Elite Bookkeeping & Tax Services: 2015

Thursday, September 3, 2015

Tax Tips and News Compilation

Wednesday, September 2, 2015

10 Tax Tips Regarding Amended Returns

If you made a mistake on your tax return, don't panic. We can help you with filing an amended return if you need to fix any errors. You can also amend your tax return if you forgot to claim a tax credit or deduction. Here are ten tips from the IRS if you need to amend your federal tax return.

1. When to amend. You should amend your tax return if you need to correct your filing status, the number of dependents you claimed, or your total income. You should also amend your return to claim tax deductions or tax credits you did not claim when you filed your original return.

Note: If, as allowed by recent legislation, you plan to amend your tax year 2014 return to retroactively claim the Health Coverage Tax Credit, contact our office first for more information.

2. When NOT to amend. In some cases, you don't need to amend your return. The IRS usually corrects math errors when processing your original return. If you didn't include a required form or schedule, the IRS will send you a notice via U.S. mail about the missing item.

3. Form 1040X. This form is used to amend a federal income tax return that you filed before. Since amended returned may not be filed electronically, this form must be filled out and mailed to the IRS.

4. More than one year. If filing an amended return for more than one year, a separate form for each year is required. They should not be mailed together.

5. Other forms or schedules. If your changes have to do with other tax forms or schedules, they'll need to be attached to Form 1040X to prevent delays in processing.

6. Amending to claim an additional refund. If you are waiting for a refund from your original tax return, you should wait to receive it before any amendments are filed. Amended returns typically take 16 weeks to process.

7. Amending to pay additional tax. If an amendment is being filed because you owe more tax, Form 1040X should be filed as soon as possible. This will limit interest and penalty charges.

8. Corrected Forms 1095-A. If you or anyone on your return enrolled in qualifying health care coverage through the Health Insurance Marketplace, you should have received a form 1095-A, Health Insurance Marketplace Statement. You may also have received a corrected Form 1095-A. If you filed your tax return based on the original Form 1095-A, you do not need to file an amended return based on the corrected Form 1095-A. This is true even if you would owe additional taxes based on the new information. However, you may choose to file an amended return.

In some cases, the information on the new Form 1095-A may lower the amount of taxes you owe or increase your refund. You may also want to file an amended return if:

You filed and incorrectly claimed a premium tax credit, or
You filed an income tax return and failed to file Form 8962, Premium Tax Credit, to reconcile your advance payments of the premium tax credit.

Before amending your return, if you received a letter regarding premium tax credit or Form 8962, you should follow the instructions in your letter.

9. When to file. To claim a refund Form 1040X must be filed no more than three years from the date you filed your original tax return. You can also file it no more than two years from the date you paid the tax, if that date is later than the three-year rule.

10. Track your return. You can track the status of your amended tax return three weeks after you file it with "Where's My Amended Return?".

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. As Enrolled Agents we are authorized by the IRS to serve as a taxpayer advocate on your behalf.

Read more about Enrolled Agents and how we can help you.
What is an Enrolled Agent
Expertise of the Enrolled Agent

For additional tax tips see our other recent posts. Our blog is here to help you and anyone you know. Feel free to share any information you find and by all means, call us if we may be of assistance.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Friday, August 28, 2015

IRS Waives Penalties for Colleges, Universities or Other Educational Institutions

The IRS is waiving penalties assessed against any college, university or other educational institution for Forms 1098-T that were filed with an incorrect or missing taxpayer identification number (TIN). The IRS is granting this relief for tax years 2012, 2013 and 2014.

Relief for these three years is being given in light of recent legislation that provides relief to educational institutions from future penalties for missing or incorrect TINs if the educational institution certifies under penalty of perjury that it has complied with regulations governing solicitation of payee TINs. Although this legislation permits this certification, it does not remove the requirement to properly solicit payee TINs.

For tax year 2012, each educational institution that was previously assessed such penalty will receive a letter from the IRS informing them of the IRS' decision. Affected institutions that do not receive a letter by October 1, 2015, should respond to the IRS using the original penalty assessment notice. The IRS is not assessing penalties for incorrect or missing TINs for tax years 2013 and 2014.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Wednesday, August 19, 2015

Gift Tax Information

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Tuesday, August 18, 2015

History of Enrolled Agents (EAs)

After the Civil War, many citizens had problems settling claims with the government for horses and other property confiscated for use in the war effort. After many petitions and much pleading, Congress, in 1884, endowed enrolled agents with the power of advocacy to prepare claims against the government and to seek equitable justice for the citizenry. For many years, the purpose of the enrolled agent was to act in this capacity.

In 1913, when the income tax was passed, the job of the enrolled agent was expanded to include claims for monetary relief for citizens whose taxes had become inequitable. As the income tax, estate, gift and other sources of tax collections became more complex, the role of the enrolled agent increased to include the preparation of the many tax forms that were required. Additionally, as audits became more prevalent, their role evolved into taxpayer advocacy and negotiating with the Internal Revenue Service on behalf of their clients.

In 1972, EAs united to form a national association to represent the needs and interests of EAs and the rights of taxpayers. That association is today called the National Association of Enrolled Agents (NAEA). Through their national association and state affiliates, enrolled agents have successfully defended their rights to practice and furthered the passage of legislation and administrative rules that benefit both tax practitioners and ordinary citizens.

Read more about:
What is an Enrolled Agent
http://elitebookkeepingtaxservices.blogspot.com/2013/05/what-is-enrolled-agent.html

Expertise of Enrolled Agents
http://elitebookkeepingtaxservices.blogspot.com/2014/06/expertise-of-enrolled-agent.html

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Monday, August 17, 2015

Deductions for Moving Expenses

Per the IRS, if you move your home you may be able to deduct the cost of the move on your federal tax return next year. This may apply if you move to start a new job or to work at the same job in a new location. In order to deduct your moving expenses, your move must meet three requirements:

1. Your move must closely relate to the start of work. In most cases, you can consider moving expenses within one year of the date you start work at a new job location. Additional rules apply to this requirement.

2. Your move must meet the distance test. Your new main job location must be at least 50 miles farther from your old home than your prior job location. For example, let's say that your old job was three miles from your old home. To meet this test, your new job my be at least 53 miles from your old home.

3. You must meet the time test. You must work full-time at your new job for at least 30 weeks for the first year after you move. If you're self-employed, you must also meet this test. In addition you must work full-time for a total of at least 78 weeks during the first two years at the new job site. If your tax return is due before you meet the time test, you can still claim the deduction if you expect to meet it.

If you qualify for this deduction, here are a few more tips:

Travel. You can deduct certain transportation and lodging expenses while moving. This applies to costs for yourself and other household members while moving from your old home to your new home. You may not deduct your travel meal costs.

Household good and utilities. You can deduct the cost of packaging, crating and shipping your property. This may include the cost to store or insure the items while in transit. You can deduct the cost to disconnect or connect utilities at your old and new homes.

Expenses you can't deduct. You may not deduct:

Any part of the purchase price of your new home.
The cost of selling your home.
The cost of breaking or entering into a lease.

Reimbursed expenses. If your employer later pays you for the cost of the move that you deducted on your tax return, you may need to include the payment as income. You must report any taxable amount on your tax return in the year you get the payment.

Address change. When you move, make sure to update your address with the IRS and the U.S. Post Office.

Thursday, August 13, 2015

Important! Revised Due Dates for 2016 Tax Reporting Year

Contributed by Robyn Yelton, EA

On July 31, 2015, President Obama signed into law P.L. 114-41, the “Surface Transportation and Veterans Health Care Choice Improvement Act of 2015.” Although this new law was primarily designed as a 3-month stopgap extension of the Highway Trust Fund and related measures, it includes a number of important tax provisions, including revised due dates for partnership and C corporation returns and revised extended due dates for some returns. This letter provides an overview of these provisions, which may have an impact on you, your family, or your business.

Revised Due Dates for Partnership and C Corporation Returns

Domestic corporations (including S corporations) currently must file their returns by the 15th day of the third month after the end of their tax year. Thus, corporations using the calendar year must file their returns by Mar. 15 of the following year. The partnership return is due on the 15th day of the fourth month after the end of the partnership's tax year. Thus, partnerships using a calendar year must file their returns by Apr. 15 of the following year. Since the due date of the partnership return is the same date as the due date for an individual tax return, individuals holding partnership interests often must file for an extension to file their returns because their Schedule K-1s may not arrive until the last minute.

Under the new law, in a major restructuring of entity return due dates, effective generally for returns for tax years beginning after Dec. 31, 2015:

Partnerships and S corporations will have to file their returns by the 15th day of the third month after the end of the tax year. Thus, entities using a calendar year will have to file by Mar. 15 of the following year. In other words, the filing deadline for partnerships will be accelerated by one month; the filing deadline for S corporations stays the same. By having most partnership returns due one month before individual returns are due, taxpayers and practitioners will generally not have to extend, or scurry around at the last minute to file, the returns of individuals who are partners in partnerships.
C corporations will have to file by the 15th day of the fourth month after the end of the tax year. Thus, C corporations using a calendar year will have to file by Apr. 15 of the following year. In other words, the filing deadline for C corporations will be deferred for one month.

Keep in mind that these important changes to the filing deadlines generally won't go into effect until the 2016 returns have to be filed. Under a special rule for C corporations with fiscal years ending on June 30, the change is deferred for ten years — it won't apply until tax years beginning after Dec. 31, 2025.

Revised Extended Due Dates for Various Returns

Taxpayers who can't file a tax form on time can ask the IRS for an extension to file the form. Effective for tax returns for tax years beginning after Dec. 31, 2015, the new law directs the IRS to modify its regulations to provide for a longer extension to file a number of forms, including the following:

Form 1065 (U.S. Return of Partnership Income) will have a maximum extension of six-months (currently, a 5-month extension applies). The extension will end on Sept. 15 for calendar year taxpayers.
Form 1041 (U.S. Income Tax Return for Estates and Trusts) will have a maximum extension of five and a half months (currently, a 5-month extension applies). The extension will end on Sept. 30 for calendar year taxpayers.
The Form 5500 series (Annual Return/Report of Employee Benefit Plan) will have a maximum automatic extension of three and a half months (under currently law, a 2½ month period applies). The extension will end on Nov. 15 for calendar year filers.

FinCEN Report Due Date Revised

Taxpayers with a financial interest in or signature authority over certain foreign financial accounts must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR). Currently, this form must be filed by June 30 of the year immediately following the calendar year being reported, and no extensions are allowed.

Under the new law, for returns for tax years beginning after Dec. 31, 2015, the due date of FinCEN Report 114 will be Apr. 15 with a maximum extension for a 6-month period ending on Oct. 15. The IRS may also waive the penalty for failure to timely request an extension for filing the Report, for any taxpayer required to file FinCEN Form 114 for the first time.

I hope this information is helpful. If you would like more details about these changes or any other aspect of the new law, please do not hesitate to call.

Wednesday, July 29, 2015

Tax Tips about Hobbies that Earn Income

Do you have a particular hobby that is also a source of income? If so, you must report any income you get from your hobby on your tax return. How you report the income is different than how you report income from a business. For example, there are special rules and limits for deductions you can claim from a hobby.

Here are four tax tips you should know:

Business versus Hobby. A key feature of a business is that you do the activity to make a profit. This differs from a hobby that you may do for sport or recreation. There are nine factors to consider when you determine if you do the activity to make a profit. Make sure you base the decision on all the facts and circumstances of your situation.
Allowable Hobby Deductions. You may be able to deduct ordinary and necessary hobby expenses. An ordinary expense is one that is common and accepted for the activity. A necessary expense is one that is helpful or appropriate.
Limits on Expenses. As a general rule, you can only deduct your hobby expenses up to the amount of your hobby income. If your expenses are more than your income, you have a loss from the activity. You can't deduct that loss from your other income.
How to Deduct Expenses. You must itemize deductions on your tax return in order to deduct hobby expenses. Your costs may fall into three types of expenses. Special rules apply to each type.

As always it's a good idea to consult with your tax adviser regarding these matters. Call us if you need help.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Monday, July 27, 2015

Reminder Regarding Extensions

If you requested an extension to file your 2014 taxes, the deadline is October 15th. However, you do not have to wait until then to complete your filing if you have all of your documentation ready- especially if you have a refund coming.

If you're not ready, be sure to get all of your documentation in order now so that you don't miss the deadline. Otherwise you risk getting a late filing penalty and interest on payments due.

For military members serving in a combat zone, you have 180 days after you leave the combat zone to file returns and remit any tax payment that is due.

Let us know if we can help.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Wednesday, July 15, 2015

Webinar Series offered on ACA Provisions for Employers and Coverage Providers

The IRS is presenting three different webinars regarding the Affordable Care Act provisions for employers and health care coverage providers.

Please note they are all schedule for Eastern Daylight Time.

Employer Shared Responsibility and Information Reporting
Learn about the ACA's employer shared responsibility provisions and information reporting requirements for employers and providers of minimum essential coverage.

July 28, 11 a.m. - 12:30 p.m.- Click here to register
Aug. 20, 1 - 2:30 p.m.- Click here to register
Sept. 16, 1:30 - 3 p.m.- Click here to register

Employer-Sponsored Health Coverage Information Reporting Requirements for Applicable Large Employers
Learn about employer-sponsored health coverage information reporting requirements for applicable large employers, including who is required to report, what information the law requires you to report, and how to complete the required forms.

July 29, 1 - 2 p.m.- Click here to register
Aug. 11, 1 - 2 p.m.- Click here to register
Sept. 10, 11 a.m. - 12 p.m.- Click here to register

Information Reporting Requirements for Providers of Minimal Essential Coverage
Learn about the information reporting requirements for providers of minimum essential coverage, including employers that provide self-insured coverage. Learn who is required to report, what information the law requires you to report, and how to complete the required forms.

July 30, 1-2 p.m.- Click here to register
Aug. 26, 1 - 2 p.m.- Click here to register
Sept. 22, 1 - 2 p.m.- Click here to register

For more information about the Affordable Care Act and tax provisions for employers and health coverage providers, visit http://www.irs.gov/Affordable-Care-Act.

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Tuesday, July 14, 2015

Small Businesses Can Get IRS Penalty Relief for Unfiled Retirement Plan Returns

Small Businesses Can Get IRS Penalty Relief for Unfiled Retirement Plan Returns

For more information, contact Elite Bookkeeping & Tax Services at (800) 416-3820 or (775) 884-6188 Address: 123 West Nye Lane, Suite 103, Carson City, NV 89706. Visit our website at www.elitebookkeeping.biz

Wednesday, July 8, 2015

Tax Tips Regarding Vacation Home Rentals

If you rent a home to others, you usually must report the rental income on your tax return. However, you may not have to report the rent you get if the rental period is short and you also use the property as your home.

In most cases, you can deduct your rental expenses. When you also use the rental as your home, your deduction may be limited. Here are some basic tax tips that you should know if you rent out a vacation home:

Vacation Home. A vacation home can be a house, apartment, condominium, mobile home, boat or similar property.
Schedule E. You usually report rental income and rental expenses on Schedule E, Supplemental Income and Loss. Your rental income may also be subject to Net Investment Income Tax.
Used as a Home. If the property is "used as a home", your rental expenses can't be more than the rent you received. For more about these rules see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
Divide Expenses. If you personally use your property and also rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. To figure how to divide your costs, you must compare the number of days for each type of use with the total days of use.
Personal Use. Personal use may include use by your family. It may also include use by any other property owners or their family. Use by anyone who pays less than a fair rental price is also personal use.
Schedule A. Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
Rented Less than 15 Days. If the property is "used as a home" and you rent it out for fewer than 15 days per year, you do not have to report the rental income. In this case you deduct your qualified expenses on schedule A.

Wednesday, May 20, 2015

Five Tax Filing Predictions for 2015

IRS audited 0.86 percent of all individual income tax returns last year, the lowest coverage rate since 2004. And The Washington Post reports that IRS service is, well, abysmal.

IRS National Taxpayer Advocate Nina Oldon testified that as of February 14, "only 43 percent of the people who called IRS...were able to reach a human being." So, where does this leave us this tax season? The National Association of Enrolled Agents (NAEA), the association that represents the federally licensed tax practitioners who hold the highest credential awarded by the IRS, has released some prognostications for 2015.

1) The number of calls being answered by an IRS staffer is not going to improve. Same as last year, there were budget cuts at IRS--$346 million worth this time! The level of service is heading down and the wait times are heading up.

2) The complexity of returns is increasing. The Affordable Care Act (ACA) has thrown some curves into tax return preparation that even experienced preparers have had to dig into to learn. When NAEA offered a three-part Webinar on the effect of the ACA on taxes, members signed up in droves.

3) In light of the slow response times from IRS and the complexity of returns, more people than ever are going to be hiring tax professionals. IRS has published directories on the IRS.gov site where taxpayers can find licensed tax preparers, such as Enrolled Agents and CPAs, and the NAEA "Find an EA" directory on www.naea.org allows taxpayers to search by location, language specialty, and more.

4) We may have thought identity theft was at an all time high last year, but the cyber villain hacks affecting Target, Anthem and other companies have released private information such as names, addresses and Social Security numbers into the wrong hands allowing crooks to file taxes and steal other people's refunds. This is going to be a bad year for tax refund theft.

5) The beleaguered IRS will do what it must: meet projected refund times. Like last year, the IRS expects to issue more than 9 out of 10 refunds within 21 days.

Tuesday, May 19, 2015

Taxes Done? The Perfect Time to Contact a Tax Pro

By the time most of us finish our taxes, we don’t want to think about them again for a long while. However, that’s exactly what financially savvy taxpayers do! By taking a look at your tax situation before the year is over, you can take advantage of every legal means to reduce the amount you’ll pay in taxes next year.

If you know in advance of looming life changes, events such as marriage, divorce or remarriage, you need to consider the affect of these changes to your tax status. The exemptions claimed on your W-4 may need to be adjusted to prevent an unexpected tax bill. If you are going through a divorce, discussing the tax ramifications of dependents, alimony, childcare or division of property before signing anything is extremely helpful. Divorce decrees often contain wording that has a different tax result than what was intended. Call on your tax professional for a review.

A change in family size with the birth or adoption of a child can also affect your tax return. And, as children get older, you may lose certain credits.

A career change is another life change that might affect your tax situation. If you have pension opportunities that you are not sure about or excludable benefits such as cafeteria plans and dependent care benefits to choose from, your tax professional can help you evaluate your options. A career change might also increase income, shifting you into a higher tax bracket or changing the work-related deductions available, making a change in withholding a possibility.

And, if you find yourself in financial trouble, bankruptcy may be the option you choose. If so, there are tax implications you should be aware of and options that may be available, so contact your tax professional. Time is of the essence if you are in a bankruptcy situation.

Did your company present you with an early retirement proposal or are you considering an early retirement? This event definitely changes your life and your tax situation! It’s better to discuss the options before you act rather than face a large tax bill because you didn’t. Know the tax implications of your decision: check with your tax professional to make sure you are not triggering an early withdrawal penalty or causing Social Security to be taxable.

Of course, it’s important that you’re speaking with someone knowledgeable who can be trusted. The person doing your taxes should be registered with IRS, have passed testing on taxation, and be required to complete continuing education to keep up with the ever-changing tax code. Enrolled agents are licensed by the U.S. Department of Treasury, must report continuing education credits to IRS in order to maintain their licenses and are bound by a code of ethics.

Last, but not least, if you receive a letter from the IRS, call us! We have two Enrolled Agents in our office. Do not ignore it or toss it in a drawer hoping it will disappear. Putting off action only creates more letters and possibly, larger penalties.

The key word is communication: keep your tax professional informed of any changes in your life because they may change your tax situation.

About Enrolled Agents

Enrolled agents (EAs) are America’s tax experts. They are the only federally-licensed tax practitioners who specialize in taxation and also have unlimited rights to represent taxpayers before the IRS.

Friday, May 15, 2015

Bartering for Products or Services

Trading one product or service for another has become increasingly popular in recent years. If you barter, you should know that the value of products or services from bartering is taxable income. This is true even if you are not in business.

Here are some things you should know about bartering per the IRS:

· Bartering income. Both parties must report the fair market value of the product or service they get as income on their tax return.

· Barter exchanges. A barter exchange is an organized marketplace where members barter products or services. Some operate out of an office and others over the internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. Exchanges must give a copy of the form to its members who barter each year. They must also file a copy with the IRS.

· Trade Dollars. Exchanges trade barter or trade dollars as their unit of exchange in most cases. Barter and trade dollars are the same as U.S. currency for tax purposes. If you earn trade and barter dollars, you must report the amount you earn on your tax return.

· Tax implications. Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place. Barterers may owe income taxes, self-employment taxes, employment taxes or excise taxes on their bartering income.

· Reporting rules. How you report bartering on a tax return varies. If you are in a trade or business, you normally report it on Form 1040, Schedule C, Profit or Loss from Business.

Monday, January 12, 2015

2014 Tax Checklist

Tax Checklist

This form is to assist you in gathering your income tax information. Use it as a guide for information you need to provide. Please call or e-mail with any questions.

GENERAL INFORMATION:

□ First, middle initial, and last names of taxpayers and dependents as written on the Social Security cards, and dates of birth for taxpayers and all dependents, especially new dependents.

□ Address (city, state, ZIP), telephone number and e-mail address.

□ Marital Status: Single ___ Married ___ Head of Household ___ Separated ___

□ Did you get married to a same-sex spouse in a state that legally recognizes same-sex marriage?

□ Number of Dependents: ___ Did any dependents have any income? Yes ___ No ___

□ Do all dependents live with you? Yes ___ No ___

TYPES OF INCOME AND TAX REPORTING FORMS:

□ Wages: All Forms W-2

□ Income from Rentals: All 1099-MISC

□ Pensions/Retirements: 1099-R

□ Business Income: All 1099-MISC & 1099-K

□ Social Security: SSA-1099

□ Farm Income

□ Bank Interest: 1099-INT

□ Alimony Received: Total amount

□ Dividends: 1099-DIV

□ Unemployment: 1099-G

□ Commissions: 1099-MISC

□ State Tax Refund: 1099-G

□ Tips and Gratuities

□ Miscellaneous: Jury Duty, Gambling, Other

□ Sales of Stock, Mutual Funds: 1099-B

Foreign Income Matters:

__Did you receive a distribution from, or were you a grantor or transferor for a foreign trust?

__Did you have a financial interest in or signature authority over a financial account located in a foreign country?

__Did you have any foreign financial accounts, foreign financial assets, or hold interest in a foreign entity?

BUSINESS INCOME & EXPENSE ITEMS: This list is not all encompassing. If you don’t see an expense listed below, ask.

Total (Gross) Income
Advertising
Auto: Parking &Tolls
Business Phone Expense
Cell Phone Expense
Subcontractors
Commissions Paid
Insurance
Interest Paid
General Office Expense
Rent/Lease Fees Paid
Legal or Professional Fees
Repairs
Cleaning/Maintenance
Dues & Publications
Equipment/Supplies
Tools
License Fees/Taxes Paid
Utilities
Education Expense
Association Dues
Bank/Credit Card Fees
Postage
Meals/Entertainment
Business Miles & Total Miles (A Mileage log is required)
Hotel/Travel Expense
Asset Purchases (Date, amount and item)

ADDITIONAL ITEMS FOR RENTAL PROPERTIES:

Keys
Condo/PUD Fees
Management Fees
Mortgage Statements
Yard Work
Termite Treatment Expense
Utilities
Mileage/Travel
Other

DEDUCTIONS/CREDITS TO INCOME:

Self-employed Health Insurance
IRAs /Keogh/SEPs
Retirement Saver’s Credit
Health Savings Account (HSA)
Teacher Expenses A
doption Expenses
Penalty on Early Withdrawal of Savings
Moving Expenses
American Opportunity/Lifetime Learning/Student Loan Interest/Education Expenses

* Total Alimony Paid: Must have name and Social Security number of recipient, and amount paid.

* Child Care/Day Care Credit: Must have name, address, Social Security number or EIN of provider, and amount paid per child.

ESTIMATED TAXES PAID:

Date of payment and amount paid for each Federal and State quarterly tax estimate.

HEALTH CARE INFORMATION:

__Did you have qualifying health care coverage (employer group plan coverage or government-sponsored coverage) for every month of 2014 for you, your spouse and all members of your family as claimed on your tax return?

__Did you or anyone in your family qualify for an exemption from the health care coverage mandate?

__Did you acquire health care coverage through the Marketplace under the Affordable Care Act? If yes, provide Form(s) 1095-A.

__Did you make any contributions to or receive distributions from a Health Savings Account, Archer MSA or Medicare Advantage MSA?

ITEMIZED DEDUCTIONS:

INTEREST

Mortgage Interest, Form 1098

MEDICAL

Medical & Dental bills
Prescriptions
Glasses/Contact Lenses
Out-of-pocket expenses
Medical miles
Lab fees
Hearing Aids
Medical/dental/long term care insurance

TAXES

Prior year state tax paid
City/local tax
Real estate tax
Personal property tax
Other

CHARITABLE CONTRIBUTIONS

Church
Boy/Girl Scouts
United Way/CFC
March of Dimes
American Heart
Easter Seals
Red Cross
MDA/MS
YWCA/YMCA
Salvation Army
FoodBank
Payroll deductions
Out-of-pocket Volunteer Expenses
Charitable miles
Other

For donations, please provide evidence such as a receipt from the done organization, a canceled check, or record of payment to substantiate all contributions made. An itemized listing of all non-cash donations must be maintained with the receipts. List must include the Fair Market Value for each donation of non-cash items.

Identity Theft:

__Did you receive an Identity Protection PIN from the Internal Revenue Service or have you been a victim of identity theft? If so, please provide the IRS letter.

Friday, January 9, 2015

A Review of The Affordable Care Act

In March 2010, President Obama signed the Patient Protection and Affordable Care Act (the “Affordable Care Act”) into law. We suggest that you take some time to review the provisions and see how it can effect your taxes for 2014 and beyond.

The Affordable Care Act – an Overview

Under the Affordable Care Act, all individuals will be required to have health insurance. There will be incentives for those who enroll and penalties for those who do not. While the majority of US citizens and legal residents will be subject to the penalties, certain groups will be exempt such as undocumented immigrants, incarcerated individuals, American Indians and members of certain faiths. Large employers (those with 50 or more full-time employees) will be required to offer coverage to employees and will be penalized for noncompliance. Small employers who provide coverage for their employees may qualify for tax credits in 2014 and 2015 and will pay no penalties for failure to participate.

As a result of this legislation, Health Insurance “Marketplaces” (formerly known as exchanges) will be established to assist low and moderate-income individuals, families and small businesses in purchasing health insurance plans that are eligible to receive federal subsidies.

Under the ACA, several aspects of health insurance plans will be regulated. All health insurance plans must have no lifetime or annual limits, no potential rescission of coverage, no pre-existing conditions exclusions, no excessive waiting periods for eligibility to become covered by the plan and no cost sharing for preventive care. The insurance market must limit deductibles for certain plans and new insurance plans must cover your children until they reach age 26 while older plans must only cover children who cannot get insurance from their place of employment until they are 26.

The plan provider must provide a summary of benefits and coverage to participants. Plan enrollees must be allowed to select any available participating primary care provider. Premiums can be based only on limited factors, and there must be an effective process for appeals from claims determinations.

Each of these requirements is designed to improve the experience of the insured individuals and to ensure greater coverage than was previously provided by health insurance companies.

As you can see, the impact of this legislation is far-reaching. We are providing this information so that you are informed. Our goal is to make you aware of these provisions in order that we may discuss them in more detail and determine exactly how they may apply to your particular situation. If you have any questions about the Affordable Care Act or any other tax matter, please give us a call.

Tax Credits to Offset Insurance Premiums

A Kaiser Family Foundation study predicted that nearly half of all Americans who buy their own health insurance through the Affordable Care Act’s Marketplaces will be eligible for tax credits or subsidies. Researchers estimated tax credits averaging $2,672 for individuals will cover approximately 32% of the insurance cost, and tax credits averaging $5,548 will cover 66% of the cost for families.

The federal tax credits will be available for people who have incomes from 100% up to 400% of the poverty level (between $11,500 and $46,000 for a single person, and about $24,000 to $94,000 per year for a family of four in 2014). The tax credit will be refundable so taxpayers who have little or no income tax liability can still benefit, or the credit can be paid in advance to the taxpayer’s insurance company to help cover the cost of premiums.

The amount of the tax credit used in the study is based on a benchmark premium, which is the cost of the second-lowest-cost silver plan in the area where a person lives. The tax credit equals that benchmark premium minus what the individual is expected to pay based on their family income (which is calculated on a sliding scale from 2% to 9.5% of income). Researchers cautioned that it is difficult to determine exactly what Americans will be paying for coverage through the Marketplace because subsidy amounts will be based on factors including age, income, place of residence and type of policy chosen.

IRS Releases Health Care Disclosure Rules

The IRS has issued the final regulations explaining how it will release tax return information to the Department of Health and Human Services, and in turn, the Marketplace and state agencies, to determine a taxpayer’s eligibility for various health insurance programs and credits. The IRS noted Section 6103(l)(21) of the tax code allows the disclosure of income, filing status, number of dependents and taxpayer identity to determine eligibility in Medicaid, CHIP or BHP programs. Income verification will also be required to determine eligibility and affordability in the insurance exchanges, or Marketplaces, as they are now known.

The same tax code section also authorizes the disclosure of other information that would indicate if an individual is eligible for the premium tax credit or any cost-sharing reductions. In addition to income, filing status and identity, Social Security benefits were also added to the list of information that can be disclosed to enable insurance exchanges to determine a taxpayer’s modified adjusted gross income. Providing the amount of Social Security benefits will also help the exchanges determine if a taxpayer is eligible for the premium tax credit or any cost-sharing reductions.

Nothing in the ACA allows the IRS to access an individual’s health information, including information about the individual’s health status or health services received.

Watch Out for These Two New Taxes!

Two new taxes were included in the Affordable Care Act enacted in 2010, but didn’t go into effect until 2013: the 3.8% tax on net investment income and the 0.9% Medicare surtax on earned income. Both new taxes are designated as Medicare taxes, but none of the funds generated by these provisions are earmarked for Medicare or health care purposes. While the type of income subject to these new taxes is different, there is some overlap in the definition of taxpayers subject to these new taxes.

The 3.8% Tax on Net Investment Income

The 3.8% surtax will be imposed on the lesser of your net investment income for the tax year, or the amount by which your modified adjusted gross income (MAGI) exceeds the “threshold amount” for the year. The threshold for married filing jointly is $250,000, $125,000 if you are married filing separately, and $200,000 for everyone else.

Although the IRS issued more than 100 pages of regulations to define “net investment income,” the term basically includes interest, dividends, annuities, rents, royalties and capital gains. Interest on tax-exempt bonds and distributions from qualified retirement plans are not included, nor is any gain excludable from income on the sale of your primary residence.

Planning related to this tax focuses on reducing net investment income. Rebalancing portfolios, maximizing deductions and/or non-income producing real estate may be options. If gain on the sale of property will be subject to the tax, it might be worthwhile to consider an installment sale or a like-kind, tax-deferred exchange of investment real estate instead of a sale.

Bottom line: Give us a call now so we can examine possible tax strategies before the year is over. Although your investment choices and long-term objectives should come first, tax implications are also a consideration.

The 0.9% Medicare Surtax on Earned Income

Unlike the 3.8% tax on net investment income, this tax applies to wages and self-employment income. The income thresholds are the same as the tax on net investment income above: $250,000 for couples filing jointly, $125,000 for those married filing separately and $200,000 for other filers. The surtax applies only to the employee’s portion of the Medicare tax. There is no increase to the employer-paid portion, but employers are required to withhold the surtax once an employee’s wages exceed $200,000 in a calendar year.

Caution: If filing jointly, each spouse could earn less than the $200,000 threshold and have no extra withholding on their wages during the year, however, if their combined wages exceed the $250,000 threshold on their tax return, they will pay the surtax owed at tax time. On the other hand, if one spouse’s wages are over $200,000 and the employer withholds the additional tax, but the other spouse earns less than $50,000, then any extra surtax withheld would be credited on their tax return.

Summary of the Affordable Care Act Provisions Effective January 1, 2014

- Most Americans who can afford coverage will be required to purchase health insurance or pay a tax penalty that starts at $95 ($285 per family) or up to 1% of income, whichever is greater.

- Up to 17 million Americans under age 65 could be eligible for Medicaid. States that choose to expand their program will receive federal financial aid for the increased payment rates.

- Depending on which state you live in, you will have access to an Exchange administered by your state. Health insurance exchanges will be known as “Marketplaces” where consumers can compare and purchase health insurance. Four different options, called “Metal Plans” (Bronze, Silver, Gold, and Platinum), will be offered through these Marketplaces. Subsidies and tax credits will be available based on age, income, and geographic location.

- Effective in 2014, the law makes it illegal for any health insurance plan to use pre-existing conditions to exclude, limit or set unrealistic premium rates on coverage for adults. The requirement to cover children under age 19 for pre-existing conditions began in 2010.

- The provision that required employers with 50 or more workers to provide health care coverage or face fines has been postponed until 2015.

IRS’ Affordable Care Act Tax Tips

Confused about the Affordable Care Act? Have questions and need more information? The IRS launched the Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them. The new home page has three sections that explain the tax benefits and responsibilities for individuals, families, employers, and other organizations, with links and information for each group.

Topics include:

Tax credits for individuals
New benefits and responsibilities for employers
Tax provisions for insurers, tax-exempt organizations and certain other business types.