Personal Taxes

After the occurance of Hurricanes Katrina, Rita and Wilma, Congress acted to eliminate the 10% of AGI limitation as well as the $100 subtraction. As of today 3/7/13 Congress has not acted to extend similar tax law changes for the victims of Hurricane Sandy. Taxpayers should contact their local Congressman and ask them to vote ASAP.
The current law is as follows:
After you have figured the amount of your loss, you must figure how much of the loss you can deduct. If the loss was to property for your personal use or your family's, there are two limits on the amount you can deduct for your casualty or theft loss.
1.You must reduce each casualty or theft loss by $100 ($100 rule). 2.You must further REDUCE the total of all your losses by 10% of your adjusted gross income (10% rule).

Many disaster victims won’t qualify for any personal casualty loss write offs because of the following two rules.
1, you must reduce your loss by $100. Obviously, that’s no big deal. THEN you must further reduce the loss by an amount equal to 10% of your adjusted gross income (AGI) for the year. That is a big deal.
For example, If you incur a $20,000 personal casualty loss this year and have AGI of $100,000. Your write off is $9,900 ($20,000 - $100 - $10,000). You get absolutely no tax break if your loss before the 2 required subtractions is $10,100 or less.Also you have to Itemize your deductions to use the casualty loss deduction.

A deductible loss can result from a number of events. Here are some examples:
•Storm (including hurricanes and tornadoes). •Flood and wind, •Fire, •Earthquake,
•Other “sudden and unexpected events,” such as an automobile accident, also qualify as a casualty for tax purposes.

The taxpayer Has the Burden of Proof. To deduct a casualty loss, the taxpayer must meet all of the following tests and requirements to take a casualty loss:
•Be able to show that there actually was a casualty loss including showing all of the following:
The type of casualty, Its date of occurrence, That the loss was a direct result of the casualty , That the taxpayer owned the property or was liable for the damage to the owner of the property, and whether there is a claim for insurance reimbursement with a reasonable expectation of recovery. and Justify the amount taken as a deduction.

Unlike business property, if personal property is completely destroyed, the loss cannot exceed the decline in value from the casualty, even if this is less than the basis.
If property owned outside of the business or investment setting, like a personal residence, is damaged, the loss is the lesser of the property’s decline in value or its adjusted basis, reduced by insurance proceeds or other reimbursement.

The AMT Patch was the mechanism used by Congress to offset the failure of the tax law to automatically require an adjustment of the AMT brackets for inflation.
This failure, with the resulting need for the annual Patch, has been going on since 2000.
Congress permanently addressed the AMT issue by indexing the annual exemption limits for inflation retroactive for 2012.

For 2012 tax years, the alternative minimum tax exemption for a child subject to the Kiddie Tax is limited to the sum of (1) the child's earned income for the taxable year, plus (2) $6,950.

Interest Rates for Q1, Q2 and Q3 for 2013 will continue to be charged as follows:
3% for overpayments (2% for corporations)
3% for underpayments
5% for large corporate underpayments
0.5% for the portion of a corporate overpayment in excess of $10k.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points. Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points.
The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point. Further, the federal short-term rate that applies during the third month following the taxable year also applies when determining estimated tax underpayments during the first 15 days of the fourth month following the taxable year

Generally damages received for Wrongful termination are taxable as compensation.