Monthly Archives: February 2013

Roth IRA Contributions

 

Advice from a Westchester tax preparation firm on your Roth IRA

Creating a Roth IRA can help secure your financial future.

Tax preparers at Herman & Company CPA’s have all the answers to your personal finance questions!

Confused about whether you can contribute to a Roth IRA? The IRS suggests checking these simple rules:

  1. Income
    To contribute to a Roth IRA, you must have compensation (e.g., wages, salary, tips, professional fees, bonuses). Your modified adjusted gross income must be less than:

    • $176,000: Married Filing Jointly.
    • $0-$10,000: Married Filing Separately (and you lived with your spouse at any time during the year).
    • $120,000: Single, Head of Household, or Married Filing Separately (and you did not live with your spouse during the year).
  2. Age
    There is no age limitation for Roth IRA contributions. Unlike traditional IRAs, you can be any age and still qualify to contribute to a Roth IRA.
  3. Contribution Limits
    In general, if your only IRA is a Roth IRA, the maximum current year contribution limit is the lesser of your taxable compensation or $5,000 ($6,000 for those age 50 or over).The maximum contribution limit phases out if your modified adjusted gross income is within these limits:

    • $167,000-$176,000: Married Filing Jointly
    • $0-$10,000:  Married Filing Separately (and you lived with your spouse at any time during the year)
    • $105,000-$120,000: Single, Head of Household, or Married Filing Separately (and you did not live with your spouse)
  4. Contributions to Spousal Roth IRA
    You can make contributions to a Roth IRA for your spouse provided you meet the income requirements.

Our Westchester CPA firm is your one-stop shop to planning your retirement. Herman & Company, Certified Public Accountants & Consultants proudly serves businesses and individuals inWestchester County, NY, Armonk, NY, Bedford, NY, Bedford Hills, NY, Chappaqua, NY, Harrison, NY, Katonah, NY, Larchmont, NY, Mt. Kisco, NY, Rye Brook, NY, Pound Ridge, NY, Purchase, NY, Rye, NY, Scarsdale, NY, White Plains, NY and Greenwich, CT.

Social Security and Medicare Update

Inflation adjustment update from Westchester tax preparation firm

The updated inflation adjustments for this year affect both Social Security and Medicare.

Westchester tax preparation firm Herman & Company CPA’s has all the answers to your personal finance and tax questions!

The annual inflation adjustments have been made for the various social security amounts and thresholds. So, we thought it would be a good time to update you for 2013.

The social security wage base, for computing the social security tax (OASDI only), increases to $113,700 in 2013, up from $110,100 for 2012. The additional $3,600 for 2013 represents an increase of 3.3% in the wage base. There is no taxable earnings limit for Medicare (HI only) contributions.

New for 2013, the 0.9% Medicare Surtax is imposed on wages and self-employment (SE) income in excess of the following modified adjusted gross income (MAGI) threshold amounts: $250,000 for joint filers, $125,000 for married separate filers, and $200,000 for all other taxpayers. The employer portion of the tax is not increased. This new tax is a provision of the Patient Protection and Affordable Care Act.

For social security beneficiaries under the full retirement age, the annual exempt amount increases to $15,120 in 2013 up from $14,640 in 2012. These beneficiaries will be subject to a $1 reduction in benefits for each $2 they earn in excess of $15,120 in 2013. However, in the year beneficiaries reach their full retirement age, earnings above a different annual exemption amount ($40,080 in 2013, up from $38,880 in 2012) are subject to $1 reduction in benefits for each $3 earned over this exempt amount. Social security benefits are not reduced by earned income beginning with the month the beneficiary reaches full benefit retirement age. But remember, social security benefits received may be subject to federal income tax.

Individuals may have to pay federal income taxes on up to 85% of their benefits. Inclusion within taxable income can occur if you have substantial income from wages, self-employment, interest, dividends, and other taxable income, in addition to your benefits. However, no one pays federal income tax on more than 85% of his or her benefits.

The Social Security Administration estimates the average retired worker will receive $1,261 monthly in 2013. The average monthly benefit for an aged couple where both are receiving monthly benefits is $2,048. These amounts reflect a 1.7% cost of living adjustment (COLA). Elderly individuals may also be eligible for a tax reduction.

The maximum 2013 social security benefit for a worker retiring at full retirement age is $2,533 per month, up from $2,513 in 2012.

For more tax tips and information, visit our website at http://www.hermancpa.com, or call us to speak directly with experts at our White Plains accounting firm, 914.400.0300.

Standard Mileage Rates for 2013

You can deduct business-related miles taken in your vehicle

You can deduct business-related miles taken in your vehicle

Tax preparation professionals at Herman & Company CPA’s have all the answers to your personal finance questions!

The 2013 standard mileage rates for use of an automobile are 56.5¢ per mile for business miles driven (an increase of 1¢ from 2012), and 24¢ per mile for medical or moving purposes (up 1¢ from 2012). The rate for rendering gratuitous services to a charitable organization remains unchanged at 14¢ per mile.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving expenses is based on variable costs. Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rate.

A taxpayer may not use the business standard mileage rate for any vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or claiming a Section 179 deduction for that vehicle, or for more than four vehicles used simultaneously.

Westchester tax preparers at Herman & Company can help you with:

  • 2013 Financial Planning for your Westchester-based business
  • Retirement planning, business valuation and bookkeeping for your small or medium-sized firm
  • Proudly serving all the towns of Westchester County, including White Plains NY, Mamaroneck NY, New Rochelle NY, Mt. Kisco NY, Scarsdale  NY and beyond.

Any U.S. tax advice contained in the body of this website is not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.