This month's Financial Services E-Advisor includes the following:
- Estate Tax After the Fiscal Cliff
- Understanding the New Medicare Tax on Unearned Income
- Financial Tips for Obtaining a Mortgage Loan
- I Don't Think I'll Be Able to File My Tax Return By April 15. Is There Any Way to File Later?
- What Should I Do With This Year's Large Tax Return Refund?
Estate Tax After the Fiscal Cliff
After threatening to go over the fiscal cliff, the gift tax, estate tax, and generation-skipping transfer (GST) tax have come in for a soft landing. The American Taxpayer Relief Act of 2012 (ATRA 2012), enacted on January 2, 2013, permanently extended the $5 million (as indexed) gift tax and estate tax applicable exclusion amount and GST tax exemption. It also permanently extended portability of the gift tax and estate tax applicable exclusion amount between spouses. However, it also increased the top gift, estate, and GST tax rate to 40% starting in 2013. A number of other provisions were also permanently extended.
Click here to read more about estate tax after the fiscal cliff.
Understanding the New Medicare Tax on Unearned Income
Health-care reform legislation enacted in 2010 included a new 3.8% Medicare tax on the unearned income of certain high-income individuals. The new tax, known as the unearned income Medicare contribution tax, or the net investment income tax (NIIT), took effect on January 1, 2013.
Click here to read more about the new Medicare tax on unearned Income.
Financial Tips for Obtaining a Mortgage Loan
Protection Bureau released a new mortgage regulation, which sets forth stricter underwriting requirements for mortgage lenders. The regulation requires lenders to ensure a borrower's ability to repay a loan by taking a variety of underwriting precautions, including verifying income and assets and increasing debt-to-income ratios.
The regulation implements sections of the 2010 Dodd-Frank Act, and is aimed at protecting consumers by providing for a standardization of the mortgage loan underwriting process.
Click here to read more about financial tips for obtaining a mortgage loan.
I Don't Think I'll Be Able to File My Tax Return By April 15. Is There Any Way to File Later?
If you don't file your federal income tax return on time, you could be subject to a failure-to-file penalty. Fortunately, you can file for and obtain an automatic six-month extension by using IRS Form 4868.
You must file for an extension by the original due date for your return. Individuals whose due date for filing a return is April 15 would then have until October 15 to file their return. It is important to note, however, that in most cases this six-month extension is an extension to file your tax return and not an extension to pay any federal income tax that is due. You should estimate and pay any federal income tax that is due by the original due date of the return without regard to the extension. Any taxes that are not paid by the regular due date will be subject to interest, and possibly penalties.
Click here to read more about filing your tax return later than April 15.
What Should I Do With This Year's Large Tax Return Refund?
It's easy to get excited at tax time when you find out you'll be getting a refund from the IRS–especially if it's a large sum of money. The prospect of taking your family on a dream vacation, purchasing that 60-inch LCD television you've had your eye on, or going on a shopping spree at the mall all seem like great ways to spend the money. But what about doing something a bit more practical with your refund, such as putting it towards improving your overall financial picture?
Click here to read more about what to do with a large tax return refund.
For more information on Skoda Minotti Financial Services, contact Bob Coode by leaving a message below or by calling 440-449-6800.