Extension Deadlines Looming

For anyone who extended their corporate returns, partnership returns, and/or individual returns, extension deadlines are approaching quickly. 

For Corporations and Partnerships who filed an extension, your tax returns are due by September 17, 2012.  Additionally, contributions to retirement plans must be made by September 17.

For Individuals who filed an extension, your tax returns are due by October 15, 2012. 

Penalties can pile up if not timely filed; therefore, please take the appropriate steps to file timely. 

If you need assistance completing your 2011 tax returns, please contact our office as soon as possible. 

brad@mcarthurco.com

704.544.8429 

What is AMT?

AMT is the Alternative Minimum Tax system and establishes a parallel set of tax rules for taxpayers and tax preparers to work with when filing individual income tax returns.  It was created as a method to establish a minimum tax for individuals making certain levels of income.  Over the years, various patches and exemptions have lessened the impact of the AMT, but it is still has a direct impact on many taxpayers. 

Whether you are aware of it or not, each taxpayer must calculate their taxes under both the “normal” tax guidelines as well as the AMT tax guidelines.  If you pay a CPA or other preparer to complete your tax returns or use TurboTax or similar software programs, this calculation is being completed.  The reason taxes are calculated under both guidelines is that you will owe the higher of the normal income taxes and the AMT tax. 

Why Should I Care?

Over the years, Congress has established exemption levels that have kept a large number of taxpayers from incurring AMT taxes.  However, as of this point of 2012, the AMT exemption level is set to drop to its lowest level since the early 2000’s.  In 2011, the AMT exemption amount was $74,450 for a couple married filing jointly and $48,450 for a single individual.  In 2012, the exemption amounts drop to $45,000 for a couple married filing jointly and $33,750 for a single individual. 

If you paid AMT in the past, this reduced exemption will likely increase your AMT tax.  If you have not been subject to AMT in the prior years, the reduced exemption could introduce this additional tax to you and your tax return. 

There is a light at the end of the tunnel.  It has been routine for Congress to pass AMT tax patches to increase or extend exemption amounts to avoid millions of additional taxpayers becoming subject to AMT tax.  To be clear, right now, no such patch has passed for 2012 and will not likely be entertained until after the November elections.  Between now and then, take a look at your tax picture with your CPA to see how the AMT changes may (or may not) affect your 2012 tax filings.

brad@mcarthurco.com

704.544.8429

NC Sales Tax Free Weekend is Here!!

The annual North Carolina sales tax holiday begins Friday, Aug. 3 and runs through Sunday, Aug. 5. Shoppers can save money on certain purchases of items like clothing, school supplies and computers.
The popular event includes clothing, footwear, and school supplies of $100 or less per item; school instructional materials of $300 or less per item; sports and recreational equipment of $50 or less per item; computers of $3,500 or less per item; and computer supplies of $250 or less per item from sales tax. Tablet computers and netbooks of $3,500 or less per item qualify; eReaders do not.
Items are not necessarily exempt from sales tax just because they are required by a child's school or sports team.  Visit NCDOR's website for a http://www.dornc.com/taxes/sales/holiday_exempt.pdf of items that qualify.

The holiday begins at 12:01 a.m. Friday and lasts until 11:59 p.m. Sunday. Participation in the sales tax holiday is required; retailers cannot opt out.

Retailers may not charge sales tax on exempt items sold during the holiday and tell shoppers to request a refund from the Department of Revenue. In cases where the sales tax is charged on purchases that should be exempt, a customer's only option to obtain a refund is from the retailer.

Discounts from retailers' coupons are deducted from the price of an item before determining if the item is eligible for the sales tax exemption. Example: a customer buys a dress priced at $105 and uses a retailer's coupon for a 10 percent discount. The discounted sales price of the dress is $94.50 ($105.00 - $10.50 = $94.50) and the dress is exempt from sales tax if purchased during the holiday. Manufacturers' coupons are treated just the opposite way and are not deducted from the sales price before determining an item's eligibility for the sales tax exemption.

Rebates do not affect the sales price of an item for the sales tax holiday. Example: a computer priced at $4,000 with a $600 rebate is not exempt from sales taxes. The amount of the rebate is not deducted from the sales price of the computer before determining if the computer is eligible for the sales tax exemption.

Happy shopping! 

brad@mcarthurco.com

704.544.8429