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home : ask an expert : ask an expert April 17, 2015

Alissa K. Hollinger
Allissa K. Hollingerr, CPA
Expertise: CPA, PA
1013 W Center St in Sheridan
870-942-1686
http://www.ahollingercpa.com
Click here to ask Alissa K. Hollinger a question!
Contact Alissa K. Hollinger, CPA, PA, in Sheridan for more information and a review of your tax and financial plans. Hollinger is located at 1013 W. Center St./Highway 270 W. For information, call (870) 942-1686, email ahollingercpa@windstream.net or visit www.ahollingercpa.com.

Q: Is identity theft really a serious problem?
A: Businesses sometimes adopt a head-in-the-sand attitude when it comes to identity theft. That’s good news for thieves. By stealing the average consumer’s credit card data, a thief can run up a sizeable bill at a department store or online auction. But if the crook absconds with corporate files, a treasure trove of sensitive information (from vendors, customers, and employees) can be his for the taking.

Say you operate a local video store. In the process of signing up new members, you collect sensitive information such as credit card numbers and home addresses. One night a tech-savvy thief breaks in and steals the store’s computers, thereby gaining access to all customer data you’ve collected. When the spending spree begins (and it will) and your customers learn of this security breach (and they will), your business reputation is headed for a nose dive.

To reduce the risk of identity theft at your company, consider the following:
• If you don’t need it, don’t collect it. The more sensitive information that’s sitting in your filing cabinets or on your computer, the more risk you run. So don’t ask for a customer’s social security number and home address if all you really need is a name and phone number.
• Limit access. Staff should only be allowed to view information that’s needed for their particular duties. The maintenance guy probably doesn’t need to know about client health records. Perhaps the receptionist can remain ignorant about supplier identification numbers.
• Who’s asking? Thieves often get sensitive information from eager-to-help staff who fall for believable stories. “Miss, my mother is in the hospital and she really needs this information for proof of insurance.” When you or your staff get a seemingly legitimate request, be sure to follow up. Call the hospital directly before sharing information.

Identity theft is not just a problem for your clients; it’s a business threat as well.

Contact Alissa K. Hollinger, CPA, PA, in Sheridan for more information and a review of your tax and financial plans. Hollinger is located at 1013 W. Center St./Highway 270 W. For information, call (870) 942-1686, email ahollingercpa@windstream.net or visit www.ahollingercpa.com.


Q: How does the American Taxpayer Relief Act affect me?
A: The new tax law passed as the  country  teetered  on  the edge of the fiscal cliff – the American Taxpayer Relief Act of 2012 (ATRA) – generally extends favorable tax rates for capital gains and dividends. But the news isn’t good for all taxpayers. Some upper-income investors will have to pay a higher tax than other individuals.

Background: Under prior law, investors were taxed at a maximum 15 percent rate on long-term capital gains and qualified dividends, reduced to 0 percent for taxpayers in the two lowest 10 percent and 15 percent ordinary income tax brackets. These tax breaks, which had been extended several times, were set to “sunset” after 2012. At that point, the maximum tax rate for long-term capital gains would have increased to 20 percent, or 10 percent for the lower-income taxpayers, while qualified dividends would have been taxed at ordinary income rates as high as 39.6 percent.
Now ATRA permanently preserves the lower maximum rates for most investors. However, for single filers with taxable income above $400,000 and joint filers with taxable income above $450,000, the maximum rate for long-term gains and qualified dividends jumps to 20 percent, beginning in 2013.

The other tax rules for capital gains and dividends continue to apply. For instance, you must hold assets for longer than one year to qualify for a long-term gain on a sale, while capital gains and losses are still “netted” at the end of the year. The definition of “qualified dividends” still covers most dividends paid by domestic corporations when you’ve held the stock more than 60 days during the 121-day period beginning 60 days before the ex-dividend date.

Summary: Another key tax factor might influence upper-income investors in 2013. A new 3.8 percent Medicare surtax may apply to a portion of net investment income. Consider all the tax implications as you make investment decisions this year.

Q: How can loss of deductions and exemptions with recent legislation changes affect me?
A: Changes stemming from the fiscal cliff tax legislation not only raised tax rates, but also lowered valuable itemized deductions and personal exemptions for higher-earning taxpayers.

Under the new law, married couples making $300,000 or more ($275,000 for head of households and $250,000 for single filers) will have their personal and dependent exemptions gradually phased out. For every $2,500 of adjusted gross income (AGI) over $300,000, their exemptions will be reduced by 2 percent. This means that personal exemptions go away completely at income levels over $422,500 for joint filers. These income thresholds will be adjusted annually for inflation.

Itemized deductions will also be limited for certain taxpayers. Write-offs of mortgage interest, property taxes, charitable deductions, and state and local income taxes will be reduced by 3 percent of that portion of AGI exceeding $300,000 (same income levels as above). There is a limit on this phase-out however; your itemized deductions cannot be reduced by more than 80 percent. And you may deduct in full your qualified medical expenses, investment interest, and theft and casualty losses. Wagering losses are also left untouched.

So  how  can  you  bounce back  from  the  phase-out rules? Obviously, lowering or postponing taxable income to stay under the applicable thresholds will help, not only for avoiding the phase-outs, but also for the other tax increases passed by Congress as well. And to maintain your tax-favored charitable giving, consider the newly reinstated charitable IRA rollover provision. Those age 70½ or older can make tax free gifts of up to $100,000 direct from their IRA without regard to the phase-out rules.

If the one-two punch of the new legislation has you reeling, call our office for a thorough review of your tax situation. Creating a solid tax plan has never been more important.



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The Sheridan Headlight
PO Box 539
101 North Rose St.
Sheridan, AR 72150
(870) 942-2142
fax: (870) 942-8823
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