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Using IRA Distributions for Charitable Deductions – It’s Not Too Late Yet!

Have you considered using the funds in your individual retirement account (IRA) to make a charitable contribution? If so, it’s a good idea to follow up on your plans sooner rather than later. Under the American Taxpayer Relief Act of 2012, individuals who are age 70½ or older can make a qualified charitable distribution from an IRA directly to a charity. You can exclude donations up to $100,000 of an otherwise taxable distribution from your gross income and count them toward the current tax year’s required minimum IRA distributions.

The rules only apply to distributions made in 2012 and 2013, so you need to act now. If this option doesn’t suit your needs, there are many other planning opportunities involving charitable giving. Not sure which ones apply to you? Be sure to contact us today to get the answers to all your financial questions.


Will You be Hiring Soon? Tax Credit for Certain Hires Only Available through Dec. 31

The Work Opportunity Tax Credit offers employers a tax credit for hiring members of certain groups, including many veterans and those who have received vocational rehabilitation. The maximum credit can be as high as $9,600, depending on the employee, but it only applies to hires who begin work before January 1, 2014.

Tax credits are a dollar-for-dollar reduction in your tax bill, so they are well worth taking advantage of. Your company may be eligible for many credits or deductions that can lower your tax outlay. Are you making the most of all of them? Contact us today to discuss the best ways to minimize what you’re paying.



Take the Uncertainty Out of Health Care Reform

If you’re not sure what the new health care law means to you, you’re not alone. A poll by the Kaiser Family Foundation revealed that just over a third of the public had tried to find out more information about the law—the Affordable Care Act—in recent months. About half of the respondents to the survey said they remain confused about the law and its provisions.

If you have questions we can provide the answers you need. Among other things, our individual clients should be aware of the Shared Responsibility Provision that becomes effective on January 1, 2014. Under the provision, people of all ages, including children, must either have minimum essential health coverage, qualify for an exemption or make a payment when they file their tax return. We can help you understand whether your coverage meets the law’s requirements, how gaps in coverage will be treated and what circumstances qualify for an exemption. Contact us today to find out how the health care law will affect you. 


Do You Qualify for the Health Care Premium Tax Credit?

Beginning this year, individuals and families can buy private health insurance through Affordable Insurance Exchanges, which are marketplaces where individuals can find private health insurance.  (This is a new program created by the Affordable Care Act.)  If you purchase health insurance through an exchange, you may be eligible for a tax credit that will make your coverage more affordable.

The credit is aimed at middle-income individuals and families. A larger credit is available for older individuals whose coverage costs may be higher. The credit will be refundable, which means it can be used by people who pay little or no federal income tax. You can arrange for the credit to be paid to your insurer in advance so that you have little or no out-of-pocket costs.  Are you eligible for the credit? We can help you find out and work with you to make the best use of
your health insurance dollars. Call us today with all your questions about health care finance or any other financial concerns.


DOMA Decision’s Impact on Financial Planning for Same-Sex Couples


If you are a member of a married same-sex couple, then the U.S. Supreme Court’s recent decision to strike down the Defense of Marriage Act could have a substantial effect on many aspects of your financial life. You may want to consider, for example, filing an amended income tax return if you now qualify for deductions or credits available to married couples under federal law. Since same-sex couples are now eligible for the estate tax exemption available to surviving spouses, it may also be time to review your estate planning. 
   
Those are just a few of the changes affecting qualifying same-sex couples. If you have questions about the decision’s impact and what it means to your financial situation, be sure to contact us today.


Seeking a Job? You May Be Able to Deduct the Expenses


Did you know that if you are trying to find work in your current occupation, the costs of your search, including expenses for preparing and sending resumes, employment agency fees and related travel expenses, should be deductible?
The deductions aren’t available in all cases. For example, you’re not eligible to use them if you are seeking employment in a new field or if this will be your first job.  If it’s been a long time since you left your last job, your costs also may not qualify.  Don’t try to navigate the rules on your own. If you want to learn more about these deductions, or ask any questions about your tax situation, contact us today.

Smart Disaster Planning Steps

Deadly tornadoes in the Midwest and the beginning of hurricane season are reminders that it’s important for both individuals and businesses to protect themselves against the potential financial consequences of natural disasters. A few smart steps we recommend include making electronic backups of important records, including your insurance policies, tax returns, bank and credit card account information, and vital records.  It is critical that you store this backup in a separate location that will be easy to access if your area suffers damage.  You should also take the time to take pictures or videos of your home or business and store them separately in case you need to make an insurance claim.

If you run a business, you must consider how you will get up and running again after a disaster. It’s a good idea to develop contingency plans that will enable employees to work from home or elsewhere if your location is damaged or inaccessible. Both businesses and families should consider using phone trees or other methods to maintain contact in an emergency. Review your contact and contingency plans every year to be sure they are up to date.

Want further advice on protecting your family’s or business’s financial well-being in case of a disaster? We can help. Contact us today with all your financial questions.


A Simplified Home Office Deduction

Do you work at home or have a home-based business? If so, you should be aware that beginning this year, the IRS has created a simpler option for calculating the deduction for the business use of your home. The new option makes recordkeeping easier because, instead of maintaining records of specific home office expenses, you can use a standard rate per square foot.  The rate is $5 per square foot (up to a maximum of 300 sq. feet or $1,500) for qualifying business use space in place of taking a pro rata percentage of items such as mortgage interest, taxes and repairs.
Keep in mind there are good and bad aspects to this “simpler” method.  The new method gives you back your full interest and tax deduction on schedule A, but you will lose your depreciation and loss carryover deductions. Of course, you must still use your home office regularly and exclusively for business. This may be a welcome relief for some taxpayers, but it might not be the best choice for others. Is it the right choice for you? Please contact us for answers to all your financial questions.

Student Loan Debt: We Can Provide the Decision-Making Details You Need


Did you know that the average student loan balance is $24,803?  Student debt is taking a heavy toll on borrowers, according to an American Institute of CPAs survey, which found that 75% of
respondents or their children had made personal or financial sacrifices because of monthly student loan payments. Sacrifices included putting off saving for retirement (41%); delaying car purchases (40%); postponing a home purchase (29%); and even waiting on marriage (15%).

Among the most troubling findings were that only 39% fully understood the burden that student loan debt would place on their future and 60% had at least some regrets about their decisions on financing their education. That’s why it’s always critical to understand the full potential impact of all your financial choices. The good news is that your CPA can help. Contact us with all your financial questions and we’ll provide the knowledge and insights you need to make the best decisions for you.


Stop Tax Identity Theft in Its Tracks

Imagine after sending in your annual tax return, you receive a notice from the Internal Revenue Service saying that another return has already been filed using your name and Social Security number—and claiming a refund. Sound impossible? It can happen if you become one of a growing number of victims of tax return identity theft. According to one estimate, tax-related identity theft cases have soared more than 650% since 2008. At the least, this crime can lead to a delay in your refund, but the consequences may be much more serious. In addition, you may face a larger problem with identify theft if the scammer is also running up credit card debt or taking out loans in your name.

To avoid becoming a victim, we recommend steps such as safeguarding your Social Security number and other financial information, keeping an eye on changes to your credit ratings and taking precautions with electronic transfers of confidential information. Be sure to contact us if you believe you have been a victim of identity theft or would like advice on the best ways to secure your financial information.


What You Should Know about Changes in Education Provisions in the Tax Law

Are you making the most of tax benefits designed to offset some of the high costs of education? The American Taxpayer Relief Act of 2012, which settled the year-end fiscal cliff debate, extended the American Opportunity Tax Credit through 2017.The credit provides a tax break of up $2,500 for qualified college expenses. The Act also made permanent several education-related tax options, including Coverdell education savings accounts through the end of 2013.

Given the many changes, we can help you make sense of the benefits available to you and ensure you’re taking full advantage of them. We can also offer advice on smart steps for financing the high cost of education, so please contact our office with all your questions.


Does the New Surtax Apply to You?

As of January 1, 2013, there is a 3.8% net investment income tax on some categories of passive investment income for individuals, trusts and estates that exceed certain income thresholds.  As a result, it is in your best interest to identify these income sources and adopt strategies to lower your modified adjusted gross income or your net investment income to avoid the surtax.  If you think the new tax may apply to you, we can explain your choices and help you pick the best strategy to reduce your tax bill.


How Do New Estate Tax Rules Affect You?

You may have heard that there are new rules on estate taxes as a result of the new tax law enacted earlier this year.  The top tax rate on estates rose to 40% from 35% as of Jan. 1, 2013, but no tax will be imposed on the first $5.25 million (adjusted for inflation) of an estate. While $5.25 million sounds like a lot, and you may think that the estate tax doesn’t affect you or your family, you may be surprised. Estate planning should still be a priority. Contact us now to discuss all your questions about estate planning and the steps you can take to minimize the potential estate tax burden to your beneficiaries.


Is a Like-Kind Exchange a Good Option for Your Business?

Normally, when companies sell properties, they must pay taxes on any gain they receive. Like-kind exchanges, transactions in which companies trade properties, may be carried out without any immediate tax consequences. They must satisfy Internal Revenue Service rules, however, which include:

The properties must have the same “nature or character,” as set forth in IRS guidance.
•    The exchanges can be business or investment properties put to a productive use.
•    The exchanges can’t involve inventory, most securities and some other assets.
•    Taxes must be paid on any cash or non-similar property that is part of the deal.

Keep in mind that like-kind exchanges are tax-deferred transactions, not tax free. When a company eventually sells the property it received in an exchange, it must pay tax on any gain from its original investment. In the meantime, though, the business/company can use the funds it would have paid in taxes and it has acquired a new property that may better suit its needs without necessarily making a cash outlay.

Want more information about whether like-kind exchanges can be a good strategy for your business and insights on their tax impact? We can help. Contact us today for expert advice on the best ways to address your business and tax concerns


Help for those Struggling with Mortgage Payments


The recession has left many people wrestling with debt, including the monthly mortgage bill. If you’re one of them, you should be aware that relief may be available through the Home Affordable Modification Program, also known as HAMP. Earlier this year, the government expanded the eligibility criteria to include more homeowners. If you originated a loan on or before January 1, 2009, are behind, or in danger of falling behind on mortgage payments, and meet a range of other criteria, you may be eligible. 
If you believe you may qualify, or if you have any other questions about dealing with debt or money management issues, be sure to contact us. We can help you address this and other tough financial questions.

Is Your Will Up To Date?

When was the last time you reviewed your will? People generally make wills to guarantee the
proper disposition of their money and property, which is why it’s a good idea to consult your CPA when it’s time to create or update your will.

We recommend that you revisit your will every time you experience a major life event, such as marriage, the birth of a child, retirement or other significant milestones. Even if there is no meaningful change in your life, it’s smart to review the document every couple of years to ensure it still addresses all your estate concerns and reflects your wishes. Changes in the value of your investments—such as a stock portfolio or real estate—may also require adjustments in your estate plans.

Reviewing your will may raise questions about various areas of your financial life, including your retirement or estate planning, college savings or other financial concerns. Be sure to turn to us for the perspective and advice you need to make the best choices.


Let Us Help You Leverage What You Can Learn from Your Tax Return

What does your  tax return say about your financial situation? The fact is, the paperwork you file each year offers excellent information about how you are managing your money—and about areas where it might be wise to make changes in your financial habits. If you have questions about your financial situation, remember that we can help. Our firm is made up of highly qualified and educated professionals who work with clients like you all year long, serving as trusted business advisors. So whether you are concerned about budgeting; saving for college, retirement or another goal; understanding your investments; cutting your tax bite; starting a business; or managing your debt, you can turn to us for objective answers to all your tax and financial questions.


How Do Taxes Affect Your Financial Picture?

Do you know how much you’re paying in taxes? You may have a sense of what you spend on income taxes, but have you also considered the taxes you pay on utilities, gasoline, cigarettes and alcohol, hotel stays and numerous other items? The CPA profession’s Total Tax Insights™ calculator (www.totaltaxinsights.org) can put these numbers in perspective, enabling you to make better informed financial decisions. Take a few minutes to drop in your numbers, and if your results raise questions about your financial planning choices, we can help.  If you’d like to get started, don’t hesitate to contact us with all your questions.

2014 Tax News

 Individuals

 Businesses

 

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Tax Credits that May Reduce Your Taxes A tax credit reduces the amount of tax you must pay. A refundable tax... Read more
Insurance Deduction for Self-Employed The deduction is for medical, dental or long-term care insurance premiums... Read more
Taxpayers with Foreign Income If you are living or working outside the United States, you generally... Read more
Rental Real Estate Income If you own rental real estate, you should be aware that all rental income... Read more
Claim Your Refund Here are some things to know about unclaimed refunds: 1. Not required... Read more
Itemizing vs. Standard Deduction When you file a tax return, you usually have a choice to make: whether to... Read more
Home Office Deduction 1. If you use part of your home for your business, you may qualify to... Read more
Child and Dependent Care Tax Credit If you paid someone to care for your child, dependent or spouse last... Read more
Mortgage Debt Forgiveness If your lender cancelled or forgave your mortgage debt, you generally... Read more
Capital Gains and Losses The term “capital asset” for tax purposes applies to almost everything... Read more
Take Credit for Your Retirement Saving for your retirement can make you eligible for a tax credit worth... Read more
Unemployment Benefits If you received unemployment benefits this year, you must report the... Read more
Medical and Dental Expenses If you paid for medical or dental expenses in 2013, you may be able to... Read more
Employee Business Expenses Some employees may be able to deduct certain work-related expenses. You... Read more
Energy-Efficient Home Improvements You may be able to get some credit for qualified home energy improvements... Read more
Rules For Child’s Investment Income Parents may not realize that there are tax rules that may affect their... Read more
Education Credits The American Opportunity Credit and the Lifetime Learning Credit may... Read more
How To Get Prior Year Tax Information The IRS offers several different ways to get tax return information or a... Read more