INEPTOCRACY

I couldn’t find it in the dictionary, so I Googled it, and discovered it is a recently "coined" new word.

Read this one over slowly and absorb the facts that are within this definition!

I love this word, and believe that it will soon become a fully recognized English word. At last, we have a word to perfectly describe our current political situation......

 INEPTOCRACY

(in-ep-toc'-ra-cy)- a system of government where the least capable to lead are elected by the least capable of producing and where the members of society least likely to sustain themselves or succeed, are rewarded with goods and services paid for by the confiscated wealth of a diminishing number of producers.

FAILING TO KEEP CURRENT ON PLAN BENEFICIARIES CAN SPOIL YOUR ESTATE PLANNING

Failing to keep current on plan beneficiaries can spoil your estate planning. A pension plan member neglected to name anyone to replace his spouse as a beneficiary after she died, even though his intention was to leave his entire estate to his two stepsons.

The plan provided that if someone dies without a beneficiary, benefits are paid to the surviving spouse, children, parents and siblings, in that order. After his death, the plan paid out his benefits to his siblings and not to his stepsons, because the stepsons weren’t his biological or legally adopted kids.

An Appeals Court decided this interpretation of the plan was reasonable (Herring v. Campbell, 5th Cir.). Similar problems can arise if your IRA beneficiary dies before you do and you die without naming a replacement beneficiary. In that situation, your heirs will be stuck with a much shorter distribution period to clean out your account.

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.

WHY YOUR 2013 PAYCHECKS ARE 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.

SCIENCE GOES WILD #3

Our third winner- if you can follow it:

The U.S. Government General Accountability Office won a well-deserved literature Ig Nobel "for issuing a report about reports about reports that recommends the preparation of a report about the report about reports about reports." Got that?

PAYROLL TAX INCREASES MAY SPOIL THE PARTY

I WARNED YOU THAT THIS WAS COMING.

Despite the federal tax relief for taxpayers passed at the last minute, or actually after the last minute, payroll tax increases may spoil the party. As we have been warning you, the payroll tax reduction of 2% on employees that has been in place for 2011 and 2012 was allowed to expire on December 31^st.

Lawmakers did not renew the two-percentage-point cut in the employees’ share of the Social Security tax. They did not like the idea that government funding was required to make up the decrease in tax revenue for the Social Security trust fund. As a result, they decided to let this break lapse. Thus, employees will see smaller paychecks as the rate returns to normal.

So the result of all of this…Since the cliff bill was passed the federal tax withholding stayed the same as in 2012 instead of going up, but since the 2% withholding of Social Security went up people will see 2% less in their 2013 paychecks.

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.

• 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