Theresa Arndt, CPA

With the fiscal cliff stealing the spotlight over the holidays, very little attention was given to two new taxes that started January 1.   Thanks to the Affordable Care Act (also known as Obamacare) the first wave of tax increases rolls out in 2013 to help fund the massive 2010 health care reform.   The new taxes on wages and investment income are expected to raise about $318 billion over 10 years.   Granted the bulk of these taxes fall mainly on the wealthy and the health care industry, but sooner or later we will all be paying more.   To find out who pays and how much, keep reading: Increased Medicare payroll tax Currently, the Medicare payroll tax is 2.9% and it applies to earned income only.   An employee is responsible for 1.45% of the tax and it’s deducted automatically from the paycheck.   The employer kicks in the other 1.45%.     Under the new tax provision, most taxpayers will continue to pay the 1.45% Me...

In about three weeks, Black Friday 2011 will officially be underway. For decades this has been the busiest shopping day of the year.   But there is another day that many of you are looking forward to:   Cyber Monday. Cyber Monday is the e-based alternative to Black Friday.   It falls on the Monday after Thanksgiving and is the biggest online shopping day of the year.   Hundreds of online retailers participate.   Experts say that in many cases you get a better deal making your purchase on Cyber Monday than on Black Friday.   What does all of this have to do with taxes?   Well, if you plan to scoop up some of those deals on Cyber Monday, chances are good that it will be from a retailer that is not required to charge you sales tax.   And that is a hot topic right now. Does this mean that you are off the hook for paying the sales tax if weren’t charged for it?   No.   According to Missouri law, you are supposed to declare that ...

In June, the IRS announced an increase in the standard mileage rates for the final six months of 2011 .    In their news announcement, the IRS wrote, “This year’s increased gas prices are having a major impact on individual Americans so the IRS is adjusting the standard mileage rates to better reflect them.” For your convenience, here are the mileage rates for 2011: ·          Business: 55.5 cents per mile (Compared to 51 cents for 1 st six months) ·          Medical: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Moving: 23.5 cents per mile (Compared to 19 cents for 1 st six months) ·          Charitable: 14 cents per mile (Unchanged) Taxpayers can use one of two methods to deduct vehicles expenses: standard mileage rate and actual expense method.   Traditionally I have ...

According to a Treasury report last month, taxpayers wrongly received nearly $3.2 billion in American Opportunity Tax Credits (AOC) between Jan. 1, 2010 and May 28, 2010 .    The report attributes the error to ineffective IRS procedures for the review of education credits.   The Treasury has forecasted that an additional $12.8 billion in wrongfully claimed education credits will be granted over the next four years unless the current system of review is modified. Here is a breakdown of the errors: ·          $2.6 billion to 1.7 million individuals who weren’t even attending college ·          $550 million went to students who didn’t attend school at least half-time or who were in graduate school, both contrary to the tax laws ·          $88 million to students who were claimed as dependents on someone else’s tax return ·    ...

This month the first cars to be fully powered by electricity were released by many of the major auto makers. The new fully electrical vehicles, the Chevy Volt and Nissan Leaf, have no drivetrain and no combustion engine. They are leading the way for the new green revolution in the auto industry. Uncle Sam has promised big tax credits of up to $7,500 for those who purchase any of the new electric models.   This is an attempt to increase consumer interest in green technology.   At the moment consumers are concerned about battery life and whether the infrastructure is in place to support an electric vehicle.   But these big tax breaks may be just enough to make you take a second look. If you are thinking about buying a green vehicle, here is what you need to know.   How much is the credit: This credit is up to $7,500.   A credit is worth more than a deduction; how so?   A deduction reduces your taxable income, so the value depends on your tax brack...