered by a retirement plan at work, the phase-out range remains $0 to $10,000.
• The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $59,000 for married couples filing jointly, up from $57,500 in 2012; $44,250 for heads of household, up from $43,125; and $29,500 for married individuals filing separately and for singles, up from $28,750.

TAX CREDIT FOR ADOPTION COST

Expanded Adoption Tax Credit is still available for October 15 Filers.


 If you adopted a child last year and requested an extension of time to file your 2011 taxes, you may be able to claim the expanded adoption credit on your federal tax return for qualifying expenses paid to adopt an eligible child.


Qualified adoption expenses are reasonable and necessary expenses directly related to the legal adoption of the child and may include adoption fees, court costs, attorney fees and travel expenses.
The adoption credit for tax year 2011 can be as much as $13,360 per eligible child. If you adopt a U.S. child whom a state, county or the District of Columbia has determined has special needs, you may be entitled to the full credit regardless of whether you paid any actual qualified adoption expenses.


Here are some things to remember if you still need to file your 2011 tax return or amend your 2011 tax return:

•You can use IRS Free File or other software to prepare your return, but you must print and mail the tax return to the IRS, along with all required documentation.
• Required documents may include a final adoption decree, placement agreement from an authorized agency, court documents and/or the state’s determination for special needs children.
•The credit for qualified adoption expenses is subject to income limitations, and may be reduced or eliminated depending on your income.
•You can get the credit as a tax refund even after your tax liability has been reduced to zero.
• To claim the credit, you must file a paper tax return and Form 8839, Qualified Adoption Expenses, and attach all supporting documents to your return.
• If you filed your tax return for 2011 and did not claim an allowable adoption credit, you can file an amended return to get a refund. Use Form 1040X, Amended U.S. Individual Income Tax Return, along with Form 8839 and the required documents to claim the credit.
It is necessary for the IRS to review all documents submitted. Normally, it takes six to eight weeks to process a return claiming the adoption credit.

IS Barter Income Taxable?????????

Bartering and Trading? Each Transaction is Taxable to Both Parties


Sometimes, when the right opportunity presents itself, you may be able to pay for goods and services that you need or want by trading goods that you own, or providing a service that you can perform in return. An example of this is if you own a lawn maintenance company and receive legal services from an attorney and pay for those services by providing an agreed upon amount of mowing and maintenance services at the attorney’s home or place of business. In this scenario, the fair market value of the legal services provided is taxable to you as the lawn maintenance company owner. At the same time, the fair market value of the lawn and maintenance services you provide is taxable to the attorney or his firm.
This type of transaction - bartering or trading - can prove to be useful when cash-flow problems would otherwise prevent you from securing needed goods or services. And while there is no exchange of cash or credit, the fair market value of the goods or services that were exchanged is taxable to both parties and must be claimed as other income on an individual or business income tax return.
Remember, just like with payments by money, if a business makes payments of bartered services to another business (except a corporation) of $600 or more in the course of the year, these payments are to be reported on Form 1099-MISC.
When considering record keeping requirements, barter and trade transactions should be treated just like any other financial transaction or exchange. Original cost of goods being bartered or traded, transaction dates, fair market value at the time of the transaction, and other pertinent details should be recorded to assist in the preparation of your income tax return and held, in general, for a period of 3 years in accordance with other documents and receipts used to substantiate income and expenses.

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