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IRS Scam Alert

Posted by Admin Posted on June 23 2017



It almost seems like a monthly rite of passage when the latest tax scam comes up that I have to cover in this spot. I almost can’t believe it sometimes, but as long as the IRS keeps putting out warnings, I feel it is my job to pass them along. At least with this latest one, it gives me the opportunity to highlight many of the things to look out for all at once.

First, the new scam starts with receiving a phone call claiming that you must make a payment through a prepaid debit card that is apparently linked to the Electronic Federal Tax Payment System (EFTPS). The system exists, and talking of it seems to lend credence to the scammer’s claim. The reality, though, is that it does not utilize this one magic mode of payment.

Second, there is a claim made that payment must be made immediately to avoid arrest. Although the process of working through a tax issue may never be fun, it is never that quick, and rarely that dire.

Also, the scam caller claims that there were previous attempts to contact the taxpayer via certified mail that were returned as undeliverable. Never pay heed to such words, for you should always assume that the first word you get from the IRS about any potential problem will come in writing.

Finally, the call comes with warnings to not contact a tax preparer, attorney, or local IRS office before making the payment. That’s because those are the people who could lead you to finding out that the whole thing is not legitimate.

Those are the four prongs of the latest attack, which has been reported across the country, but they all share some things in common.

Scam artists are out to play on fear. Each piece of this scam tries to build on the fear of reprisals while offering a way to make it end as quickly as possible.

If anyone, for any reason, ever asks for payment in a form of currency that can’t be traced, there is something illegitimate going on. Even if it is to purchase an opportunity that seems too be good to be true, remember it is because it is too good to be true.  And why would the IRS not accept a check or a wire from your bank account? I mean, wouldn’t that direct payment from a bank account be faster than adding another middle-man transaction?

And if the federal government is able to track you down by phone, apparently has your legal information on a tax return, why couldn’t it get a letter into your hands first?

Finally, why would someone not want you to be in contact with the very people who are most knowledgeable about what is supposedly going on? If it was legitimate, wouldn’t they want to involve those who can help things reach an endpoint?

Listen to those questions that come up in your mind, and if you ever fear you may be becoming a potential victim of fraud, do contact someone, for I can help.

Tax Return Procrastination

Posted by Admin Posted on Mar 16 2017

Tax Return Procrastination

Last week, reports came out that fewer people were filing their taxes than had at the same point of calendar year 2016.  Bloomberg released an article that theorized taxpayer confusion was one of the reasons for this.  Although the current political climate makes that more likely this year than others, it is not like taxes made sense to everyone in past years.

Talk of tax plans, health care, tax reform and repeal and replace, though, is making many wonder more about how everything is going to shake out and what our tax pictures will look like next year (and this includes myself and my associates).  Your responsibilities this year are set, though, so if you have been putting off filing, it is time to start moving on that, especially as our calendar tends to fill up fast time of year.

No matter how things fall in the future, though, it would involve a serious revamping to make the tax code something that is easy to understand.  This is why one hears so much rhetoric about just how large and unwieldy our country’s tax code is.

So with all this talk of reform, just how big is that code?

Some of the biggest and most recent work on this subject appears to have been done by the Washington Examiner at the end of last tax season.  It uses numbers from Dutch-based Wolters Kluwer to say the code has expanded from 400 pages in 1913 to over 74,000 in 2014, and that includes a jump from a number of just over 60,000 pages in 2004.

 The only problem is that this isn’t really the right number.

First of all, the tax code should be something that you can actually have and access, no?  Well maybe not you, but someone (let’s say your trusted neighborhood tax professional), should have access to it and have it be something that is actually useable.  70,000 pages would not fit within it, as I cannot even quite imagine just what a 70,000 book (or series of books) would look like.  Think about it, that would be 70 volumes of 1,000 pages each, which is simply ridiculous.

Instead, read this quote from Andrew Grossman in a 2014 article on about this topic:

So, how long is it?  In the 2013 edition, the last page is numbered 4,037.  Now, that’s not exactly right either, for two reasons:  The book starts at page 100, and then skips 500 pages in its numbering (don’t ask me why), and this volume (like all other volumes I’ve ever seen) contains both the present-day tax laws and prior versions of the tax law.  That is because tax lawyers like me often find it useful to refer to prior versions of the law.  But the compilation of those old laws isn’t really the “tax code”—it’s just a resource for lawyers.  I’d estimate that the old law takes up about 800 pages.  So let’s say the tax code is about 2,600 pages long.  It’s like 2½ times the length of Stephen King’s It—except you replace “scary clown” with “accounting methods.”

Now that sounds much more reasonable, and Grossman even goes on to try to figure out where the 70,000 number comes from.  He finds that it began with equating the “CCH Standard Federal Tax Reporter,” with the US tax code.  And although that tome does contain the tax code, it also includes history, commentary, regulations, etc. on tax law in general.

This still does not mean that understanding the tax code is easy, but it’s not as wildly complicated as some would have us believe, and that is worth knowing.  It is also worth knowing someone who understands the code no matter its size, so if you still have questions or needs for your 2016 return, don’t hesitate to contact me.  I remain available to assist you at any time.

Issues That Can Trigger an Audit / Examination

Posted by Admin Posted on Mar 01 2017

Issues That Can Trigger an Audit / Examination

On February 15, 2017 I posted a blog on What Triggers an Audit.  Because of the concerns that taxpayers have around this topic, I am continuing to share with you more information about audits as it remains - as it should be - a hot-button topic this time of year.  It was reported last week that the number of audits the IRS is carrying out continues to decrease, but remember they are far from nonexistent.

That report seems to be what triggered this recent article on, which goes into ways to try to avoid being audited.  Much of what is in that article is similar to my recent writing on the subject, but there were some new additions that I think are worth highlighting.

The first comes under the heading of “Call Home,” referring primarily to the number of college students away from home who may be filing their own tax returns, possibly for the first time.  If they are doing such a thing, what will they mark when it comes to whether they are a dependent on someone else’s tax return?  And most importantly, will it match what their parents claim?  This is something that a phone call will figure out in a few minutes.  That time commitment is quite worth it to make sure that everyone’s return says the same thing.

The next heading I want to mention is “Don’t make up stuff.”  Granted, this is as obvious as it sounds, but I enjoy the story shared to highlight the issue – a client at audit who claimed expenses (without receipts) with all round numbers, but not just to the nearest dollar, to the nearest hundred or thousand.  It serves as a warning that if numbers look made up, the IRS will know it.  If putting something on your return makes you uneasy, you probably shouldn’t’ do it.

There is, however, another topic in the article with which I wanted to raise some issue, and that is “Be as normal as possible.”  Now sure, if your only goal is to not be audited, yes, you should be as normal as possible, for outlying numbers are ones that can raise red flags when the IRS is reviewing returns.  But even if being as normal as possible may keep you from an audit, I don’t think you should withhold anything legitimate on a return, even if it lies outside the norm.

So think of the college student and his parents whose audit issues could be avoided with a couple of questions.  Think of the business owner who didn’t keep good records and ran with guesses and estimates because they thought they were entitled to something.  And then think of someone facing an audit because they knew they were due to more of a tax break than most in their situation.

Who would you rather be?

I think we will all pick the last of the three, and that is because they are the one who filed their return with not only confidence, but with the necessary knowledge.  It’s a good thing you already know a tax professional that you can trust, isn’t it?

Affordable Care Act Status a/k/a Obamacare

Posted by Admin Posted on Feb 22 2017

Affordable Care Act Status a/k/a Obamacare

During the election season I never touched on politics.  Since I never thought it was my place to take sides, I stayed on the sidelines.  Now there is a different issue that has come up and it has come up from a campaign promise of President Trump.  As this action by President Trump can affect ones taxes and financial situation, I believe it is appropriate for me to comment about this impact but I will remain non-committal as to my position.

As most have hopefully realized by now, there is a connection between your tax return and the Affordable Care Act/Obamacare (and since I have seen recent data that says many don’t realize it, please know that those are two names for the same thing).  Since President Trump’s first executive order displayed his intentions to undo any aspects of the ACA that he could as quickly as possible, it is not surprising that us in the tax world are closely watching this.

Unfortunately, we are largely in another wait-and-see area now, though.  We have just moved into a further shade of gray (of which I hear there are at least 50, some of them darker) because the executive order doesn’t lay out definite action steps.  Instead it states that agencies and authorities, “shall exercise all authority and discretion available to them to waive, defer, grant exemptions from, or delay the implementation of any provision or requirement of the Act that would impose a fiscal burden on any State or a cost, fee, tax, penalty, or regulatory burden on individuals, families, healthcare providers, health insurers, patients, recipients of healthcare services, purchasers of health insurance, or makers of medical devices, products, or medications.”

So how is the IRS handling this and how does it affect your current tax filing?

Well, you should currently not make any changes and not wait to file your taxes.  Hopefully, that’s clear enough to move us back toward black and white areas.

There are a couple of other definites we can say, too.  First, the IRS was rejecting returns earlier in the season that did not include information related to health coverage.  Now, however, lacking that information is no longer resulting in an automatic rejection.

This does not mean that there will not be penalties for those who did not carry health insurance without qualifying for an exemption.  And that penalty can be big, $695 per adult and up to $2,085 per family, or 2.5% of the family income, whichever is greater.  As the IRS has warned, new legislation – an Act of Congress- will be required to change those aspects of the ACA.

The debate over the Affordable Care Act is going to continue for the foreseeable future and changes to it seem likely, though I would not hazard a guess just how far they will proceed.  No matter how quick they come, though, we are already deep into the 2016 tax season, with returns already being accepted and refunds given.  I would be totally surprised to see any legislation having an effect on this tax filing season. 

What will this mean next year - tune in next year to know that.  In the meantime, proceed as you would have before the election and inauguration and know that we will be here along the way to help you with any questions you may have about this confusing situation.

What Triggers an Audit?

Posted by Admin Posted on Feb 15 2017

What Triggers an Audit?


I suppose it is not surprising that this is the time of year when people most think about the potential of a tax audit.  After all, many like to ignore all thoughts of taxes through much of the year, only letting them rise to the forefront when forced to file a return.


It also gets avoided, because it is the most frightening aspect of paying taxes.  Again, no one gets too overjoyed when they see the amount of money they send to the government on an annual basis, but it is even worse when mysterious agents decide to take extra steps in an attempt to gather even more money from you.  This can be especially worrisome, and unexpected, when it comes years after the return in question.  I don’t want to be the bearer of bad news, but as the carrier of a little dose of reality, you may want to take note of this recent Forbes article that speaks of how audits can be started on returns that are up to six years old.


The rarity of audits is difficult to determine, for there are so many factors involved, and just what can trigger one is also impossible to nail down.  Regardless of the answers, though, the best way to ease the tension of the possibility of coming under one is to work with a professional tax advisor that you trust (wink, wink, nudge, nudge).  That way, even if you face this situation, you know that your return was correctly handled, and the only thing the audit should result in is inconvenience.


Tied in with that are common-sense things that can be done with a tax return that decrease the overall chances of an audit, there is another article from Forbes that tackles the idea from that point of view.  Essentially, it largely comes down to the idea that you should fully be taking advantage of all that you are entitled to, but if you feel like you’re pushing the limits of what is reasonable (or even legal), then it is much more likely someone else looking at that return will agree with that feeling.


I would like to highlight one piece, though, about watching out for Forms 1099.  These come in many different varieties, some of which may even surprise you when they arrive in your mailbox.  But know that if you received one, the government knows about it too, so you can’t hide it.


I know that a lot of these more vague ideas about what could trigger an audit are not enough for some, and you want to know just what could make one happen, so here is one final article that goes a little more into it, and even has some concrete numbers on the chances of an audit.


For those who don’t want to read the whole article, or for those who just prefer to receive news through my golden words, here is a brief summary.


  • First, your chances of an audit are higher if you’re self-employed.  This makes sense as the government has less of a chance to track your income throughout the year.  There are also more deductions open to someone in that situation, making more things the IRS may want to check up on.  For purposes of this, self-employed is being defined as filing a Schedule C (sole proprietor or sole member LLC).  If you file as a Corporation (C or S Corp) you have decreased your odds of getting audited because you are really not self-employed but employed by the corporation.


  • Second, the IRS knows the value of deductions someone in your financial situation claims on average, so if you’re an outlier claiming much more, they may question it.  Again, this does not mean that you should not claim anything that is a legitimate deduction (let’s say you’re more charitable than most, you deserve the perks that come with those good deeds), but you will want to be able to back up all that you are claiming.


  • Finally, those on the extreme ranges of the income spectrum also run higher chances of an audit.  These are further things that look out of the ordinary, after all, so the government may want to know why things look strange.


Remember telling the IRS  that these are not “crazy” numbers as expenses or deductions is not a defensible defense during an audit.  Documentation is what counts.  If you cannot document it you should not be claiming it. 


What you most want is for your return to be legitimate and result in you paying as few taxes as you are allowed, so contact me if you have not already so that we can ensure that is done for your latest return.  

Accounting and Cyberspace

Posted by Admin Posted on Feb 02 2017

Accounting and Cyberspace


Now that we are out of the holiday season and entering tax season lets look back on a phenomena of the holiday shopping season.  In this holiday-season lookback, we can at least start to give some hope to those who are finding it difficult to come by.


This optimism can come in the economic realm, where numbers show that spending over the holiday season grew at a 3.4% rate.  The growth was fueled by the 14% increase in online sales

This does not surprise me, as more and more people I know get the most value from their Amazon Prime membership around the holidays.  We all know people that have done ALL of their holiday shopping online is no longer rare and these numbers seem only bound to grow.

It stands to reason then that at the same time that those numbers are increasing, I have also noticed a marked decrease in the amount of people who worry about shopping online. Even those in older generations (traditionally the ones least accepting of new technology) no longer seem to have many qualms about inputting a credit card number online to make a purchase.

With all those dynamics in place, though, it does still surprise me that some people are still hesitant about embracing online accounting.  If society is already pushing more and more of their transactions into cyberspace, why hold back from embracing that next step?

From my end, I not only have been moving to learn about such new types of accounting, but am impressed at what it allows me to do.  Many of the traditional issues one has with an accountant, after all, happened with communication breakdowns and the ensuing waiting those breakdowns cause.  If I am waiting on a couple answer to easy questions, of a few receipts, and my client is then waiting in turn for me to address them once received, those bits of time add up and can hold books and my records from being finalized when they’re 98% of the way there.

Now, however, there are more ways to this communication to happen, more access to books on both sides of the relationship, and thus more ways to finish things quicker.

With that, reporting happens faster.  With that, reporting is more powerful because it more accurately reflects what is happening in your business or personal life as of the moment.  Wiith that, why would one not want to embrace these new technologies?

Those who do not want to make the cloud accounting jump seem to most hesitant about security concerns. I hope then that this little anecdote about how much holiday shopping happens online helps illuminate why this need not be a giant concern.  Sure, no one can ever 100% guarantee complete cyber security, but with that many online transactions happening, they are clearly coming with a level of security with which we are comfortable.

So if you have been reticent about making the cloud accounting jump in the past, we understand.  But if it is something you would like to explore, I would love to hear from you now and see what I can do to help.   Remember as a Certified QuickBooks Pro Advisor, your small business can always have professional help available at all times.


Really – I Have to Pay Taxes on This? – Form 1099

Posted by Admin Posted on Jan 20 2017

Really – I Have to Pay Taxes on This? – Form 1099


There are a number of different 1099 forms and chances are pretty good that at least one will be making its way into your mailbox (be it the actual one at the curb or a virtual one) over the coming weeks.  These forms cover a large range of money that you may have received during the year and include things from interest income to dividends to tax refunds to real estate transactions.  The most mysterious of these, however, may be the 1099-MISC from that reports miscellaneous income.

I think that many have their first introduction to this form come in a negative way. Wait, what’s this? I have to report this money that I got months ago, and only now pay taxes on it?

Well, yes.  And you may have to pay self-employment tax on this income.

Beyond that, however, there may be money that you received over the last year that did not result in someone needing to send you that 1099 form, but chances are to be completely legal, the IRS would require you to still report that income if you want your return to be valid in their eyes.

Yes, it may feel unfair that you have to pay taxes on this money. Yes, it may feel strange that with any money you ever receive, you should default to thinking that taxes will be owed on it. This, though, is just another one of those topics that show why it is best to have a tax professional on your side when you try to navigate these waters.

Growing up, I thought of these forms as what people received for their side hustle; they had a real job they went to from Monday to Friday, did something else smaller to supplement their income, and this form showed up at the beginning of year when it was time to account for that.  More and more people, however, are finding their way through the modern economy with only income of this 1099 nature.

The Bureau of Labor Statistics published data in August that said nearly 15 million people are self-employed.  This makes up about 10 percent of U.S. workers, which is a number that I found rather surprising.  Granted, my profession brings me into contact with many people who are working in such a way and need help to make sure they are handling their finances correctly, but I had no idea how large a portion of the work force these people constituted.

On one side of this, I am thrilled by it.  The idea that one can plot their own way through life, choose what they want to do, and succeed in doing so lines up with much of what we believe is inherently great in our country.  On the other side, however, I am afraid that this might mean there is a great number of people blazing this path who are unaware of just what their tax burden is.  Sadly, lacking this knowledge could lead to the end of the dream where you blaze your own course.

So if you are someone worried about what your upcoming tax bill is going to look like, or just what money you made that will be taxed, this is the time to tackle those questions.  At least now you are giving yourself some time to get the money together if you are facing a large bill you did not count on. And, as always, I am always here to help you answer all those questions.

Non Deductible Expenses – Political Contributions and Others

Posted by Admin Posted on Oct 26 2016

Non Deductible Expenses – Political Contributions and Others

There are many hot phrases coming out of this presidential campaign cycle, but it is not all crooked locker room talk.  Taxes have also been getting lots of attention, and not just when it comes to which candidate’s plan you prefer. If you go to Google and type in “are political” the first suggestion is “are political contributions tax deductible?”

And sometimes the best part of my job is when it is really easy.

The answer is simply “no.” And the IRS’ wording on the subject doesn’t leave any room for debate:

You can't deduct contributions made to a political candidate, a campaign committee, or a newsletter fund.  Advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate aren't deductible.

For anyone wondering then, there is your answer.  There is no ambiguity in the IRS wording.  Although I have to note the irony that you can deduct donations to many organizations whose goal is to do good.  As many have heard me say the tax code is designed for two purposes:  raising revenue for the country and influencing social policy – charitable contributions.  That may say something about the quality of work that our political system does.

Really, it is just more that the IRS does not see political action as a deductible expense.  After all, you generally also cannot deduct expenses incurred for trying to influence legislation, participating in political campaigns or communicating with executive branch officials to influence their actions.

Looking at these political maneuverings got me to thinking that it might be worth looking at other things that are not tax-deductible.  So to that end, you should not be counting on the positive tax ramifications of the following:

-Wristwatches. In the IRS’ wisdom-filled words, “You can’t deduct the cost of a wristwatch, even if there is a job requirement that you know the correct time to properly perform your duties.”

-Health Spa Expense. If your job also requires that you be in good physical condition to perform your duties, you still do not get to deduct any spa expenses.

-Travel Expense for Other Individuals. There are plenty of legitimate reasons for deducting expenses when traveling for business.  There are many fewer legitimate reasons for why you had to pay for your wife and family to accompany you.

-Lunches with Co-Workers. In a similar vein, if you have traveled away from home for business, those meals can be deductible.  When it just hits noon at the office, however, hitting a restaurant with the co-worker from the next cubicle is not a deductible expense.

-Commuting Expenses. Similarly, the cost of traveling away from home on business is likely deductible. The car ride to and from the regular office every day, though, is not – no matter how long you spend in traffic.

There are obviously many more that I could get into here.  There are also some categories of deduction where I could just pick one and write an entire article pulling apart the nuances of what is and what is not deductible.  What this highlights is the usefulness (or dare I say, need) of having someone who understands the rules on your side.  So if you are curious about what expenses you have incurred this year are actually deductible, this is a good time to start getting answers to those questions and making some moves before the end of the year if your tax situation needs help.


Divorce Effect on Taxes

Posted by Admin Posted on Oct 05 2016

Divorce Effect on Taxes

They say the three hardest things for a person to go through is the passing of a loved one, losing a job and getting divorced.  This blog will deal with the latter.  Quite often - or maybe it is just quite often to those of us in the accounting profession - one hears jokes about the tax incentives behind marriage.  And yes, like all good humor, there is some truth behind it.

Never - and this is because it’s rarely a joking matter - does one hear about the tax ramifications of a divorce, though.  I do not want to be a downer (contrary to how other stereotypical jokes portray accountants), but wanted to spend a little time giving a few things to think about it if you or anyone you know find yourselves in this situation.  Please keep in mind that everyone’s divorce situation is different and each one has different financial complications.  What is good for one may not be good for someone else.  As legal guidance is in your best interest, professional financial guidance is also in your best interest



This is crucial even beyond your tax picture.  When any life event leads to you changing your name, be sure to notify the Social Security Administration.  If the name on your tax return doesn’t match the name that the SSA has for you, there could be problems processing your return.


As most are already aware, the Affordable Care Act (Obamacare) requires people to have health insurance coverage or face tax penalties.  Most people have taken care of this, but most people also don’t foresee situations where they will lose that coverage.  This can happen during a divorce.  That situation, though, qualifies as a life event that allows one to get coverage during a special enrollment period without waiting until the end of the year.

Apart from the potential losing of coverage, keeping your health insurer notified of name changes, life events, social security number changes, etc., is also something that should be done.


Child-support payments are not deductible and any child support received is not taxable.  Alimony, however, works in the opposite manner. If you are paying alimony, that money can be deductible whether or not you itemize deductions.  Not surprisingly then, alimony received is taxable.


Here things start to get a little more complicated.  If a divorce is completed by the end of a year, you will not be able to deduct contributions that you made to your former spouse’s traditional IRA.  If you have your own, though, then you still may be able to deduct those contributions.


That final bit is not the only potential difficulty, though.  I do not think this is the place to get too deep into too many of those issues, but just be aware they exist.  As quick examples, any tax credits that were involved with a shared qualified health plan will have to be allocated between both you and your former spouse’s returns.  And since alimony received is taxable, that might mean that the tax you paid during the year may no longer cover you obligations.  If you are receiving alimony, you may be subject to estimated tax payments.  Please feel free to call to discuss.

Overall, a divorce may result in the most complicated tax return you have ever submit.  Yes, I know it is already a disconcerting, life-altering experience and no one wants to be reminded of it or continue to feel its ramifications.  You also don’t want to ignore it, however, for if you do the effects will just linger longer.  That means it is best to put someone on your side who knows how to handle these situations, makes sure they are correctly addressed, and can help you move beyond them.

As always, I am very happy to be your advocate  who assist you in getting there. 

Personal Touch Accounting and Tax

Posted by Admin Posted on Sept 26 2016

Personal Touch Accounting and Tax


Now that Labor Day has passed, summer is over (sorry to depress you) and the autumn has begun, the big national tax preparation chains are starting to ramp up for tax season.  (Well I am too, but my marketing budget is much lower, so you may not notice nearly as much.)

Those large companies are not yet casting their large nets as they fish for schools of new clients.  They remain active, though, and are now looking for their next batch of tax professionals to prepare tax returns.

That’s right, someone who is only now starting to learn about tax law could be preparing taxes in four months.   And I even came across a program where they can learn all they need in a single week!

I do not want to degrade these companies or their workers, as I never begrudge anyone how they make their living.  I do, however, believe that this system should not engender the most customer confidence.

In my opinion, taxes (and maybe all businesses) are best done with a bit of a personal connection.  I have clients who come back to me year after year and this allows me to understand their situations and appreciate who they are beyond the numbers on their tax returns.  I want to help them, and I want to help them so much that I in see them again next year (and in some cases, that next meeting won’t even take a year).

I believe there is a level of comfort and confidence bred in those types of relationships that cannot be matched in a situation where you walk in and wait for the next available representative.  Imagine that representative may only be a few months on the job  I provide more experience than that. With over 35 years of experience, my commitment to taxes is yearlong and is not a hobby.

All of these thoughts come with a clear bias.  When it comes to my finances, though, I know which situation I would rather embrace.  And when clients make the same decision, I am committed to making them realize they made the right choice.

                                    *                                  *                                  *

As a little bit of an addendum to the above, here is a slight story about how confusing the IRS can be, and how navigating their rules can be difficult:

Recently news came out that the IRS was going to make information about Offers in Compromise available online.  A little background may be necessary for those who are not familiar with the subject. Offer in Compromise is a program through which those with outstanding tax bills can work out a deal to settle the debt for a lower amount.

Those OICs that were accepted have been public record for decades, but were only accessible to those who were willing to put in some effort.  This is because the IRS would create a hard copy and then ship it to one of seven locations around the country.  If someone then wants to view the file, they still have to make an advance appointment.

Yes, this is not an agency that makes things easy.  I however, like to make things easy for you when it comes to your dealings with it.  It is the personal touch that will always set me apart from everyone else.

Why Do I Need an Accountant or a Tax Professional?

Posted by Admin Posted on Sept 09 2016

Why Do I Need an Accountant or a Tax Professional?


I sometimes feel funny when I post these blogs.  By their nature, they involve me talking myself up a bit and I try to keep that to a minimum.

This one, however, is not going to look like it is anywhere near that minimum level.  I swear it’s not my fault, though, for most of the words are coming from others.

I mean, first there is this recent article from that speaks to how every business, no matter their size, needs to know they will need legal and accounting help.  These are areas where if you go at them yourself, you may succeed and have everything go along fine, but if you make a mistake it could prove a very costly one.

Then I came across a piece from Accounting Today that goes through five of its reasons why a small business needs an accountant.  These are both short pieces, but both do a good job of showing some of the potential benefits of working with an accountant.

They both are also written with an eye toward a business that could use an accountant’s services.  At the risk of letting you see behind the curtain, I want to mention one more piece that is aimed more toward the accountants themselves.

That article comes from, and speaks more of how accountants can serve clients with whom they are already working.  It discusses how accountants need to not just be crunching numbers, but letting clients know what those numbers mean.

This is a viewpoint I agree with, for I believe my clients are not getting enough value out of my fee if they do not understand what I am doing.  I should not only be giving numbers, I want to help clients see what actions they should be taking because of those numbers.

Now let me try to synthesize these ideas a bit ….

Although that last article I spoke about was urging accountants to be a trusted advisor, I think some of the reason this relationship does not always blossom comes from the client end as well.  This is not to say that clients would not like this type of service, but they often do not even know it exists.

Take a look at the other two articles, too.  They speak of situations where a business owner could benefit from working together with an accountant.  But would one’s first response in those situations be “Let me discuss this matter with my accountant?”

So this then is my plea for you to realize that, yes, you can AND SHOULD bring such matters to your accountant.  I do want to help. I trust that if you are already one of my clients, you feel  I am providing you with solid service.  Do not ever think I cannot do more, though. I never have to be only bookkeeping, payroll, taxes or advisors, I can be all those things depending upon what is called for by your finances.

Think of these articles then, and then think about how your business runs and how it could run better. Then know that I would love to help you get there.  As I always say, my success is fully dependent upon your success.

Moreover, if you know other business owners or individuals who could benefit from services, do not be afraid to point them toward professional help.  One thing these articles show is that there is a need to not be afraid to accept the service and guidance of those that can provide it.  So I would love to help those people get to their goals, as well.

No matter how self-serving that is. 

Back to School Time and Taxes

Posted by Admin Posted on Aug 24 2016

Back to School Time and Taxes

You see it in every department store and upon the countdown calendars gracing the walls of every parent – it is back-to-school time.

From a personal standpoint, whether your kids are already back in the classroom or are dreading their return there, I hope you had a good summer and made some lasting memories with that extra time together. From a professional standpoint, there are always tax questions that arise during this time.

This is far from a complete breakdown of some of the things you may now be thinking about, but consider it a primer and a push to think about some of these issues. To get a better feel for your personal situation, though, please contact me and let this be one of the ways I can point your finances in the right direction over the last few months of the year.

But until then, some general notes:


Many are aware that college tuition can be a deduction on your tax return. Be aware, however, that private and parochial school tuition for those not yet in college is not deductible. For those with children under 13, though, there could be some tax credit involved with private school and its child care component cost.

Also remember that deductible tuition is not only for those in their teens and early 20s. Graduate, post-graduate and other continuing education at eligible institutions could also qualify.


If you have any of those under-13 children (no matter what type of school they attend) those tax credits may again be involved if the child receives this type of care on either end of the school day.

These only apply, however, if the child is there so a parent can go to work, look for work or attend school themselves.


This is a tricky area, but worth keeping in mind. For example, if you make a donation to a public school, it could qualify as a charitable donation if it is the benefit of all the students; if it is only for your child, however, then it would not be.

Throughout the year, you are bound to take place in many fundraisers and raffles, too. A raffle is never tax-deductible, but a fundraiser could be if you receive nothing in return. Again, please talk with me to help better determine where things lie in your personal situation.


There are some accounts that are slated for educational expenses and are tax-deferred. Money in those accounts could be used for different expenses over different ages - let’s say a computer for your child in high school – and avoid extra taxes.


Much of this takes place after (and sometimes MANY years after) our schooling ends, but don’t forget that the interest paid on those seemingly ubiquitous student loans is deductible.  The maximum amount that can be deducted is $2,500 and may be subject to being phased out depending upon income level.


Going back to school doesn’t only involve students, as teachers also get back to work. For those of you who spend time at the front of the classroom, keep your receipts when you buy materials for your classroom. There is an Educator’s Expense deduction that allows a deduction of up to $250 without itemizing deductions.

Beyond that, more can be deducted with itemizations. There are also considerations to be made for charitable contribution if you purchase something for the classroom that is more than general supplies and will remain with the school into the future.

Again, I am always more than happy to consider anyone’s personal situation, just contact me!



Tax Responsibility and the Millennial

Posted by Admin Posted on Aug 12 2016

Tax Responsibility and the Millennial


Filing taxes is one of the most daunting and potentially fear-inducing tasks when it comes to handling your finances.  A recent study, though, found that fear to be even stronger in the younger generation.

In a piece published by, it was found that 80 percent of millennial tax payers (people 18-34 years old) have tax concerns, be it making a mistake or not getting their full refund.  That number may seem really high, but when doing such a big task with minimal experience, some trepidation and anxiety should be expected.

And let’s give the youth a break, the same study found that 60 percent of taxpayers over 55 years old have some of the same concerns.  With age then comes some increased confidence, but it is far from complete.

What I found more surprising in these findings is the fact that millennials filed their taxes by mailing paper returns at a higher rate than those over 35.  The more I thought about it, however, the more those two forces seemed to play together. v

First, I wonder if there is something to be said for the concrete nature of a paper return.  It allows you to see all the numbers at once, giving a fuller picture at a glance.  This may feel more real than inputting numbers into boxes on a computer screen.  If you are at an age where taxes are new and causing some extra worry, there might be some comfort (even if subliminal and unacknowledged) that comes with the paper return.

Beyond that, however, I bet that many of those numbers are explained by having a tax professional at your side.  This is not something one tends to use (and it may not be needed) when you are young, making a minimal salary and do not have much happening in your financial world beyond that salary.  It is easy to understand how someone in that position figures they can handle a tax filing – even if not with complete confidence.

(Hey, I will even admit to having been there at some point …. Some point longer ago than I may care to think about or admit.)

As you get older, your financial picture hopefully gets more robust, but that also means it is getting more complicated.  At that point, seeking the help of a professional makes more sense, and once you use one, your confidence level should rise … and you will no longer be scratching your numbers out on a paper return.

In response to nerdwallet’s findings, CPA Practice Advisor, put together a quick three-point list to help millennials start to gain some traction and confidence when it comes to thinking about taxes. They are simple steps, but ones that do not always get passed on.

Tax awareness is something that is not commonly thought about as part of a general education, and this is unfortunate.  I would lump that in with knowing just how a credit card works and how one goes about getting a mortgage as knowledge gaps that should be addressed in some way before they are encountered in real life.

So if you have a child, keep their financial education in mind, even the parts that do not yet seem very pertinent.  And if you are no longer a kid and still feel the need for some guidance, I am always here to help. 

IRS Scams and Notices

Posted by Admin Posted on July 20 2016

IRS Scams and Notices

I have written about IRS identity theft and scams issues in the past and unfortunately I continue to write about it today.   It is real and we all need to be diligent about protecting ourselves from cyber predators.   It seems that barely a week goes by without the IRS warning of a new tax scam. If you pile them up together, it becomes rather frightening.

But I am here to try to spin this in a more positive direction (and it isn’t even that much of a spin).

First, realize that the high number of warnings being released means that people are aware of them and actively are trying to shut them down.  For the extra curious, take a peek at the IRS’ news releases and see how many headlines concern security, data, scams, etc.  Although I realize this easily sets up humorous retorts, it shows that the government is doing something, and maybe a lot of things.

There was even a Security Summit at the end of June, where tax agencies gathered with private-sector interests to make sure they do not remain complacent and continue to stay on top of security issues.

This will not be the tone given with most of these stories, though, for fear makes better headlines.  Taxes feel so mysterious to most people that is easy to tap into a sense of danger when talking about them.  Paying taxes already involves money being sent somewhere unknown, taken by an entity with which we rarely have any interaction and the benefits of that relationship are never immediately apparent.  At the same time, we know there can be stiff discipline for not fulfilling our end of the relationship.

Losing money and potential penalties?  Those are the stories you want to know about.  The government taking steps to keep your money safe?  Then it is just doing what its job, no need to discuss.

As the do-it-yourself tax business continues to grow, stories of security concerns are destined to multiply with it.  Those of us who work in the tax-preparation business have rules that we need to follow to ensure that our clients’ information remains safe.  The more that tax work happens in more (less secure) places, however, the more chances there are for more criminals to take advantage of it.

So although I believe there is reason for calm when it comes to this area, it is something that should not simply be ignored.  My biggest piece of advice when it comes to this – and it can apply to every avenue of life – is be mindful.

If you get involved in any situation that does not feel legitimate, chances are that it is not.  If by some chance you are ever having a real interaction with an actual IRS agent, you are not going to make the situation worse by taking the time to confirm credentials.  Call it an extra layer of security.

And that leads to the second important rule to remember.  The first interaction with the IRS in any official capacity will never be a phone call, but through official correspondence sent through the mail.

Now for the more self-serving bit, as I remind you that working with a tax professional can be an even stronger layer of security.  I am already abiding by those previously mentioned rules established to keep your information safe and secure.  And if you ever do receive some of that official correspondence from the government, wouldn’t you already rather have someone already on your side and not be going at it alone?  If you get a notice, contact me so the correct course of action can be determined.  Don’t ignore the notice as the problem will only get worse.  I am always here for you.  

The 4 Fifteenth's - Estimated Tax

Posted by Harry E. Hunter Posted on June 30 2016

The 4 Fifteenth’s

We are now exiting June, and many may be surprised to find that I was a little busier over the past month than usual. (I swear it’s not all golf and play after April, but not everyone believes me). You see, I got a pretty steady flood of questions around mid-month when quarterly estimated tax payments were due.


This does not affect every taxpayer, as many have enough taxes being taken out of their paychecks to cover their annual tax bill. If this is you, congratulations, you are all set and I can’t wait to see you next tax season.


This is not everyone, though, and for the rest of you the IRS would like you to be checking in quarterly (well, not quite quarterly, but four times per year, more on that later). So let’s start with the agency’s two rules for requiring you to make quarterly estimated payments, which sound a little complicated, but if they take them individually they are not too bad. And keep in mind that both situations have to apply for you to fall in the group that must make payments.


First, you must expect to owe at least $1,000 in federal tax for the year, after subtracting federal tax withholding and refundable credits. In easier terms, if you expect to be making at least a $1,000 payment before next April 15th, this is you.


Second, you must expect that your federal withholding and refundable credits to be less than the smaller of: 90% of the tax to be shown on your 2016 return or 100% of the tax shown on your 2015 return (if it was for a full 12 months). This just means the IRS wants to be sure they are getting enough money to cover their expected bill. The government isn’t too keen on you keeping that money for now, they would rather get the interest.


Now lets get back to when these payments are supposed to be made. The first two for this year (covering  the periods from January 1-March 31 and April 1-May 31) already passed.  Those dates were April 15 and June respectively. There are upcoming due dates of September 15 for the period covering June 1-August 31 and January 17, 2017 for the rest of 2016.


Making these payments is done by estimating your adjusted gross income, taxable income, taxes, deductions and credits for the calendar year. This is done on Form 1040-ES, which includes an estimated tax worksheet. It also includes instructions that go way more in depth than is suitable for this space. It sometimes does it in language that is typical government-ese, however, so remember I am in your corner to help you figure out if this applies to you.


A large number of those who are affected by this situation are the self-employed. If you are not receiving a paycheck from an employer, the IRS is missing out on the tax payments that would come along with it and it would like to get some of its taste through the year. This is an unavoidable aspect of being self-employed.  Instead of thinking of this as an unnecessary burden, try to frame it as being proud that you are successful enough to be earning enough money that you fit in this schema.


If you are not self-employed and still fit the IRS’ rules for these quarterly payments, though, maybe you would like to increase your withholding to cover the liability. The government is always happy to take more money from your check, after all. Again, feel free to contact me if you want some guidance on figuring out what you should be paying, and from there it can be easily changed with your company’s payroll department or you can still make estimated tax payments.  .


So until September 15 …. 


Posted by Admin Posted on Jan 17 2016





This is a follow up to my newsletter that was published earlier this month.  If you did not read that newsletter I would strongly recommend that you read it in conjunction with this blog (Preventing Tax-related Identity Theft & Simplifying Your Financial Life 

The IRS has publically stated that identity theft is its number one issue.  While identity theft is prevalent, there is something you can do to help protect your identity within the Internal Revenue Service.  It is important to realize that you need to be proactive in protecting your identity and doing this with your tax return is essential. 


By taking this simple action, it will make it harder for a fraudulent income tax return to be filed.  It is important to realize that you will not know if someone has filed a fraudulent income tax return with your identity until you file your income tax return.  Most fraudulent returns are filed at the beginning of the income tax filing season.  This year the filing season starts on January 19, 2016.  If someone files a fraudulent income tax return with your social security number, it will take months for your return to be processed and for you to receive your refund.  If you believe that mailing in your tax return instead of filing it electronically will reduce your odds of having fraudulent return filed under your social security number, this is not true.  My office through my service bureau files your tax return electronically and all your tax information is encrypted keeping your personal data fully secured.  This is actually the safest way to file your tax return. 

All you need is 10 minutes and this will help put up a shield of protection.

Here is what you need to do:  You are going to request from the Internal Revenue Service an Electronic Filing PIN (Personal Identification Number).  By getting this assigned PIN instead of creating your own at the time of filing your tax return (or having me create your filing PIN) will ensure that this is unique to your social security number.  If this PIN is not used when filing your tax return, that tax return will be rejected.  This is another security check the IRS uses to ensure YOU are filing your tax return not someone else.

Step 1:  To qualify your 2014 income tax returned must have been processed by November 21, 2015.  If yes, you may continue.

Step 2:  You need your 2014 tax return to get the IRS PIN as certain data will be requested from that return.

Step 3:  Go to the following link to get started:

Step 4:  Click on the link in box 3 and follow the instructions

Step 5:  This needs to be done for each taxpayer.  A PIN for each taxpayer will be generated during this process.  Print out this PIN and save it with your tax papers to file your 2015 tax return.  I will need this PIN to file your tax return.

The sooner you do this simple step the better off you may be.  If you need assistance in doing this please do not hesitate to contact my office.  Remember the identity you save and refund you save will be your own.

Estimated Taxes - June 15, 2015

Posted by Admin Posted on June 03 2015

If you are required to pay estimated taxes the next scheduled estimated tax payment for individuals is June 15, 2015 reflecting income through May 31, 2015.  If you are required to make a payment this will serve as a reminder to make that payment.  If you need to have an estimated tax review, please give my office a call.  If my office set you up to have your estimated taxes paid through direct debit, please make sure you have the sufficient funds in your account so the payment can be made.  If you have any questions please feel free to reach out to me.

For additional information on Estimated Taxes, please scroll down and see the Estimated Tax blog dated September 2, 2014.

Tax Law Changes: Effects on the 2014 Tax Return and Tax Planning Items for 2015

Posted by Admin Posted on Feb 08 2015

Tax Law Changes

 Effects on the 2014 Tax Return and Tax Planning Items for 2015


Tax law changes every year. Laws are updated, loopholes are closed and other adjustments are made. Some of these changes affect virtually all wage earners while others might affect only small businesses or higher-income taxpayers.  Here are some of the changes that may affect your 2014 tax return.


Affordable Care Act

The Patient Protection and Affordable Care Act (ACA) could well be the biggest change to taxes in 2014.  Employers with more than 50 full-time equivalent employees will be facing a tax penalty if they fail to provide affordable essential health coverage to their employees.


Starting with the 2014 tax returns, everyone will be required to state whether they are covered by Health Insurance or risk paying a “Shared Responsibility Payment” (with few exceptions) which will be calculated as part of your tax return.  This will be the first tax return to reflect the ACA.  Here are some of the basic questions that you will need to answer to determine how the ACA affects your.

1.       Do you have medical coverage?

2.       How did you get the medical coverage?

3.       Were you covered for health insurance in each month of the year?

4.       If you received health Insurance from an employer sponsored insurance plan, box 12 of your W-2 should show a code “DD” and the cost of that coverage.

5.       If you purchased the insurance through the various state health exchanges, you will receive a Form 1095-A which will be needed to complete your tax return.


If you do not have health insurance or meet certain provisions, you may be subject to a penalty of either 1% of your taxable income or a flat fee of $95 per uninsured adult and $47.50 per child (up to $285 for a family), whichever amount is higher. The penalty is due when you file your 2014 tax return.  Starting in 2015 the penalty rises as the flat fee increases to $325 or 2% of your taxable income and $695 in 2016 per adult or 2.5% of the taxable income, whichever is greater.


If you purchased your health insurance through the health care exchanges you may have qualified for a premium assistance credit.  This is the health insurance subsidy that you have probably heard about.  You are potentially eligible if your household income is between 100% and 400% of the federal poverty line and you do not have access to employer-sponsored affordable coverage. The allowable credit can vary widely depending on your specific circumstances.


The credit can be paid by the government directly to your insurance company to lower your monthly premiums or it can be claimed when you file your federal income tax return. You may not know the exact amount of your allowable credit until you file your tax return. Any differences between what you receive in the form of reduced insurance premiums and the credit you are actually entitled to for the year will be reconciled when you file your 2014 return. In other words, if you collect more than you are entitled to you will have to pay back the excess with your return.

Keep in mind that this credit is refundable which means you can collect the full credit even if it exceeds your federal income tax liability for this year. The credit is first used to reduce your 2014 federal income tax bill. After your tax bill has been reduced to zero, any remaining credit can be either refunded to you in cash or used to make estimated tax payments for 2015.


While this has nothing to do with your tax return directly, late last year, the IRS announced a new exception to the dreaded “use-or-lose” rule for health care flexible spending accounts (FSAs). Under the exception, employers can allow you to carry over to the following year up to $500 of any unused balance from the previous year.  The new carry-over deal is in lieu of allowing a grace period through March 15 of the following year to incur enough expenses to use up your unused balance from the previous year.  In other words, your company’s health care FSA plan can allow either the $500 carry-over deal or the grace period deal but not both. Contact your employee benefits department to see what your company plan allows.


Net Investment Income Tax

A new tax on investment income is in effect starting in 2014.  The Net Investment Income Tax (NIIT) will be assessed if you have both net investment income and modified adjusted gross income (MAGI) of at least $200,000 for an individual taxpayer and $250,000 for taxpayers filing as married. Net investment income includes interest, dividends, capital gains, rental and royalty income, and certain income from businesses. It does not include wages, unemployment compensation, operating income from a non-passive business, Social Security Benefits, alimony, tax-exempt interest, self-employment income, Alaska Permanent Fund Dividends and distributions from certain Qualified Plans.


Limitation for Itemized Deductions and Exemptions

The limitation for itemized deductions claimed on individual returns for tax year 2014 will begin with incomes of $254,200 or more ($305,050 for married couples filing jointly). The limitation reduces itemized deductions by 3% of the amount by which your adjusted gross income (AGI) exceeds the aforementioned thresholds, up to a maximum reduction of 80%.  The personal exemption phase-out rules for 2014 begin with AGI of $254,200 for individuals and $305,050 for married couples filing jointly.  Personal exemptions phase out completely at $376,700 for individual taxpayers ($427,550 for married couples filing jointly).   These provisions get adjusted annually due to the rate of inflation.


Same Sex Marriage

In 2013 the Supreme Court struck down the 1996 Defense of Marriage Act (DOMA)leaving the definition of marriage to each state to define.  For the first time the IRS will consider as legally married all couples who are legally married.  The IRS will recognize a legally married same sex couple regardless of whether the couple currently lives in a jurisdiction that recognizes same-sex marriage or a jurisdiction that does not recognize same-sex marriage as long they were married in a state that recognized same sex marriages.


Long Term Capital Gains

A capital gain or loss is simply the difference between what you purchased an asset for and what you sold the asset for. The situation can get more complicated if dividends were paid out, stock splits or stock dividends, capital was returned, or other corporate actions took place.  An example of this was the January 1, 1984 divestiture of AT&T into 7 different companies and all the merger and spin offs from these companies over the years.  These actions can affect the purchase price of the stock for tax purposes and in determining the  "cost basis" or "tax basis." All of this used to be track by you but since 2011 brokerage firms have had to report cost basis information to you for shares acquired on or after January 1, 2011.  If you acquired securities before 2011 you need to retain all the purchase statements, dividend reinvestment statements, etc. to still calculate your true cost basis.  If you switched brokerage firms, make sure you retain the statements from the original firm that you bought the securities as the new firm may not received the correct basis. 


While this is relatively simple for stocks you bought yourself, the rules are more complicated for other situations and other assets – asset received as a gift or inheritance.  The cost basis for mutual funds will required you to retain the statements to do the calculation.  (Sometime in the future I will dedicate a blog just on Capital Gains).


For 2014, assets sold and held for less than a year - short term capital rates are based on your tax bracket.  For 2014 your assets sold and held for more than one year qualify as long-term capital gains and the rate is based on the tax bracket you currently fall.  Here is a summary of the tax bracket and the corresponding long term capital rate.


Tax Bracket

Long Term Capital Rate
















There are three important things to note about long term capital gains rates.

1.       If your long-term capital gains take you into a higher tax bracket, only the gains above that threshold will be taxed at the higher rate. For example, if your long-term capital gains bring your taxable income $1 over the level for the 25%-35% bracket, only $1 will be taxed at 15%, and the rest of your long-term capital gains will be taxed at 0%.  

2.       For single taxpayers who make more than $200,000 per year and married taxpayers who file jointly and earn more than $250,000, there is an additional 3.8% tax on investment income, including capital gains, above a certain level because of the net investment income tax. This was covered before under the Net Investment Tax paragraph.

3.       There are separate capital gains rates for certain categories, including sales of collectibles, precious metals, commercial buildings, and small-business stock.


After discussing some of the changes for that will impact your 2014 tax return, here are some items that you should be aware of for 2015 and will help you start tax planning.  Remember tax planning is an ongoing process and should not only be done at year end.


Ø  Health Insurance Penalty: Part of the Affordable Care Act mandates that all Americans have health insurance, or pay a tax penalty. In 2015, these penalties increase significantly to 2% of total household income, or $325 per person. That can really add up for a middle-class family of four. If you are not covered and paying a penalty on your 2014 taxes, make sure you get health insurance ASAP to avoid penalties.


Ø  401(k) Limits: The limit on employee contributions to a 401(k) plan will increase to $18,000, up $500 from 2014's cap. If you are not contributing the maximum amount you should contact your payroll department and request the necessary forms to change the amount of your contribution.   Also, the "catch-up" allowance for those over than 50 has also been increased, allowing for an additional $6,000 in contributions. These new contribution levels are also applicable to 403b accounts and most 457 retirement plans.


Ø  Flexible Spending Account Limits: The annual limit on employee contributions to flexible spending accounts is now $2,550 for qualified health care expenses.


Ø  Standard Deduction: The standard deduction rises to $6,300 for single filers and $12,600 for married taxpayers filing jointly in 2015. That's up $100 and $200, respectively, from 2014 figures. This is important in tax planning and withholding because if you cannot itemize your deductions to surpass this amount, this is the only tax break the government will likely be giving you the 2015 tax return.


Ø  Tax Brackets: Income tax thresholds have again been adjusted up for inflation.


Ø  IRA Rollovers: Starting in 2015, you can only make one single rollover from an IRA in a 12-month period. You are still allowed to make as many "trustee-to-trustee" transfers as you wish, moving your money directly from one provider to another. The new IRS rule targets the practice of withdrawing all those funds and then re-depositing them in a new account – a tactic some folks were using as a short-term, interest-free loan. To protect yourself, limit all rollovers to direct transfers in 2015 if you plan on moving money more than once.


Ø  AMT Changes: The so-called "alternative minimum tax" is quite a headache for many middle-class Americans. Since certain breaks can significantly reduce your tax bill, the IRS created the AMT to set a limit on those benefits – and create a minimum tax burden on you. The Alternative Minimum Tax exemption amount for tax year 2015 is $53,600 for individuals or $83,400 for joint filers. That's up about 1.5% from 2014.


2014 Year End Items

Posted by Admin Posted on Nov 04 2014

Year End Items


This blog warns about an ongoing IRS Scam and the announced 2015 retirement fund limits, tax rates and Social Security.  If you have any questions concerning any of these topics please do not hesitate to contact me.


IRS Scam

Recently a client contacted me stating they have received a phone call from the IRS and is to return the call to the IRS making arrangements to pay some back taxes.  This is someone impersonating the IRS and calling you from a 202 phone number (the number my client was given to call back was 202-864-1149).  They will say they have been trying to get in touch with you for a while and that if you don’t pay some amount of money the IRS will sue you. 


The IRS initial form of contact will not be via the phone.  You should be aware that the IRS will not call you about taxes you owe without sending you various notices in the mail.  The IRS will not ask you to get a prepaid debit card to pay your taxes, ask for your credit card number over the phone or ask you to send a wire transfer.  If you receive a call like this get a phone number from the person calling, their name and most important their identification number.  You will call the IRS back. 


If you believe you have been swindle by an IRS impersonator contact the US Department of the Treasury or use this website to file a claim: To read more about this scam see the press release 



2015 Retirement Contribution Limits

The IRS has announced the 2015 limits for various Retirement Plans.  The elective deferral or contribution limit for employees who participate in 401(k), 403(b) and most 457 plans and the Federal government’s Thrift Savings plans has increased from $17,500 for 2014 to $18,000 for 2015.  If you are age 50 or over the catch up contribution limit has increased from $5,500 for 2014 to $6,000 for 2015.  For those 50 or older the maximum amount is $24,000.


2015 IRA Contribution Limits and Applicable Levels

The IRA contribution limits for 2015 remain unchanged from 2014.  If you are under age 50 the maximum contribution is $5,500 and $6,500 for age 50 and over.  There is no limitation on IRA Rollover contributions or qualified reservist repayments.  If neither spouse participates in a retirement plan at work, all of your contributions will be deductible.  Below you will find the limitation amounts for Traditional IRA contributions for those that are covered by a work based retirement plan.


Spousal IRA:  If you are married filing a joint tax return, you and your spouse can each make IRA contributions even if only one has taxable compensation. The amount of your combined contributions cannot be more than the taxable compensation reported on your joint return.  It doesn’t matter which spouse earned the compensation.


Traditional IRA Contribution Deduction Levels:  The deduction for taxpayers making traditional IRA contribution is phase out for people whose filing status is single or head of household and are covered by a workplace retirement plan and have a modified adjusted gross income between $61,000 and $71,000 up $1,000 on each end from 2014.  For married couples filing a joint tax where the spouse who makes the IRA contribution is covered by a workplace retirement plan the income phase out range is $98,000 to $118,000 up $2,000 on each end from 2014.  For a jointly filing taxpayer who is not covered by a workplace retirement plan and the other spouse is covered by a plan the IRA contribution phase out limit is between $183,000 and $193,000 up $2,000 on each end from 2014. 


Roth IRA Contribution Levels:  The Adjusted Gross Income phase out range for Roth IRA contributions is $183,000 to $193,000 for married filing joint taxpayer which is up $2,000 on each end from 2014.  For single and head of household filers the range is $116,000 to $131,000 which is up by $2,000 on each end from 2014. 


IRA contributions after age 70½:  You cannot make regular contributions to a traditional IRA in the year you reach 70½ and older. However, you can still contribute to a Roth IRA and make rollover contributions to a Roth or traditional IRA regardless of your age.


Tax on excess IRA contributions:  An excess IRA contribution occurs if you:

ü  Contribute more than the contribution limit.

ü  Make a regular IRA contribution to a traditional IRA at age 70½ or older.

ü  Make an improper rollover contribution to an IRA.

Excess contributions are taxed at 6% per year as long as the excess amounts remain in the IRA.  The tax cannot exceed 6% of the combined value of all your IRAs as of the end of the tax year.

To avoid the excess contributions tax you must withdraw the excess contributions from your IRA by the due date of your individual income tax return (including extensions) and withdraw any income earned on the excess contribution.



2015 Tax Rates

The following table details the 2015 taxable income levels and rates for Married Filing Jointly and Single Filing status



Married Filing Jointly Status

Taxable Income

Marginal Tax Rate

Calculation of Tax

Long Term Cap Gain Rate

Less than $18,450


10% of taxable income


$18,450 - $74,900


$1,845 plus 15% between taxable income referenced range


$74,900 - $151,000


$10,313 plus 25% between taxable income referenced range


$151,200 - $234,450


$29,388 plus 28% between taxable income referenced range


$230,450 - $411,500


$51,578 plus 33% between taxable income referenced range


$411,500 - $464,850


$111,324 plus 35% between taxable income referenced range


Over $464,850


$129,997 plus 39.6% over $464,850

20% - 23.8%


Single Filing Status

Taxable Income

Marginal Tax Rate

Calculation of Tax

Long Term Cap Gain Rate

Less than $9,225


10% of taxable income


$9,225 - $37,450


$923 plus 15% between taxable income referenced range


$37,4500 - $90,7500


$5,156 plus 25% between taxable income referenced range


$90,750 - $189,750


$18,481 plus 28% between taxable income referenced range


$189,7500 - $411,500


$46,075 plus 33% between taxable income referenced range


$411,500 - $413,200


$119,401 plus 35% between taxable income referenced range


Over $413,200


$119,996 plus 39.6% over $413,200

20% - 23.8%



Social Security

The Social Security Administration announced that recipients of Social Security will receive 1.7% more in 2015.  The average increase is approximately $22 per month.  The average social security check starting in 2015 is $1,328 per month.  Social Security payments are automatically adjusted each year to keep pace with inflation as measure by the Consumer Price Index for Urban Wage Earners and Clerical Workers. 


Workers that are paying into the Social Security System pay 6.2% of each paycheck into the program.  For 2015 the maximum amount of wage subject to Social Security will increase to $118,500 from $117,000. 


The Medicare amount of contribution is set at 1.45% per paycheck and is not subject to any wage ceiling.  For those individuals who earn more than $200,000 or married couples filing a joint return earn more than $250,000 there is an additional 0.9% in Medicare Taxes.


Social Security beneficiaries who are under age 66 can earn as much as $15,720 in 2015, before $1 in benefits will be withheld for every $2 earned above the limit.  Retirees who turn 66 and have signed up for Social Security can earn up to $41,880 before every $3 earned above the limit will result in one benefit dollar being withheld.  However, once a retiree turns age 68 there is no limit on earnings and Social Security payments are recalculated to give the retiree credit for the withheld benefits.


The maximum possible Social Security payment for a worker who signs up at full retirement age will be $2,663 per month in 2015, up $21 from $2,642 in 2014. 

Estimated Taxes

Posted by Admin Posted on Sept 02 2014

Estimated Taxes


The next scheduled estimated tax payment for individuals are due on September 15, 2014 reflecting income through August 31.  If you are required to make a payment this will serve as a reminder to make that payment.  If you need to have an estimated tax review, please give my office a call.


The question that comes up every year is:  What are estimated tax payments?  Why do I have to make estimated tax payments? 


Generally, you are required to have 90% of your income taxes paid by the time you file your tax return or April 15th.  If you do not have at least 90% of your taxes paid in by the time you file your return or April 15th, you may be subject to an under payment penalty. 


There is a Right Reason and a Wrong Reason to Pay Estimated Tax

My first overall comment on estimated taxes is that you should be paying estimated taxes for the right reason.  If you are only receiving wage income and have no other significant source of income and you have to make estimated tax payments there is a problem with your paycheck withholding.  If you are a married couple and both have wage income, your withholding of taxes should be adjusted to reflect a two wage earner household.  If this is not adjusted it may cause an under payment of tax.  If you need some assistance, please give my office a call.


What is Estimated Tax?

Estimated tax is used to pay tax on income not subject to withholding.  This includes income from self-employment, interest, dividends, partnerships, estates, trusts, alimony, rental income, capital gains, prizes and awards and other forms of non-employee compensation.  You also may have to pay estimated tax if the amount of withholding from your salary, pension, or other income is not enough.


If you are subject to self-employment tax, alternative minimum tax as well as other taxes reported on your tax return, you may have to make estimated tax payments or become subject to an under payment penalty.  If you do not pay enough tax by the due date of each payment period you may be charged a penalty even if you are due a refund when you file your tax return.


How to Pay Estimated Tax

As an individual you need to use Form 1040-ES, Estimated Tax for Individuals to figure and pay your estimated tax.  Your payments for each year are due on the 15th day of April, June, September and the following January.  Notice that although they're considered quarterly payments, they're not all three months apart.  Any payment date that falls on a weekend or holiday is due the first non-holiday weekday after that date.


If you are filing as a corporation you use Form 1120-W, Estimated Tax for Corporation to figure the estimated tax.  The due date for corporate estimate filings is based upon whether you are a calendar year or fiscal year filer.  Please contact my office to discuss.  Corporations should make its payments either through the federal deposit system or EFTPS.


For both individuals and corporations you can have the IRS debit your bank account for each payment.  This is set up when you file your annual tax return and notify the IRS that you are subject to estimated tax.


Who Must Pay Estimated Tax

As an individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.


If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect to owe tax of $500 or more when you file the return.


If you had a tax liability for the prior year, you may have to pay estimated tax for the current year.


Who Does Not Have To Pay Estimated Tax

If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings.  To do this, file a new Form W-4 with your employer.  There is a special line on Form W-4 for you to enter the additional amount you want your employer to withhold.


You do not have to pay estimated tax for the current year if you meet all three of the following conditions.


ü  You had no tax liability for the prior year

ü  You were a U.S. citizen or resident for the whole year

ü  Your prior tax year covered a 12 month period


You had no tax liability for the prior year if your total tax was zero or you did not have to file an income tax return.


How to Figure Estimated Tax

To figure your estimated tax, you must figure your expected taxable income – income after deductions and adjusted for any credits for the year.


When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for prior year as a starting point. Use your prior year's federal tax return as a guide.  You will need to estimate the amount of income you expect to earn for the year.  Your estimated tax payments do not have to be equal for all four payments.  If your income is not earned evenly you can make your payments based on the tax liability on the income earned during the respective periods.  You want to estimate your income as accurately as you can to avoid penalties.


You must make adjustments both for changes in your own situation and for changes that might occur in the tax law.


When to Pay Estimated Taxes

For estimated tax purposes, the year is divided into four payment periods.  Each period has a specific payment due date.  If you do not pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.


Underpayment of Estimated Tax

If you did not pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty one of three ways:  (1)  if they owe less than $1,000 in tax after subtracting their withholdings and credits; (2)  if they paid at least 90% of the tax for the current year or (3)  100% of the tax shown on the return for the prior year, whichever is smaller.


However, if your income is received unevenly during the year, you may be able to avoid or lower the penalty by annualizing your income and making payments that reflect the income for that period.


The penalty may also be waived if:

1.    The failure to make estimated payments was caused by a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty, or

2.    You retired (after reaching age 62) or became disabled during the tax year for which estimated payments were required to be made or in the preceding tax year, and the underpayment was due to reasonable cause and not willful neglect.


Tax Planning Tip:  The amount you have to pay is usually pretty easy to determine if you're basing your payments on the prior year's tax liability.  Figuring the payment based on 90% of the current year's tax liability is more difficult — which is why most people try to avoid that approach.


State Estimated Tax

Each state has its own personal estimated tax threshold.  As with the federal estimate, if you pay 100% of the prior year tax liability for the current year by the time you file your tax return you will not be subject to a potential under payment penalty.  Most states require you to have anywhere between 75% - 90% of your taxes paid in by the time you file your tax return.  Each state has its own threshold that requires you to pay estimated taxes if your expected amount owed after all withholding and credits equals or exceeds a certain amount.  The following table will give specifics by state.  Use this table as a guide and if you feel you may be subject to estimated tax in a state, please give my office a call so that we can confirm you do owe estimated tax and the amount.  Keep in mind that there are nine states that do not have an income tax (Alaska, Florida, New Hampshire, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming) so estimated tax is not an issue.











$75,000 / $150,000 income requires estimated tax payments

















New Jersey




New Mexico


District of Columbia


New York



$1,000 income not subject to withholding

North Carolina




North Dakota




















Rhode Island




South Carolina



$1,000 / $2,000


Not Required











West Virginia






Arizona and Louisiana – single / married joint return



Retention of Records

Posted by Admin Posted on Aug 06 2014

How Long Do I Have To Keep This Stufffffffff?

 One of the most popular questions I get from clients is “How long do I need to keep stuff?”  My answer is – it depends.  The following is a general guide for how long to retain records for tax purposes. 

 It is important to note that businesses are held to a much stricter set of rules than individuals.  In addition, certain industries set their own legal standards for retention.  This write-up offers guidelines for individual taxpayers and does not cover business requirements.

 First and Foremost

 It is important to understand that if the Internal Revenue Service (IRS) ever investigates for fraud, there is no retention guide as the IRS can go back to day one.  If there may be a fraud issue, you will need to have all supporting documentation for IRS review.  Also if you did not file a tax return, you should keep your records indefinitely.  Other than these two scenarios, use the following as guidelines.

Retention Time

The length of time you should keep a document depends on the action, expense, or event supported by the documents. Generally, you must keep your records that support an item of income or deduction on a tax return until the period of limitations for that return expires.

The period of limitations is the period of time in which you can amend your tax return to claim a credit or refund, or the IRS can assess additional tax.   This is usually three years from the time the return was due or two years after the return was filed, whichever is later.

The following guidelines are recommended by the IRS for record keeping:

Ø  It is recommended to keep copies of your filed tax returns.  They will serve as an aid in preparing future tax returns, monitoring the annual changes in income and making computations if you file an amended return. 

Ø  As a general guideline you should keep your records that support your tax return for at least three years unless any of the following apply to you: 

o   If you do not report income that you should report, and it is more than 25% of the gross income shown on your return; keep your records for 6 years.

o   If you file a claim for credit or refund after you file your return; keep records for 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later.

o   If you file a claim for a loss from worthless securities or bad debt deduction; keep records for 7 years.

Ø  Keep all employment tax records for at least 4 years after the date that the tax becomes due or is paid, whichever is later.

Okay – you have provided me guidelines on retaining tax returns and supporting documentation.  But I have all these brokerage and bank confirmations and statements.  Can you provide any retention guidelines on these?

 If you have monthly or annual statements for brokerage and bank accounts and they detail all transactions, you do not have to keep individual confirmations.  By keeping the monthly or annual statements, it will help you calculate the cost basis of investments especially when you may have had multiple purchases including reinvestment of dividends.  If your annual statement recaps all transactions for the year, you do not have to keep the monthly statements.  While most brokerage firms are now reporting cost basis of securities, if you have changed brokerage firms that holds your securities, the cost basis may not be transferred.  In addition, if you hold the security in certificate form instead of keeping the security in street name, you may need your records to compute the cost basis.  Remember it is in YOUR best interest to make sure you have this data so that you do not pay any unnecessary taxes on your gains or losses when you sell.  If you don’t have the documentation, you will have a problem proving the cost basis to the IRS.

 Which documents do I retain for my retirement accounts – IRA, Pension, 401K, 403B, etc.?

 The rule is simple:  Keep copies of all year-end statements for every account FOREVER.  Here is the reason why – Over the years you may move your Retirement Account from one custodian to another.  The contribution records are not transferred.  If you have a hybrid of deductible contributions and non-deductible contributions it is your responsibility to advise the IRS how much of a distribution may not be subject to tax.  Also, if you have rolled over retirement dollars from your employer to your IRA you may need to know how much represents contribution and how much is earnings.  This is even more important at the state level - especially if your state does not recognize deductible IRA contributions or deductible pension contributions.  Without having the proper documentation, you may pay taxes on a portion of your withdrawal that you shouldn’t.  By maintaining the proper retirement documentation you will only pay taxes on the taxable portion of the distribution instead of the whole distribution therefor saving you tax dollars.

 Discarding Documents

 Great – now I know which documents I can throw away – Right? 

 Before discarding a document, you should ask the following two questions for each record: 

 Is this record related to any asset you own?  Keep records relating to property until the period of limitations expires for the year in which you report the sale of the property on your tax return.  You need to keep any records to figure depreciation, amortization, or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.  This includes any improvements that you made on property after you originally purchased the property.  Remember, all improvements are assets as the improvements become part of the cost basis of the asset.

 Generally, if you received property in a nontaxable exchange, your basis in that property is the same as the basis of the property you gave up, increased by any money you paid. You must keep the records on the old property and the new property, until the period of limitations expires for the year in which you dispose of the new property and report it on your tax return. 

 What should I do with my records for nontax purposes?  When your records are no longer needed for tax purposes, do not discard them until you check to see if you have to keep them longer for other purposes.  For example, your insurance company or creditors may require you to keep them longer than the IRS does.

 It is suggested that when discarding documents you either shred them or have a shredding service destroy the documents. 

In closing, remember that under the United States Tax code it is your responsibility to provide proof of income or deduction when requested.  If you cannot provide proof of your income or deduction it will be disallowed.  The burden of proof under the United States Tax code is on the taxpayer not the Internal Revenue Service.  With today’s technology you can digitize most if not all of your supporting documentation.  This will not take up any physical filing room, just space on your computer.  If you do this I suggest that you back up those files or subscribe to an offsite backup program.  Here is a link to a list of cloud backup storage sites: .  To stay organized with paper copies, a three ring binder is the best method.

Remember, good documentation will save you money. 

The deduction you save will be your own!

 If you have any questions, please do not hesitate to contact me.

2013 New Jersey Senior Property Tax Freeze

Posted by Harry E. Hunter Posted on July 16 2014

The State of New Jersey has released the income requirements for taxpayers eligible for the 2013 Senior Tax Property Freeze.  Applicants whose income for 2012 did not exceed $82,880 and whose income for 2013 did not exceed $70,000 (the original limit was $84,289) will be eligible to receive reimbursements for 2013, provided they met all the other program requirements.  Residents whose 2013 income was over $70,000 but not over $84,289 will not receive reimbursements for 2013, even if they met all the other program requirements.  The Division of Taxation will send notices to these applicants advising them that they are not eligible to receive reimbursement payments for 2013.  However, by filing an application by the due date, these residents can establish their eligibility for benefits in future years and ensure that they will be mailed an application for 2014.  The filing deadline for 2013 Senior Freeze (PTR) Applications was extended to September 15, 2014.  If you have any questions about this please contact my office.

Welcome to My Blog!

Posted by Admin Posted on Oct 26 2012
This is the home of our new blog. Check back often for updates!