THE FIVE MOST OVERLOOKED WAYS TO INCREASE YOUR REFUND

“Perfect for middle-income taxpayers who deserve a break-but the IRS isn’t going to call and let you know you missed them.”

“I want the IRS to write you a check for a $1,000.00 more next year than they will this year,” Don Fuener.

The number one budget item for the average American household today is their taxes. You will spend more money on taxes then you will for your mortgage or other housing expenses. In fact taxes take such a big bite out of your take home pay, you will spend more money on taxes then food, clothing, and automobile expenses, combined. The most insidious part of taxes is that they confiscate the money before you see it. You don’t even have the luxury of writing a check for your taxes. Your taxes are withheld from your paycheck. The difference of the gross amount on your paycheck and the net amount is growing more each year. Our goal is to help you increase your net amount each payday.

We have compiled a list of strategies that you can use to lower your tax bill. The suggestions are broad and available to virtually any taxpayer. Of course if you have questions, please feel free to call us. We will be glad to discuss your specific tax situation and help you increase your refund by our $1,000.00 goal.

KEEP BULLET PROOF RECORDS. We know that you don’t live your life in income tax mode, but the key to all savings is good record keeping. Poor record keeping shouldn’t be the reason you miss a deduction. Because after all the IRS isn’t going to call you up after receiving your return and say oops, you missed that one. You certainly don’t have to keep every scrap of paper, but if that paper; or credit card statement, pertains to mutual funds invested, or a charitable contribution to the Salvation Army, hold on tight. The IRS counts on you to not be a good record keeper. Otherwise, it wouldn’t audit taxpayer’s returns. Beat the IRS at their own game. Try one of the new computer financial programs such as Microsoft Money or Quicken. By entering information on the computer regularly, you can generate tax deduction reports at year end. Or, if the computer programs are not your style, try the envelope approach. Strategically place a 9 x 12 envelope in your home or office and label it tax deductions. Throughout the year, stash in the envelope canceled checks, cash receipts and other items that relate to your taxes. Plan on spending an hour or two in January, to sort and total the receipts and canceled checks by category of expense. If you have stock, bond or mutual fund investments, gather all 12 months of statements you received and file them in a file folder marked with the investment name on the folder. Keep the investment file folders indefinitely. You then have access to your cost basis in that investment when you sell them. Reward yourself when you are done. Not only have you met IRS record keeping requirements, but you probably found deductions from last year that you forgot.

Charitable deduction record keeping tip. Receipts from the charitable organization are now necessary. However, you do not need a receipt if you have a copy of a canceled check from that organization.
Extra bonus tips for charitable deductions: auto expenses. If you volunteer for a charitable organization and you use your automobile for that organization, you are entitled to a deduction based on your mileage for that organization. Boy Scouts, 4-H, Sunday School, and similar organizations count. Keep a record on a calendar to back up your deduction. Here is one tax savings deduction tip maybe you haven’t realized you’re able to take on this year’s income tax return. Did you contribute some old clothes or household goods to a Goodwill or similar drop box this year? A receipt is not required if you deposit property at a charity’s unattended drop site unless you claim that the property is worth more than $250.00. However, you must maintain a written record of the contributions, listing the items contributed and the date and location of the contribution. You are required to file form 8283, Non Cash Charitable Contribution if you claim a deduction of over $500 for non cash contribution. Additional rules apply for non cash contributions over $5,000. Questions? Please feel free to call our office.


TAX CREDITS, WHY YOU SHOULD LOVE THOSE CREDITS. More important than any deduction on your tax return are tax credits. Learn to love those credits. Why? Because credits give you a dollar for dollar reduction in your taxes. Deductions only reduce the income before taxes based on your individual tax rate. Tax credits come in various flavors. Do you have a dependent under the age of 17? You are entitled to a $1000.00 credit for each eligible child. Pay child care expenses for your under 13 year old so you can work? You are entitled to credit of up to $1,050.00 for those child care expenses paid. Do you have a dependent who is attending college? You may be entitled to a refundable credit of up to $2,500.00 per dependent for college tuition and other expenses paid.

 
There is one credit that any taxpayer can take advantage of no matter what tax return they file-short or long-the Life Time Learning Credit. We call it the “eight to 88” credit because anyone can take advantage of this credit. The credit is available for any tuition and fees’ expenses as long as the classes are part of a course of instruction to acquire or improve job skills. Tuition and fees for undergraduate or graduate school can be claimed for more than one course. There is no limit of the number of years that the credit can be claimed for each student. The maximum amount of credit is $2,000.00.

The IRS has placed incomes on who can claim the educational credits. But don’t give up. You can still deduct your higher education expenses even if you don’t itemize deductions on schedule A. Our computer system automatically figures the correct amount credit or deduction to give you the best benefit.

DON’T STAND FOR BIG REFUNDS. It is hard to believe that the same people who have the least amount money strive to get the largest refunds...deliberately. Thinking that a refund is some sort of savings account, these taxpayers actually ask their employer to withhold extra tax dollars so their refund will be larger. REALITY CHECK. A tax refund is nothing more than an interest free loan of your money to the government. And when it comes time to get your money, it is really tough to get back. You have to file an income tax return to get it, wait six weeks for the refund, or pay extra to file it electronically. The smart taxpayer figures their withholding so that they can use their money all year long instead of having the IRS hold on to it.

Are you eligible to receive Earned Income Credit? You do not have to wait to file your income tax return to receive your earned income credit. Your employer can advance you the earned income credit you are entitled to each paycheck. Employers encourage employees to take the advanced income credit, since it reduces their tax liability.

Need a short term emergency loan? You can change your withholding to reduce the amount of federal income tax withheld from your paycheck temporarily. Use the extra money to pay the unexpected bill. Later, you are allowed to change your withholding back to make up the difference.

Extra bonus IRS secret...the IRS doesn’t charge interest as long as you pay you entire tax liability from your paycheck. The IRS doesn’t care if you do it all at once or equally during the year. Payments from withholding are treated as being paid equally all year long, no matter when they were actually paid.

PARTICIPATE IN YOUR EMPLOYER’S CAFETERIA PLAN. Payments for day care expenses and other insurance payments can be made with pretax dollars when you participate in your employer’s cafeteria plan. The idea is that you will have to pay these expenses anyway, so why not use dollars that are not taxed to pay for them? Even better is the fact that you not only have an opportunity to save up to 42% in income tax savings, you also do not have to pay Social Security-Medicare taxes on your cafeteria plan payments. Your total tax savings can be as much as 49 %.

CONTRIBUTE TO YOU EMPLOYER’S TAX SAVING PLAN. If your employer offers a 401 K, 403 B or deferred compensation plan, contribute to it. Your employer’s savings plans are almost painless because they take the money away from you through payroll deduction. You get an immediate up to 42% return (tax savings) and tax deferred earnings for your contributions. Some employers even match your contribution, tax free. When your employer matches your contribution, you get even more bang and tax savings for the punch.

FINAL EXTRA BONUS TIP---Using a tax preparer saves money. Of course we want you to use us. There is no substitute for experience. $89.00 tax return preparation software programs can’t match our ability to apply the current, ever-changing tax laws, to your individual tax situation. Even more important is the fact that if the IRS calls, we are here to help. We call it our “sleep at night guarantee.” Each day we help clients with IRS problems that they can’t solve themselves. We know how to make the system work for you. Our tax professionals are friendly. We don’t speak tax geek, unless we have to. We are here to help you this year prepare your taxes. We appreciate your interest, and look forward to working with you.

IRS Delays Refunds Yet Again.

Last year IRS delayed some refunds till mid February.  This year early filers expecting early refunds were disappointed according to the Chicago Tribune.


The early bird does not always get the worm: The Internal Revenue Service says that some taxpayers who filed on or before Jan. 25 may have to wait a week longer than expected for refunds.

The IRS blamed it on new antifraud safeguards being installed on IRS computer systems that required "fine-tuning."

The federal agency had originally announced that many taxpayers would get their money back as soon as 10 days after they filed online and had their check deposited directly.

That still remains true for those who filed after Jan. 26, said IRS spokesman Mike Dobzinski in Plantation, Fla.




Read more by clicking the above link.

Congressional Budget Office Predicts A Huge Tax Increase In the Next 2 Years

From CNS Online:


The amount of money the federal government takes out of the U.S. economy in taxes will increase by more than 30 percent between 2012 and 2014, according to the Budget and Economic Outlook published today by the CBO.
 
At the same time, according to CBO, the economy will remain sluggish, partly because of higher taxes.
“In particular, between 2012 and 2014, revenues in CBO’s baseline shoot up by more than 30 percent,” said CBO, “mostly because of the recent or scheduled expirations of tax provisions, such as those that lower income tax rates and limit the reach of the alternative minimum tax (AMT), and the imposition of new taxes, fees, and penalties that are scheduled to go into effect.”


Click the above link to read more good news.

S Corporations

Choosing the form of business you will be operating under is the second most important decision you can make, the first being actually going into business.

 I believe that operating your business as a Sub Chapter S or Small Business Corporation makes sense.  In fact five businesses I own are operated as Sub Chapter S Corporations. I am not alone in this belief.  This year of the 4,000,000 corporate income tax returns that will be filed with the Internal Revenue Service, more than 2,000,000 will be Sub Chapter S Corporation returns.

Take a minute to read the discussions from a variety of experts.  Then if you believe that becoming an S Corporation makes sense, call us.   

We will make an appointment to visit with you to discuss your individual situation.

Ten stupid things smart people do to mess up their taxes

After every April 15th we kind of shake are heads and wonder why.  How can really smart people, our clients, do such stupid things to their taxes.  Each year we compile of list of mistakes our clients made with one purpose in mind.  Don’t make the same mistake. Learn from their lessons.

Here is our current list of things to avoid this year.


1.    Take money out of their IRA or pension plan and don’t have any money withheld for taxes. If you have to take money out of your tax sheltered plan don’t forget that there is a 10 percent penalty in addition to Federal tax owed on the distribution if you are under age 59 1/2.  Don’t ever take money out of these plans without having the most Federal tax withheld from the distribution.  Call our office if we can help.

2.    Take money out of their IRA or pension plan or 401 K and not roll it over to another tax deferred plan.  Back on this subject again. Leaving your job usually means cashing in a pension plan or 401 K.  We understand that sometimes the money is needed to pay for day to day activities until you can find a new job.  But if you don’t need the money don’t spend it roll it over. We can help you if you don’t know what to do.  We can refer you to very competent people that can help with the rollover.  Taking the money if you don’t need it means additional tax liability.

3.    Sell stocks or mutual funds and not know what they paid for it. If you are dabbling in the market, you need to keep track of what you paid for the security and when you bought each security.  We suggest keeping a permanent stock purchase file, and filing the confirmation each time you buy a security.  That way, when you sell it you can easily locate the purchase price and purchase date.  Remember that you only pay tax on the gain and you can deduct the loss of each security you sell.

4.    Don’t keep any records. Records are very important in our imaginary tax world.  Especially for business tax deductions like car expenses. Jotting down on a daily basis in a daily planner or pocket calendar is all you need.  Keep a file nearby for tax deductible receipts.  Better yet get a credit card that you use only business tax deductions.  That way you all the receipts organized for you.  Your credit card along with your milage calendar is all you need to make April 15th very less taxing.

5.    Give charitable deductions, especially non cash and don’t make an attempt to value the donation.  A note about the date and time of your deduction and a short list of the description of the deduction in your tax deduction file is all you need.

6.    Not  filing your taxes because you don’t have the money to pay. Always file, even if you do not have the money to pay the taxes you owe. The IRS considers not paying on time and not filing as two separate issues, and a penalty is involved for each. When you file your tax return, you have several options. You can apply for an "offer in compromise," make monthly payments through an IRS installment agreement, or temporarily delay paying. Whichever is best for you, we will help you contact the IRS right away to let them know you cannot pay. You should pay as much as you can when you file because the IRS assesses penalties and interest on the amount not paid.

7.    Ignore those letters from the IRS. Do not ignore mail from the IRS. If you owe taxes, the IRS will collect. Persons who do not communicate with the IRS about inability to pay can expect a "Notice of Federal Tax Lien" to be filed against their property. In lien terms, this is a lien about the size of Alaska. Few carry more weight. The lien attaches all your property, including your house, car and any future property you might obtain. A levy, which is a legal seizure of property to satisfy a tax debt, is another legal means the IRS can use to collect taxes. This means the IRS can seize your car, boat or home and sell it to satisfy your tax debt or it can place a levy on your wages. More good news is that these liens often stay on your records long after the issue has been resolved or until the IRS gets around to removing it. So it's also the gift that keeps on giving!

8.    Signing. It's not the toughest part of the tax return, but we have found that one of the most common mistakes occurs on the bottom of the tax form: the place where you're supposed to sign your name. A lot of taxpayers simply forget to do it. And, a return without a signature is like no return at all. Although the IRS won't send back your forms (it doesn't want them to get lost in the mail), everything is put on hold while you're sent a special form to sign certifying that your return is accurate. Only after you sign and send in that form, and the tax agency matches it up with your other forms, can your return be processed -- and any refund check issued.

9.    Big refunds.  Isn’t that the point of filing? Big refunds. In fact some clients rate the expertise of their tax preparer with the size of their refund.  The bigger the refund the better the tax preparer.  Nothing can be farther from the truth.  Refunds are nothing more than interest free loans of your money, even earned income credit which can be advanced to you from your employer throughout the year, to the government.  Then you have to go through the expense and the wait of getting your refund when you file your taxes. Extra withholding doesn’t benefit you, only the government. Don’t stand for big refunds.  Stand for bigger paychecks.  Your goal should be break even on April 15th.

10.    Assuming the wrong filing status.  Single taxpayers should be singled out for assuming that they should file as single tax payers when in fact they qualify for the much-more-favorable head-of-household (HOH) filing status. Say you're single and your non-adult child lives with you and pays for less than half of his or her own support. If you pay more than half the household's costs, you qualify. You may also qualify if you are still married and lived with your child but apart from your spouse for at least the last half of 2006. Finally, if you are single and can claim your parent as a dependent, you can probably file as HOH. This is true even if your parent has his or her own place. You are the HOH if you pay more than half the cost of your dependent parent's home.

Ten stupid things business owners do to mess up their business.

Ten no 12 stupid things business owners do to mess up their business.

1.    No mailing list to their existing customers.
2.    Relying on quickbooks for their accounting.
3.    Getting complacent.
4.    No relationship with their bankers.
5.    Stop learning.
6.    Not being honest and dependable.
7.    Not having a goal in mind about what your business will look like when it is done.
8.    Not picking the right
9.    Not leaning from their mistakes.
10.  Not taking action.  Any action
11.  Depending on marketing sales people to focus on your advertising and marketing.
12.  Not realizing that sales are the most important thing.  That sales are the answers to all your problems.

Wow federal workers failed to pay billions in taxes in 2010

According to Investors Business Daily   federal workers have failed to pay more than $3.4 billion dollars in taxes last year.    


How embarrassing this must be for President Obama, whose major speech theme so far this campaign season has been that every single American, no matter how rich, should pay their "fair share" of taxes.
Because how unfair -- indeed, un-American -- it is for an office worker like, say, Warren Buffet's secretary to dutifully pay her taxes, while some well-to-do people with better educations and higher incomes end up paying a much smaller tax rate.
Or, worse, skipping their taxes altogether.
A new report just out from the Internal Revenue Service reveals that 36 of President Obama's executive office staff owe the country $833,970 in back taxes. These people working for Mr. Fair Share apparently haven't paid any share, let alone their fair share.