Have you received an IRS notice?

Here’s what to do. The full article from IRS.gov is copied below.

What to do if You Get a Notice from the IRS

IRS Summertime Tax Tip 2014-01, July 2, 2014

Each year the IRS mails millions of notices. Here’s what you should do if you receive a notice from the IRS:

  1. Don’t ignore it. You can respond to most IRS notices quickly and easily. And it’s important that you reply promptly.
  2. IRS notices usually deal with a specific issue about your tax return or tax account. For example, it may say the IRS has corrected an error on your tax return. Or it may ask you for more information.
  3. Read it carefully and follow the instructions about what you need to do.
  4. If it says that the IRS corrected your tax return, review the information in the notice and compare it to your tax return.If you agree, you don’t need to reply unless a payment is due.

    If you don’t agree, it’s important that you respond to the IRS. Write a letter that explains why you don’t agree. Make sure to include information and any documents you want the IRS to consider. Include the bottom tear-off portion of the notice with your letter. Mail your reply to the IRS at the address shown in the lower left part of the notice. Allow at least 30 days for a response from the IRS.

  5. You can handle most notices without calling or visiting the IRS. If you do have questions, call the phone number in the upper right corner of the notice. Make sure you have a copy of your tax return and the notice with you when you call.

  6. Keep copies of any notices you get from the IRS.
  7. Don’t fall for phone and phishing email scams that use the IRS as a lure. The IRS first contacts people about unpaid taxes by mail – not by phone. The IRS does not contact taxpayers by email, text or social media about their tax return or tax account.

For more on this topic visit IRS.gov. Click on ‘Responding to a Notice’ at the bottom left of the home page. Also see Publication 594, The IRS Collection Process. You can get it on IRS.gov or call 800-TAX-FORM (800-829-3676) to get it by mail.

Additional IRS Resources:

 

William A. Olson, CPA: Contact me at wolsoncpa.com

Posted in 1040 Personal Income Taxes, 1065 Partnership Income Taxes, 1120 C Corporation Income Taxes, IRS | Comments Off on Have you received an IRS notice?

Mid-year Tax Planning (re-post)

There are always things you can be doing throughout the year to lower your tax bill at year end. Full year tax projections are a great way to see how what you do now will make your life easier come tax time in 2015 and they can be updated as your circumstances change… contact me at any time if you would like one prepared for you.

As an additional resource, here is an article from Kiplinger with some good ideas you can implement right now.

William A. Olson, CPA: Contact me at wolsoncpa.com

Posted in 1040 Personal Income Taxes, 1065 Partnership Income Taxes, 1120 C Corporation Income Taxes, 1120 S Corporation Taxes | Comments Off on Mid-year Tax Planning (re-post)

2014 Standard Mileage Rates (IRS)

Here they are.

2014 Standard Mileage Rates

IR-2013-95, Dec. 6, 2013

WASHINGTON — The Internal Revenue Service today issued the 2014 optional standard mileage rates used to calculate the deductible costs of operating an automobile for business, charitable, medical or moving purposes.

Beginning on Jan. 1, 2014, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:

  • 56 cents per mile for business miles driven
  • 23.5 cents per mile driven for medical or moving purposes
  • 14 cents per mile driven in service of charitable organizations

The business, medical, and moving expense rates decrease one-half cent from the 2013 rates.  The charitable rate is based on statute.

The standard mileage rate for business is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes is based on the variable costs.

Taxpayers always have the option of calculating the actual costs of using their vehicle rather than using the standard mileage rates.

A taxpayer may not use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle.  In addition, the business standard mileage rate cannot be used for more than four vehicles used simultaneously.

These and other requirements for a taxpayer to use a standard mileage rate to calculate the amount of a deductible business, moving, medical, or charitable expense are in Rev. Proc. 2010-51.  Notice 2013-80contains the standard mileage rates, the amount a taxpayer must use in calculating reductions to basis for depreciation taken under the business standard mileage rate, and the maximum standard automobile cost that a taxpayer may use in computing the allowance under a fixed and variable rate plan.

William A. Olson, CPA: Contact me at wolsoncpa.com

Posted in 1040 Personal Income Taxes, 1065 Partnership Income Taxes, 1120 C Corporation Income Taxes, 1120 S Corporation Taxes, IRS, Michigan Taxes | Comments Off on 2014 Standard Mileage Rates (IRS)

Affordable Care Act (ACA) Tax Provisions

Need help understanding the Affordable Care Act’s tax provisions? Your local CPA is a good source for information, but so is the IRS itself. See here for a link to a helpful page on the IRS’s website.

William A. Olson, CPA: Contact me at wolsoncpa.com

Posted in 1040 Personal Income Taxes, 1065 Partnership Income Taxes, 1120 C Corporation Income Taxes, 1120 S Corporation Taxes, IRS | Comments Off on Affordable Care Act (ACA) Tax Provisions

Mid Year Financial Checkup from the USA Today

Some great tips for getting your financial house in order… see here or see below for the article text.

This year is more than half gone. Amid your summer vacation and plans for fun in the sun, find time now for your mid-year financial checkup.

Like many, you probably picked a financial goal for this year, such as pay off debt or generally get your financial house in order. Now reevaluate your intentions and take a good look at where you stand. Start reviewing the following:

• Spending plan. Cash flow management is key to a successful financial future and knowing where your money goes a must in creating a plan.

If you still need a spending plan, use Excel or another application to start tracking where your money goes. Scrutinize amounts you pay for such fixed expenses as your mortgage or rent, car, insurance premiums and utilities. Pay yourself first (via savings or investing) before laying out for variable or discretionary expenses such as entertainment, clothing or other, extracurricular activities.

This tracking allows you to pinpoint areas and categories where you may need to make adjustments, such as decrease dining out to put more toward savings for travel or a home down payment.

• Debt management. Did your credit card and personal debt balances decrease or increase so far this year? Review your statements to track your progress (if any) in the last six months.

When paying down debt, either give priority to your accounts carrying the highest interest rates first or target your lowest balances for payoff first. Your spending plan also comes into play with debt reduction: Review where your money goes and target any areas you can cut back on to help you accelerate payoff.

• Savings and investments. Is your emergency fund of three to six months’ expenses fully funded or do you still work toward that first $1,000? What about taking advantage of employer retirement plans and contributing to your company 401(k)?

Set up a systematic transfer from your paycheck to your savings or investment account – and then forget it. For Roth individual retirement accounts and employer retirement plans, saving in smaller, automated increments minimizes your cash flow strain and sets the stage for a disciplined investment strategy.

Also review allocation of your investment accounts and make any necessary adjustments or rebalances.

• Personal and asset protection. Nothing can send your dreams off course faster than inadequate insurance coverage in time of need.

If you’re single with no dependents, for example, make sure you’re covered for disability, health, home, auto and personal liability. If you’re married or others depend on your income, add life insurance.

Reach out to your insurance agent or broker to ensure you hold adequate coverage. Take into account updates for potential transitions in your life such as marriage, the birth of a child, job loss, an increase in your income, a remodeling of your home, big ticket purchases, death or divorce.

• Estate planning. Review or create your family trust, wills or powers of attorney to allow others to make your health-care decisions if you’re incapacitated; do it now. If you have children, also establish guardianship provisions.

The more clearly and concisely you document your intentions, the better. Although this planning area may make you uncomfortable, your family and you need a current plan outlining your wishes and specific requests for after you die.

Don’t worry if you’re behind on some of these; getting on track financially is a journey, not a race. Set small goals and tasks for yourself and remember to celebrate your achievements along the way for the rest of 2014.

William A. Olson, CPA: Contact me at wolsoncpa.com

Posted in 1040 Personal Income Taxes | Comments Off on Mid Year Financial Checkup from the USA Today

What’s NOT Deductible

I often get asked, “What expenses are deductible?” However, I have never had someone ask what is not deductible. Here is an article from Forbes with some “bad” ideas of tax deductible items… if you do not want to click over, I have reproduced the list below.

  1. Pets. No matter how much your four-legged, scaly or feathered friend feels like a member of your family, the cost of caring for your pet – from food to vet visits – is generally not deductible. The IRS considers pet-related expenses routinely personal. A few exceptions do apply, including service animals and guard dogs.
  2. Alarm systems. Generally, there is no tax deduction for installing an alarm system at your home. Similarly, the monthly fees are not deductible. If, however, the property that you alarm is a rental or commercial property, the installation and the monthly fees are deductible as the cost of doing business. Additionally, if you take the home office deduction, then you may claim the pro rata portion of the alarm system on your taxes, just as you do with other home office expenses; the portion attributable to the non-office portion of your home is still not deductible.
  3. Gym memberships. Most weight loss programs are only deductible as a treatment for a specific disease diagnosed by a physician. The diagnosis is key and the program must be specifically ordered by the doctor: if your doctor merely advises you to lose some weight to protect your health, that’s not sufficient. That said, you cannot deduct gym or health club membership dues even if your doctor orders you to up your activity level. Some separately stated activity fees, such as those for water aerobics, however, could be deductible if prescribed by a doctor.
  4. Maternity clothes. Clothing for work is only deductible if the sole purpose of the clothing/uniform is clearly for business purposes (think branded uniforms). It’s not deductible if you could wear the clothes outside of your workplace even if you don’t. That goes for maternity clothes, too. If you have to stock up on maternity clothes – including suits for court or coats for outdoor use – to get you through your pregnancy, that cost is not deductible even if you don’t plan to wear them again.
  5. Driver’s license fees. While state and local taxes are deductible, including certain personal and real property taxes, associated costs and fees may not be. That includes your driver’s license fees and car inspection fees. Similarly, you can’t deduct the cost of licensing dogs, cats or other animals – even if they’re considered property in the state where you live.
  6. Plastic surgery. You cannot deduct the cost of surgeries to simply look or feel better; the procedure must be a treatment for a specific disease diagnosed by a physician. But plastic surgery for non-medical purposes (including breast augmentation surgery for cosmetic reasons) is never a deductible expense.
  7. Political contributions. You cannot deduct contributions made to a political candidate, a campaign committee, or a newsletter fund. And don’t try to be tricky: you can’t get around the rules by claiming it’s for business or other purposes. The IRS clearly states that advertisements in convention bulletins and admissions to dinners or programs that benefit a political party or political candidate are not deductible.
    English: Traffic with 73 solo drivers vs. traf...

    English: Traffic with 73 solo drivers vs. traffic with 73 commuters using commute alternatives including bus, carpool and vanpool. (Photo credit: Wikipedia)

  8. Commuting expenses. You cannot deduct the costs of getting to and from work, no matter if you take a bus, trolley, subway, taxi, or drive your own car. Commuting expenses to and from your regular place of work (as opposed to travel for work) are never deductible.
  9. Private school. Private school expenses (including tuition) are not deductible. However, expenses for a child in nursery school, preschool, or similar programs for children below the level of kindergarten are deductible for purposes of the child care tax credit if they otherwise qualify as child care. The IRS takes the position in Pub 503 (downloads as a pdf) and in the Regs that expenses to attend private or parochial kindergarten or higher grades are not deductible (I happen to think that’s not always the case).
  10. Babysitting. Occasional babysitting so that you can catch a movie that isn’t animated (!) or enjoy a nice meal may be a much-needed expense, but it’s still considered personal in nature and not deductible. This should be distinguished from childcare that allows you to work or look for work: those expenses may be count towards the child and dependent care credit.
  11. Vitamins. For federal income tax purposes, you can only deduct qualifying medical expenses: qualifying medical expenses include the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. That includes any medicine or drug which requires a prescription of a physician for legal use. Over the counter meds – even if you need them – don’t count unless prescribed by a doctor (like gym memberships, the prescription is required, a mere mention or suggestion isn’t sufficient).
  12. Child support. Child support is tax neutral. It is neither tax deductible to the payor nor taxable to the recipient. Spousal support, on the other hand, is both tax deductible to the payor and taxable to the recipient. You don’t get to choose which is which at tax time: that’s up to the judge or it must be memorialized in agreement.
Posted in 1040 Personal Income Taxes | Comments Off on What’s NOT Deductible

Mid year 2014 Tax Planning

It is almost June 30th which means we are about half way through 2014. It is not too late or too early to do some tax planning to manage your tax liability.

Common strategies/suggestions for lowering your tax liability include:

  1. Income deferral (hold off on selling those stocks until 2015)
  2. Deduction acceleration (paying your winter tax bill early)
  3. Increasing your 401(k) deferral percentage
  4. Establishing an HSA with a high deductible health insurance plan

Additionally, this article from BusinessWest.com has some great ideas/suggestions… if you would like to discuss any of them with me and find out how they might apply to you, please contact my office.

THANKS!

Posted in 1040 Personal Income Taxes, IRS, Michigan Taxes | Comments Off on Mid year 2014 Tax Planning

It’s never too early to do tax planning

There are always things you can be doing throughout the year to lower your tax bill at year end. Full year tax projections are a great way to see how what you do now will make your life easier come tax time in 2015 and they can be updated as your circumstances change… contact me at any time if you would like one prepared for you.

As an additional resource, here is an article from Kiplinger with some good ideas you can implement right now.

William A. Olson, CPA

 

Posted in 1040 Personal Income Taxes, Michigan Taxes, Personal Finance | Comments Off on It’s never too early to do tax planning

On-line (Cloud) Computing for Small Business

More and more office applications are moving to cloud from spreadsheets and word processing programs to accounting systems. Some are even free of charge (Google Sheets and Wave Accounting) but others are available for a subscription fee. For the small business owner who wants to be able to access all of their data from anywhere they are on any device they are using, cloud computing is becoming more and more the solution of choice.

If you are interested in learning more about the options available to small businesses, this article from PC Magazine highlights several cloud computing options available.

Posted in Accounting, QuickBooks, Small Business, Technology | Comments Off on On-line (Cloud) Computing for Small Business

Your year-end tax to do list: what you do before the Dec. 31 deadline can save you big bucks at tax time

More year end tax planning ideas here.

Posted in 1040 Personal Income Taxes, 1065 Partnership Income Taxes, 1120 C Corporation Income Taxes, 1120 S Corporation Taxes, Michigan Taxes, Personal Finance | Comments Off on Your year-end tax to do list: what you do before the Dec. 31 deadline can save you big bucks at tax time