Tag Archives: irs taxes

Tax Tips for 2011 – 6 Last Minute Tax Saving Tips

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This time of year, clients call for last minute tax guidance that will help them maximize their returns. While we advise our clients on a year round basis – not just at tax time – here are a few last minute tips you might find helpful.

Here are a few things you can do in the next couple of days that may save you some 2011 tax dollars:

1) Make a charitable contribution.
If the last minute contribution is for more than $250, it must be documented by a contemporaneous acknowledgement from the donor organization.

2) Make a contribution to an IRA, 401(k) or other retirement account.
Most retirement plans actually give you up until April 15, 2012 to make a contribution as long as you designate that the contribution should apply to the 2011 Tax Year.

3) Fund a Health Savings Account or a Medical Savings Account.
The money put into these accounts is tax deductible up to certain limits and is not taxed when it is taken out as long as it is used for medical expenses. Any funds put into either of these account types before December 31 can be counted as a tax deduction for 2011 even though will not used for medical expenses until 2012. At the end of each year, money in these savings accounts that has not been used to cover medical expenses during the current year can be rolled over for use during the next calendar year.

4) Pay your 2011 State Income Tax.
Although the deadline for paying your 2011 State Income Taxes is April 15, 2012, the State Income Tax Deduction can be claimed a whole year earlier if the payment is made before December 31.

5) Consider selling investments that are down if you have sold investments that have shown gains in 2011.
Although the entire amount of capital gains is taxed during the year they are realized, the maximum yearly deduction for capital losses is $3000. However, any capital gains realized during a calendar year can be offset by capital losses posted during the same year. This tax law essentially allows you to increase the allowable capital loss deduction by the entire amount of any gains realized during the same year.

6) If you own a small business, consider making equipment purchases.
A special tax code makes it an advantage to purchase business tools and equipment before the end of 2011. Although the cost of a capital expenditure usually must be depreciated over the predicted life of the equipment, a special tax code allows you to deduct the full amount of a purchase, up to certain limits, in the calendar year it is made. (https://boxmining.com/) This amount is $500,000 for 2011 but will drop to $139,000 in 2012 and then to $25,000 per year.

If you need tax advice, contact us at (877) 889-6527 or by email at info@protaxres.com for a free, no obligation consultation with a CPA today.  If you already owe a tax debt or are simply trying to avoid incurring tax debt in the future, our experienced professionals can help. Click the links for more information about our tax planning and preparation and  tax debt resolution services.

IRS Tax Code and Money Earned Abroad – Could it Change?

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Money earned abroad by American corporations is free from U.S. taxes until it is returned to the United States. However, once these foreign earnings are repatriated, they are taxed at a rate of 35%. The current tax code allows multinational companies to avoid this tax, but only if they invest in certain domestic assets such as bank deposits, stocks and bonds. If the foreign earnings are reinvested into the companies themselves, they are taxed at the corporate tax rate of 35%. Currently, a group of multinational companies who have joined together to form what is called the Win America Coalition, is lobbying Congress to reduce the tax rate on earnings they bring home from overseas. This group of companies, which consists mainly of the Silicon Valley technology giants together with some pharmaceutical companies, is asking for the tax rate on repatriated foreign earnings to be reduced from 35% to just over 5%. They claim that a reduction in the tax rate would increase hiring and stimulate job growth by allowing companies to invest in themselves. While some members of both major political parties are in favor of such a tax cut, others are against it. The pros and cons are outlined below.

Reasons for favoring a tax cut on repatriated foreign earnings:

• Due to a flawed U.S. tax code, profits of U.S. companies continue to be invested around the world instead of at home.

• Even though companies are allowed to keep funds earned abroad in U.S. banks, they are not able to put the funds to work in the U.S. economy without being subjected to a 35% tax rate.

• Reducing the tax rate for repatriated funds earned abroad would inject billions of dollars into the U.S economy, thus creating jobs.

Reasons for opposing a tax cut on repatriated foreign earnings:

• Domestic companies that do not have overseas operations say it is unfair to give multinational companies a lower tax rate.

• Some analysts say that job growth created by a tax cut would be lower than some estimates predict because foreign earnings are already invested in U.S. stocks and bonds and deposited in U.S. banks.

• Independent tax analysts have said that when a similar tax cut was initiated in 2004, most of the repatriated funds were spent on shareholder dividends, stock buybacks and executive pay rather than on any type of expansion that would have created jobs.

According to recent report by the Senate’s Permanent Subcommittee on Investigations, large multinational companies are already investing nearly $250 billion in United States financial institutions in order to avoid paying the 35% tax rate on repatriated foreign earnings. The question is whether a reduction in the current rate would promote changes in the distribution of these funds that would be beneficial to the economy.

Do you have a tax planning or preparation question?  Are you thinking about your 2011 taxes and want to avoid owing the IRS a tax debt?  Call for a free, no obligation tax consultation with our CPA’s today (877) 889-6527 or email us at info@protaxres.com

Start of 2012 with clear and accurate tax advice – contact us today!