Beyoncé Super Bowl Show Far From ‘Free’

By all accounts, Beyoncé’s Super Bowl halftime show literally put the lights out. And for the price, it was a steal. She is at the top of her game and reaps huge rewards, earning about $70 million annually. Although her income dropped from that levellast year when she and husbandJay-Z had a child, she’ll reportedly soon be back to grossing over $2 million a night.

Yet her Super Bowl show was done at no charge, though the exposure is clearly money in the long run. See Why Beyoncé Isn’t Getting Paid For Her Super Bowl Halftime Gig. Not paying is NFL policy, although they cover all costs including travel, lodging, setup, fees for backup dancers and musicians. That could total $600,000 or even more. And how the money changes hands can impact taxes and tax reporting.

This surely sounds like a wash, and for Beyoncé, it should come out the same. But in the tax world it can come out differently. If you imagine that she were an employee of the NFL rather than an independent contractor, the direct pay or reimbursement choice might matter in ways that seem surprising if not downright unfair.

In fact, many an employee has found that getting ‘reimbursed’ by their company for an employee business expense can leave them short. The employee has to report the income when it is included on their Form W-2. But when they deduct the expenses, their deductions are often limited. If you can’t deduct it dollar-for-dollar, you’ll certainly care how the reimbursements are handled on your taxes.

The best deal is if your employer has an “accountable plan.” If the company reimburses you or gives you an advance or allowance for your employee business expenses under that kind of plan, you should be able to avoid the issue. The payment won’t appear on Form W-2, you do not include it in your income, and you cannot deduct any of the reimbursed amounts.

To be an accountable plan, your employer’s reimbursement or allowance arrangement must include all three of the following rules:

  1. You must have paid or incurred expenses that are deductible while performing services as an employee;
  2. You must adequately account to your employer for these expenses within a reasonable time period; and
  3. You must return any excess reimbursement or allowance within a reasonable time period.

Beyoncé surely doesn’t need to worry about this sort of thing. But if you think details like direct pay vs. reimbursement don’t matter to employees, think again.– taken from


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Entrepreneurs Could Benefit from New Research and Development Tax Credit

Entrepreneurs could benefit from a new research and development tax credit that has been proposed by bipartisan lawmakers in Congress. If it passes, the tax credit would bring serious savings to startups that spend money on innovation before they have turned a profit.

Dubbed the Startup Innovation Credit Act of 2013, the bill would allow qualifying companies to claim the Research and Development Tax Credit against their employment taxes. Typically, a business deducts its research and development expenses from its taxable profits, which means the current R&D tax credit is useless for any startup that has not yet started making a profit. Under the proposed bill, if a startup is not yet making profit, it will still be able to reap a reward for investing in innovation by deducting its R&D spending from its employment spending.


To qualify for the tax credit, a startup must be fewer than 5 years old and have less than $5 million in total revenues. The startup would be able to deduct the total amount it spent on R&D up to $250,000 frm its employment taxes the following year. 

Related: Push for Entrepreneur Immigration Reform Grows on Capitol Hill

Representatives Jim Gerlach (R, Pa.) and Ron Kind (D, Wi.) are expected to introduce the bill in the House of Representatives later this week that would mirror the Senate’s version, according to a release from Senator Chris Coons’ (D, Del.) office. Gerlach’s office said it was still working with the House Committee on Ways and Means to determine a specific date for introducing its version of the bill. The Senate introduced its version last Thursday.

In the Senate, Coons and Mike Enzi (R, Wyo.) teamed up with Senators Chuck Schumer (D, N.Y.), Marco Rubio (R, Fla.), Roy Blunt (R, Mo.), Debbie Stabenow (D, Mich.), and Jerry Moran (R, Kan.) in re-introducing the bill which was initially brought to the Senate floor in the summer of 2012.

Related: Calculating Your Home-Office Deduction Just Got Easier

Historically, the R&D tax credit has primarily benefited large companies. Over half of the R&D tax credit taken in 2012 was taken by companies generating over $1 billion in revenue, said Coons on the Senate floor last week. “This gaping hole in our policy around R&D can be fixed, I think, with a relatively simple tweak,” said Coons. “Rather than shutting our startups out of the R&D tax credit, let’s open the doors to these innovators and see what they can do.”




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Bigger Tax Bite for Most Under Fiscal Pact

WASHINGTON — Only the most affluent American households will pay higher income taxes this year under the terms of a deal that passed Congress on Tuesday, but most households will face higher payroll taxes because the deal does not extend a two-year-old tax break.

 The legislation, which was forged in the Senate and overcame resistance in the House late Tuesday will grant most Americans an instant reversal of the income tax increases that took effect with the arrival of the new year. Only about 0.7 percent of households will be subject to an income tax increase this year, according to the Tax Policy Center, a nonpartisan research group in Washington. The increases will apply almost exclusively to households making at least half a million dollars, the center estimated in an analysis published Tuesday.

But lawmakers’ decision not to reverse a scheduled increase in the payroll tax that finances Social Security, while widely expected, still means that about 77 percent of households will pay a larger share of income to the federal government this year, according to the center’s analysis.

The tax this year will increase by two percentage points, to 6.2 percent from 4.2 percent, on all earned income up to $113,700.

Indeed, for most lower- and middle-income households, the payroll tax increase will most likely equal or exceed the value of the income tax savings. A household earning $50,000 in 2013, roughly the national median, will avoid paying about $1,000 more in income taxes — but pay about $1,000 more in payroll taxes.

Sabrina Garcia, a 35-year-old accounting assistant from Quincy, Mass., who together with her husband made about $102,000 last year, said the payroll tax increase equated to “about $200 a month for my family.”

“That’s a lot of money for us,” Ms. Garcia said. “It means we will have to cut back.” She said in an e-mail exchange that she will most likely will postpone buying a new computer. “And forget about being able to save money,” she added.

The deal will impose larger tax increases on those who make the most. It will raise taxes in two ways: by restoring limits on the amount of income affluent Americans can shelter from federal taxation, and by returning to a top marginal tax rate of 39.6 percent. The current rate is 35 percent.

For married couples filing jointly, the deduction limits apply to income above $300,000, while the top tax rate kicks in above $450,000. But both numbers are somewhat misleading, because “income” in this context is a technical term, referring only to the portion of income subject to taxation after exemptions and deductions.

Few households with actual incomes of less than half a million dollars will face a tax increase. The Tax Policy Center calculated that less than 5 percent of families earning $200,000 to $500,000 will actually pay more.

The size of those increases will be much smaller than President Obama originally proposed. The net effect, according to the center’s estimates, is that the top 1 percent of households will see an average income tax increase this year of $62,000 rather than $94,000. “The high-income people really are doing very well in this compared to what the president wanted to do,” said Roberton Williams, a senior fellow at the Tax Policy Center.

The deal passed by the Senate and the House will impose fewer limits on deductions than the White House plan. It will also tax income from dividends at a flat rate of 20 percent, rather than the same marginal rate as earned income. And there is another important point, often misunderstood: Affluent households will pay the new 39.6 percent rate only on income above $450,000. They and everyone else will still will pay lower rates on income below that threshold.

Households making $500,000 to $1 million will pay an additional $6,700 in taxes on average. Those making more than $1 million will pay an additional $123,000 on average.

Changes in the estate tax will also benefit affluent families. The tax will not apply to the first $5 million of an inheritance, extending the current exclusion rather than reverting to the $3.5 million threshold that President Obama initially favored. However, wealth above that amount will be taxed at a rate of 40 percent rather than the previous rate of 35 percent.

The Obama administration did win a five-year extension of tax breaks for lower-income families, including the child tax credit and earned-income tax credit. Those credits eliminate income tax liability for many lower-income families. In many cases, the government actually makes a direct payment to the family to help offset the burden of payroll taxation — up to $1,000 a child under the child credit and up to $5,900 total under the earned income credit.

 The deal will also restore unemployment benefits for about two million Americans. People who can’t find work, and have already received government checks for the standard period of 26 weeks, have been able to stay on the rolls for up to an additional 47 weeks. But financing for that program, which is aimed at the states with the highest unemployment rates, expired Saturday. Under the terms of the deal, people who are eligible will receive any missed benefits retroactively.

The deal also includes new rules for the alternative minimum tax, which threatened this year to impose higher taxes on roughly 30 million households. The tax was created in the 1960s to set a lower limit on the taxes paid by the most affluent households, but the eligibility threshold was not indexed to inflation, so it theoretically encompasses a larger share of households with each passing year. Congress has repeatedly passed short-term increases in the threshold; the deal will make those increases automatic, obviating the annual ritual.

That is small consolation for middle-income Americans like Joe Interlandi, 61, a long-haul trucker who on Tuesday was driving a load of tomatoes from Florida to Los Angeles.

Mr. Interlandi, writing from a rest stop, said he understood the need for higher taxes. He will rather pay more now than impose higher taxes on his children and grandchildren, he said.

But Mr. Interlandi, who estimated that he worked 100 hours many weeks, added that the payroll tax increase still meant he will need to spend even more time on the road. Describing things he will have to cut back on, he wrote, “Family outings like vacations, and time together.”

(taken from New York Times)

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Obama’s Second Term Sets a New Beginning for Inclusion and Activism


More than 1 million people filled the streets of the nation’s capital. Viewers from across the globe were glued to television sets. They all bore witness to history being made — again.

Earlier this week, on the day in which the nation honored slain civil rights leader Martin Luther King, Jr., the year that marks the 150th Anniversary of the Emancipation Proclamation and 50th Anniversary of the March on Washington, the first African American President of the United States took the oath of office for his second term.

The event confirmed Barack Obama’s place in a rare club for U.S. Presidents: Only 13 presidents in history have been re-elected to a second term and only three Democrats in the past 75 years. The ceremony’s significance was that his return to the Oval Office could not be viewed as some political fluke, rejection of an unpopular president nor a knee-jerk response to an economy in freefall as some noted in 2009. He was America’s choice – a diverse America in which African Americans, women, gays, and youth now play a larger role in national discourse, policy-making and governing. A new agenda is being set.

We witnessed a confident, self-assured Obama who spent his first term locked in partisan battles with Republican obstructionists rooting for the failure of his presidency. Despite continuous Byzantine maneuvers and blatant acts of disrespect to the man and the office, the first-term president managed to revive an economy; rescue a financial system; resurrect the auto industry; reform health care; end a bloody, unpopular war while winding down another; and deliver justice to the mastermind of the 9/11 terrorist attacks: Osama bin Laden.

So as he delivered his inaugural address to mark the beginning of his second term, Obama paid homage to the centuries-old battles for equality as he offered his sweeping vision of inclusion and opportunity.

“We, the people, declare today that the most evident of truths –- that all of us are created equal –- is the star that guides us still; just as it guided our forebears through Seneca Falls, and Selma, and Stonewall; just as it guided all those men and women, sung and unsung, who left footprints along this great Mall, to hear a preacher say that we cannot walk alone; to hear a King proclaim that our individual freedom is inextricably bound to the freedom of every soul on Earth,” he told the cheering masses.

“It is now our generation’s task to carry on what those pioneers began.  For our journey is not complete until our wives, our mothers and daughters can earn a living equal to their efforts.  Our journey is not complete until our gay brothers and sisters are treated like anyone else under the law…Our journey is not complete until no citizen is forced to wait for hours to exercise the right to vote. Our journey is not complete until we find a better way to welcome the striving, hopeful immigrants who still see America as a land of opportunity…Our journey is not complete until all our children, from the streets of Detroit to the hills of Appalachia, to the quiet lanes of Newtown, know that they are cared for and cherished and always safe from harm.”

He discussed the further development of a nation that embraces “tolerance and opportunity, human dignity and justice” while calling for the need to “harness new ideas and technology to remake our government, revamp our tax code, reform our schools, and empower our citizens with the skills they need to work harder, learn more, reach higher.” At the same time, he declared  that we must “reject the belief that America must choose between caring for the generation that built this country and investing in the generation that will build its future, ” committing to social safety net programs like Medicare, Medicaid and Social Security as well as education funding – all of which have fueled and will continue to spark intense debates among Democrats and Republicans during past and upcoming budget battles. Moreover, he spoke to the preservation of  future generations by responding to “the threat of climate change” and “that enduring security and lasting peace do not require perpetual war.”

Although details of his second term agenda will be spelled out in his Feb. 12 State of the Union address, Obama made it clear that he seeks to promote an activist government to address this myriad of concerns.

The ceremony also served as his clarion call for all citizens to become more involved in moving the nation forward. Obama made it clear that the inauguration is more than a president taking the oath of office but a reaffirmation of the need for individual and collective action. In fact, that spirit was apparent in the invocation delivered by Myrlie Evers, former chair of the NAACP and wife of slain civil rights leader Medgar Evers, who shared the struggle of the Civil Rights Movement, and presence of today’s civic advocates Rev. Al Sharpton, National Urban League CEO Marc Morial, NAACP President Benjamin Jealous and Martin Luther King III on the platform.

Now that the celebration is over, African American civic and business leaders are seeking to have the current occupant in the White House address a range of problems that still confront the black community, among them, alarming high rates of unemployment and poverty and financing for small businesses. Another issue: a continuation of diversity at the cabinet level and throughout the federal government. In the past few weeks, Obama has gained criticism for filling cabinet vacancies for secretaries of state, defense and treasury with white men. Although he has yet to replenish his cabinet, his selections to replace secretaries of labor, interior, energy as well as U.S. trade representative and EPA administrator – all filled by minorities and women during the first term – will come under increased scrutiny. In fact, NAACP’s Jealous has called for the next Supreme Court appointee to be an African American woman.

In talking with radio host Warren Ballentine on his show last week about the job creation and training initiative currently being developed by a group of African American civic leaders, he stressed that “we need to move quickly on these issues. We only have 14 months,” identifying the amount of time before congressmen start campaigning for 2014 mid-term elections and the presidency starts entering lame-duck status.

I watched the Inauguration at the “Celebration of Democracy” brunch held by the Executive Leadership Council, the organization comprised of senior executives of major corporations. The gathering of 200-plus swelled with pride and toasted the moment.  Ronald Parker, the group’s president & CEO, used the ceremony to galvanize the troops.

“We must use this moment to spur us to meet our goals,” he told the crowd, “to increase diversity and expand our power within the executive suite.”

As part of the ELC’s call to action, the group has developed a plan to expand the number of African American CEOs, C-suite executives and corporate directors at each of the largest publicly-traded corporations.

So the Inauguration serves as not only a new beginning for the president but for those who truly seek to keep government as an activist tool that has a role in increasing unemployment, expanding business opportunities, protecting voting rights, eradicating poverty and promoting diversity. That level of activism did not stop with pulling a lever in November or engaging in pomp and circumstance this week. It requires the collective action of leaders and foot soldiers to challenge the administration to address such problems and set priorities; make a do-nothing Congress accountable for their actions; and ensure our voices are heard. It is a new beginning for inclusion and activism.

The president has eloquently stated that it takes the voice, action and will of the people to put the nation on the course to a more perfect union. From the streets to corporate suites, that will be required of all of us during the next four years.

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An open letter to my friends-

Dear Friend:

With the beginning of the year among us, I am sure you are starting to receive your W2s. I want to stop you really quick. Before you head out to HR Block, or download a copy of turbo tax I want you to hear me out. This year I want to challenge you to consult a professional –

Marjorie L McPike, CPA is passionate about what she does and she likes to see people succeed. She is available not only during tax time, but throughout the year to answer questions or review your withholding and financial transactions to ensure you are not surprised at the end of the year. Additionally, she will prepare past year returns and help solve tax problems.

She has helped many people to get on the right foot financially and with the tax authorities. You really don’t want to get on the bad side of the IRS or FTB.

We realize that many people prepare their own returns for free, that’s fine. However, if you are paying anyone to prepare your returns, even if you pay Turbo Tax, we would like the opportunity to work with you. As a way to show the benefit of working with a professional and having someone help you to provide guidance in the area of taxes, pay us what you would pay them and we will prepare your return. Our goal is to help you with your financial success. Please email me so we can schedule a meeting. Lastly, if you know anyone who could use our services, all referrals are appreciated.

Very truly yours,

Marjorie L McPike, CPA
Charles L Oglesby, III

MLM: 951-805-5633
CLO: 213-590-8633

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It Pays to be a Landlord

It Pays to be a Landlord.


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Take Advantage of These Tax Breaks

No one can predict the market, and with taxes on the table, it’s tough to know what next year will bring on that front, too. But a number of money-saving opportunities exist through 2012; here are five ways you might profit from today’s IRS rules and rates:

[See 12 Money Mistakes Almost Everyone Makes.]

1. If you have a sizable estate, this is a good time to give some of it away while you’re still alive. The current estate and gift tax exemptions and rates are the most generous in many decades, says tax historian Joseph Thorndike. As recently as 2010, though no estate tax applied for that year, the gift tax exemption limited you to handing off $1 million free and clear. (If that sounds like more than you can imagine passing along, keep in mind that many people would hit it quickly, counting the value of their real estate.) But at least for 2011 and 2012, each person can give away $5 million without paying a penny in taxes–which makes now an advantageous time to set up a trust for your grandchildren, say, or to hand over part of a closely held business. “We don’t know what the law will be like in 2013,” says Mark Nash, a Dallas-based partner in the personal financial services practice of Price-waterhouseCoopers. “But it’s unlikely it will be this generous.”

2. People making money from a hobby may benefit by starting to run it as a business before the end of this year. As of last January, anyone who sells something is subject to a new kind of reporting by the companies handling the transactions. If you have more than 200 transactions totaling over $20,000 per year on eBay or on MasterCard or Visa from peddling your wares at craft fairs, say, you (and the IRS) will get a 1099-K showing your take. Handling it as a business rather than a hobby will allow you more generous deductions, says Eva Rosenberg, a tax expert who answers questions and offers professional education at For example, expense deductions from a hobby are limited to the amount of income it brings in and reduced by 2 percent of your adjusted gross income, no matter how much you actually spent. One easy way to establish that you’re truly in it for money: Write up a business plan.

3. Take some deductions early. There’s a lot of talk about capping the generosity of itemized deductions as a way to raise more revenue. Those in a high tax bracket may want to prepay real estate taxes and state income taxes so as to nab the greatest benefit while it’s still available. This strategy also applies to other expenses you can accelerate: the points you pay upfront to refinance a mortgage or buy a house, for example, and unreimbursed professional dues.

[See the Top 10 Individual Tax Breaks.]

4. Take advantage of the zero percent capital gains tax available through 2012 to low-bracket taxpayers; for this year, that means single taxpayers with taxable income of no more than $34,500 and joint filers with up to $69,000. Retirees who come in under these income limits may want to bump up against the ceiling by realizing some of their investment gains in 2012 rather than in 2013, says Kay Bell, who writes the popular “Don’t Mess With Taxes” blog. For people in higher brackets whose stocks have appreciated significantly and who are interested in giving money to adult children or elderly parents, Rosenberg suggests thinking about giving them shares if they’re in the right income range. They just can’t be your dependents; if the capital gains were realized by a dependent college student, for example, they’d be taxed at your rate. “This is something that costs you little and could cost them nothing,” she says.

5. Anyone who has sold a business, a building, or some other asset by setting up an installment agreement with the buyer might benefit by urging him or her to refinance and pay up completely as soon as possible. “I’m sure this 15 percent capital gains tax will end in 2012. You don’t need a crystal ball to see that,” says Rosenberg, who expects a dramatic increase by 2013.

[See Mastering the New Freelance Economy.]

The move shouldn’t be a tough sell to make to your buyer, she says, because interest rates worldwide are low and will almost certainly go up. If you need to sweeten the deal, she suggests offering to pay some of the refinancing fees. “It will reduce your profit, but you’re still going to save a lot of money in the long run.”

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