Summer 2013 Tax and Financial Planning Tips

 In Taxes


The dog days of summer are upon us. Hot days, daily (it seems) rain showers. Vacation time and somewhat quieter office time. You could also call it the nap time of tax and personal financial planning. We think, though, that August is the perfect time to work on your personal financial and tax planning items. It is a good time to start thinking about year-end planning as well as next year planning. Once the holiday season is upon us (which seems to start earlier each year), it become much more difficult to focus on your finances.
In conjunction with the American Institute of CPA’s (AICPA), below are a number of tax and general financial planning tidbits or blurbs – short discussions on a number of topics that we think are important to our clients and non-clients alike. We hope you find them insightful and helpful. Our team of CPA’s and CFP® are ready to assist you in any of the areas below. Enjoy the summer but start thinking about your financial and tax situation.
Are You Eligible for IRS Penalty Relief?
In most years, taxpayers who miss their tax filing deadlines receive a letter from the Internal Revenue Service (“IRS”) telling them they owe a late payment penalty. This year, however, the IRS has granted special relief from the penalty to some taxpayers because the last-minute fiscal cliff negotiations caused a delay in the release of 31 different tax forms. (You can find a list of the forms involved in IRS Notice 2013-24.) If you filed one of these forms and still receive an IRS letter assessing a penalty, contact us immediately so that we can inform the Service that you are eligible for relief.
And remember that there’s no reason to panic whenever you receive a communication from the IRS. In many cases, the issue can be resolved easily. No matter what the situation is, be sure to contact us so we can put your mind at ease and offer the help you need.
Miss the Tax Deadline? Here’s What to Do Now
April 15 has come and gone. Did you get your tax return in on time? If not, we advise you to file as soon as you can, preferably using the e-filing option, which we can help you with. If you failed to file because you can’t pay your taxes due, it’s best to determine the maximum amount that you can afford and send it in with your return. You may face penalties and interest charges for late payments, but anteing up a little now will help minimize those charges. Remember, too, that the IRS often allows those who can’t pay to set up an installment plan so that they can pay off your taxes over time. Contact us today if you missed the deadline so that we can explain your options and help you get caught up.
Summer Jobs and Taxes: What Do You Need to Know?
For anyone planning to take a summer job this year, what is the tax impact to you?  You may need to pay taxes to the federal, state, and local governments.  Any wages, salary, and tips you earn at your summer job may be taxable to you or your parents and you may owe self-employment tax for some odd jobs that you perform. The IRS reminds students that they should fill out a Form W-4, Employee’s Withholding Allowance Certificate, for each job they hold. Students may also need to fill out similar withholding forms for the state, city, or other local jurisdictions that in which they live or work. Employers use these forms to figure how much tax must be withheld from their paychecks.
If you or your family members have questions about taxes, or about any other aspect of your financial life, be sure to contact us. We can provide the advice you need to make smart financial decisions.

Smart Disaster Planning Steps
Deadly tornadoes in the Midwest and the beginning of hurricane season are reminders that it’s important for both individuals and businesses to protect themselves against the potential financial consequences of natural disasters. A few smart steps we recommend include making electronic backups of important records, including your insurance policies, tax returns, bank and credit card account information, and vital records.  It is critical that you store this backup in a separate location that will be easy to access if your area suffers damage.  You should also take the time to, take pictures or videos of your home or business and store them separately in case you need to make an insurance claim.
If you run a business, you must consider how you will get up and running again after a disaster. It’s a good idea to develop contingency plans that will enable employees to work from home or elsewhere if your location is damaged or inaccessible. Both businesses and families should consider using phone trees or other methods to maintain contact in an emergency. Review your contact and contingency plans every year to be sure they are up to date.
Want further advice on protecting your family’s or business’s financial well-being in case of a disaster? We can help. Contact us today with all your financial questions.
A Simplified Home Office Deduction
Do you work at home or have a home-based business? If so, you should be aware that beginning this year, the IRS has created a simpler option for calculating the deduction for the business use of your home. The new option makes recordkeeping easier because, instead of maintaining records of specific home office expenses, you can use a standard rate per square foot.  The rate is $5 per square foot (up to a maximum of 300 sq. feet or $1,500) for qualifying business use space in place of taking a pro rata percentage of items such as mortgage interest, taxes, utilities, repairs, etc.
Keep in mind there are good and bad aspects to this “simpler” method.  The new method gives you back your full interest and tax deduction on schedule A, but you will lose your depreciation and loss carryover deductions. Of course, you must still use your home office regularly and exclusively for business. This may be a welcome relief for some taxpayers, but it might not be the best choice for others. Is it the right choice for you? Please contact us for answers to all your financial questions.
Student Loan Debt: We Can Provide the Decision-Making Details You Need
Did you know that the average student loan balance is $24,803? Student debt is taking a heavy toll on borrowers, according to an American Institute of CPAs survey, which found that 75% of respondents or their children had made personal or financial sacrifices because of monthly student loan payments. Sacrifices included putting off saving for retirement (41%); delaying car purchases (40%); postponing a home purchase (29%); and even waiting on marriage (15%).
Among the most troubling findings were that only 39% fully understood the burden that student loan debt would place on their future and 60% had at least some regrets about their decisions on financing their education. That’s why it’s always critical to understand the full potential impact of all your financial choices. The good news is that as your CPA we can help. Contact us with all your financial questions and we’ll provide the knowledge and insights you need to make the best decisions for you.
Stop Tax Identity Theft in Its Tracks

Imagine after sending in your annual tax return, you receive a notice from the IRS saying that another return has already been filed using your name and Social Security number—and claiming a refund. Sound impossible? It can happen if you become one of a growing number of victims of tax return identity theft. According to one estimate, tax-related identity theft cases have soared more than 650% since 2008. At the least, this crime can lead to a delay in your refund, but the consequences may be much more serious. In addition, you may face a larger problem with identify theft if the scammer is also running up credit card debt or taking out loans in your name.
To avoid becoming a victim, we recommend steps such as safeguarding your Social Security number and other financial information, keeping an eye on changes to your credit ratings and taking precautions with electronic transfers of confidential information. Be sure to contact us if you believe you have been a victim of identity theft or would like advice on the best ways to secure your financial information.
What You Should Know about Education Provisions in the New Tax Law
Are you making the most of tax benefits designed to offset some of the high costs of education? The American Taxpayer Relief Act of 2012, which settled the year-end fiscal cliff debate, extended the American Opportunity Tax Credit through 2017.The credit provides a tax break of up $2,500 for qualified college expenses. The Act also made permanent several education-related tax options, including Coverdell education savings accounts through the end of 2013.
Given the many changes, we can help you make sense of the benefits available to you and ensure you’re taking full advantage of them. We can also offer advice on smart steps for financing the high cost of education, so please contact our office with all your questions.
Does the New Surtax Apply to You?
 As of January 1, there is a new 3.8% net investment income tax on some categories of passive investment income for individuals, trusts and estates that exceed certain income thresholds.  As a result, it is in your best interest to identify these income sources and adopt strategies to lower your modified adjusted gross income or your net investment income to avoid the surtax. See our memo on the new tax can in the archived area of Recent News on our website.  If you think the new tax may apply to you, we can explain your choices and help you pick the best strategy to reduce your tax bill.
How Do New Estate Tax Rules Affect You?
You may have heard that there are new rules on estate taxes as a result of the new tax law enacted earlier this year.  The top tax rate on estates rose to 40% from 35% as of Jan. 1, 2013, but no tax will be imposed on the first $5.25 million (adjusted for inflation) of an estate. While $5.25 million sounds like a lot, and you may think that the estate tax doesn’t affect you or your family, you may be surprised. Estate planning is still be a priority. Contact us now to discuss all your questions about estate planning and the steps you can take to minimize the potential estate tax burden to your beneficiaries.
Is A Like-Kind Exchange a Good Option for Your Business?
Normally, when companies sell properties, they must pay taxes on any gain they receive. Like-kind exchanges, transactions in which companies trade properties, may be carried out without any immediate tax consequences. They must satisfy IRS rules, however, which include:
The properties must have the same “nature or character,” as set forth in IRS guidance.

  • The exchanges can be business or investment properties put to a productive use.
  • The exchanges can’t involve inventory, most securities and some other assets.
  • Taxes must be paid on any cash or non-similar property that is part of the deal.

Keep in mind that like-kind exchanges are tax-deferred transactions, not tax free. When a company eventually sells the property it received in an exchange, it must pay tax on any gain from its original investment. In the meantime, though, the business/company can use the funds it would have paid in taxes and it has acquired a new property that may better suit its needs without necessarily making a cash outlay.
Want more information about whether like-kind exchanges can be a good strategy for your business and insights on their tax impact? We can help. Contact us today for expert advice on the best ways to address your business and tax concerns
Help for those Struggling with Mortgage Payments
The recession has left many people wrestling with debt, including the monthly mortgage bill. If you’re one of them, you should be aware that relief may be available through the Home Affordable Modification Program, also known as HAMP. Earlier this year, the government expanded the eligibility criteria to include more homeowners. If you originated a loan on or before January 1, 2009, are behind, or in danger of falling behind on mortgage payments, and meet a range of other criteria, you may be eligible.
If you believe you may qualify, or if you have any other questions about dealing with debt or money management issues, be sure to contact us. We can help you address this and other tough financial questions.

Is Your Will Up To Date?

When was the last time you reviewed your will? People generally make wills to guarantee the proper disposition of their money and property, which is why it’s a good idea to consult your CPA when it’s time to create or update your will.
We recommend that you revisit your will every time you experience a major life event, such as marriage, the birth of a child, retirement or other significant milestones. Even if there is no meaningful change in your life, it’s smart to review the document every couple of years to ensure it still addresses all your estate concerns and reflects your wishes. Changes in the value of your investments—such as a stock portfolio or real estate—may also require adjustments in your estate plans.
Reviewing your will may raise questions about various areas of your financial life, including your retirement or estate planning, college savings or other financial concerns. Be sure to turn to us for the perspective and advice you need to make the best choices.

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

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

How Do Taxes Affect Your Financial Picture?

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


We Can Help You Address the Issues that Keep You Up at Night
Where will your business be in five years? Would strategic budget cuts in some areas improve your company’s health? Are there ways you can boost revenue? If you’re nearing retirement, is there a buyer or successor in the wings? These are the kinds of questions that keep many business owners up at night. Fortunately, as CPA’s, we can probably help you sleep a little easier. Our firm is made up of highly qualified and educated professionals who work with clients like you all year long, serving as trusted business advisers. We act as coaches, guides and trainers for our business clients, helping them chart the best route to success. So be sure to turn to us with all your business questions or concerns.
What’s So Great about CPAs?
You may not have asked yourself that question in so many words, but you may have wondered what sets CPAs apart from other financial professionals. The answer in short: A lot. We typically begin our careers with years of college and graduate education. To become licensed, we must take the demanding Uniform CPA Examination, which tests our knowledge on a wide range of business topics over a total period of 14 hours. In addition, we have to meet an experience requirement and then be licensed by a State Board of Accountancy to practice. But it doesn’t stop there. Once we become CPAs, we also must meet continuing education requirements to update our knowledge of new business developments as well as commit to a strict code of ethical standards. Armed with this rigorous training, we’re on the job year round, ready to help individuals and businesses address their own unique challenges.
If you want more information about our firm and how we can help you resolve all your financial issues, don’t hesitate to contact us.
Have Questions? We’re Here All Year!
Many clients see their CPAs at tax time, when the main focus is on completing and filing their tax return. As a result, they may not take the opportunity to ask questions about long-term tax planning or about other important financial concerns. The good news is that we are available to you all year. We’re ready when you are to take some time reviewing your financial situation, helping you understand your options and make the best decisions. We’re also here in an emergency to help address unexpected financial concerns. So, give us a call to discuss your important financial issues whenever they arise.