NEW HIRE LETTER - NEBRASKA

You may have received a letter from the State Directory of New Hires reminding you that you are required to report newly hired and re-hired employees.

Remember on October 21, 2011, President Obama signed the Trade Adjustment Assistance Extension Act of 2011. The law amends the term “newly hired employee” to mean an employee who has not previously been employed by the employer; or was previously employed by the employer but has been separated from such prior employment for at least 60 consecutive days. Nebraska’s new hire statute §48-2302 was amended to add this requirement which became operative on October 1, 2012.

The state uses the information to find people whom aren't paying child support; therefore the state knows where to garnish paychecks. 

To find out more information you can check Nebraska’s website at: NEW HIRE

FREE MEAL TAXABLE

Q:  I received an invitation for a free meal at an investment seminar? Is this taxable, if I go?

A:  No, the event is governed by the tax rules for meal and entertainment expenses. Therefore, as the recipient of the meal, you don't owe any income tax on this benefit. But it's not completely "free"; undoubtedly, you'll have to listen to a sales pitch from a financial planner, plus you may have to endure follow-up contacts.

Tip: If you pay to attend an investment seminar or convention, you can't deduct the cost, either.

NEBRASKA INHERITANCE TAX

I recently had a question on the Nebraska inheritance rates. The rate depends on who is inheriting your estate. For example, if a part of your estate goes to a nephew, the county gets a 13% tax.

NEBRASKA INHERITANCE TAX AS OF AUGUST 16, 2012

	Exemption	Rate
Surviving Spouse	All	0%
Class 1 – Near Relatives Father Mother Grandfather Grandmother Brother Sister Son Daughter Child Children legally adopted Grandchild Any lineal descendent Any person to whom the deceased for not less than 10 years prior to death stood in the acknowledger relation of a parent Spouse of any of the personal listed above Surviving spouse of any of the persons named above	40,000.00	1%
Class 2 – Distant Relatives Uncle Aunt Niece Nephew Any of the above related by adoption Lineal descendents of the above (first cousin) Spouse of surviving spouse of any of the above	15,000.00	13%
Class 3 – All Other Inheritances More distant relatives Second cousin Great-Uncle Great-Aunt Great-grandparent Unrelated people		18%

All states are different and there is talk in the Nebraska legislature and by the governor of some changes.

We will keep you posted.

WHY YOUR 2013 PAYCHECKS AE 2% LESS

The questions are already rolling in: "Why did my pay drop?" The simple answer is the expiration of the payroll tax holiday as part of the fiscal cliff deal. The payroll tax holiday was enacted in 2011, which reduced the employee share of the Social Security payroll tax from 6.2% to 4.2%. The holiday was not renewed when it expired at the end of 2012. The payroll tax holiday proved popular, but it cut federal revenues by some $10 billion per month.

1099 RELIEF ON MISCLASSIFIED WORKERS

The IRS is temporarily easing the 1099 rules. From now until June 30, 2013, firms that haven’t filed all the 1099s on misclassified workers for the past three years can sign up. The businesses will owe a slightly higher penalty and will have to pay a modest fine for failing to timely file 1099 forms on the workers.  Announcement 2012-46 has all the rules, plus a worksheet to compute the penalties. 

IRA CHARITABLE ROLLOVER

If you are over age 70 1/2, you can save on last year's taxes by giving directly from your IRA this January.

In the 2012 Taxpayer Relief Act, there is a provision that is retroactive.

How? With an Individual Retirement Account "IRA" Charitable Rollover, also called a "qualified charitable distribution."

What is an IRA Charitable Rollover? An IRA Charitable Rollover is a direct transfer of up to $100,000 from your traditional IRA to a qualified charity.

Who is eligible to make an IRA Charitable Rollover? Traditional IRA owners who are at least 70 1/2 years old.

How does an IRA Charitable Rollover benefit me? Because the donation is made directly to charity, you benefit by not having to count the donated amount as income for tax purposes - this can be particularly helpful in excluding all or part of your required minimum distribution.

What if I already took my required distribution this year? If you received a distribution between December 1, 2013 and December 31, 2012, you may donate all or part of that distribution by writing a check to your desired charity by February 1, 2013 and that donation will count as an IRA Charitable Rollover for 2012.

How long do I have to act? You are allowed to make an IRA Charitable Rollover before February 1, 2013 and have it apply to your 2012 taxes. You are also eligible to make an IRA Charitable Rollover for your 2013 taxes any time throughout 2013.

How do I make an IRA Charitable Rollover? Instruct your IRA trustee to make the contribution directly to your designated charity before February 1, 2013.

Contact us if you need further information.

IRS WILL BEGIN 2013 FILING SEASON AND PROCESSING OF INDIVIDUAL RETURNS ON JANUARY 30

If you are expecting a refund you will have to wait a little longer this year. The IRS has announced that it plans to open the 2013 filing season and begin processing individual income tax returns on Jan. 30, 2013. The announcement follows on the heels of the enactment of the American Taxpayer Relief Act of 2012 (the 2012 Taxpayer Relief Act) on Jan. 2, 2013, which, apart from permanently extending the Bush-era tax cuts for most taxpayers and increasing the income tax rates for some high-income individuals for 2013 and later years, retroactively restored many deductions and credits and patched the alternative minimum tax for 2012. IRS will begin accepting tax returns only after updating forms and completing programming and testing of its processing systems to reflect these retroactive changes. IR 2013-2

It appears we are going to file returns later than normal. The following is a list of forms that the IRS will not accept until late February or March. Depreciation is on this list, so this will impact a lot of our clients.

Note that depreciation schedule is on the list.

• Form 3800 General Business Credit

• Form 4136 Credit for Federal Tax Paid on Fuels

• Form 4562 Depreciation and Amortization (Including Information on Listed Property)

• Form 5074 Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern

Mariana Islands

• Form 5471 Information Return of U.S. Persons With Respect to Certain Foreign Corporations

• Form 5695 Residential Energy Credits

• Form 5735 American Samoa Economic Development Credit

• Form 5884 Work Opportunity Credit

• Form 6478 Credit for Alcohol Used as Fuel

• Form 6765 Credit for Increasing Research Activities

• Form 8396 Mortgage Interest Credit

• Form 8582 Passive Activity Loss Limitations

• Form 8820 Orphan Drug Credit

• Form 8834 Qualified Plug-in Electric and Electric Vehicle Credit

• Form 8839 Qualified Adoption Expenses

• Form 8844 Empowerment Zone and Renewal Community Employment Credit

• Form 8845 Indian Employment Credit

• Form 8859 District of Columbia First-Time Homebuyer Credit

• Form 8864 Biodiesel and Renewable Diesel Fuels Credit

• Form 8874 New Markets Credits

• Form 8900 Qualified Railroad Track Maintenance Credit

• Form 8903 Domestic Production Activities Deduction

• Form 8908 Energy Efficient Home Credit

• Form 8909 Energy Efficient Appliance Credit

• Form 8910 Alternative Motor Vehicle Credit

• Form 8911 Alternative Fuel Vehicle Refueling Property Credit

• Form 8912 Credit to Holders of Tax Credit Bonds

• Form 8923 Mine Rescue Team Training Credit

• Form 8932 Credit for Employer Differential Wage Payments

• Form 8936 Qualified Plug-in Electric Drive Motor Vehicle Credit