“The purpose of a tax cut is to leave more money where it belongs: in the hands of the working men and working women who earned it in the first place.” – Bob Dole
We’ve watched the campaign promises, the debates, the flurry of activity and our government in action. The biggest tax reform of our generation has just been passed into law. So what does that mean for you? Will you see more money in your pockets, or are the taxes going up for you next year?
“Thankfulness is the beginning of gratitude. Gratitude is the completion of thankfulness. Thankfulness may consist merely of words. Gratitude is shown in acts.” —Henri Frederic Amiel
Before we put you all to sleep with a lot of boring tax talk, let’s simply say that great things are about to come that will surely stimulate the economy in more ways than meets the eye at first glance.
Great works are performed not by strength but by perseverance.
~ Samuel Johnson
This week we complete our series on the value-added tax planning services which are perfectly suited to do during the off-season months.
With tax season upon us, we have compiled a list of hot topics the IRS has been known to closely examine with the filing of a Schedule C – Profit or Loss from Business.
The IRS’s primary concerns revolves around the reliability/duplication of information provided on the Schedule C as well as the methods used for recordkeeping and presentation in the following areas:
An increase in income within the business should be considered taxable.
If the payment of income would not have been received without the existence of the business, the income should be considered business income. This includes IOUs, cash, etc. So remember, if the payment crosses the door of your business, that payment of income should be considered part of your business income.
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.
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.
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:
That being said, if the taxpayer has significant itemized miscellaneous expenses in relation to their income, then that can certainly raise a red flag.
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.
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?
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.”
A condominium is different from a house in many respects. For instance, condos typically do not have a yard or basement. Instead, condo owners share land, lobbies, elevators, stairs, pools, and other service areas. As such, owners generally pay dues or assessments to a special corporation that is organized to manage the common areas.
The short answer is that common area expenses are not deductible if the condo is being used as personal property. However, if the condominium association makes a capital improvement to the property, the owners can add their pro-rata share of the expense to their cost basis. It is important to save the supporting documentation detailing the nature of the improvement since it will be incorporated in your capital gains tax calculation when you eventually sell the condo.
We are married and earn about $300,000 per year. My wife is trying to become pregnant and we have already spent $24,000 in fertility treatment. Now we are considering using donor eggs which will cost an additional $42,000 Thus $66,000 in expense in 2015 or we can break it up to $24k this year and $42k next year. Is this type of expense deductible as a “medical expense?” Secondly, would the use of a FSA or HSA have been wise? Third, would it benefit to wait until 2016 to do this procedure and use a HSA or FSA? Fourth, assuming that we would receive some benefit by waiting until 2016, can they have the procedure done now and pay later to move the expense to 2016.