did you know?

2 January 2018
Here is an article that discusses how your taxes may be going up sooner that you think.

14 October 2016
How to Keep Your Current Property Tax Base When You Move

If you've lived in your home for a number of years, there is a good chance that your property tax is lower that someone who moved next door recently. So if you decided to move and your home has increased in value is there a way not to have to pay a property tax of 1% of the sales price of the new home? The answer is... maybe. Read this find out how.

10 October 2016
Increasingly you hear the words: "My identity has been stolen. Now what? What can I do?". Security measures for keeping data save is a big deal, but after it's already happened? Then What? What do you do? The IRS has created a new website to help taxpayers with this issue. The first step for taxpayer should be to goto https://identitytheft.gov/

15 September 2016
When would you like to retire?
This article talks about some of the issues related to retirement. Following these rules will go a long way in helping to get there.

6 November 2015
Now is the time to do an annual credit check
We see more and more often... someone is announcing that their server was hacked and that thousands of user data has been taken. Recently the IRS even announced that a major breach occured where user data including social security numbers were taken from their servers. Many of these institutions are providing credit monitoring services, but now is the time for you to take action and check your credit. Click here for more info

28 January 2015
Importance of Keeping Records
Many years ago when I was writing software on a project, I learned the importance of saving your data often. On one particular night after working for several hours and making fantastic progress, my machine crashed and I lost everything in its memory that I had been working on during that time. It was a wakeup call on the importance of periodically saving what I was working on. Doing this simple act: menu "ALT-S" has saved my backside more times that I can count over the years.

It's the same when you're working with documents required to substantiate tax deductions. The IRS expects and requires you to keep accurate records. This includes all areas of the tax return. Would you like to deduct your home mortgage? Then it is required for you to keep the 1098 form that your lender sends you at the end of the year. Would you like to deduct your charitable contributions? Same thi... you are required to save your receipts. The same holds true for your business deductions, employee expenses, auto recor... the list go on, but you probably get the idea.

If you have been a client of mine for any length of time, you will know that I talk about the importance of this and have provided many helpful tools that help make this painless and useful at tax season. Please resolve to do this tod... you will feel more at ease when tax time rolls around.

Avoid Summertime Tax Scams
Ah summertime! Warm days, rest and recreation and...tax scams. Thieves don't stop victimizing unsuspecting taxpayers with their scams after April 15. Identity theft, phone and phishing scams happen year-round. Those three top the IRS's menu 'Dirty Dozen' list of tax scams this year. Here's some important information you should know about these common tax scams:

1. Identity Theft. Identity thieves steal personal and financial information to commit fraud or other crimes. This can include your Social Security number or bank information. An identity thief may file a phony tax return to claim a fraudulent refund.

The IRS has a special identity protection page on IRS.gov. It has many resources you can use to reduce your risk of becoming a victim. The page can also tell you what steps to take if you are a victim of identity theft and need help. This includes how and when you should contact the IRS Identity Protection Specialized Unit.

2. Phone Scams. In these scams, thieves pose as the IRS and call would-be victims with one goal in mind: steal their money. Callers will tell you that you owe taxes and demand immediate payment. They will tell you that you must pay the bogus tax bill with a pre-loaded debit card or wire transfer. The callers are often abusive and threaten arrest or deportation. They may know the last four digits of your Social Security number. They also rig caller ID to falsely show that the call is from the IRS.

Keep in mind that if a person owes taxes, the IRS will first contact them by mail, not by phone. The IRS doesn't ask for payment with a pre-paid debit card or wire transfer. If you owe, or think you might owe federal taxes and you get one of these calls, hang up. Call the IRS at 800-829-1040. The IRS will work with you to pay what you owe. If you don't owe taxes, call and report the incident to the Treasury Inspector General for Tax Administration at 800-366-4484.

3. Phishing Scams. Criminals use the IRS as bait in a phishing scam. Scammers typically send emails that purport to come from the IRS. They often lure their targets with a false promise of a refund or the threat of an audit. They may also set up a phony website that looks like the real IRS.gov. These phony sites often have the IRS seal and other graphics to make them appear official. Their goal is to get their victim to reveal personal and financial information. They use the information they get to steal identities and commit fraud.

The IRS doesn't contact people by email about their tax account. Nor does the agency use email, social media, texting or fax to initiate contact or ask for personal or financial information. If you get an email like this, do not click on a link or open any attachments. You should instead forward it to the IRS at phishing@irs.gov. For more on this topic visit IRS.gov and select the 'Reporting Phishing' link at the bottom of the page.

Don't let tax scams take the fun out of your summer. Be alert to phone and phishing email scams that use the IRS as a lure. Visit the genuine IRS website, IRS.gov, for more on what you can do to avoid becoming a victim and how to report tax fraud.

IRS YouTube Videos:

12 March 2013
Special Exclusion for Cancelled Home Mortgage Debt
If a lender cancels or forgives money you owe, you usually have to pay tax on that amount. But when it comes to your home, an important exception to this rule may apply in 2013. Here are several key facts from the IRS about the special exclusion for cancelled home mortgage debt:
  • If the cancelled debt was a mortgage loan on your main home, you may be able to exclude the cancelled amount from your income. To qualify you must have used the loan to buy, build or substantially improve your main home. The loan must also be secured by your main home.
  • If your lender cancelled part of your mortgage through a loan modification, or 'workout,' you may be able to exclude that amount from your income. You may also be able to exclude debt discharged as part of the Home Affordable Modification Program. Visit IRS.gov for more details about HAMP. The exclusion may also apply to the amount of debt cancelled in a foreclosure.
  • The exclusion may apply to amounts cancelled on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or greatly improve your main home. Proceeds used for other purposes don't qualify. For example, a loan that you used to pay your credit card debt doesn't qualify.
  • Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit card debt or car loans.
  • If your lender reduced or cancelled at least $600 of your mortgage debt, you should receive Form 1099-C, Cancellation of Debt, in January of the following year. This form shows the amount of cancelled debt and other information. Notify your lender if any information on the form is wrong.

23 November 2013
Interest paid on an unrecorded mortgage isn't deductible, the Tax Court says. A couple borrowed funds from the wife's mother to buy their primary home, signing a mortgage note requiring them to pay only interest during the 30-year term, with the balance due in a lump sum after that. Although the mortgage was secured by the home, the mother-in-law never recorded the note to protect her rights. Thus, because the mortgage would not be valid if the couple had sold the home to a buyer who had no knowledge of the note, they lose the ability to deduct the almost $20,000 in interest they paid on the loan during the year.

Note the tax implications if you're considering a short sale of your home... selling the property for less than the outstanding balance on your mortgage loan.

One set of rules applies to debtors who are personally liable for the shortfall. If the lender ends up forgiving that amount, the waived debt is taxed as income, unless the homeowner is insolvent or has filed for Chapter 11 bankruptcy. In addition, if the loan is on the seller's main home, up to $2 million of forgiven debt is tax free. But this relief is scheduled to expire at the end of 2013 unless lawmakers extend it.

The results differ for those who aren't personally liable for the deficiency. The waived debt is included in the amount realized for figuring gain or loss on the sale, and if the house is the seller's primary home, up to $500,000 of gain can be excluded. Many lender-approved short sales of Calif. homes will be treated this way, IRS says.

... And you thought you had it bad...
50 years ago, President Kennedy was assassinated in Dallas. We thought we'd take a quick look back at the tax system that was in effect in 1963. There are a number of differences and similarities with the current tax code.

Income tax rates were a lot higher, starting at 20% and maxing out at 91% on taxable income over $200,000 for singles and $400,000 for joint filers. However, the rate effectively fell to 87% for singles over $629,500 and couples over $1,259,000.

Ditto, corporate tax rates...30% on the first $25,000 and 52% above that.

Capital gains and dividends were tax-favored. Half of the profit from assets that were held more than six months was excluded. The top tax on gains was 25% for single filers with taxable income over $18,000 and married couples over $36,000. Recipients of dividends from U.S. corporations were allowed a 4% tax credit on them.

A Kennedy income-tax-cut proposal had stalled in Congress before his death. President Johnson broke the logjam and signed the bill into law in early 1964. Tax rate cuts were phased in over two years. In 1964, individual rates ranged from 16% to 77%. The following year, rates started at 14% and topped out at 70%. For corporations, the rates for 1964 were 22% and 50%...22% and 48% for 1965.

At the time, the measure was the largest income tax reduction in history. But it didn't last long. In 1968, Congress OK'd a surtax for the Vietnam War

2 November 2013
Sticker shock often follows insurance cancellation
A recent article describes what some subscribers are finding oug about their health insurance. You can read the details here.

28 August 2013
Give Withholding and Payments a Check-up to Avoid a Tax Surprise
Some people are surprised to learn they're due a large federal income tax refund when they file their taxes. Others are surprised that they owe more taxes than they expected. When this happens, it's a good idea to check your federal tax withholding or payments. Doing so now can help avoid a tax surprise when you file your 2013 tax return next year.

Here are some tips to help you bring the tax you pay during the year closer to what you'll actually owe.

Wages and Income Tax Withholding
  • New Job. Your employer will ask you to complete a Form W-4, Employee's Withholding Allowance Certificate. Complete it accurately to figure the amount of federal income tax to withhold from your paychecks.
  • Life Event. Change your Form W-4 when certain life events take place. A change in marital status, birth of a child, getting or losing a job, or purchasing a home, for example, can all change the amount of taxes you owe. You can typically submit a new Form W-4 anytime.
  • IRS Withholding Calculator. This handy online tool will help you figure the correct amount of tax to withhold based on your situation. If a change is necessary, the tool will help you complete a new Form W-4.
Self-Employment and Other Income
  • Estimated tax. This is how you pay tax on income that's not subject to withholding. Examples include income from self-employment, interest, dividends, alimony, rent and gains from the sale of assets. You also may need to pay estimated tax if the amount of income tax withheld from your wages, pension or other income is not enough. If you expect to owe a thousand dollars or more in taxes and meet other conditions, you may need to make estimated tax payments.
  • Form 1040-ES. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to find out if you need to pay estimated taxes on a quarterly basis.
  • Change in Estimated Tax. After you make an estimated tax payment, some life events or financial changes may affect your future payments. Changes in your income, adjustments, deductions, credits or exemptions may make it necessary for you to refigure your estimated tax.
  • Additional Medicare Tax. A new Additional Medicare Tax went into effect on Jan. 1, 2013. The 0.9 percent Additional Medicare Tax applies to an individual's wages, Railroad Retirement Tax Act compensation and self-employment income that exceeds a threshold amount based on the individual's filing status. For additional information on the Additional Medicare Tax, see IRS questions and answers.
  • Net Investment Income Tax. A new Net Investment Income Tax went into effect on Jan. 1, 2013. The 3.8 percent Net Investment Income Tax applies to individuals, estates and trusts that have certain investment income above certain threshold amounts. For additional information on the Net Investment Income Tax, see IRS questions and answers.
See Publication 505, Tax Withholding and Estimated Tax, for more on this topic.

7 August 2013
If you will be moving this year, this information from the IRS will help in knowing if the move will be a deductable item or not.

2 August 2013
Help! I owe the IRS! What options do I have?. I have often heard this from clients after completing their tax returns. Here are 8 tips a taxpayer can do if you find that you owe the IRS.

22 June 2013
Here is an article that is talking about what I have been saying for a while now and is a real possibility regarding how employers handle their health insurance for their employees.

8 June 2013
Here is a recent article that talks about price increases for California's implementation of Obama's Affordable Healthcare Act. What's the name of the article you ask?... Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%

25 February 2013
Here is the latest article I found related to getting a bigger social security check.

The rest of the articles are here.

30 January 2013
With the beginning of a new year, now would be a good time to check your records with the Social Security Administration. They used to send annual reports to you (paper copies), but they stopped doing that a few years back, so to ensure that they are tracking your earnings correctly, you need to visit their secure website. If you don't have an account you can create one. It only takes a few minutes to login and review your records. I encourage you to do it today! Go to: https://secure.ssa.gov/RIL/SiView.do

17 December 2012
Obamacare... the gift that keeps on taking - yet another tax has been discovered. Read the details here.

22 October 2012
I've seen recently several articles about Social Security and pulled them together here.

15 October 2012
At the conclusion of preparing a clien's taxes this last year (tax year 2011), as I was getting ready to leave, my client (Lynn Effinger) handed me a signed copy of his book Believe to Achieve - The Power of Perseverance. Lynn is a motivational speaker and had spent much of the last year on the conference circuit doing what he does best - motivating his audiences. I have not attended one of his conferences, but know that he spends time talking about overcome difficulties and shares some of his personal experiences. Although I didn't have the time to read his book until after the tax season, once I started reading I couldn't put it down. You have to know that Lynn doesn't just talk about life experiences and how to overcome them, he talks about his experiences and how he overcame them and then relates them to you in your life. The book is wonderful. I highly encourage you to pick up a copy from his website http://www.effingercommunications.com/. Contact him via his website to have him speak at your organization.

10 September 2012
I read an interesting article about how not extending the Bush tax cuts would affect us and thought it would be worth the read if you had a chance... You can find it http://finance.yahoo.com/news/bush-tax-cuts-end-cost-181220449.html. If this no longer works, I saved a copy here.

If you have extra funds and were thinking about gifting options, consider this... contributing to a Roth IRA for him or her this year. You can put in up to $5,000, but not more than what the child makes. The pay in counts toward $13,000 annual gift tax exclusion ($26,000 if your spouse contributes too), and a $5,000 contribution to a 16-year-old's Roth that earns 7% each year will grow to $138,000 at age 65.

13 June 2012
For several years the Social Security Administration mailed out paper copies at the end of the year to workers letting them know the dollar amount of their earnings history and their expected benefits at different retirement ages. However, this has recently been changed and they now encourage workers to create a secure account online with them. An account only takes a few minutes to create and is based on personal information only you would know (eg: financial loans for mortgage or auto financing, your current or past employers etc). Access is immediate and the process is fairly painless. You can create an account or login by going to https://secure.ssa.gov/RIL/SiView.do. They also ask some interesting questions you will need to answer if you ever forget your password. I encourage you to create an account and use it today.

6 April 2012
In case you had not heard? tax reform talks are in the air. There are many ideas being floated around which include: a plan to collapse the current six tax brackets down into two (10% and 25%). Getting rid of AMT (alternative minimum tax) and making the top tax rate on corporations at 25%. For individuals if we look to the past for areas that might be affected we see these two potential areas:
  1. The deduction for state and local taxes would be on the chopping block. This was slated to be removed in the 1986 Tax Reform Act but was kept in at the last minute, but in order to achieve the top 25% for individuals, this potentially would get cut.
  2. Mortgage interest and charitable donations would surely be under the gun too. The current Obama administration is talking about making this a 12% tax credit subject to a 2% cap. Only the excess over the 2% of AGI would be eligible for the 12% credit.
Only time will tell to see what changes actually become new law, but according to Murphy?s Law? if anything can go wrong? you know the government will for sure mess it up.

5 November 2011
IRS Audits
Nothing is a scary as an IRS audit. Receiving a letter from the IRS can put fear into the hearts of anyone. Over the years I have had a few of my clients receive IRS letters, and most of the time the letter indicates that income that was reported to the IRS was not included on the tax return. When this happens, I find that the taxpayer forgot to tell me about some income source and we generally end up agreeing with the increased taxes indicated by the letter (the taxes were in fact actually due, the taxpayer forgot about that source). However, once in a while I will get a call from a client about a true audit ? the IRS wants to meet with the taxpayer and go over entries on the tax return. I have told clients for years that an audit is nothing to be concerned about AS LONG AS THEY HAVE THE SUPPORTING DOCUMENTS. As an example, you may remember me talking about the importance of keeping a 90 day mileage log. Keeping these logs allow us to extrapolate out mileage for the rest of the year and provides the necessary documentation for taking the deduction.

Recently I received such a call. A client was being audited. As I looked over the return, I realized that it was actually pretty clean. Nothing stood out as a ?red flag?. The IRS had listed specific items they wanted to look at during the audit. This type of audit is one of those where the IRS pulls a name out of a hat (just a random audit). As I worked with the client in helping them to prepare gathering the data they would need I counseled with them on what the IRS was looking for and what information they needed. When the audit was done, the IRS had accepted everything we had taken as a deduction on the return and the client was happy with the outcome.

So why am I relating this story? I wanted to emphasize the importance of keeping good records. If we have a business deduction, I?m going to take it, but you need to keep the records.

28 October 2011
A self-employed person traveling on business may elect to deduct the Federal per diem rate for meals and incidentals, rather than of keeping track of actual costs.

For another year, that rate will continue at $71 for high-cost areas, and $57 for other areas  same as the past 12 months. No receipts or other documentation are required if the per diem rate is used.

These rates are only for meals and incidental expenses  lodging is deducted at actual costs, and receipts are required to document the deduction.

Federal per diem rates are available online at www.gsa.gov/perdiem

25 September 2011
Medical Expense Deduction
Effective for taxable years beginning after December 31, 2012, the new law increases the threshold for the itemized deduction for unreimbursed medical expenses from 7.5% of AGI to 10% of AGI for regular income tax purposes. However, for the years 2013, 2014, 2015, and 2016, if either the taxpayer or the taxpayer?s spouse turns age 65 before the end of the taxable year, the increased threshold does not apply and the threshold remains at 7.5% of AGI. The new law does not change the 10% of AGI threshold for AMT purposes.

28 May 2011
You may have recognized seeing more money in your paycheck these days. For 2011 the employee portion of Social Security dropped 2%. But don't get too comfortable because this temporary increase in pay will be going away at the end of the year. There was however no such drop for the employer portion of Social Security and self employed individuals continue to pay both sides. That means sometimes you pay more for the Social Security tax than you do for your Federal income tax bill! Here is a list of the proposed Social Security tax ceiling:

Tax Year Social Security Ceiling
2011 $106,800
2012 $110,700
2013 $114,900
2014 $120,000
2015 $125,400
2016 $130,800
2017 $135,900
2018 $141,300
2019 $146,700
2020 $153,300

28 January 2011
A daughter can deduct medical costs and real estate taxes paid by her mom? the Tax Court says. In its view, by paying her daughter?s bills, the mother is deemed to make a gift to the daughter. For income tax purposes, the cash is treated as going to the daughter and then to the creditors, so the daughter gets the deduction. And since the mother paid the daughter?s medical expenses directly to the doctor, the mother doesn?t owe any gift tax on that payment.

6 January 2011
Read 10 reasons businesses fail here.

5 January 2011
Did you know that shortly after the 16th ammendment was rattified the number of income tax laws on the books was about 400. We?re now up over 71,000. My how times have changed.
Click here to enlarge.

24 December 2010
An ounce of prevention is worth a thousand pounds. No statement is more true than when working with the IRS.

As another tax filing season is rapidly approaching, there are a few key items that will prevent problems with the IRS ? they are:
  1. Never mail anything to the IRS without keeping an exact copy.
  2. Never mail any letter to the IRS (including a paper copy of your tax return) without using certified mail, return receipt requested.
  3. Store both the return receipt card and the postage receipt. They are very helpful should you need to prove to the IRS an item was filed timely.
  4. Never send multiple documents in a single envelope.
Following these simple rules can ensure peace of mind and potentially dollars in your pocket.

18 December 2010
Attention Landlords
Starting in 2011, landlords will be required to issue a 1099 if they pay a service provider $600 or more in a year. Temporary rentals of primary residences are exempted. IRS has the authority to issue regulations exempting landlords with rental invome below a specified level. This means that tax identification numbers must be collected if you think you will be paying one individual more than $600.

1 December 2010
Filers will get an additional three days to file their tax returns for 2010. The deadline will be April 18. Even though April 15 falls on a Friday, Washington D.C. will observe its Emancipation Day holiday on that date. Thus, the due date for all returns is deferred to the 18th. This also affects estimated taxes and other actions that are tied to April 15, such as the IRA contribution deadline.

30 November 2010
"A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years."

"Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage."
At least part of the above quote is generally attributed to Alexander Tytler. I always liked it. Sadly, I think it's true.

As the close of the year is quickly approaching, we need to be looking closely at what is happening in Congress - it has the potential to affect us all.

We now have about a month left of 2010. The Bush tax cuts will expire at the end of the year unless Congress extends them or makes them permanent (we'll see... don't hold your breath). It's a time of posturing. It's the game of politics. I guess that's one of the reasons I never wanted to get into the game. Here is a very interesting article 30 November 2010 from Bloomberg Business.

I've had this story in my files for several years and I think it captures the essense of what the game is currently about. Click here to read.

27 November 2010
Here is a link for per diem rates.

11 July 2009
Summer Camp For Your Kids - What Can You Write off?

If you have children under the age of 13 who need daycare during summer vacation while you work, the cost can count towards Child and Dependent Care Credit, BUT ONLY IF it is DAY-camp, not overnight camp.

This Credit can range from 20% to 35% of the actual cost up to $3,000 for one minor, or up to $6,000 for two or more dependents under 13.

The 20% rate applies if your income is over $43,000, and the higher 35% rate is for those making under $15,000 in 2009.

10 October 2008
If You Are Short of Cash... Weigh the Tax Angles

There's no doubt about it-these are tough economic times. Job layoffs, cutbacks in work hours, and rising prices are taking their toll on many Americans.

A seemingly simple solution to a cash crunch is to tap credit cards or a bank line of credit for the needed funds. But the high interest rates and monthly payments on these borrowings can make a bad situation worse (and the interest is not deductible at tax time).

There are, however, some other options.

Tapping retirement funds. While dipping into funds that will be needed for retirement may sound like a bad idea, it may be preferable to racking up high-interest debt. And, in some case, it may be possible to use retirement savings for a cash emergency without permanently depleting those funds. Consider these possibilities:

Rollovers. A rollover is traditionally a method for moving funds from one retirement plan to another tax-free. However, a rollover can also be a useful tool for a short-term cash emergency. A distribution from an employer-sponsored retirement plan or IRA is tax-free if the distribution is rolled over to another employer-sponsored plan or IRA within 60 days. So, for example, you can pull funds out of an IRA, use the money for 60 days, and then put it back into another IRA without owing a dime in taxes.

Plan loans. If you have funds in a 401(k) or other "defined contribution? retirement plan, you may be able to borrow against those funds. These loans bear interest and must generally be repaid over five years. However, bear in mind that you'll be repaying yourself-and replenishing your retirement funds.

Roth IRA distributions. As with a regular IRA, you can tap Roth IRA funds on a short-term basis by means of a rollover. However, if the need arises, you may also be able to permanently withdraw a significant portion of your Roth IRA fund without triggering a tax. As a general rule, as long as you don't take out more than you have put in over the years, your withdrawals will be tax-free.

Borrowing from family or an employer. If borrowing from yourself through your retirement plan doesn't do the trick, family members or your employer may be willing to help out by loaning needed funds. As a general rule, the lender must charge interest at the going rate or both of you may owe tax. However, a loan of $10, 000 or less won't trigger a tax even if it's made at little or no interest.

As with just about everything in the tax law, there are strict rules that must be followed to take advantage of these options. So, if you or someone you know is looking for ways to make ends meet, I'll be happy to help.

16 August 2008

More on home businesses
If we've talked, you will probably remember me taling about the tax benefits of having a home business... well for a refresher read here for me to explain why once more.

7 March 2008

I Owe This Year...Now What?
Once in a while I hear this question and people want to know what to do. Here is an IRS link that talks about setting up a payment plan with them. To learn more click here http://www.irs.gov/individuals/article/0,,id=149373,00.html to learn about the Online Payment Agreement (OPA) Application.

24 November 2007

The Standard War Cry... TAX THE RICH. Take A Look At These Stats...
Are you one of the millions of Americans who say the IRS should stick it to the wealthy because they don't pay their share of taxes? Here are some numbers that may surprise you:

Taxpayers making more than $364,000 (putting them in the top 1% of all income earners) paid nearly 40% of ALL taxes paid by ALL taxpayers in America last year.

Taxpayers making more than $145,000 (putting them in the top 5% of all income earners) paid nearly 60% of ALL taxes paid by ALL taxpayers in America last year.

Taxpayers making more than $103,900 (putting them in the top 10% of all income earners) paid 70% of ALL taxes paid by ALL income earners in America last year.

The BOTTOM 50% of ALL taxpayers paid only 3% (yes, that says THREE PERCENT!) of ALL taxes paid by ALL wage earners last year.

More than HALF of ALL Americans are paying NOTHING or next to nothing in taxes. Shocked?

Conclusion: We already ARE sticking it to the rich!

Revision To The AMT? Well...

The Alternative Minimum Tax (AMT) is snagging a whole lot of middle-income earners (believe me... I hear the moans more and more each year), which was not its original purpose. But the added money coming in as a result, leaves lawmakers with a temptation to leave it alone.

My read is Congress WILL make some adjustments before recessing for the holidays, BUT that will be too late to get the changes into 2007 tax materials and forms, which need to go to the printer this week. I'm guessing the thresholds will be around $44,000 for singles, and about $66,000 for married filing jointly.

So taxpayers who don't use me to prepare their taxes may end up with a re-run of last year... where the taxpayer (there were millions) missed out on the phone tax refund, because it wasn't printed on the forms or in the filing instructions.

Please be assured that if Congress makes any changes to the AMT, even if it doesn't get added to the printed tax materials and forms, I will know about the changes and correctly prepare your return.

Do You Have A Business Checking Account?
In an audit, the IRS will try to prove you don't have a real business. They'll try to call it a hobby or an avocation, because that severely limits your deductions.

Co-mingling your personal finances with your business finances, using one combined checking account, is not a good idea.

Having a separate bank account for your business income and expenses helps prove you have a legitimate business and that you have intent to make a profit.

11 May 2007

Mortgage Interest

With the housing demand and great increases in mortgage amounts in California, we have the possible problem of taxpayers taking more interest on their tax returns than is legally allowed. So, California is auditing returns to check. For the taxpayers with the large interest deduction I expect the State will send a letter requesting details to support this deduction. As you may know, acquisition loans can have a debt of a maximum of 1 million dollars but the equity loan debt is limited to $100,000 and that is reached rather easily these days. We have to remember these maximums too when the taxpayer has a second home.

Read these messages:

Social Security information 22 October 2012
Importance of the home business 16 August 2008
Deducting A Cruise 24 November 2007
A Simple Estate-Planning Tip 26 August 2005
Updated flexible spending arrangements (FSAs) rules dated 3 August 2005
Deduct your kids allowance
Important info on home sales.
Increase your compensation (C or S Corporations)