Friday, March 22, 2013

Impact of Medicare Tax on 2013 Estimated Tax Vouchers

Q.  I've been hearing a lot about the new Medicare tax affecting our returns this year. I don't follow. Where do I find this new tax?
A.  The Medicare Tax takes affect this year, 2013, so you won't find it until this time next year when we file our 2013 returns. It is a tax on investment income, and won't affect the majority of Americans. If you are filling a joint return, the threshold amount is investment income of $250,000 or more; $125,000 for single filers, and everyone else (such as a trust return) $200,000.

The only impact this year is on figuring your estimated tax payments. I think most of us can rest easy!

Thursday, March 21, 2013

Deducting Mortgage Interest on your RV

Q.  My husband and I are retired military and currently live full time in our RV. Although we do have a small cabin in another state, there is no mortgage on it. I am taking the mortgage interest on the RV as a deduction on our tax return. Is this correct? What is the impact if we take the standard deduction?

A.  Yes, since your RV is your primary residence you can deduct the mortgage interest. The mortgage interest would be deductible even if the RV was a secondary residence, providing, of course, it meets all the criteria.  If you elect to take the standard deduction, there would be no impact as you don't account for how it is "spent" so to speak. Always take the higher of the two.

Wednesday, March 20, 2013

Distributions From an HSA etc.

Q.  What do I do with Form 1099-SA? I've never seen one before.

A.  If you received this form, you made a withdrawal from a HSA (Health Savings Account) Archer MSA, or a MA MSA. In either case, usually the funds are used to pay for medical care. If you used the proceeds to pay for medical care,  you will need to file form 8889 to report the amount which is not taxable.  Insert the amount used (usually all of it) to cover your medical care costs.  If the proceeds were not used to pay for medical care, you will be taxed on the entire amount. More  paperwork and more headaches!

Tuesday, March 19, 2013

Missing Incoming 1099

Q.  I want to file my return, but have not received the 1099 Forms I was expecting in regard to the BP oil spill. Calls to the lawyer offices and claims department have gone in a big circle nowhere. Why can't they at least give me the federal ID number so I can go ahead and file?

A.  Although your software may ask for a federal ID number, there is actually no legal requirement that it appears on your tax return.  My suggestion would be to go ahead and file with your income reported to the best of your knowledge. The IRS uses the 1099 forms to "match up" returns. Even if you don't show receipt of a 1099, as long as the income you report on your return is at least the amount reported to the IRS or more, there should be no concern.

In the event you should receive a 1099 later this year and it matches what you have reported, there is no problem. If the reported income is greater than what you reported on your return, you have 3 years to amend the return from the later of the filing date or due date.

Monday, March 18, 2013

RV Parsonage Allowance?

Q.  As a retired minister I will be a full time RVer with a parsonage allowance.  Will this apply to campground fees and memberships?

A.  This is an area I haven't dealt with in years, so you may want to find someone who specializes in the ministry. My understanding is that the clergy does not have to report the fair market value of the parsonage they live in. This comes under the housing benefit for the convenience of the employer rule,(so that ministers are available at all times to tend to the flock, so to speak). According to my resources, Reg 1.107-1 stipulates... " it includes the portion of a retired minister's pension designated as a rental allowance by the national governing body of a religious denomination having complete control over the retirement fund."

I'm not certain, but this would tend to make me think the amount for parsonage allowance  received could be used to apply towards your campground fees. Clearly, the law was not written with RVs in mind. Please seek out several opinions on this. Truly, this is nothing more than a WAG!