November 2011

We see many ads and much talk on TV regarding who pays how much tax – here are the FACTS as published by the IRS for the tax year 2009:

• The top 1% of all filers paid 36.7% of all Federal income taxes – AGI of over $343,927.
• The top 5% of all filers paid 58.7% of all Federal income taxes – AGI of over $154,653.
• The top 10% of all filers paid 70.5% of all Federal income taxes – AGI of over $112,124.
• The bottom 50% of all filers paid 2.25% of all Federal income taxes.

Not a political comment – just the FACTS!

Contact Us or call today: 303.232.8300

The Social Security Wage Base for 2012 will jump to $110,000, a $3,300 increase over this year’s figure and the first increase since 2009.

For 2011, the rate on employees was reduced to 4.2% from 6.2%. We think that Congress will extend this break for 2012 and possibly expand the reduction to 3.1% for employees AND employers; however, this is still up in the air.

Contact Us or call today: 303.232.8300

Benefit Plans: Several key ceilings on retirement plans will be higher next year: The maximum 401(k) contribution rises to $17,000 in 2012, up $500 over this year. Individuals born before 1963 can put in as much as $22,500. The contribution limits apply to 403(b) and 457 plans as well. The ceiling on SIMPLEs will remain $11,500. Folks age 50 or older in 2012 can put in an additional $2,500.

Plan contributions can be based on up to $250,000 of salary next year. The payin limitation for defined contribution plans increases to $50,000 in 2012. That’s a $1,000 increase for Keogh plans, profit sharing plans and the like.

Contact Us or call today: 303.232.8300

Capital Gains: Reporting your capital gains for 2011 is going to be more complicated. You will have to use two forms. Form 8949 and Schedule D. The reason? Basis reporting rules that went into effect for securities bought after 2010 and sold in 2011 and later. All sales will be listed on the 8949, and the totals will be carried to Schedule D. Separate 8949s must be filed for sales where the basis is reported by the broker, for sales where the tax basis isn’t reported and for any disposition where no 1099-B is received reporting the gross proceeds. This way, the Service will be able to cross-check the basis information it receives with the sellers’ returns.

Contact Us or call today: 303.232.8300

The IRS will NEVER email regarding your tax account! BEWARE of PHISHING SCHEMES! What if you become aware of an IRS-related phishing scam? If you receive an unsolicitied email communication claiming to be from the IRS, please forward the original message to phishing@irs.gov. Find complete instructions at www.irs.gov.

Contact Us or call today: 303.232.8300