All posts in category

Personal Tax

16 / 03 / 2016 by Greg Freyman, CPA in Personal Tax

What You Need to Do with Form 1095

You, your employees or your clients may receive one or more forms that provide information about 2015 health coverage. These are Form 1095-A, 1095-B and 1095-C. The following health care tax tips provide some answers to common questions about these forms:

For more information on these forms, see Questions and Answers about health care information forms for individuals, or contact Freyman CPA P.C. for further assistance.

Tags:

Tax Scams – What to Look Out For

As a reminder during this tax season as well as throughout the year, it is important to keep in mind that the IRS will not contact you by phone or e-mail regarding tax liens or outstanding tax liabilities.  The IRS has strict protocols when contacting taxpayers regarding tax deficiencies, with letters of correspondence being their official method of first contact.

Phone key pad

How to identify a tax scam:

  • Demands immediate payment; extreme urgency to receive payments
  • Tries to make you pay taxes without giving you the option to research the debt or file an appeal for the amount you allegedly owe
  • Asks for payment using a credit or debit card especially over the phone
  • Threatens to arrest you for not paying

Continue reading

Tags:

Tax Extenders: 2016 Tax Rule Updates

On December 18th, right before shutting down for the holidays, Congress has passed 50 major changes for the upcoming tax filing season. Some of the tax extenders will be quite important, while others may go by without much notice. We’re taking a look at the notable changes.

Permanent Tax Extenders

Some of the previously enacted temporary provisions, have been made permanent:

  • State and local sales tax deduction, an alternative to claiming state tax withholdings on the Schedule A, Itemized deductions, is now a permanent line item. It benefits not only people in states with no income tax, but also taxpayers whose state tax withholdings are not large, or certain AMT taxpayers.
  • The now permanent teacher’s expenses deduction of $250 is being enhanced to include professional development expenses, in addition to classroom supplies. But teachers will have to wait one more year before they can begin using this deduction for continuing education, as the enhancement is not effective until 2016.
  • IRC Section 179 was made permanent, with an expanded definition of what property qualifies. This will affect many taxpayers, especially small business owners. Limits on expensing tangible depreciable property have been raised dramatically, and offer a good year-end tax planning strategy.
  • 15-year cost recovery on qualified leasehold improvements is now permanent, and could mean big savings to small business owners.

Continue reading

Tags:
14 / 11 / 2015 by Greg Freyman, CPA in Personal Tax

HSA Contribution Limit For 2015

The tax deadline that is coming up in four months is also an important date for health savings account (HSA) contributions. Similar to an IRA, you have the option of electing whether or not you want to apply the contributions to the 2015 or 2016 tax year. Find out the best ways to use your health savings account by reading about HSA contribution limit.

HSA contribution limit for 2015

You can contribute up to $3,350 for individual health insurance coverage and $6,650 for family coverage and an additional $1,000 if you’re 55 years or older. To contribute to a health savings account, you must have a high-deductible health insurance plan of at least $1,300 for individual coverage and $2,000 for a family plan.

Continue reading

Tags:
07 / 11 / 2015 by Greg Freyman, CPA in Personal Tax

Required Minimum Distributions For Beneficiaries

Those fortunate enough to be named a beneficiary of a retirement account will want to know the nuances for reporting income on their tax return. This is specifically important when the account holder passes away before or after the time they are supposed to take required minimum distributions (RMDs).

 

What are required minimum distributions?

Traditional IRA and 401(K) account holders are required to start taking minimum distributions when they reach the age of 70 ½, even if they are still working for an employer at the time. However, in the first year they are required to take distributions, they can defer it until April 1st of the following year.

Continue reading

Tags:
26 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

Does Itemizing Increase My Audit Risk?

Itemizing deductions in itself does not increase the chances of being audited. If we reference the latest IRS statistics, the taxpayer’s income is more of a factor than whether or not they itemized. Specifically:

  • Most basic tax returns with less than $200,000 in income and without any business or investment income have a 0.3% chance of being audited, or 3 out of every 1,000 tax returns are audited.
  • If the taxpayer’s income is at least $200,000 for the same, the rate is 2.2%, or slightly in excess of 2 out of every 100.
  • Over a $1M in income, and the rate is 7.5%.

That being said, if the taxpayer has significant itemized miscellaneous expenses in relation to their income, then that can certainly raise a red flag.

Continue reading

Tags:
20 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

Should I Itemize Or Claim The Standard Deduction?

The obvious answer is that if your itemized expenses exceed the standard deduction, you should itemize. That being said, if you don’t have the actual receipts and supporting documentation to justify claiming those expenses, then you run the risk of losing those deductions as a result of an audit, which can be costly from an interest and penalties perspective. Not to mention, you’ll likely need to hire a tax professional to assist you with IRS correspondences.

Continue reading

Tags:
14 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

Tax Breaks For Retirees

Many existing or soon to be retirees should pay careful attention to the tax breaks that are available to them. As most of us know, when you’re on a fixed budget, every dollar counts. So, what are some of the tax breaks for retirees?

 

Vitamins/Nutritional Supplements

This can be overlooked as many elderly taxpayers may think there’s no chance of deducting these medical expenses. That’s not always true. We’ve seen countless examples of those on dialysis being prescribed specific supplements & vitamins by their doctor that goes beyond just caring for their general health. With the proper support, in those instances, the costs which can be in the several thousand dollar range and possibly greater are eligible deductions. Specifically, if we reference IRS Publication 502 page 16 — it states, “You cannot include in medical expenses the cost of nutritional supplements, vitamins, herbal supplements, “natural medicines,” etc. unless they are recommended by a medical practitioner as treatment for a specific medical condition diagnosed by a physician. Otherwise, these items are taken to maintain your ordinary good health, and are not for medical care.”

Continue reading

Tags:
05 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

Did You Recently Inherit An IRA?

If you did inherit an IRA account from a deceased relative that was under the age of 70 1/2, you’ll be prompted to elect a distribution option. The options are to take a lump-sum distribution, open an inherited IRA based on the life expectancy method or open an inherited IRA based on the 5 year method. What should you do?

 

Elect a lump-sum distribution

In this instance, all assets in the IRA are distributed to you at once. You will pay income taxes on the distribution all at once. You may also move to a higher tax bracket depending on the amount of the distribution and your current income level. However, you will not incur the 10% early withdrawal penalty. This is the option in which you will likely pay a significant amount of taxes in year 1.

Continue reading

Tags:
04 / 10 / 2015 by Greg Freyman, CPA in Personal Tax

How Do Roth 401(K) Plans Work?

If your company offers a 401(K) plan to your employees, some of them may inquire about treating the contributions as Roth contributions. This is how you can be prepared to answer their questions about Roth 401(k) contributions.

 

What is a Roth 401(k)?

This type of employer-provided retirement account allows the employee to designate Roth contributions of up to $18,000 or $24,000 if 50 or older (reference IRC Section 402(g)) for the 2015 tax year. Similar to a Roth IRA, the contributions are made with after-tax dollars, but appreciate tax-free over time. A key benefit of the Roth 401(K) is that there is no income limit as is the case with a Roth IRA. You can earn $1 million and still be eligible.

Continue reading

Tags:
Contact Us Form
Get in touch with us