Making the best of the alternative minimum tax

Tony Nitti for the Aspen Daily News writes: Warning: This is going to get a little bit geeky. But stick it out, because there’s some useful tax advice that can save you real dollars. 
 
Let’s say 2013 turns out to be a nice year for you down at the ol’ cracker factory. A little bit too nice, in fact, and you find yourself subject to the dreaded alternative minimum tax (AMT). Might I recommend a bit of contrarian advice? Consider accelerating even more income into 2013, despite the fact that it, too, might be subject to the AMT. Actually, strike that: Consider accelerating more income into 2013 precisely because it, too, will be subject to the AMT.
 
I’ll explain, but first, a bit of background:
 
Individual taxpayers must compute their federal tax liability twice, once under the so-called “regular” system, and again under the parallel AMT system, which limits or disallows many of the deductions and preferences allowed for regular tax purposes. After computing your regular and AMT liabilities, the taxpayer must pay the higher of the two.
 
So where does my planning opportunity come in? While a taxpayer’s regular taxable income is subject to graduated rates with a high of 39.6 percent, the maximum rate under the AMT system is only 28 percent. And where I come from, 28 percent is less than 39.6 percent. And it’s this variance that gives rise to an often-overlooked opportunity for tax savings. 
 
To illustrate, assume Joe earns $515,000 in wages in 2013. On the deduction side, Joe has $5,000 of charitable contributions, $28,000 of state income tax, $28,500 of mortgage interest deductions, and $10,000 of real estate taxes, resulting in taxable income of approximately $450,000 and a “regular tax liability” of approximately $125,000.
 
Unfortunately, Joe’s state income and real estate taxes are not deductible for AMT purposes; as a result, his AMT liability is $131,000. Because Joe has to pay the higher of his AMT liability ($131,000) or regular tax liability ($125,000), Joe finds himself subject to the AMT.
 
Now, let’s say Joe has the option to accelerate $40,000 of income into 2013. Should he do it? The intuitive reaction is no, because when taxpayers find they are subject to the AMT, they tend to freeze like the proverbial deer in headlights and assume any additional dollars of income will only bring more pain. That’s not the case however, and here’s why.
 
With taxable income (before considering the $40,000 bonus) of $450,000, the next dollars of income Joe earns will be taxed at the maximum 39.6 percent rate. As a result, if Joe accelerates the $40,000 of income into 2013, his regular tax liability will increase from $125,000 to $141,500. But remember: Joe is in the AMT. And as long as his AMT liability exceeds his regular tax liability, Joe will continue to be subject to the AMT and its maximum tax rate of 28 percent.
 
Should Joe choose to accelerate the $40,000 bonus into 2013, (and assuming no additional state withholding), his AMT income will rise to $520,000 and his AMT liability to $142,000. Because Joe’s regular tax liability was only $141,500, he must pay the higher AMT tax of $142,000.
 
But that’s a good thing, because Joe’s total tax liability rose from $131,000 without the bonus to only $142,000 with the bonus. That’s an increase of $11,000 on $40,000 of taxable income, or exactly 28 percent. So despite having taxable income in excess of $450,000, Joe just paid tax on the $40,000 bonus at 28 percent — the AMT rate — rather than at the regular rate of 39.6 percent. Not a bad deal, right?
 
Once a taxpayer is aware of the limits of this opportunity, it can be used to their advantage. But first, you have to understand the floor and ceiling of the taxpayer’s AMT range:
 
• The floor: The key to this planning opportunity is taking advantage of the maximum AMT rate of 28 percent. Note, however, that while the 28 percent rate officially “starts” at AMT income of $179,500, through a quirk in the math the rate is actually 35 percent until the taxpayer’s AMT income reaches $477,100 (for married taxpayers), because it is at this point where the taxpayers are fully phased out of their AMT exemption. 
 
It is this $477,100 of AMT income that represents the taxpayer’s “floor,” because from this point on, the next dollars of income will be taxed at a 28 percent tax rate. 
 
• The ceiling: This opportunity has a ceiling as well, and it is the level of income at which the taxpayer’s regular tax liability first exceeds the AMT liability. Once the taxpayer reaches this point, any additional dollars of income will no longer be subject to the AMT, but rather to the regular tax rates at a maximum of 39.6 percent. 
 
Now, let’s go back to our sample taxpayer. Joe’s “floor” was AMT income of $477,100. Because in our example Joe had AMT income of $480,000, he had already exceeded his floor, and was in a position to take on additional income that would only be taxed at 28 percent.
 
But how far could Joe go?
 
Assuming he purely added income and no deductions, Joe could take on $45,000 of additional income before his regular tax ($143,500) would exceed his AMT ($143,400). This is Joe’s AMT ceiling, and to the extent he accelerates any additional income, it will not be taxed at the AMT rate of 28 percent, but rather at the top regular rate of 39.6 percent.
 
If you can determine your AMT floor and ceiling, you can turn the perceived negative of being in AMT into a positive by accelerating additional income subject to a favorable 28 percent rate. As you can see, however, these computations require attention to detail, as there are a lot of moving parts, so it’s best not to go it alone. Hire a tax advisor, have them compare the benefits of acceleration versus deferral into the next year, and come up with a plan.

Four Ways Mint Can Make Your Tax Season Easier

Tim Murphy for Lifehacker writes: Last year 110 million Americans got a tax refund and the average amount was about $2,800. That's a lot of money—so why do we still love to hate tax season? Because the added paperwork, deciphering IRS definitions, and ever-changing laws make our tax returns tougher every year. But with the right tool, you can save time and skip some of the anxiety. Lifehacker readers' favorite mobile finance app Mint is great for basic organization, but there's a lot more you can do with it.  I wrote an entire book about getting more out of Mint everyday, and here are a few tips to make your tax season easier.

Tags

A sadly underutilized tool within Mint is a concept you're probably familiar with—tags. Just like in Evernote or Wordpress, tags are a way to group similar items that exist in different categories. This is particularly useful during tax time, when you might have several tax-deductible expenses that all occur in different categories (like Home or Health and Fitness).

For example, if you bought a high efficiency appliance last year, you'd categorize that as a Home Improvement expense. But you want to make sure you get the tax credit reinstated in the "Fiscal Cliff" bill, so you'd tag it as Tax Related. That way it's still in the Home category where it belongs, but it's easily grouped with other Tax Related transactions throughout the year.

Why not just create a category called Tax Related, you ask? Because budgets pull data from categories, not tags. So removing that appliance purchase from your Home category would screw up your Home budget. Coherent categories are the key to successful budgeting in Mint, so the last thing you want to do is mess around with your categories. Tags offer an easy and effective alternative.

Creating tags is easy—just bring up any transaction on Mint.com, and click the "Edit Details" tab. In the box that pops up, click on the "Edit Tags" button and you can create a new tag on the next page. Simple as that.

Save In Case You Owe

Part of why so many of us delay filing our taxes is because we're worried we'll owe money in the end. If you earned more in 2012 than in 2011, or if you profited from selling an investment or business, you could owe the IRS money in April. How much will depend on a number of factors, but a tax estimator or IRS withholding calculator are useful for getting a rough idea.

If you're going to owe money the following April, set up a savings goal right away. That way when tax time rolls around, it won't be a shock to your system if you owe a few hundred or thousand dollars. To set up a tax season savings goal, head to the Mint website and click Goals > Add a Goal > Create a Custom Goal. Name your goal "2012 Tax Payment," choose the Bills and Taxes category and set the total amount you want to save. Follow the steps to link the goal to your savings account (or open a new one), set a date before April 15, 2013, and hit Save.

The final step is to automatically send money from your checking to your savings account, and Mint will adjust your goal as money gets deposited into that savings account.

Export as .CSV

Another well-kept secret about Mint is that your data doesn't have to stay there. You can easily download it (all or in segments) as a .CSV file to read or share as a spreadsheet. When would you need to do this?

Well, the tags example above is a good place to start. Let's say your company wants a list of all your reimbursable expenses for the month (or year). If you've tagged them as Reimbursable, you'll be able to download all of them as a .CSV and send that to your employer—all in about 10 seconds.

Just go to Transactions and scroll down to the Tags section, which is on the left side underneath Accounts. Click Reimbursable and Mint will pull up all the transactions with that tag. Click the tiny link that says, "Export all # transactions" at the bottom and that's it. Now you have an easily readable and shareable spreadsheet of your expenses, complete with transaction dates and details. One more reason to use tags!

Put Your Financial Life Into Perspective

The Trends section is another valuable tool during tax time, providing a breakdown of expenses, income, net income, assets, debts, and net worth. It also allows you to search by category and see transactions by day, week, month, or year. This information is really handy during tax time when you might have to answer questions like, "Did you make any charitable donations last year?" or "Did you incur any expenses while looking for a job?"

To see a list of your total charitable donations, for example, go to the Trends section and view by Spending Over Time. In the text box, start typing Charity (or whatever category you're searching) and select it from the dropdown list that appears. Scroll down and you'll see your totals for the year, which you can add to your tax forms (or easily export as a .CSV file). You can also search by tags or merchant name to get a quick look at your spending history.

Filing your taxes might seem intimidating, but it really doesn't have to be. Leverage free tools like Mint and get organized. As you become more of a Mint pro, you'll be able to tweak and fine-tune your strategy until tax time is just a walk in the park. Good luck!

Editor's Note: Lifehacker readers get 25% off Tim's e-book, The Mint Manual: A short-cut to mastering and saving money with Mint.com. Just enter code "LHMint25" at checkout.

Why We’re So Irrational When It Comes to Tax Refunds

Kit Yarrow for Time writes:  Think about it: A tax refund is just that — a refund of your own hard-earned money. It’s not a gift or a stroke of good fortune. The problem is that most people don’t look at tax refunds this way.

Most Americans—a full 75%—receive refunds after filing their taxes. In other words, most Americans have too much money withheld from their paychecks. More than half of Americans—58%, to be exact—say they intentionally plan to receive a refund each year. Understandably, people do so to avoid an unexpected tax payment come April 15, with the idea that it’s better to withhold a bit more to be on the safe side. But the average tax refund will be over $2,800 this year — well beyond “a bit more.”

Clearly people have other motives for over withholding, or they just don’t put much thought into it. Here are the four ways we’re irrational when it comes to tax refunds, and arguments for why it’s better to approach the topic far more logically:

1. Mistaking Uncle Sam for Your Rich Uncle

Wouldn’t it be great to have a wealthy relative who sends you a fat check every spring? That’s how many view their tax refunds: as gifts from the government. On Facebook, Trish, 36, posted a photo of her new juicer along with a caption that read, “Thanks Uncle Sam!”

In the course of my research, I spoke with many consumers like Trish, who seem to think that tax refunds pretty much appear out of the blue. Max, 55, told me that he knows he’ll get back at least $1,000 every year. He generously earmarks $1,000 for his church, but anything above that is what Max calls “free money.”

When people view their tax refund as a gift or some kind of reward or bonus, they spend it differently. They’re more likely to splurge, and it’s easier to rationalize purchases. For example, Nancy, 48, normally prides herself on her frugality, but when it comes to her tax refund she admits she’s developed a habit that’s out of character. “I always seem to get my refund when I’m yearning for warm weather,” she says. “Three years in a row now I’ve bought full-priced spring shoes. I never buy full-priced shoes. I don’t know, I just feel like it’s a bonus and I treat myself.”

A survey commissioned by ShopAtHome.com found that 29% of those with annual incomes below $35,000 plan to spend their refunds, compared to 17% of those with incomes above $75,000.

2. Using Uncle Sam as a Piggy Bank

Tax refunds are often called interest-free loans to the government. That’s exactly what they are. Lately, interest rates are low to non-existent, so you’re not missing out much in the way of interest by having more money than is necessary deducted from your paycheck. Still, you are missing out. Those who over-withhold are putting slightly less money in that college or retirement fund when they let the government keep their money, interest free, throughout the year.

And remember, if that extra money isn’t saved throughout the year and is instead handed over in a lump sum, there’s a higher likelihood that you might just spend it. According to the National Retail Federation, 12% of those receiving tax refunds will spend it on a vacation, and 13% on a major purchase such as a car or television. Meanwhile, 42% say they’ll save at least part of their refund.

As illogical as it is, some people say the act of depositing a large sum of money into a savings account makes them happier than saving little by little, paycheck after paycheck. “I love making a really big deposit,” says Cleo, 39. “Last year I got back almost $3,000, and I don’t know if it would have been so satisfying to put in a few hundred dollars a month.”

Some people know themselves well enough to assume that they wouldn’t be able to save throughout the year. “I’ve thought about changing my taxes, but I really count on my refund for our vacation,” says Sandra, a 40-something mom of three, who is skeptical of her ability to save. “It always seems like something comes up.” One solution is to automatically have a portion of paychecks set aside into a special savings account. That would seem to be more sensible than letting the U.S. government hang onto your money for most of the year.

3. Paying Interest on Your Own Money

Debbie, 33, says she feels a huge sense of relief when her tax refund arrives, not so she can afford a vacation or a new TV—but so that she can pay off the credit card bills from holiday purchases. “I hate seeing that I’m paying all those finance charges, and I always file my taxes as soon as possible so that I can get the refund,” she said.

I asked Debbie why she didn’t withhold less so that she could avoid finance charges altogether. “I might spend it,” she replied. “And then I wouldn’t be able to pay off the Christmas bills.” Debbie doesn’t normally carry a balance on her credit card, and she estimates that she spent about $90 in finance charges just as a result of holiday purchases.

Debbie’s not alone in her approach. Nearly 42% of those receiving a tax refund plan to use them to pay down debts.

But if you wait for a tax refund to help you pay off debts, how much extra are you paying in the meantime? Someone with a $2,800 balance on their credit card will pay nearly $500 in interest fees by making the minimum payment each month for a year on a card with an 18% interest rate. On the other hand if that person had less of his paycheck withheld so that he had an extra $235 per month to add to his minimum payment, he would be debt free in 10 months and pay less than $240 in interest.

4. Letting Inertia Take Over

For most, the idea of rejiggering withholdings is a chore. It’s not just that the paperwork is tedious. There’s also the added anxiety that you’ll do something wrong and wind up owing a huge amount at tax time—or worse, wind up audited.

All of which explains why most people don’t bother. “Believe me, I know I should change my withholdings,” said 40-something Alexander, who received a refund of over $5,000 last year. ”I just didn’t get to it. I’m going to do it for sure this year … probably.”

If you’re feeling ambitious, or just curious, the IRS has a calculator tool to help determine how much you should be withholding. And FYI, you can change your withholdings at any time during the year.

Tax Tips for Gifts to Charity

Mark Kennan for Demand Media writes: Tax deductions usually aren't the driving force behind giving money to charity, but if Uncle Sam's offering a tax write-off, you might as well take advantage of it. Your generosity alone isn't enough to reap the maximum tax benefits for your donations, however: to claim any write-offs for charity, you must itemize on your taxes.

TIMING YOUR GIFTS

If you're already itemizing your deductions, you don't have to worry about whether you'll be able to write off your gift. But, if you're not sure that itemizing will be advantageous to you, timing your gifts so that they all occur within the same calendar year may tip the balance, making it worthwhile to itemize your deductions. For example, say your standard deduction is $6,100. If you give $3,000 in December and $3,000 in January, those two deductions have to be taken in different tax years, and the sum of your other itemized deductions might not make it worth itemizing. And, if you don't itemize, you don't get to deduct your giving. But, if you make both donations in either December or January, you count all $6,000 in the same tax year.

TRACKING AND RECEIPTS

If you make small donations throughout the year, keep track as you go and make sure to get receipts from the organizations you donate to. Without a receipt, you're almost never allowed to claim a deduction -- the only exception is for when it's impractical to get one, for example when you leave items at an unattended drop bin. Even then, the exception only applies to gifts under $250. Plus, if you keep a running total, it's a lot easier to know how much you're eligible to write off -- and make sure you're not missing any deductions -- when it comes time to file your taxes.

CHECK THE ORGANIZATION

If you're donating with the expectation of a tax break, make sure you pick a legitimate, qualified charity. Just because there's a need and you give without receiving anything in return doesn't mean you get a tax deduction. For example, if you see a single parent with two kids and give her money for food, you've done a noble deed, but not one that's worthy of a tax deduction. If you're not sure if an organization qualifies, check the IRS database of qualified organizations, which is available online.

CAR DONATIONS

Donating your old car to charity can be a big ticket write-off, not to mention the time and hassle you save when you don't have to sell it yourself. But, how much you can deduct depends on the circumstances. If the charity sells the car to raise money, you're only allowed to deduct the selling price. Yep, that means if your car with a $10,000 blue book value sells for just $3,000, you're only allowed to write off $3,000. But, if the charity uses your car, you get to write off the fair market value, which makes charities that promise to use your car much more attractive for tax purposes.

When Uncle Sam Wants His Money Back / These 3 steps can help ease the tax bite on your Social Security benefits

Robert Powerll for the Wall St. Journal writes: The rules for income tax on Social Security payouts have long confounded beneficiaries—and can make it harder to stretch a dollar in retirement. Indeed, as much as 85% of a recipient's benefit can be taxed, depending on how much other income there is and what the sources are. If wages, income from self-employment, interest, dividends and other taxable income exceed a certain threshold, part of your Social Security income will need to be reported as well. An individual earning as little as $25,000 from combined sources may owe taxes on up to 50% of his or her benefit.

Here are some tips older Americans can use to reduce or avoid the amount of taxes they might pay on their Social Security benefits.

Convert to A Roth IRA.

One strategy is to convert all or some of your traditional IRA into a Roth IRA. Distributions from a traditional IRA are viewed as income that could affect your benefit. Qualified distributions from a Roth IRA, however, are nontaxable and won't affect benefits.

There are a few catches. Amounts from Roth conversions count toward your taxable annual income, so the ideal time to do a Roth conversion is before Social Security benefits start.

"It means biting the bullet and paying taxes sooner than you need to," says Elaine Floyd, director of retirement and life planning at Horsesmouth, a New York City-based provider of content to financial advisers.

But you can also make partial, strategic conversions, spreading them out to benefit from a lower tax rate, Ms. Floyd says.

Delay Taking Social Security.

The best thing about delaying the start of your Social Security benefits is it increases your eventual payouts: by 8% for every year that you delay receiving benefits beginning with the year you reach full retirement age—67 for people born after 1959—until 70.

Most retirees should defer collecting Social Security for as long as they can, and draw on their retirement accounts when they need money, says David Freitag, vice president at Impact Technologies Group Inc., a Charlotte, N.C. financial-planning technology firm.

By drawing down your retirement funds, Mr. Freitag says, you also are reducing the amount of your required minimum distributions after you turn 70½, which could lower your taxable income if you have a traditional IRA.

Convert Your 'Countable' Income.

If you're already collecting benefits and have investment income that you don't need—and that pushes your benefit into taxable territory—consider "converting your countable income into non-countable income," says Andy Landis, founder of Thinking Retirement, a retirement-education website.

For example, a certificate of deposit generating $5,000 of unneeded income may trigger Social Security taxation. But you could sell the CD and buy a deferred annuity instead, Mr. Landis says. The income will be deferred, and so will any tax owed on it.

The same is true if you own a traditional IRA or tax-advantaged investments such as stocks that don't pay dividends and so are subject only to capital-gains tax. With those types of accounts and investments, you could delay any tax impact by not taking distributions from your traditional IRA until age 70½, or by putting off generating capital gains until necessary.

Simply put, having money in an IRA can allow you to time the receipt of that income to avoid being taxed on your Social Security benefit. You have to coordinate and balance the withdrawals from your taxable and retirement accounts with your Social Security checks so they support the best tax strategy.

Says Mr. Freitag, "Just like a seesaw on a playground, balancing is the key to a successful, fun ride and not a crash."

New Jersey delays tax refunds for thousands

Michael Symons for Ashbury Park Press writes:  New Jersey is delaying income tax refunds to more than 13,000 filers by as long as three months as part of an effort by the state Treasury Department to reduce what it says is the growing problem of tax-refund identity fraud. In all, the state flagged 22,000 returns filed in February for additional scrutiny – and some of those individuals suspect the Division of Taxation’s ulterior motive is to hang onto millions in taxpayers’ money as long as possible.

“My impression is they’re just holding onto your money, because the letter says also that once they receive all your documentation, it’s going to take at least 90 days,” said Connie Ippolito of Manchester. “It’s a real pain in the neck. If you don’t pay your taxes on time, they come after you. But they’ll hold your money and not give you any interest.”

The state is requesting documentation from individuals such as W-2 forms, recent payroll stubs and copies of Social Security numbers. This week it sent follow-up letters to 9,000 filers it says shouldn’t have been included and said their refunds would be deposited beginning Thursday.

Treasury Department spokesman Bill Quinn said the effort reflects the expansion of a program begun last year that focused on people receiving payments from the state through the earned income tax credit. Software screens tax returns to identify discrepancies, particularly gaps between what the taxpayers report as their taxes they’ve paid and what their employers report had been withheld.

“The general idea, the general effort is to prevent tax refund fraud or improper payment, which is getting to be a big problem nationally,” Quinn said. “… Sometimes it’s just error, a mistake. So the idea is to catch errors that might trigger an audit and also to prevent any possible fraud.”

The suspected fraud isn’t that taxpayers are trying to claim bigger refunds than they should. It’s that identity thieves are using stolen Social Security numbers to file a fraudulent claim for a refund before the real taxpayers file. The Internal Revenue Service said last month that it stopped roughly 5 million tax refunds in 2012, amounting to $20 billion in suspected fraud, up from $14 billion in 2011.

Edward Ricciardi, managing member of the Central Jersey Tax Services accounting firm in Howell, said every client who is due a refund of more than $1,000 from the state has received the same letter.

Ricciardi said he double-checked returns for clients who received the letters and that the information about tax withholdings matched the W-2s. He wondered if the state’s motivation is in part to hold onto taxpayers’ refunds longer.

“What fraud? You already have these W-2s, because the employers send them to you. It’s an easy match. What are you breaking people’s chops for?” Ricciardi said.

Ippolito, for instance, was unable to locate her husband’s Social Security card. The couple spent a few hours at the Social Security Administration applying for a replacement card, which hasn’t arrived yet – meaning the state’s 90-day review clock hasn’t even begun.

“If you don’t have the money, you’re broke, just tell the people: We’re a little broke, we’ll see people in three months,” Ricciardi said. “Don’t put people through the wringer to get their money back.”

Quinn said the effort is not about the state’s cash flow.

“It’s not to delay refunds or to manipulate them. The idea is just that, in general, if there’s a possible question about a refund, it’s better to stop it before it’s paid than to try to recover it after it’s been paid,” Quinn said.

After the Treasury Department announced last week that February income tax revenues were $142 million (or 25 percent) ahead of forecast for the month, budget analysts at the Office of Legislative Services said net revenues were “inflated by a significant delay in refund payments” – with $120 million less paid out than in February 2012.

“This reduction is believed to be due to delays in federal tax filing as a result of the ‘fiscal cliff’ tax changes,” said the OLS report. “Taxpayers typically wait to file their state returns until after completing their federal returns.”

The opening of the electronic tax filing season was delayed slightly this year due to the protracted debate about tax rates in Washington during the year-end “fiscal cliff” standoff that wasn’t resolved until January. The IRS began accepting returns Jan. 30, rather than the planned Jan. 22.

In what is acknowledged to be a cash-flow strategy, Gov. Chris Christie announced last month that the state plans to delay the payment of property tax credits until August, rather than May, which pushes $392 million in spending from the current state budget year into next year.

Taxpayers whose refunds are stolen can face delays of as long as six months obtaining their money as they prove their identity to government officials. Federal officials say the fraud results in more than $2 billion a year in losses to the U.S. Treasury Department.

A New Jersey-based federal task force last September arrested 14 people and shut down one a stolen identity scheme that had been operating more than five years and involved more than 8,000 fraudulent tax returns seeking $65 million in illicit refunds. Two people from Middlesex County pleaded guilty in the case last month.

MYOB launches API for online accounting suite / Opens up to third party developers.

Charis Palmer for  iTnews.com.au (Australia) writes: Accounting software provider MYOB has launched an API (application programming interface) for its software-as-a-service products.  The API allows third party applications to connect to MYOB’s AccountRight and AccountRight Live data files, and follows a three month beta test with developers, many of which had been part of MYOB’s developer community for its desktop product.  “We have 500-plus developers registered on that program and it’s been quite a vibrant community,” said MYOB chief technology officer, Simon Raik-Allen.  “Now we’ve moved our systems to the cloud, it’s a good opportunity to do a refresh and build a programmatic-based API.”

Raik-Allen said MYOB worked with the developers to decide which products required an API. The software company promises more integrations, including one for its Client Accounting product. Rod Drury, chief executive of competitor Xero welcomed the move, saying it helped to legitimise the industry, but he questioned MYOB’s decision to charge developers for higher level access to the API.  MYOB’s “developer” package costs $996 and includes support, access to API cloud services, and continued access to ODBC driver.

There is also an "open" option with free access to the API, and a "premium" option for $2200 which includes access to events, product certification and marketing tools.

“We don’t charge our partners, we’re trying to build a healthy ecosystem,” Drury said, adding that Xero currently has around 200 applications plugging into its platform.

Raik-Allen said the paid products were there for organisations that would like additional marketing and support.  “We want to open it up as much as possible to provide free access so people can build these tools,” Raik-Allen said.  He said he was looking forward to seeing what developers did with the API. The API has the potential to provide small businesses access to technology previously only available to those who could afford to pay a high cost, he said.

Watch the Tax Reform - C Corp v. S/LLC Fight / The great struggle in the reform of the US Tax Code lies with the current disparate rates and treatment of C corporations as compared to the “pass through” corporations, S and LLC’s

Joel Andersen for DC Velocity writes: The great struggle in the reform of the US Tax Code lies with the current disparate rates and treatment of C corporations as compared to the “pass through” corporations, S and LLC’s.  The recommendations divide strongly on R v D lines, and, as a result Senate versus House.  Each party has a different means of addressing the pass through corporation and those differences will be the subject of this column.

For reference, I recommend you read the publication, “Taxing Business Through the Individual Income Tax” by the Congressional Budget Office released December 2012. This publication outlines a process that with the LLC and S corporations being taxed at the same method as C Corporations, an additional $76 Billion would be received by the U.S. Treasury.  In essence, it would extend the double taxation inherent in C corporations to partnership and S corporations.

Republican Camp, Chairman of the House Ways and Means Committee clearly sees the need to maintain the single taxation of S and LLC corporations.  His Ways and Means Committee is soliciting comments from stakeholders on two options: one that revises current rules and a second that replaces current tax rules with a new unified pass-through regime.

Camp has said “More Americans get their paycheck from small businesses than any other type of business or government. If we really want to strengthen our economy and put more money in the pockets of American workers, we must fix the Tax Code and how it treats small businesses. In addition to all the complexity these Main Street businesses face, Washington currently taxes them at top rates nearly 10 percentage points higher than their corporate counterparts.”

Senator Baucus opened his hearing into tax reform with a written statement that included the following language: “Pass-throughs don’t pay corporate taxes; their business income is taxed at individual income tax rates. However, C-corporations get taxed on income, and then — when that money is distributed in dividends to shareholders — it is taxed again. While a valuable tool for small businesses, we should examine if the use of pass-throughs have disrupted the level playing field for larger non-public companies and their public competitors. . . One of my main goals of tax reform is to make the system more competitive, but also keep it fair. Our hearing this morning will examine the difference between corporate and pass-through taxation and whether current rules strike the right balance in our diverse economy.”

For IWLA members and logistics companies, please keep a close eye on tax reform.  The “pass throughs” are the major focus. 

As a personal and political aside, much of the intensity of the fight of how to obtain more revenues occurs because of a federal government bias toward spending versus thrift.  If we could reduce the spend of government we could reform taxes, eliminate the high marginal tax rates on C corporations and fix any disparate incentives between the C and the pass throughs.      

Accounting software startup Xero ditches HTML5 in favor of native iOS and Android apps / Xero's Making Mobile Work

John Russel for TheNextWeb writes: Supporters of HTML5 for mobile were dealt a significant blow when Facebook u-turned and began developing native apps last year. Now another company is hedging its bets after accounting software maker Xero gave up on Web apps for mobile claiming that the development was resource intensive and difficult.

Xero’s tone is softer than that of Facebook — founder and CEO Mark Zuckerberg said famously said ”betting completely on HTML5 is one of the, if not the biggest strategic mistake we’ve made” — although the Xero blog post is titled ‘Making mobile work’, which inherently suggests that Web apps don’t work.

The company explains that, though it will continue to use HTML5 for its core app, forgoing the traditional route of native iOS and Android apps has not been the success story that it anticipated when it made the decision one year ago.

Like The Atlantic, the company worked with Sencha‘s development tools to build its apps. Sencha drew a lot of attention to HTML5 after it produced ‘Fastbook’, a technology proof of concept to show Facebook working in HTLM5 in response to Zuckerberg’s comments.

The general view from Xero is that native apps are a better option for companies with limited resources, while it also questions whether there is any major benefit from an HTML5 app over a native app. Here are some excerpts from the blog post.

Iterating at speed was increasingly difficult:

We do not regret this choice [to develop Web apps] – but we’ve found that building a complicated mobile application in HTML5 has been hard. Even with frameworks as amazing as Sencha Touch, we’ve found the ability to iterate as fast as we would like has become harder as our application has become more complex.

HTML5 required greater cost and time than native apps:

Our view is that HTML5 technologies can deliver as-good-as-native experiences…but the lesson from Fastbook is that it’s hard work – you don’t get those experiences out-of-the-box. And the lesson we’ve learnt over the last 12 months has been that the cost in time, effort and testing to bring an HTML5 application to a native level of performance seems to be far greater than if the application was built with native technologies from the get-go.

Native apps are more capable than Web apps:

Maintaining and iterating a web app was becoming a big impediment – so the next release of Xero Touch will be built with native technologies and we’ve already made a lot of progress. It does feel better.

The debate is sure to continue but Xero’s comments are interesting, and they also mean that it is hiring. Having already brought in an iOS engineer, it is now on the hunt for a senior Android developer.

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Making mobile work

Matt Vickers for Xero writes: Very early on we chose to build Xero Touch using HTML5 technologies. That choice showed that we care about the future of the open web and its continued success as an application delivery platform and we firmly believe that HTML5 is the future of development across any and all platforms. We do not regret this choice – but we’ve found that building a complicated mobile application in HTML5 has been hard. Even with frameworks as amazing as Sencha Touch, we’ve found the ability to iterate as fast as we would like has become harder as our application has become more complex.

The choice to go with HTML5 was very much a choice based on us – how do we use the skills we already have to build a mobile application? Unfortunately as the application grew we needed to hire to fill out the team, and we were never able to hire fast enough to fill those roles. Ironically those skills were equally as critical for the “desktop” version of Xero – we were cannibalizing our own team and slowing everything down.

Xero prides itself on not compromising on customer experience, and when it comes down to it, the question isn’t “How can we use our existing skills to build a mobile application?” but “What is going to enable us to deliver the best customer experience on the mobile devices that our customers use?”

Our view is that HTML5 technologies can deliver as-good-as-native experiences – and that will continue to be the focus for our core application, where we’ll continue to improve our performance on all devices. And we were all extremely impressed by Sencha’s Fastbook which is a testament to the ability to deliver great experiences using web technology. But the lesson from Fastbook is that it’s hard work – you don’t get those experiences out-of-the-box. And the lesson we’ve learnt over the last 12 months has been that the cost in time, effort and testing to bring an HTML5 application to a native level of performance seems to be far greater than if the application was built with native technologies from the get-go.

There’s a lot we want to pack into Xero Touch and there’s a lot that our interaction designers want to do to push the capabilities of our mobile accounting platform to its limits so we need to remove all the impediments to delivering on that. Maintaining and iterating a web app was becoming a big impediment – so the next release of Xero Touch will be built with native technologies and we’ve already made a lot of progress. It does feel better.