These brochures are a summary of the key tax law changes in 2013 for individuals and small businesses that may affect you.

2013 Individual Tax Law Snapshot
2013 Small Business Tax Law Snapshot

The following individual income tax deductions, credit and exclusions will expire at the end of this month:

• The non-business energy property credit
• The credit for health insurance costs of eligible individuals
• The deduction for certain elementary and secondary school teacher expenses
• Premiums for mortgage insurance deductible as qualified residence interest
• Deduction for state and local general sales taxes
• The special rules for contributions of capital gain real property made for conservation purposes
• The above-the-line deduction for qualified tuition and related expenses
• The exclusion for discharge-of-indebtedness income on principal residence
• Parity between the exclusion from income for employer-provided mass transit and parking benefits
• Tax-free distributions from IRAs for charitable purposes

As we enter the final 3 months of the tax year, here are a couple of strategies to consider with your non-retirement investment portfolio.

• 0% rate on long-term capital gains and dividends. If your income other than gains and dividends is in the 10% or 15% bracket, profits on sales of assets owned for over a year and dividends are tax free until they push you into the 25% bracket. That bracket starts at $72,500 of taxable income for couples and $36,250 for singles. The balance of your long-term gains and dividends is taxed at 15% or possibly 20%.

Syndicated talk show host Dave Ramsey has selected CPA Kevin Boudreau as one of his Endorsed Local Providers in the Phoenix area for tax services. For more information, contact Kevin at (480) 776-3358.

As some companies look to avoid certain administrative and financial headaches of employing workers, they make arrangements with individuals to be independent contractors who generally get paid without benefits and worker protections.

But be careful. The IRS and courts have certain working environment aspects that are used to evaluate the true definition of the worker.

This comes to light again as a federal judge ruled earlier this week that Rick’s Caberet, a strip club, has to pay its dancers minimum wage and treat them as employees. The club had long classified its dancers as independent contractors and were only paid in customer tips, thus skirting minimum wage rules. This week’s ruling means that 1,900 of Rick’s Caberet International current and former dancers can seek back wages, according to NBCNews.com.

The Tax Court (Hofinga, TC Summ. Op. 2013-43) recently reiterated that real estate pros have to satisfy two time tests to deduct their rental losses in full:

• They must spend over half of their working hours; and
• They must spend at least 750 hours per year materially involved in real estate as a developer, broker, landlord or the like.

Although a contemporaneous logbook that documents the number of hours worked is not required, real estate professionals still must have calendar entries or similar evidence to validate their time, or their losses will be passive. Real estate professionals can be exempt from the passive loss rules; but they need proof that they’ve met the time tests.

With the explosion of online activity in recent years and the creation of virtual currencies, lawmakers are becoming increasingly concerned about how those actions, sometimes taking place in economies that exist entirely within a specific program, might impair the abilities of the IRS to collect what’s due.

Mixed and open systems users are able to turn a virtual currency or good into something with real-world value, or even U.S. dollars (which could create a taxable item.). “Closed-flow” currencies probably do not come with a tax issue because the virtual currency exists entirely within a virtual setting and cannot be used to obtain real goods and services or turned into U.S. dollars.

While there is no fool proof way to guarantee your income tax return will not result in an audit by the Internal Revenue Service, there are a few things that can help you avoid way about 1.5 million Americans experience.

A return can be flagged randomly in an IRS study of the behavior of similar taxpayers, such as those in the same profession. Audits often result from:

The 1% Temporary Transaction Privilege Tax approved by Arizona voters in May 2010 will expire June 1, 2013. That means more money in your pocket.

The tax law is probably going to change in 2013 and chances are, most people will be paying more to the government. The Obama administration is advocating changes to Social Security and placing a heavier burden on those with higher incomes. Understandably, there is not agreement by our elected officials. As of mid-April, here are some of the current proposals that would affect 2014: