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Zaher Fallahi, Tax Attorney, CPA; Fiscal Cliff Averted, So What?

Posted by: Zaher Fallahi
Posted On: Jan 05, 2013

January 1, 2013, Congress reached a tax deal around 11:00 PM, Eastern Standard Time. The so called “fiscal cliff”; HR 8 or the Tax Relief Extension Act (the Act), or American Taxpayer Relief Act (ATRA) passed by 257 to 167 votes of the US House of Representatives. 85 House Republicans and 172 Democrats voted in favor while 151 Republicans and 16 Democrats were opposed. This bill had passed by the members of the US Senate previously by 89 to 8 votes. With certain exceptions, the Act essentially extended the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), and the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), collectively referred to as the “Bush Era Tax Cuts”. The Congressional Budget Office estimates that this bill would add $329 billion to 2013 budget deficits and approximately $3.9 trillion to the deficits over the next 10 years. The next step for the bill is its signing by President Obama so that it would become law. The bill postponed the scheduled government spending cuts for the next two months, which means the lawmakers and the President must be working on another significant package within the next 60 days. Simply put, the bill has not addressed the real economic issue facing the nation.

 

Here are the highlights:

 

Individual Taxpayers

No tax increase for single individuals making less than $400,000 a year, married individuals filing jointly making less than $450,000 and married spouses filing separately making less than $225,000. The taxpayers with taxable income in excess of these thresholds would pay additional

4.60 %= (39.60-35.00) in taxes on the excess amounts, not the whole amounts.

 

Itemized Deductions Phase-Out

The phase-out of a taxpayer’s itemized deductions and personal exemptions returns in 2013, for those taxpayers with Adjusted Gross Income of $300,000 for married taxpayers, $250,000 for single taxpayers and $275,000 for the heads of household.

 

The Mortgage Forgiveness Debt Relief Act was extended

Under the Mortgage Forgiveness Debt Relief Act of 2007 (Section 108 of the Internal Revenue Service), the majority of the people selling their primary residence through short sale or foreclosure will not pay taxes for up to $2 million of debt forgiveness. This is such a big sigh of relief for the homeowners whose primary residences were financially up-side down, and for the real estate professionals who feared that this exclusion may not be extended beyond December 31, 2012.

 

 

Mortgage Insurance Premiums

Mortgage insurance premiums treated as qualified residence interest, Section163 (h), extended through 2013.

 

Compensation Raise for Members of the Congress

The members of the congress will not get the 2013 scheduled salary increase.

 

Comment: This is a small step in the right direction, although, too little too late. There is no doubt that our elected officials of the both executive and legislative branch, Democrats and Republicans, have failed us by causing such a financial disaster. When executives in private sector cause injury to their organization, they are held accountable for their conduct, terminated, demoted, penalized, or may be put on trial, depending on the degree of negligence, mismanagement or recklessness. It is advisable that the same rule apply to the people running the government. I believe everyone responsible for creating this “fiscal cliff”, members of the current Administration or any prior ones should be held accountable for their conduct. This includes lawmakers from both parties, who appropriated funds for exuberant expenditures without identifying the source of revenue to pay for them, executives who acted improperly, imprudently and incompetently, and economic advisers involved in devising both monetary and fiscal policies leading to such dilemma. Each one of these authorities should be reminded that by their act they are mortgaging the future of the children of this country.

 

 

Long-term unemployment benefits

The Federal Long-term unemployment compensation is extended for one year. This is a real treat for the unemployed people whose benefits ended the last week of 2012.

 

 

Capital Gains Tax

Capital Gains and Dividends tax rates will increase from 15% to 20% for taxpayers with taxable income in excess of the thresholds mentioned above. The rate will remain 15% for the middle class and the taxpayers in the 10% and 15% bracket still pay zero taxes on their Capital Gains.

 

 

Estate and Gift Tax

The estate and gift tax exclusion amount will be the $5,000,000. However, the rate will increase from 35% to 40 %. The estate portability election where a surviving spouse uses the unused portion of the deceased spouse’s exemption amount is available through an election.

 

 

Alternative Minimum Tax Patch-Up

Alternative Minimum Tax (AMT) that hits most middle class families with additional taxes will be adjusted for inflation. The 2012 amounts were $78,750 and $50,600 for the married filing jointly and filing separately taxpayers, respectively.

 

 

Foreign Provisions

The withholding tax on gains on the disposition of US real property interest by partnerships, trusts, or estates that are passed through to partners or foreign beneficiaries was made permanent and the amount increased to 20%. Background: The Foreign Investment in Real Property Tax Act of 1980 otherwise known as FIRPTA imposes income tax on foreign persons disposing of United States Real property interest. The Tax is imposed at regular tax rates for the type of taxpayer on the amount of gain considered recognized. Purchasers of real property interests are required to withhold tax on payment for the property. Withholding may be reduced from the standard 10% to an amount that will cover the tax liability, upon application in advance of sale to the IRS. FIRPTA overrides most non-recognition provisions as well as those remaining tax treaties that provide exemption from tax for such gains. Note: Acquisition of the US real property interest by foreign persons from the countries under the US sanctions is subject to the US Treasury Office of Foreign Assets Control (OFAC) regulations.

 

 

Bonus and Section 179 Depreciation

50% bonus and section 179 depreciation is extended through 2013. In addition, some transportation and longer period production property is eligible for 50% bonus depreciation through 2014.

 

Medicare Reimbursement

Medical professionals will be protected for a year from the scheduled compensation loss for treating Medicare recipients.

 

 

Milk Subsidy

Subsidies for milk producers are extended.

 

 

Tax Credits

Tax Credits are extended for: Renewable energy companies, Child Care for five years, Earned income for five years, Education for five years, Cellulosic biofuel production, Biofuel and renewable diesel, Research & Development has been retroactively reinstated to cover calendar year 2012 and prospectively extended to cover calendar year 2013, Personal residence energy efficient improvement and appliances extended for a year, and others.

 

 

The following temporary provisions under EGTRRA extended permanently

Marriage penalty relief, Adoption Credit, employer provided educational assistance, interest on student loan deduction special rates for accumulated earnings tax and personal holding tax; modified tax treatment for electing Alaska Settlement Native Trusts, etc.

 

 

2013 New Taxes

End of Payroll Tax Holiday

Two years ago the employees’ share of the social security (Old Age, Survivors and Disability Insurance) was reduced from 6.2 % to 4.2%. This added 2% of the wage earners’ payroll amount to their disposable income, which was considered a major contributor to the economic growth of the country. Some economists that ending such deduction would dampen the Gross National Products (GNP) by 2%, because almost all of this extra money used to be spent and helped the economy. This issue was not included in the Act and ended at December 31, 2012.

 

 

New Medicare Tax Hospital Insurance Tax on High-Income Taxpayers

Effective January 1, 2013, the employee share of FICA withholding from wages will increase from 1.45% to 2.35% on wages in excess of $250,000 for joint filers and $200,000 for married taxpayers filing separately. The extra tax is imposed on the combined salaries of the spouses for joint filers. This applies to the self-employed individuals as well.

 

 

Medicare Tax on Investment Income

A new 3.8% Obama-Care tax on net investment income on the lesser of

  1. a) A taxpayer’s net investment income is the investment income reduced by applicable associated cost; interest, dividends, rents, annuities, royalties, and net capital gains from disposition of property not used in a trade or business, or
  2. b) Modified Adjusted Gross Income (adjusted for foreign earnings)

that exceeds the threshold of $250,000 for married filing joint taxpayers, or $200,000 for single taxpayers. This applies to estates and trusts on theirs undistributed net investment income.

 

 

Itemized Medicare Deduction

The threshold for itemizing unreimbursed medical expense increase from 7.5% to 10% of AGI for regular income taxes. This is not effective for the years 201-2016 if the taxpayer or spouse turned 65 before the year-end.

 

 

Cafeteria Plans

Effective January 1, 2013, the amount of salary reduction contribution that an employee may elect to make to a health flexible spending program is limited to $2,500.

Good luck and have a prosperous New Year.

Ali Fassih
Ali Fassih
1713124814
It's been an honor to know Zaher Fallahi, Esq for the past 49 years.He is one of kind in almost everything. His clients and friends are always his priority. In my long life, I have had the chance to be helped by many people. But ZaherFalahi is a distinguished personality that his professionalism helped me to succeed in life.And that's why I never hesitate to refer my family and friends for all their legal and financial matters to him.
I have had the pleasure of knowing attorney Zaher Fallahi for over 10 years in a professional capacity. Zaher is knowledgeable, diligent, capable and a conscientious attorney. Zaher has a strong reputation in his field - International Tax and Undisclosed Foreign Bank Accounts - and is a good person, in general. I highly recommend him for your legal needs.
Jack
Jack
1699943138
Mr. Fallahi's expertise was critical in helping me navigate my complex tax matter, and helping me resolve it successfully. I am very happy to have worked with him. He was very knowledgeable and had excellent service.
Seyhun F.
Seyhun F.
1698124160
I recently used Mr. Zaher Fallahi’s services for my International Tax and CPA requirements. He has extensive knowledge, remarkable competence, and maintains a highly professional approach. His confidence, diligent follow-up, excellent communication, and accessibility, even during the weekends, provided great comfort. I would highly recommend him to anyone in the need of assistance with international tax matters
Yasamin Khalili
Yasamin Khalili
1696386366
I had the pleasure of working with Mr. Fallahi to obtain an OFAC license, and I couldn't be more satisfied with the results. Mr. Fallahi displayed exceptional expertise in navigating the complex OFAC regulations, ensuring a smooth and efficient process throughout. Mr. Fallahi's attention to detail, professionalism, and commitment to my case were truly impressive. Thanks to Mr. Fallahi, I successfully obtained the OFAC license I needed. I highly recommend him for anyone seeking expert legal assistance in this field.
Yousef Salami
Yousef Salami
1678051820
Dear Dr Fallahi helped me with cryptocurrency and stock market which are my business . During last five years ago, Dr Fallahi and his extremely expert team helped me to make money through crypto taxes and also Mr Jon is knowledgeable and always gives me best advice ,Appreciate your support and kindness.Best regards.
Reza Shafiee
Reza Shafiee
1669154077
I am writing my experience of getting an outstanding advice and going forward with getting an OFAC Permission for a family member. It was done fast, accurate, and perfectly amazing. I would recommend Dr. Fallahi with the highest rating possible. Thank you.
Eric B
Eric B
1669073014
Mr. Fallahi handled filing my foreign inheritance tax return and FBAR international tax filings. He was unassuming, thorough, and responsive. He was available via text, email or call, daytime hours and after hours, weekdays and weekends. He made himself available to my schedule and went above and beyond to ensure my peace of mind. It was a pleasure working with him and someone I highly recommend.
Alireza Modafe
Alireza Modafe
1668394662
I have known Mr. Fallahi for more than five years and have been using his legal expertise for several tax and OFAC related cases. I have been very happy with his advice and the outcome of those cases. He is an excellent attorney and CPA, very professional, responsive, and caring. He goes above and beyond to ensure your peace of mind. I highly recommend him.
A B
A B
1668040092
We hired Mr. Fallahi for an international money transfer matter that required OFAC compliance. Mr. Fallahi was very knowledgeable about the matter and knew all the legal nuances pertaining to the money transfer regulations. He is very kind and responsive and answered all of our questions during consultation session and after it. I definitely recommend him to any one that needs legal help in the similar cases.
Lisa Williams
Lisa Williams
1667953700
We enjoyed working with Mr. Fallahi who is quite knowledgeable and assisted us with an international financial endeavor with great success. We highly recommend him.
Vahid Emadi
Vahid Emadi
1666799203
Mr Fallahi was a great help to me and my family. He is a very knowledgeable lawyer and knows the ups and down of the law about our case. He gave us an step by step direction and made this a very easy process.I have to mention that his staff in Costa Mesa were always polite and helpful.
Mr. Zaher went above and beyond for me. His fees are comparable to other attorneys in the field. Nothing extravagant. In addition I received a personal attention I did not from other attorneys I've worked with. He made himself available when he was out of the office and worked diligently to meet a crucial deadline for me even as a first time customer. I am happy to have found an attorney such as Mr. Zaher.
Hossein
Hossein
1640013657
A dedicated and expert attorney. He spends time with the client as much as needed to answer any doubt or to ensure the client has a peace of mind in his/her case status. I've had attorneys who wouldn't care what happened to my case until I reach out to them. But Mr. Fallahi is quite opposite. He always follows up with you as he has a commitment to his work.
Knowledgeable OFAC and Tax Attorney/CPAI consulted Mr. Zaher Fallahi for OFAC and International Tax Matters. He did a great job for me. He is a very knowledgeable Attorney,CPA. I needed the work completed over the weekend, which he did instead of waiting for two weeks. He followed up on the status of the case regularly and I felt assured that everything was going well. I recommend his services without hesitation.
Nahid Ariant
Nahid Ariant
1639612533
DR. Fallahi is one of the most experienced, trustworthy, and knowledgable professionals in the field. I contacted him for the legal service. He was super helpful during the initial consultation and patiently answered all my questions. His responses were always timely even during the weekends, which I really appreciated . I had a great experience with DR.. Fallahi and would highly recommend him to those who needs legal services!
David Jafari
David Jafari
1637004741
I have known Mr. Fallahi for more than 15 years. He has helped us with several matters involving tax consequences of various transactions from the perspective of a tax attorney as well as matters related to OFAC. He is well versed in his profession and we do not hesitate to go back to him for advice on these matters. I wholeheartedly recommend him.
Bijan Golkar
Bijan Golkar
1636589140
We used Mr Fallahi's OFAC services for an international fund transfer. He is very well-versed in the subject matter and provided invaluable advice. He was available to answer our questions at all time. We appreciate and highly recommend him.
X Chen
X Chen
1633383304
Mr. Fallahi is one of the most experienced, trustworthy, and knowledgable professionals in the field. Recently, I contacted him for the incorporation service. He was super helpful during the initial consultation and patiently answered all my questions. His responses were always timely even during the weekends, which I really appreciated for. I had a great experience with Mr. Fallahi and would highly recommend him to those who needs legal services!
Sarel Gaur
Sarel Gaur
1633004601
Great experience using incorporation services as an MD radiologist! Very professional and responsive attorney + CPA
Greg
Greg
1630268731
We and our CPA worked with Zaher Fallahi to resolve a tax issue with a very satisfactory result. We greatly appreciated Mr. Fallahi’s knowledge, professionalism, and guidance. He was very easy to work with. He took care to patiently explain every step that we took, and completed our project in a very timely manner. Although our tax issue was probably a minor one for him, we never felt that he was giving us anything but top priority. I would highly recommend Zaher Fallahi to anyone needing tax/legal assistance.
Babak Mohseni
Babak Mohseni
1629657993
Hi. About six months ago I contacted Mr. Fallahi in regard to the inheritance money that I was trying to transfer to US. I needed guidance on what the legal procedure to follow is in lieu of all the issues that exist because of the Iran sanctions by the US government.Mr. Fallahi was extremely professional, accessible at all times and provided sound and legal advise. He guided me in the right direction and mentioned all the legal documents that I needed to collect while in Iran. Once i got back to US, he drafted the legal document that I presented to my bank and proceeded with the transfer of funds.I was so pleased with Mr Fallahi's conduct that I got him engaged with my cousin to take care of his case.
Shadi Shiri
Shadi Shiri
1619307484
My husband and I have been Mr. Zaher Fallahi’s client for more than 5 years. Mr. Fallahi has been outstandingly knowledgeable and caring. He is a compassionate professional that You can trust and benefit from his excellent advice. We feel lucky to have him by our side. Wish you all the best Mr. Fallahi.
I have been lucky to have Mr. Zaher Fallahi as my CPA and Tax attorney for the last 5 years. He is very informative and helpful in providing insights and perspectives. Zaher is detail-oriented, trustworthy, confident, and extremely knowledgeable in tax laws. He always goes the extra miles to make sure his client is protected and well served. Zaher is the most responsive person through email, that I have worked with in my life. Having his support is a peace of mind and blessing.
Hossein F
Hossein F
1614790936
Mr. Fallahi is very knowledgeable and highly competent in the OFAC area. He helped me navigate my case with ease and confidence. He advised and explained the steps necessary for the best outcome and frequently followed up with me to ensure my case was progressing. He always responded to my questions in a timely and expedient manner even on weekends. He takes special care of his clients and provides a high level of service. I highly recommend him to my friends and family and anyone who needs legal advice.
Hamid
Hamid
1614702813
Mr. Fallahi helped me with an OFAC related case. He did a great job for me and I am very happy to have worked with him.He explained the details of the process and gave me valuable advice.He is very knowledgeable and always available and responsive, even on weekends.
Golenaz El
Golenaz El
1604919344
Mr. Fallahi is amazing! very professional, very responsive and easy to communicate with. My husband and I had several consultations with Mr. Fallahi and his advise and the way he does business is excellent. You can really trust him and his experience specially with OFAC.We are very thankful and looking forward to do more business with him.I would highly recommend Mr. Fallahi regarding international financial issues and OFAC.
One of the best Tax attorneys and tax professionals in California. I always enjoyed visiting his office to get feedback and advice about various tax issues. Mr. Zaher Fallahi is both a CPA and a Tax Attorney and that combination is very helpful...
Dr. Shadi
Dr. Shadi
1598718032
Mr. Fallahi impressed me with his extensive knowledge and experience as a top of the line professional during the initial consultation. He patiently gave me detailed advice and instructions and gained my full trust. He answered any follow up questions very promptly and within hours, even on the weekends. Moreover, he followed up on my case several times to ensure everything is going well. Since I was on a very tight schedule, he expedited the process and made all the documents ready in one day. My experience was very positive and I would highly recommend him to my friends and family.
P K
P K
1590722834
I have been Mr.Fallahi’s client for over 15 years and as a healthcare professional, Mr. Fallahi and his team have done an excellent job for my personal and corporate taxes and book keeping.During these uncertain times of COVID-19, Mr.Fallahi and his team-members have been there every step of the way to help me file and send my PPP-COVID loan application as soon as it became available and they informed me about the EIDL COVID19 in such timely manner that on April 23, I saw the sum being deposited into my account!Zaher and his team treat every client like family and I am confident that I have been in good hands regarding my business financials and optimized personal and business tax filing for the last 15+ years .
Poorya Kiani
Poorya Kiani
1587264313
I met Mr. Zaher Fallahi two times and received consultation and services. I found him a very knowledgeable and helpful lawyer. He supported me patiently and timely. I really appreciate his excellent services.
David Khorram
David Khorram
1527881180
Zaher Fallahi has been our business financial advisory for over 25 years. His team have assisted us with all bookkeeping and tax preparations. His advise has been instrumental in our business growth. if you are looking for the best and most professional in tax service for personal or your business needs Mr. Fallahi ( Zaher Fallahi, CPA, Attorney At Law ) and his staff are the most knowledgeable and experienced in the business. they are thorough, experienced, intelligent and up to date on anything tax and business law related , financial or business related. Highly recommended
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