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What to consider before lending money to family and friends


When your best friend views your nest egg as a source of start-up funds for his latest business venture, or your nephew hits you up for a car loan, your first impulse may be to reach into your bank account to help. But it's a fact that loans to family and friends often end up straining both finances and relationships. As Shakespeare said, "Loan oft loses both itself and friend." In other words, if you lend money to friends, you often don't get paid back, and the friendship itself may disintegrate.


It's best to consider a loan to someone you love as an "arm's length" transaction. If you're pondering such a loan, keep the following in mind:


* You can just say "no." It's your money, after all. Do you really want to raid an emergency fund or dip into your child's college account to finance a friend's business idea? Think like a bank. It's reasonable to ask tough questions about the person's bank accounts, potential sources of income, planned use of loan proceeds, and spending habits before extending credit.


* Consider a gift. If you're comfortable sharing your resources, you may want to provide a monetary gift with no strings attached. In many cases, this is the best solution because neither you nor your friend expect the money to be paid back. Unlike a loan, this type of arrangement can forestall misunderstandings and hurt feelings later on. Of course, you should not give money if doing so would unduly strain your own finances.


* Formalize loans. If you decide to lend more than a small amount to a friend or family member, it's generally best to draft a written agreement. This can be as simple as filling out a promissory note (available online or at office supply stores). Such forms spell out the basic terms of the loan -- amount, interest rate, payback period -- and provide some limited protection should you and the borrower end up in small claims court. Another recent innovation is the use of direct lending (also called social lending or peer-to-peer lending) websites to facilitate loans between family and friends. For a fee, such sites can prepare loan documentation, send payment reminders, issue regular reports, even facilitate electronic fund transfers. If the loan involves a significant amount of money, check with your attorney.


Remember: Many personal relationships have been damaged when loans go awry. So proceed with caution.


31 July 2018
When Does Your Kid Have to File a Tax Return?

Posted in general

Did your kid get a part-time job during the summer? And now you were you wondering if your kid needs to file taxes for next year.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

If your kid has only a W-2, your kid needs to file a return if the total is more than the standard deduction. Starting in 2018, the standard deduction for a dependent child is up to $12,000. That means your kid can make up to $12,000 without paying taxes. That’s almost double from the 2017 numbers.

Here are two other things that you need to consider:

  1. Have your kid claim “exempt” on the W-4 withholding allowance form so that he does not have to file a tax return if he makes less than $12,000.
  2. Your kid should still file a return if he or she qualifies for the other credits like earned income credit, additional child tax credit, or refundable American opportunity education credit.

There you have it. That’s the new tax filing requirement for 2018.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2018-07-31 06:48:22 PM

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07 June 2018
Three Things You Need to Know About The 2018 Child Tax Credit Changes

Posted in general you have children or dependents? Do you make above average income and cannot take the tax credit from prior years? If you answered “yes” to both questions, then I got great news for you. With the recently passed new tax law, you might be able to take advantage of the new and improved 2018 child tax credit.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here are three things you need to know about the new 2018 child tax credit:

Tax credit is doubled

  • Credit went up from $1,000 to $2,000 per kid.
  • Your kid must be under 17 at the end of the year to claim the credit.

Income range huge increase

  • This credit will now be available to more taxpayers, because of the massive increase in the income range. Here's a quick guide:

Married filing jointly - $400K - $440K

Other filers - $200K - $240K

  • So if your income is below the limit, you can take the full credit. But if it falls between the income range, then you can only make claim a partial credit. But if your income exceeded the limit, you cannot take the credit.

Other dependents’ credit

  • They also passed a nonrefundable $500 "family credit" for other dependents. Examples are your aging parent or your kid who is 17 years or older.

One thing I want to point out is that - this is a credit, not a tax deduction. While a deduction reduces your income, a credit reduces your tax dollar-for-dollar. So, for example, if you have a tax due of $2,000 for the year, and have a $2,000 child tax credit, your tax bill drops to zero.

To recap, here are the three things you need to know about the 2018 child tax credit: 1. The tax credit doubled, 2. Income range huge increase & 3. Other dependents’ $500 credit.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2018-06-07 06:53:35 PM

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31 May 2018
The 2018 Alimony Tax Changes: Eight Things You Need to Know

Posted in general

Are you thinking of getting a divorce? Before you jump and do anything, I would recommend that you read this blog to know the eight important things about the 2018 alimony tax changes.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here are eight things you need to know about the 2018 alimony tax changes:


  • Effective date  - any divorce agreement executed after 12/31/18.
  • New 2018 tax law - alimony payments are no longer deductible and alimony income is no longer included as income.
  • Grandfathered payments - any alimony paid based on a divorce agreement in place on or before 12/31/18 remains deductible by the payor spouse and included as income for the recipient spouse
  • Modified agreements - the old tax rule still applies unless the agreement expressly states that the new 2018 tax law applies. That means, that the modified agreement will lose its grandfathered payments and status.
  • Timing - if you are thinking of filing for a divorce in 2018, it is very important to time the divorce/alimony settlement before 12/31/18.
  • State conformity - determine if your resident state agrees with the federal law. For example, in California, they still allow the alimony deduction and inclusion in income.
  • Tax strategy - make sure that you account for the federal and state tax effect of the alimony payments or receipts when you are working with your attorney.
  • Reason for change - Congress called the alimony deduction a “divorce subsidy”. They argued that divorced couples can benefit more compared to a married couple. So they want to treat alimony as a non-deductible child support. The Joint Committee on Taxation estimates that this tax change will add almost $7 billion in tax revenues over ten years. Wow!

To recap, make sure you remember these eight important things in case you are getting a divorce.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2018-05-31 10:26:20 PM

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31 May 2018
How Does the New Mortgage Interest Deduction Affect You?

Posted in general

Are you planning to buy a new home? Are you thinking of refinancing your mortgage? Or taking out a home equity line of credit? If you answered “yes” to all the questions, then it’s important for you to know the new tax law regarding mortgage interest deduction.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here are seven things you need to know about the new mortgage interest deduction:


  • Effective date  - any loan started after 12/15/17.
  • New 2018 tax law - you can deduct interest for up to $750,000 in new mortgage debt for your first and second home. Under prior law, you can deduct mortgage interest on $1 million of home debt and $100,000 of home equity debt.
  • Couples filing separately - each spouse can claim $375,000 in mortgage interest deductions.
  • Grandfathered debt - any mortgage loan you entered before 12/15/17 will allow you to claim interest up to the $1 million ($500K for married couples filing separately) for your first and second home.
  • Mortgage refinancing - you can deduct your mortgage interest if you refinance your mortgage debt up to $1 million on or before 12/15/17. But the new loan can’t exceed the amount of the current mortgage being refinanced. Example - If you have a $1 million mortgage and you paid it down to $700,000, then you can refinance it up to $700,000 of debt and continue to deduct interest on it. If you refinance it for $900,000 and you use $200,000 of cash to upgrade your home, then you could also deduct the interest on $900,000. But if you refinance for $900,000 and simply pockets $200,000 of cash, then you could deduct interest only on the $700,000 of refinancing.
  • Home equity line of credit (HELOC) debt - interest on a HELOC is only deductible if the loan proceeds are used to make substantial improvements to your home, and the combined total of the first mortgage and home-equity line of credit or second mortgage does not exceed $750,000.
  • State conformity - determine if your resident state agrees with the federal law. For example, in California, you can still deduct mortgage interest on $1 million of home debt and $100,000 of home equity line of credit (HELOC) debt.

There you have it. Those are the seven things you need to know about the new mortgage interest deduction.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2018-05-31 10:25:59 PM

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05 Feb 2018
10 Tax Changes You Need To Know Now

Posted in general

Raise your hand if you heard about the new tax law? Now, raise your hand if you understood some of them. For the rest of you, raise your hand, if you have no clue what I’m talking about.

President Trump signed the new tax reform bill into law last year. This is the most significant tax change in more than 30 years. So the million dollar question is: How will this affect you? So today, I’m going to share with you 10 tax changes that you need to know now so you can plan and prepare for 2018. Are you ready?

#1. Lower tax rates

Across the board, all the tax brackets went down by 3% give or take. What does that mean to you? If everything is equal, meaning, your tax situation is the same, then you will get slight tax refund on your return next year.

#2. Standard deduction doubled & elimination of exemptions.

For single filers, the standard deduction increased to $12,000; for married couples filing jointly, it is increased to $24,000. What does that mean to you? It could be a good thing or a bad thing? It’s a good thing if you were filing standard deduction from previous years because you will benefit by the increased deductions.

However, it’s a bad thing if your Form Schedule A itemized deductions is lower than the new standard deduction. Basically you are losing out on some of your deductions which we are going to talk about later.

#3. Medical expenses are still deductible.

They almost took this out. Let’s talk about this. You can only deduct medical expense in excess of 7.5% of your income. So for example, you make a $100,000, 7.5% of $100K is $7,500. That means, if your medical expenses were $8,000, then you can only claim $500 of medical expenses.

My client, who had a kidney operation learned about the limitation, so he asked me: Noel, how can I deduct my kidney operation? I told him: have another surgery? So that’s what you have to do. You need to see if you can bunch major medical expenses into one year to get the medical deductions.

#4. State and property tax $10K limit.

Here’s the good news: you can still deduct your state tax withholding, sales tax and property tax on your return. Here’s the bad news: you will be limited to $10,000 of deductions.

What is your strategy? Well, the state is coming up with a bill. They will create a fund that you can donate money for the benefit of various California agencies. You will get a potential tax credit for CA and an IRS tax deduction.

Example: If you give $100K to this fund, you will get back $100K CA tax credit and also 37K of IRS tax savings (assuming you are in the 37% IRS tax bracket). In essence, you got back $137K by contributing $100K to this fund. It’s in the works. Beware though! IRS might not approve and will contest this.

#5. Mortgage loan $750K limit.

Mortgage interest will be limited to mortgage debt of up to $750,000 ($375,000 for married filing separate). Home equity line of credit cannot be deducted anymore (you need to review your equity line interest rate and compare with your investments to determine if you need to pay it off. Also, try to pay down your mortgage debt if it’s more than $750k and you can also downsize to meet the $750K mortgage debt limit).

#6 Elimination of miscellaneous & moving expense

No deduction is allowed for miscellaneous itemized deductions (these include unreimbursed employee expenses, management fees, tax preparation fees, investment expenses, etc.)(You need to discuss this with your employer and see if you can ask for an expense reimbursement or a salary increase to cover the expenses.

#7 Elimination of alimony deduction

Raise your hand if you know someone that got divorced last year? Now raise your hand, if you know someone will get divorce this year? You know the big difference? Your ex will get more than half.

Alimony payments will no longer be deductible for the spouse who writes the checks. Likewise, it’s not taxable to the one receiving the payments. That means you have to take this into account - non-deductible alimony payments - in case you get divorce and trying to finalize a settlement in the future). Keep in mind though that this tax change will be effective for tax year 2019.

#8 Bunch charitable donations in one year

Since the standard deduction went up, you might not be able to go over the standard deduction. You might feel that you are losing out on the charitable deductions. What do you do? You would give the same amount over a two-year period, but you would bunch them into one year. This will help you itemize your deductions so you don’t lose your tax benefits.

#9 Lower corporate tax rate.

Raise your hand if you have a C-corporation. The corporate tax (C-corporations) will go down from 35% to 21%. They now have a flat tax rate of 21%. What is the only issue? If your net income is usually less $50K, under the old law, you will only pay 15%, under the new law, you will pay 21%. That means you are paying more taxes. What is the solution? You need to look at the other business structure and see if you will come out ahead.

#10 Lower pass-through entities business tax rate

Pass-through entities like S-corporations, LLC, and partnerships – who report their business income on the owner’s personal tax returns, and a sole proprietor, will have a 20% deduction. The 20% deduction would not be allowed if you are in a service business unless your taxable income is less than $315K for married and $157.5K if you are single.

Last Updated by Admin on 2018-02-05 09:07:36 PM

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24 Jan 2018
2018 Mileage Rate Reimbursements & Deductions

Posted in general

If you are going to use your car for business, charity, and medical appointments during 2018, please be aware that the standard mileage rates for computing the deductible costs have changed.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Effective January 1, 2018, here are the rates to use to calculate reimbursements and deductions for the year:


  • Business. The rate is 54.5¢ per mile for business miles driven (up from 53.5 cents in 2017)
  • Charitable. For charitable services, it remains at 14¢
  • Medical. The rate for medical mileage is 18¢ per mile (up from 17 cents in 2017)


Keep in mind that the mileage expenses for moving expenses and job-related mileage deductions for employees were eliminated effective January 1, 2018. For tax planning purposes, talk to your employer and see if you can get a reimbursement for both of these expenses. If not possible, ask for a raise to at least cover all or at least part of your expenses.

That is all for now.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2018-01-24 07:01:02 PM

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29 Nov 2017
Top 7 IRS Online Features That You Need To Know

Posted in general

Have you ever visited the IRS website? I have to tell you, I was pretty impressed with the online tax features. And as the tax filing season approaches, the IRS encourage you to visit first for tax tools and online resources to address any of your issues before calling.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here are the top seven online reasons to visit the IRS website


So I encourage you to try it and check out my top seven reasons why you need to visit the IRS website this upcoming tax season. 

Last Updated by Admin on 2017-11-29 08:14:57 PM

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04 Oct 2017
Pay Zero To Become The Hero Part 1 (Presented at Anaheim Hills Brokers Caravan)

Posted in general

Noel:                What do the Irvine Company, McDonalds and our lovely President have in common?

Audience:        They don’t pay taxes.

Noel:                (laughing) Great. (Laughing) They’re a billion dollar real estate investors. And you might be wondering, how in the world were they able to do that?

Noel (cont’d):  Simple.

Noel (cont’d):  They took advantage of the most powerful real estate tax strategies.         

Noel (cont’d):  They use the powerful tax code to zero their taxes.

Noel (cont’d):  As you can see, IRS is their friend. Is IRS your friend?                                

Audience:        No!                                                                             

Noel:                No? Well, then in the next few minutes you’ll discover 5 ultimate tax secrets to zero down your taxes.

Noel (cont’d):  It’s called (picks up piece of paper from table) – the LDDER Approach. That if you apply (puts paper down on table) you will zero your taxes.

Noel (cont’d):  So you can pay zero and become

Noel (cont’d):  the hero.

Noel:                Are you guys ready -

Audience:        Yes.

Noel:                To become the hero?

Audience:        Yes.

Female voice: Always.

Noel:                Let’s do it. The first L (picks up paper from table) stands for like-kind exchange. Raise your hand if you’re familiar with like-kind exchange.

Noel:                Great! (puts paper on table). A like-kind exchange allows you to postpone your taxes by exchanging up to a higher price property. It’s a way to consolidate your real estate portfolio…

Noel (cont’d):  Or to – to minimize your taxes by building up your portfolio. It’s a two-step process.

Noel (cont’d):  One – you got to sell the property. Number two, you have to re-invest the cash proceeds.

Noel (cont’d):  I have a client. His name is Rich. He started with one triplex twenty years ago.

Noel (cont’d):  Guess what he ended up with right now?

Noel (cont’d):  Apartment buildings.

Noel (cont’d):  He started with a triplex. Now it’s worth I think ten million dollars.

Audience:        Wow!

Noel:                Here’s a strategy that you may not be familiar with. Once he passed away,

Noel (cont’d):  and that property transferred to his survivors – which might be the kids – his starting number which he bought way back, I think like half a million dollars. The starting numbers of the beneficiaries – or the kids – is not half a million dollars.

Noel:                Its ten million dollars. So, if the kids decided to sell the property the next day for ten million dollars, guess – what’s the tax for the kids?

Audience:        Zero?

Noel:                Zero (makes symbol of 0 with his hand). What is the strategy called? It’s called the 3D. It’s defer – defer – and die. Remember that.

Noel:                (laughing) Very powerful concept! The next one, the D (picks up paper) – stands for depreciation. (puts paper down) Depreciation allows – it’s a deductible expense for the wear and tear of the property. What is the plus? It’s a paper loss. There’s no money coming out of your pocket. I have - I have a client, Rich, I met 15 years ago. He went to my office and he said, “Noel, can you review my taxes?” And I said, “What do you have?” He said, “I only got like 2 rental properties.” And I was thinking, ‘Aah, that’s gonna be easy.’ I sat down and look at the schedule E form line one, gross rents - one million dollars. I said, “Whoa, what do you have?” “Well, I’ve got two apartment buildings.” It just gets better. One million dollars gross rent. Rental expenses, eight hundred thousand dollars.

What’s the rental income?

Noel (cont’d):  Two hundred thousand dollars – on his pocket – doesn’t fit over here (demonstrates his pants pockets). But, he’s got two hundred thousand dollars cash in his pocket. Now, here’s the kicker. I told you about depreciation, right? His depreciation was two hundred fifty thousand dollars. What’s his loss showing on the return? Fifty thousand dollar loss! I was looking at him and said, “You’re putting two hundred thousand dollars in your pocket? And you’re showing 50K of losses.” And, I was thinking, ‘Man, this is too good to be true.’ But, it was there.

Noel (cont’d):  So, take advantage of that depreciation to maximize if you have rental properties. (End of Part 1)

Last Updated by Admin on 2017-10-04 08:46:41 PM

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03 Oct 2017
How to Beat Uncle Sam

Posted in general

Noel:                Raise your hand if you know Uncle Sam.

Audience:        (Silent)

Female:           Personally?

Noel:                (Laughs)

Audience:        (Laughs)

Noel:                Great! Now raise your hand if you know Uncle Sam is not really your uncle?

Audience:        (Laughs)

Noel:                Great.  You see, a real uncle usually gives you money, this particular uncle takes away your money.

Audience:        (Laughs)

Noel:                So, today I will discuss with you, three tricky tax expenses. It’s called the 3 M’s.

I will show you how Uncle Sam takes away your money and I will also show you how to   get it back. Are you guys ready?

Audience:        Yep. Yes.

Noel:                Let’s do it.

Mortgage Interest

The first M stands for, mortgage interest.

I had a client. His name is Johnny. I gotta tell you he’s very extreme when it comes to minimizing his taxes. I was reviewing his return and guess what I saw on the mortgage interest? $50,000 of mortgage interest.

I ask him, “Why is this too high?” He said, “Well, I put zero down so I can get a huge mortgage interest deduction. Noel, it’s called, tax strategy.” I said, “Johnny, let me tell you something.”

 This is what I told him.

See, this fifty thousand? That’s your mortgage interest. If I multiply that by 30 percent, which is your tax rate, your tax savings is $15,000. That’s the good part.

Here’s the bad part. The difference between the 50,000 that came out less the tax savings of 15,000 is how much? 35,000.

I ask him, “Do you know where that goes?” He said, “No.” It goes down the drain. That’s where it goes.

Audience:        (Laughing.)

Noel:                And, I told him that imagine you had it for ten years. So, you multiply $35,000 times 10, that’s $350,000 that you paid for nothing. It’s non-deductible expenses. So he said, “Really? Oh, I’m looking at it differently.” I said, “Yeah.” So, he said, “What can I do? That’s a lot of money.”

I said three things. Number one, do a by weekly payment instead of paying once-a-month – do every two weeks.  He said, “Why?” Cause you want to shave off 4-6 years off the mortgage payoff.

Number two is, why don’t you try to convert it to 15-year fixed. Why? You will save a tons of mortgage interest. You’ll probably shave – it’s gonna be close – 15 years – half.

And, then number three, If you have the chance, convert a fixed loan to a line of credit.  Why? If you convert a fixed loan to a line of credit – a line of credit is like a credit card expense. If you pay it down, they will base the interest off the balance. The sooner you can pay that off, the sooner you can be debt free.

Medical Expenses

Noel:                Number two – the second M– medical expenses.

Alright, medical expenses – have a 10 percent income limitation. That means you can only deduct 10 percent – in excess of 10 percent of your income.

So, let me give you an example. Johnny, for example, makes $100,000  and I multiply by 10 percent. So, his limit is $10,000. If his medical expenses is $11,000, how much can he deduct on his return?


Audience:        $1,000?

Noel:                One thousand dollars – it’s in excess. So, as you can see the first 10 percent is like a non-deductible expense.

So, guess – guess what happened to Johnny? Johnny had a kidney surgery but he cannot deduct his expenses so he asks, “Noel, what can we do? I want to deduct these medical expenses.” I said, “I don’t know. Have another surgery?”

Audience:        (Laughing)

Noel:                He looked at me and said, “Okay.”

Audience:        (Laughing.)

Noel:                Here are three things that you can do to have – have medical expense deduction.

Number one, you have to bunch the expenses together in one tax year. So, if you have a major surgery, plan accordingly and do it in one year.

Number two and number three is about reducing your income. One way to do that is to maximize your 401K or retirement plan and, number two, if you have a sideline business maximize the expense.


Miscellaneous Expenses

Noel:                Third M – miscellaneous expenses.

This, miscellaneous expenses, can be broken down into three parts. The first part is what they call, unreimbursed employee expenses. So, if you’re a salesperson, commission people, you can deduct a lot of unreimbursed employee expenses.

The other one is, other expenses, and the other one that I want to talk about later is toastmaster’s expenses, okay? There’s a limit though. There’s a 2 percent income limit. It means that you can only deduct in excess of 2 percent of your income. 

So, let me go back again to Johnny. A hundred thousand dollars times 2 percent is two grand. The first two grand you cannot deduct. The only thing you can deduct is above it.

So, if it’s a reimbursed medical expenses – I mean, a reimbursed employee expenses, is $2,001. How much can he deduct? One dollar. I told him the rules.

He got pissed off…


Audience:        (Muffled laughter)

Noel:                He said, “What can we do?” I said, “Well, the way we can probably do this is, to work on this.

Have you guys seen this before?  Who’s doing their taxes?  Raise your hand.

                     There you go. Are you guys familiar with this? This, my friend got 50 deductions.

                      If you’re not familiar with this, I can e-mail this to you.

Audience:        (Inaudible, muffled. Some light laughter.)

Noel:                Is that something of interest?

Audience:        (Inaudible, in agreeance)

Noel:                Okay. So, here’s how we break it down. I already told you about the reimbursement employee expenses.  Anything that’s necessary for your job performance or to do your job is deductible if it’s on unreimbursed.

The other one is other expenses. There’s a lot a bunch here. What I want to talk about is toastmaster’s expenses. Very important if you’re not deducting.

If this is something – here’s the rule – that’s the minimum rule. If this is something to improve your skills for your job, it’s deductible. So, from work to here and back, you should be deducting it.

Female:           Mileage.

Noel:                Yes, mileage. It’s huge. Here’s another thing. If you’re attending conference,

                        conventions, if you go to Vancouver…

Audience:        (Light laughter.)

Noel:                You can deduct it.

Female:           Really?

Noel:                As long as you can document it. How? Travel expenses got to be more than 50 percent of your time. So, if you went to Vancouver for more than 50 percent, meaning you did a lot of – you know – starting Wednesday  – to that  – it’s all business, it’s all deductible. You just have to document it. Got it?

Alright. (Still holding paper.) This – so, I’ll e-mail you everything.  That’s all I have.

So, in closing, the 3 Ms is a perfect example of how Uncle Sam takes away your money. Mortgage interest, medical expenses and miscellaneous expenses. Try to apply what I told you today so you can take more money back.

So, here’s the last thing I have to say - behind every successful man stands a woman and Uncle Sam.

Audience:        (Laughing.)

Noel:                One takes the credit, the other takes the cash.

Audience:        (Laughing/ clapping.)

Noel:                If you like to learn more, click the link, and subscribe to my

weekly blog. Until then, this is Noel Dalmacio, your ultimate CPA of Lower My Tax Now.

Last Updated by Admin on 2017-10-04 08:48:55 PM

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14 Sept 2017
How To Avoid Paying Tax For Sale Of A Home You Owned Less Than Two Years

Posted in general

Did you own an existing home that you bought less than two years ago? And because of some unforeseen situations, you are force to sell it. Worse, now you are worried about the potential tax that you will be paying on the sale.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

In order to claim the $500,000 capital gain exemption on the sale of your home, you need to use and own it for two out of the last 5 years. Now, if you did not meet the 2-year rule when you sold your home, you can use the “reduced exemption” rules in order to avoid paying taxes.

A reduced exemption is available if the reason why you sold your home was due to:


  1. Change of employment
  2. Health
  3. Death
  4. Loss of job
  5. Divorce
  6. Multiple births
  7. Others


The reduced exemption is calculated by dividing the total number of months you owned and used it over twenty four months. Here’s an example: Donald owned and used a property in Washington, DC for 12 months. Due to job relocation (he will go back to New York) he sold his property. Because the move was job-related, he qualifies for the reduced exemption.



12 months (Number of months owned/used)  = 50%

24 months


$500K (capital gain exemption) x 50% = $250,000

Donald can exclude up to $250,000 of gain on the house he bought in Washington DC.

So make sure that you apply the “reduced exemption” rule in case you sell your home for less than two years.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-09-14 09:17:23 PM

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14 Sept 2017
Should You Consolidate Your Student Loans with a Mortgage Refinance?

Posted in general

Do you have an existing student loan that you want to pay-off? There is one strategy that you might want to use to pull this off.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Due to the lower interest rate, consolidating your student loan debt by using a mortgage refinance is one of your best options. However, before pursuing this option, here are the pros and cons that you need to consider:



  1. Take advantage of lower interest rate – if your student loan interest rate is higher than your mortgage rate, then you can save money.
  2. Lower monthly payments – by consolidating and having a lower interest rate and longer term, your monthly payment will be lower.
  3. Tax deductibility of the mortgage payment if structured as home equity loan. Equity loan up to $100K is tax deductible no matter how you used the proceeds for.



  1. You are converting an unsecured debt (student loan) into a secured debt (mortgage) once you consolidate it via mortgage refinance. If you cannot pay for your home, you are putting your home at risk of foreclosure.
  2. Pay more interest if you consolidate. If your student loan has 10 or 15 years, you will be extending your payment period to another 15 or 20 years. That means you will be paying more interest over time.
  3. Incur refinance closing costs. Need to account for additional closing costs when analyzing the benefit of consolidation.

So if you decide to do this, please carefully consider the pros and cons before consolidating your student loans with your mortgage refinance.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-09-14 09:17:43 PM

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14 Sept 2017
Tax Traps For Businesses’ Failure To File A Return

Posted in general

Do you have an existing business or were issued a 1099 but you decided to ignore it and not report or file any tax returns?

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

The Franchise Tax Board (FTB) sent letters to over 41,000 California businesses that have not filed their 2015 CA income tax return.  Business non-filers have 30 days to file a tax return or show why they are not required to file. 

If you disregard the letter you will be assessed penalties, fees and interest based on income and other information reported to the FTB. The FTB receives information from the IRS, EDD, BOE, financial institutions, cities, and other businesses and matches the information against its own tax record to identify potential non-filer corporations, LLCS & sole proprietors.

The FTB may also estimate your income if you hold a license. They will base it on the average income of someone with that license. For example, if you have a real estate license, the FTB will assess tax based on what they believe a real estate sales person earns. That’s messed up, right?

For first-time non-filers, the FTB will send you a “request to file” letter. If you don’t respond within 30 days, the FTB will sent a notice of proposed assessment with tax, a late filing penalty and interest but no demand penalty  or filing enforcement fee. 

For repeat non-filers, the FTB will send you a “demand to file” letter. If you don’t respond within 30 days, the FTB will sent a notice of proposed assessment with tax, a late filing penalty, demand penalty and a filing enforcement fee. 

Now let me tell you this, all these penalties and interest, they quickly add up. So what do you need to do? If you received one of these notices, you can request more time to respond to get more information by calling 866-204-7902 or go to FTB’S website at

Normally, most of these penalties are available for reasonable cause exemption so you can waive the penalties. However, reasonable cause exemption is almost impossible to get in California since California does not conform to the IRS first-time penalty abatement program.

Also, the FTB also said that just because you do not understand that you have a California filing requirement is not a ground for reasonable cause exemption.

So here’s my tax tip to you, if ever you receive an FTB letter, please do not ignore the letter. It would not magically disappear or go away. Trust me on this!  So make sure you address it ASAP in order to minimize any potential interest and penalties.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-09-14 09:18:25 PM

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23 Aug 2017
If I Buy A Second Home in Nevada, Can I Claim Nevada As My Resident State

Posted in general

Here’s a tax question I got from one of my clients: “I’m paying almost 10% CA income tax.  If I buy a second home in Nevada, can I claim Nevada as my resident state?”


Great question!


Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.


You know what she’s trying to do right? She wants to avoid paying the CA tax and take advantage of Nevada’s “0” state tax! I don’t blame her! So, what’s the answer to her question? Well, I will answer it with my two favorite words: “it depends”.  Here are few things you need to consider if you want to be a resident of a tax-free state:


Document ityou need to show that you spend more than half a year in the state that you consider your permanent home. You need to keep a diary or a log showing the number of days you spend in each state.


Prove it – in order to prove your new state residency, you need to do the following: change your driver’s license & car registration, register to vote, apply for a library card, find a new doctor in the new area, file a Declaration of Domicile (intent to live), open a local bank account, shop locally, get a hunting or fishing license, cut ties with the old resident state.


There you have it. So try to document and prove it if you want to become a resident of a tax-free state.


If you like to learn more, click the link and sign-in to receive my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-08-23 06:07:40 PM

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27 July 2017
Tax Strategies When Renting Out Your Home During Summertime

Posted in general

Are you planning to rent out your home this summer? You see, summertime is the time of the year when people usually want to rent out their property. But before you jump and do it, there are some tax issues that you need to be aware of.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here are some tax issues you need to be aware of when you rent out your primary or vacation home:


  1. If you use your vacation home solely for personal use, then it’s treated like a second home and the mortgage interest, real estate taxes, points & private mortgage insurance (PMI) will be tax deductible.


  1. Now if you decide to rent it out, it becomes a little bit tricky. Here are 3 tax scenarios that can play out once you start renting it out:


  1. Tax-Free Income Property

The first one is called tax-free income property. If you rented the vacation home for 14 days or less during the year, you don't have to report the income. You get tax-free income! You can generally deduct mortgage interest, real estate taxes, points & private mortgage insurance but you can't deduct any other rental expenses.


  1. Rental property

The second one is called rental property. If you use the vacation home personally for LESS than the greater of 14 days or 10% of the time the home is rented, all rental expenses are deductible.

Example: You stayed in your vacation home 18 days last year. It was rented at fair market value for 190 days. In this example, your personal use was less than the 10% limit (19 days). Therefore, your rental deductions are tax deductible.

  1. “Expenses claimed limited to income” property

The third one is called “Expenses claimed limited to income” property. If you use the property personally for MORE than the greater of 14 days or 10% of the number of days it's rented, the rules change. Your rental deductions are limited to the amount of your rental income. However, the personal-use portion of taxes and mortgage are still tax deductible on your return.

Example: You stayed in your vacation home 20 days last year. It was rented at fair market value for 190 days. In this example, your personal use exceeded the 10% limit (19 days). Therefore, your rental deductions are limited to the rental income you received.

TAX STRATEGY - If you rent your home to your business for 14 days or less, your business can deduct the payment as business expense. However, the rental income you received will be tax-free! Best of both worlds!

There you have it. Make sure you review and listen to this video blog to make sure you understand the tax issues before renting your property out. If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-07-27 12:09:19 AM

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12 Apr 2017
Last Chance To Claim Your 2013 Refund

Posted in general

Have you filed your 2013 tax returns yet? If you have not filed yet - STOP, and make sure you listen to this so you don’t lose your refund.


Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.


According to the IRS, if you are one of the nearly one million taxpayers who failed to file a return for 2013, then you are in danger of losing your refund. Tax law provides a three-year period limit beginning from the tax due date to claim a refund when no return is filed. That means, since your 2013 tax return due date was April 15, 2014, you are given up to three years from the due date, to file on or before the April tax deadline – April 18 of this year – or the chance to claim the refund is gone for good.

Now here’s the twist, for a refund - there’s a three-year limit, but if you owe money – there’s no time limit until you file your taxes. So what’s the LowerMyTaxNow tax strategy? File your 2013 tax returns before April 18.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-04-12 05:31:17 PM

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22 Mar 2017
How To Avoid A Tax Scam

Posted in general

Do you know someone who got victimized by a tax scam? I got to tell you, for the victim, it’s pretty scary! Since by the time you figured out that something is not right, the IRS imposter already cleaned your wallet! So how can you avoid it?

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Fake IRS phone call is one of the most common scams. You need to be careful of phone calls or voicemail messages from someone who claims to be from the IRS. Often these criminals will say that you owe money and they will demand immediate payment. Other times, they will lie to you and say you have a refund. They will ask for your bank information over the phone.

So in order for you not to fall for these scams, here are some tips that you can use:

IRS will NOT:

  • Call you demanding that you pay them right now. IRS usually correspond via mail.
  • Demand payment without giving you the chance to ask question or appeal the amount you owed.
  • Ask for your debit or credit card numbers over the phone.
  • Require you to pay your taxes with a prepaid debit card.
  • Threaten to contact your local police to arrest you for non-payment of taxes.
  • Threaten you with lawsuit.

If you don’t owe or think you don’t owe any tax, you should:

To summarize, tax scams usually reach it’s peak during tax season. So, in order for you not to fall for these scams, please review and use the tips that I’ve discussed so you can avoid being a victim.  

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-03-22 05:56:47 PM

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15 Mar 2017
Did Your Name Change Last Year?

Posted in general

Did you get married, divorced or adopted a child last year? If yes, please make sure you do this important step, before filing your taxes.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

If you or your dependent had a name change last year, please notify the Social Security Administration (SSA) before you file your taxes with the IRS. If the name on your tax return does not match the SSA records, the IRS is likely to notify you about the mismatch. How does that affect you? Well, your expected refund could be delayed. So if you had a name change due to marriage, divorce, or child adoption, please file Form SS-5 with the SSA to update your information.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-03-15 07:05:54 PM

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03 Mar 2017
HUD-1 Replaced By Two New Forms

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

The Consumer Financial Protection Bureau has created two new forms for borrowers applying for a mortgage loan. The new forms, Loan Estimate and Closing Disclosure, replaced the HUD-1 statements. The new forms have been in use since October 3, 2015.

The Loan Estimate must be given within three business days from the date you submit your loan application. It was designed to help borrowers understand the key features, costs and risks of the mortgage loan. On the other hand, the Closing Disclosure must be provided at least three business days before the loan closing date. It was created to help borrowers understand all the transaction costs of the loan. Part 1 of the Closing Disclosure looks the same as the Loan Estimate. The purpose of that is to make it easy for you to review if the estimated costs changed compared to the final closing costs.

So if ever you did any purchase, sale or refinance for this year. Make sure you provide your CPA or tax preparer the Closing Disclosure form that would show the purchase/sales price of the property and the related closing costs.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2017-03-03 12:54:31 AM

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22 Feb 2017
Receipt of Tax Document After You Filed Your Taxes

Posted in general

Have you ever filed your taxes and after you received your refund, you got an additional tax documents in the mail?

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

If that ever happened to you, here are your two options:

  1. 1. File an amended return - if you received an additional W-2s, 1099s or K-1s (a K-1 shows your income portion from either an S-corporation, partnership, LLC or trust), then you need to amend your returns to report the additional income. Ignoring and not reporting the forms might result in increased additional interest and penalties.
  3. 2.  Ignore the forms - if you received a form that shows a minimal income (interest or dividend income or losses on K-1s, then I would recommend ignoring the forms. Since amending the return would result in tax preparation fees, you need to determine if it makes sense to amend your returns.


There you have it! Now you know how to address it, if ever you receive a tax documents after filing your taxes.

Until then, this is Noel Dalmacio, your ultimate CPA at

If you like to learn more, click the link and sign-in to receive my weekly blog.

Last Updated by Admin on 2017-02-22 07:06:17 PM

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15 Feb 2017
What Do You Do If You Did Not Receive Your 1099?

Posted in general

Have you ever worked as an independent contractor and you were not given a 1099 form to report your income? What do you do? Do you report it or ignore it?

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

If that ever happened to you, my recommendation is to report your 1099 income. It does not matter if the one that hired you did not issue you a 1099, it’s still your responsibility to report the income. You might be thinking: “But the IRS did not receive a copy of the 1099, that means, I got tax-free income! No need to report it!”

Unfortunately, here are the tax traps that you need to consider:

  1. Longer audit periods - if you did not report more than 25% of your income, the IRS have 6 years to audit your returns instead of 3 years.


  1. Multiple-year audits - if you get audited, there is a potential that the IRS will go back three years or six years, if applicable to determine that you did not omit any income.


  1. Interest & Penalty assessment  - you will be assessed various interest and penalties based on the amount that you omitted. For every dollar that you saved from omitting the income, the IRS wants around $1.70 or more.

To summarize, not reporting your income can expose you to longer audit periods, multiple-year audits and penalty assessments. So please, report your income.

Until then, this is Noel Dalmacio, your ultimate CPA at

If you like to learn more, click the link and sign-in to receive my weekly blog.

Last Updated by Admin on 2017-02-15 07:17:35 PM

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08 Feb 2017
Five Items To Consider When Starting A New Business

Posted in general

Are you starting or planning a new business this year? If yes, make sure you consider these five items into account.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

  • Business plan. You need to outline who will own the business and what the legal structure will be, your qualifications to run the business, the competitive market you face, the products or services you will sell, and how you intend to advertise to prospective customers. Also, how much cash will you need to start up and where will those funds come from? These are important questions that you need to answer and address before starting your business. Keep this in mind: no answer, no business!
  • Legal form. You can form a corporation, or operate as an LLC, a partnership, or a sole proprietorship. However, you need to consider both tax and non-tax reasons for selecting a given business structure. These means, you need to know your priority. Do you want to maximize tax deductions? Is the priority legal protection? Are you going to sell the business to a competitor in the next few years? Do you want to minimize your estate tax? Are you going to go public? So make sure you know the goal in mind.
  • Location. If your business will consist only of online sales, then your corporate office can be wherever you are. However, if your business needs foot traffic to thrive, you'll need to research rents and other costs such as utilities, as well as zoning and traffic restrictions.
  • Taxes. You'll have to work with the IRS, state tax agencies, and local governments to obtain permits and business licenses.
  • Advisors. You need to create a business financial team that includes a banker, an insurance agent, an attorney, and yours truly, your favorite accountant. So make sure you involve your advisors early and frequently.

To recap, starting a new business can be very challenging, but by considering these five items, you can put yourself on the path of an aspiring business owner. Good luck!

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-02-08 06:22:39 PM

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01 Feb 2017
More Info Needed For Certain Tax Credits

Posted in general

Do the following three items apply to you?

  • Are you claiming your dependent children?
  • Did you pay for any education expenses?
  • Did your family income situation change and it’s lower than $50K?

If yes, then IRS would want to know and want to have more information.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

When you are claiming your children for tax credit purposes, you may be asked how long your children lived with you over the past year, or whether they lived with an ex-spouse, relatives or other guardian.

Now for education purposes, which can give you up to $2,500 of tax credit, you are now required to provide Form 1098-T from the college or university. You will also need receipts for related expenses. No Form 1098-T, no tax credit.

Lastly, if your family income drastically changed and it’s under $50K and as a result, you were entitled to earned income credit (EIC), you may be asked additional questions regarding your dependents’ social security numbers and dates of birth. Why? Because these two items were the major source of what the IRS calls "improper payments or refunds."

IRS estimates that of the $66 billion in EIC funds paid in 2015, nearly a quarter or $16.5 billion were collected by filers who didn't qualify to receive them. As a result, the IRS is requiring tax preparers aka “yours truly” to ask more questions.

So starting this year, if we don’t document the compliance with these new requirements, I could face fines of up to $510 per return. What?

To summarize, if I asked you more questions than usual or if I requested for additional documents, be aware that it's just a new requirement to claim the above credits.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-02-01 11:08:14 PM

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25 Jan 2017
New Repair Rules That You Need To Know

Posted in general

Are you aware that the IRS did a major overhaul in regards to determining repair versus improvements?

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Since there were a lot of changes, I will just talk about one specific topic for now and the rest will be in my next video blogs. Okay? So, last November 2015, the IRS issued a notice increasing the amount of repair that you can expense out from $500 to $2,500 for tax years beginning 2016.

That is great news! However, I recommend that you have an accounting capitalization policy in place to document the $2,500 that you will expense out. This accounting policy needs to be in place at the beginning of every tax year.

Why am I telling you all of this? Because, in case you get audited, the IRS auditor will be reviewing their 220-page (yes, 220 pages!) repair audit tax guide and will be looking for your policy to determine the following:


  • Was it in writing
  • Was it in effect beginning of the year
  • Was the policy changed to reflect the expense amount from $500 to $2,500


To recap, make sure you have the accounting policy in place to audit-proof the expense items that you are claiming.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2017-01-25 10:22:18 PM

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25 Jan 2017

Posted in general

Last Updated by Admin on 2017-01-25 10:20:28 PM

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02 Dec 2016
You’ve Received A Gift…What Now?

Posted in general

Imagine your rich parent or relative gives you a real estate property, vacant lot or stocks. And then a number of years later, your parent or relative dies and you decide to sell the gift. Your tax preparer says you'll need to calculate capital gains on the sale, and asks for your basis to offset it with the sale. So here’s the question: “What's your basis?”

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Basis is the amount of capital investment in the property which is commonly called the purchase costs. So when you sell a property or stocks received as a gift, the general rule is that your basis is the donor's cost basis or purchase costs. So if you sell it for a gain, you need to use the donor’s basis or costs. But if you sell at a loss, your cost is the lower of the donor's basis or the fair market value on the date you received the gift.

But without cost records, you have no way of proving the donor's basis and no way of saving yourself tax dollars.

So what do you do? So next time, when you receive a gift, explain why you need the cost basis to make the conversation less awkward. No one likes to pay unnecessary taxes. So I recommend having the same conversation about the cost of valuable gifts you received in prior-years. That’s very important!

Now conversely, if you're the gift-giver or the one giving the gifts, offer the additional gift of presenting the cost records to your recipient at the same time. Otherwise, you may end up giving an unintended gift to the IRS in the form of…unnecessary taxes.

There you have it. So next time, when you receive a valuable gift like a property, vacant lot or stocks, ask and inquire about the cost records so that at the time of sale, you will avoid unnecessary taxes.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-12-02 09:45:21 PM

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16 Nov 2016
To Convert or Not To Convert…That Is The Question!

Posted in general

A tax client asked me: “Should I convert my IRA or retirement plan into a Roth IRA? That is a great question! However, as with any tax questions, it is impossible to have a definite answer when deciding whether to convert a traditional IRA or retirement plan into a Roth IRA.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

You will generally benefit from the Roth IRA conversion if ALL of the following applies to you:

  • You don’t need to take withdrawals from your Roth IRA for at least 15 to 20 years;
  • Your future tax rate when you take out withdrawals is the same or greater than the rate during the conversion and
  • You can pay the tax on the conversion with non-retirement funds

If you meet all the criteria, congratulations! This is one powerful tax strategy that if you apply correctly, will definitely, build you tax-free wealth!

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-11-16 06:53:55 PM

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16 Sept 2016
How To Structure Your Tax ID When Starting A Business

Posted in general

Have you ever done a home-based business before? And you were required to fill-out form W-9 to provide your name and social security number so you can be issued a 1099 during tax time.

Hello, this is Noel Dalmacio, your ultimate CPA at LowerMyTaxNow.

Here’s a LowerMyTaxNow strategy on how to properly structure your tax ID when starting a business.

I would recommend applying for a separate tax ID number with your preferred business name. Make it a generic name so you can use it for your existing or any future businesses. Fill-out form SS-4 and you can go to for both the forms and instructions.

I know what you are thinking. Your million dollar question is: “why?” Answer: identity theft. The sole purpose of doing this is to prevent any identity theft in the future. You want to avoid providing your social security number as much as possible.

There you go! That is my LowerMyTaxNow strategy that you can use when you start a home-based business.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-09-16 08:38:18 PM

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08 Sept 2016
New Relief Re: 60-Day IRA Rollover Errors

Posted in general

Have you ever received an IRA distribution with the intention of “rolling it over” or depositing it into another IRA account but you missed the 60-day rollover rule?

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Under this rule, you're required to complete the rollover within 60 days of receiving the distribution. If you miss the deadline, tough luck, you have to report the distribution as income and perhaps pay a penalty.  Ouch!

In the past, you had to request a special statement from the IRS to avoid that outcome. Now, the IRS says you may qualify for a waiver if you meet one out of eleven allowable reasons. Here we go:

  1.  Error was committed by your financial institution

  2.  Distribution check was misplaced and never cashed

  3.  Distribution was deposited into an account that you thought was an existing retirement plan

  4.  Your principal residence was severely damaged

  5.  A family member died

  6.  You or a family member was seriously ill

  7.  You went to jail

  8.  Restrictions were imposed by a foreign country

  9.  Postal error occurred

10.  Distribution was due to IRS levy and then the proceeds was returned by the IRS

11.  The party making the distribution delayed providing information that delayed the rollover

There you have it! So next time, if you missed the IRA 60-day rollover rule, please look into the eleven allowable reasons to get relief.

​If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-09-08 09:36:38 PM

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01 Sept 2016
How to Pay ZERO tax

Posted in general

Are you aware that there is a tax code that can potentially “0” your taxes?

If you are a real estate investor and working in a real estate business, you are in a unique position to take advantage of this powerful tax strategy that could potentially “0” your taxes. It’s called the “real estate professional” designation.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Under this law, if you are a real estate professional, you can fully deduct rental losses against your W-2, business income and other income without limitation. What does that mean? It means, if you understand the tax rules and apply it correctly, you can potentially “0” your taxes.


1. 50% test – You must spend more than half (51%) of your working hours in a real property trade or business like purchase, rental, management or sales.

2. 750-hour test – You must spend 751 hours in real property trade or business

3. You must be at least a 5% owner of real property trade or business

4. The 50% test and 750-hour test must be met by only one spouse in the case of married taxpayers

5. You must materially participate in the management operations of your own rental real estate. Married couples can combine their hours to meet the material participation hours.


To recap, a “real estate professional” designation is one of the most powerful tools that you can use in order to legally zero out your taxes! So make sure you understand the rules and keep good records.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-09-01 06:07:55 PM

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17 Aug 2016
Do I Use A Credit Card Or A Debit Card?

Posted in general

When you go out and eat, put gas in your car or pay for your business expenses, I’m going to assume that you are either using a credit card or a debit card. In your mind, you might think they are the same. But there are differences that you need to be aware of.

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Here are some differences that you need to be aware of:


  1. Cash availability and fees

With a credit card, the money is not immediately taken out from your bank account. And as long as you pay back the credit card company within the allowed period, you won't be charged interest on the money owed. And you don't want to make a late payment – interest can build up quickly on credit cards.

In contrast, debit cards are linked to your personal bank account, so you're using your own money and the charges are automatically deducted from your account. However, you might be charged extra fees on top of interest for any overdrafts.


  1. Personal finance and budgeting

Earl Wilson said that there are three kinds of people: “The haves, the have-nots and the have-not paid what they bought.” You don’t want to be in the last group!

With credit cards, you might tend to overspend since you have available cash in a form of a personal loan. On the other hand, because you don't carry a balance on the debit card, you're more likely to stick with your budget and not overspend.


  1. Consumer liability protection

Federal laws protect you in the event you need to dispute credit card charges and usually cap your liability at $50. Debit cards offer fewer protections than credit cards, including a sliding scale of liability depending on when you notify your financial institution.

Which card is best for you? The answer is generally a mix of the two is a good compromise. You can use a credit card wisely to bolster your credit, while still paying for everyday purchases with a debit card.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-08-17 05:43:08 PM

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10 Aug 2016
Can You Deduct A Work-Related Education Costs?

Posted in general

Can you deduct a work-related education costs?

I got this question from one of my clients. So as an accountant, I will answer you with my favorite words: “It depends.”


Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.


So, are you planning to go back to school to get an advanced degree or just to brush up on your work skills? The answer to those questions, will determine if you might be able to deduct what you pay for tuition, books, and other supplies.


So, if you're self-employed or an employee, you may be able to claim a deduction if the training is necessary to maintain your skills or is required by your employer.


However, just remember that even when the education meets those two tests, if you're qualified to work in a new trade or business when you've completed the course, your expenses are personal and nondeductible. That's true even if you do not get a job in the new trade or business.


Work-related education expenses are an itemized deduction when you're an employee and a business expense when you're self-employed. You may also be eligible for other tax benefits, such as the lifetime learning credit.


So next time you plan on going back to school, just make sure you understand issues re: work-related education.


If you like to learn more, click the link and sign-in to receive my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-08-10 05:49:49 PM

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09 Aug 2016
How To Take Advantage Of Your Retirement Plans

Posted in general

Are you working for someone or are you working for yourself?

In regards to retirement plans, there are some things you need to be aware of so you can take advantage of the situation.


Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.


Here are three things you need to consider:


  1. Maximize employer matching. If your employer offers a 401(k) plan, try to put in at least the contribution amount in order to receive the maximize amount your company will match. Consider this free money! This also applies to self-employed. You can set-up a profit-sharing plan that will allow you to contribute up to 25% of your salary. This is tax deductible to the business but not taxable to the employee. It’s a win-win!


  1. Try to catch-up. If you're age 50 or older, you are allowed to make extra contributions to your retirement plans. These "catch-up" contributions depend on the type of retirement plan. Here is the list of catch-up items: IRA - $1,000, Simple - $3,000, and 401-K & 403-b - $6,000.


  1. Maximize total contribution limit. The total limit for 2016 is $53,000. So if you are an employee, try to take advantage of any of your company’s retirement plans. Now, if you are the employer, try to structure different plans in order to maximize your contributions up to the limit.


There you go! Consider these strategies the next time you look into your retirement plans and I guarantee you…you would say…I lowered my tax now!


If you like to learn more, click the link and sign-in to receive my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-08-09 09:28:18 PM

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28 June 2016
Foreign Account Reporting by June 30

Posted in general

If you hold foreign bank or financial accounts, or have signature authority over such accounts, and the total value of all your accounts exceeds $10,000 at any time during the calendar year, you may be required to file a Treasury Department report known as the FBAR.

It's easy to overlook this requirement because it's separate from your federal income tax filing, with a different deadline and strict rules."FBAR" refers to Form 114, Report of Foreign Bank and Financial Accounts. Your Form 114 must be filed electronically with the Treasury Department no later than June 30. No filing extension is available. So, please watch out for the filing requirement due date.

Last Updated by Admin on 2016-06-28 08:22:22 PM

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22 June 2016
How To Solve Your Depreciation Dilemma

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Do you own a rental property where you have “used up” most or all of your depreciation? You want to sell the old property and buy a new one so you can start benefiting from the depreciation deduction again. You’re thinking: Can I do that? Answer: Absolutely!

Here are 3 tax strategies that you can use:

1. Take advantage of the suspended rental losses – if your income is more than $150K, the IRS will suspend your current rental losses and will be carried over to future tax years indefinitely (exception applies for RE professional). Any carried-over rental losses not used can be claimed if your income will permit or fully expensed during the year you sell the property to offset potential capital gains.

2. Key tax rate – if you are in the 10%-15% tax bracket and you held the rental for more than a year, then you can pay “0” capital gains rate. Yes! You heard that right…zero! The key here is proactive planning. Make sure you postpone some income and increase your deductions in order to be in 10%-15% tax rate.

3. Installment sale – you can spread and report the capital gains over a number of years in order to spread the tax and create a future revenue stream.

To recap, take advantage of the strategies above so you can minimize or spread your taxes and start getting the tax benefits from depreciation deduction again.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Last Updated by Admin on 2016-06-22 06:37:15 PM

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16 June 2016

Posted in general

Last Updated by Admin on 2016-06-16 12:49:09 AM

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16 June 2016
How To Take Advantage of a 1031 Exchange

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Do you have a rental property that appreciated in value that you want to sell?

You want to pull the trigger but you are afraid of the tax you will be paying on the gain. What can you do?

Millionaire investors used this strategy to build their real estate portfolio. It’s one of the most powerful tax savings strategies available to you. It’s called: 1031 exchange.

A 1031 exchange allows you to postpone your taxes by exchanging up to another higher-priced rental property. It’s a way to consolidate and build your real estate investments without paying taxes. It’s a two-step process: first step, sell your property, second step, reinvest the cash proceeds in a new property.

Here are 6 additional things you need to know about 1031 exchanges:

  1. Must be investment property (enter in slide) - It’s only for rental, investment or business property.
  2. 45-day rule (enter in slide) - Replacement property must be identified within 45 days of the sale of the old property. There are no extensions allowed.
  3. 180-day rule (enter in slide) - It must also be purchased within 180 days of the sale of the old property.
  4. Qualified intermediary requirement (enter in slide) - To qualify for the tax deferral, you must hire a qualified intermediary (commonly called an exchange accommodator or QI).
  5. Cash receipt is taxable (enter in slide) – Any cash you received or taken out during the exchange is taxable.
  6. Consider mortgages and other debt (enter in slide) – If you don’t receive cash back but your mortgage balance went down, that will be treated as income. For example, you had a mortgage of $500,000 on the old property, but your mortgage for the new property is only $400,000. You have a $100,000 of taxable income. (show slide)


To recap, a 1031 exchange is a very powerful tool, that if you use wisely, can save you thousands of dollars come tax time.

However, you have to pay strict attention to the rules of qualification. Otherwise, you could find yourself in some trouble with the IRS.

Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Last Updated by Admin on 2016-06-16 12:50:30 AM

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13 May 2016
How To Avoid The Inherited IRA Tax Trap

Posted in general


Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow


Did you have a parent, relative or sibling that passed away and they transferred their IRA account to you?


If you inherited an Individual Retirement Account, IRA for short, from someone other than your spouse, you may be surprised to learn you have to take annual distributions.


That's generally the case whether the IRA is a traditional or a Roth account.


The problem sometimes is the brokerage company does not know the tax rules for inherited IRA.


And if you fail to take the distributions as required, you may owe a 50% penalty of the amount you should have taken.


Therefore, to avoid the penalties, make sure you take out timely distributions from the inherited IRAs.


Until then, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

Last Updated by Admin on 2016-05-13 01:30:35 PM

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22 Apr 2016
Should You Make Estimated Tax Payments?

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.

If you're required to make quarterly estimated tax payments this year, the first one is due as the same date of the tax filing deadline.

Failing to pay estimates, or not paying enough, may lead to penalties. Here are three things you need to consider:

Do you need to make estimates? If you operate your own business, or receive alimony, investment, or other income that's not subject to withholding, you may have to pay the tax due in installments. Each estimated tax installment is a partial prepayment of the total amount you expect to owe for next year. You make the payment yourself, typically four times a year.

How much do you need to pay? To avoid penalties, your estimated payments must equal 90% of your 2016 tax or 100% of the tax on your 2015 return (110% if your adjusted gross income was over $150,000).

Exceptions. There are exceptions to the general rule. For instance, say you anticipate the balance due on your 2016 tax return will be less than $1,000 after subtracting withholding and credits. In this case, you can skip the estimated payments.

If you like to learn more, click the link and sign-in to receive my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-04-22 04:01:53 PM

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16 Mar 2016
Should I donate a vacant land that went down in value?

Posted in general

Here’s a tax question, I got from one of my clients:

Should I donate a vacant land that went down in value?

Here are the facts of the case:

Client bought a vacant land in Florida 10 years ago for $35,000. It’s now worth $5K.

She is feeling charitable and would like to give the vacant land to her favorite charity.

So what do we do?

If she donates her vacant lot, she can deduct the land’s $5k market value as charitable deduction. That is good. However, we can do better.

Here’s the LowerMyTaxNow strategy:

Sell your lot to recognize the $30,000 capital loss ($35K cost less $5K market value). You can deduct $3K of capital loss every year or you can offset these losses with any future capital gains.

Afterwards, you can donate the $5K cash to your favorite charity.

Whoolah! Not only you gave the same $5k value to your favorite charity, but you were able to recognize the loss from the sale of the vacant land.

If you like to learn more, click the link and sign-in to receive my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-03-16 11:43:38 AM

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09 Mar 2016
Is It Advisable For My Kid To Fund a Roth IRA?

Posted in general


Here’s a tax question, I got from one of my clients:

If my kid works part-time, do you recommend funding a Roth IRA?


Hey, that is great question! And it deserves a great answer. Hello, this is Noel Dalmacio, your ultimate CPA at lowermytaxnow.


If you have a kid who works part-time, encourage your kid to fund a Roth IRA.


You might be thinking, what’s the big deal about a Roth IRA?


We’ll, it’s one of the most powerful retirement vehicle that you can take advantage of.


The contribution is not tax deductible, however, it grows tax-free and when you take out the money at age 60, it’s all tax-free!


 What is the income requirement to fund it then?


You only need to have a W-2 or NET business income. Age is irrelevant.


So for 2015 and 2016, your kid can contribute the lesser of: (1) W-2/Net business income or (2) $5,500.


By funding this consistently, your kid can potentially accumulate quite a bit of money by retirement age. However, your kid might not be willing to put in the $5,500 even when they have enough earnings to do so. So just be satisfied if you can convince your child to contribute at least a meaningful amount each year. Remember, if you are so inclined, you can make the Roth IRA contribution for your child.


Here's what can happen if your 15-year-old kid contributes the following amounts:


(Note that it will be worth different values depending on the amounts contributed & annual return)


 Annual Contribution                           Value when child is 60 years old


       For 5 Years                                              3%                               5%




$1K                                                     $  28K                         $84K  


$1.5K                                                  $  40K                         $127K


$2.5K                                                  $  67K                         $212K




Wow! You get the idea right? With just small annual contributions for five years, Roth IRAs can be worth eye-popping amounts by the time your kid approaches retirement age. That is the power of starting early!


 If you like to learn more, click the link and sign-in to receive my weekly blog.



Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2016-03-09 12:57:57 PM

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11 Feb 2016
How to Maximize the Dependency Deductions?

Posted in general

Do you have people that you support? Do you know that if you meet certain tests, they may be claimed as your dependent. Hello, this is Noel Dalmacio, your ultimate CPA at

Today, we will talk about how to maximize your dependency deductions.

Here are 3 things you need to know, number 1: Deductions and income limitation.

Each dependent will reduce your income by $4,000 on your 2015 tax return. However, you might lose part of that deduction if you income is more than $309K if you married or more than $258K if you are single filer.

Number 2: Who can be considered a dependent? A dependent is someone you provided more than half of their support; more than 50%. And they are either a qualifying child or a qualifying relative. You need to take advantage of both classifications in order to claim the deduction.

A qualifying child is someone related to you, lived with you, under 19 or a full-time student under 24 or it can be any age if permanently disabled

A qualifying relative is a dependent that either lives with you all year or related to you and they must have income that is less than $4,000.

So you can claim any person not related to you as long as they live with you the entire year and made less than $4,000. While any person related to you like your parents or children does not necessarily be living with you, you just need to provide more than 50% of their support and their income needs to be less than $4,000.

Keep in mind that for your parents that receive social security benefits only, those benefits will be taxed as “0” and would not be considered as income. Make sure you take advantage of both classifications in order to claim the deduction.

Okay. We’re almost on the finish line, here’s number 3: Who can’t be claimed

We’ll, your spouse is never your dependent. In addition, you cannot claim a married person if that person files a joint return with a spouse. Also, a dependent must be a U.S. citizen, resident alien, a resident of Canada or Mexico for part of the year.

Wow! You made it!

For a somewhat simple topic, claiming the deduction for a dependent can be quite complex.

You will want to get it right though, because being able to claim someone as a dependent can lead to other tax benefits, including head of the household filing status, child tax credit, education credits, and the dependent care credit.

If you like to learn more, click the link and sign-in to receive my weekly video blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-02-11 04:14:37 PM

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27 Jan 2016
Number ONE Secret on How to become a Millionaire

Posted in general

Do you know the number one secret on how to become a millionaire?

Hello, this is Noel Dalmacio, your ultimate CPA at

The number one secret on how to become a millionaire

 is to practice “paying yourself first”.

That means, you pay yourself first by automatically funding a retirement account

and transferring money in your savings account.

That way, before you even have access to your accounts, you already took steps in securing your financial future.

This is a perfect segue to discuss retirement plans.So for 2016, you can contribute $18,000 to your 401(k), plus another $6,000, if your 50 years old or older.

Taking full advantage of allowable contributions and any employer matching is still a good idea. Since contributions you make to your retirement plan reduce your taxable income and also help you build your retirement portfolio.

If you like to learn more, click the link and sign-in to receive my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-01-27 11:02:47 AM

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20 Jan 2016
Three positive steps to financial well-being

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at

While you're gathering information to prepare your 2015 tax return, set aside time for a financial review.

Here are steps to get started.

  • Compile a year-end list of your assets and debts and compare the list to last year. Are you gaining or losing ground? What actions can you take to improve your financial situation in 2016? Should you start paying off your credit card debt or adding an extra principal payment on your mortgage payment?
  • Review your insurance. Do you have disability insurance to replace take-home pay if you become incapacitated? What about life insurance – will the benefit provide enough cash to pay your family's expenses in the event something happens to you or your spouse? Is your home protected with replacement value property insurance? What about insurance for automobile accidents or lawsuits?
  • Update your will and estate plan. What changed during 2015? Did you marry? Divorce? Have a child? Move to a new state? Receive an inheritance? All of these events can affect your planning. This year, you can leave up to $5,450,000 to your heirs with no federal estate tax liability. But that doesn't mean you can ignore estate planning, which includes expressing your wishes for who will make decisions for you in times of emergencies as well as who will receive your assets.

●    Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-01-20 12:48:35 PM

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14 Jan 2016
Does your business need to file Form 1099?

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at

Forms 1099 are due to recipients by February 1, 2016. You may be most familiar with Form 1099-MISC, which you use when your business makes payment over $600 for services to nonemployees. Reportable payments can include fees for services paid to independent contractors, such as consultants, lawyers, cleaning services, landlords and property managers. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example). Lastly, you are required to issue a 1099 to an LLC unless they are tax as a corporation.

If you like to learn more, click the link and subscribe to my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-01-14 04:18:54 PM

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07 Jan 2016
New Year…new 2016 mileage rates!

Posted in general

Hello, this is Noel Dalmacio, your ultimate CPA at

Guess what? New year…new rates!

The car mileage rates went down from the 2015 rates. Here are the rates that you can use to calculate your 2016 deductions and reimbursements.

For business, the rate is 54 cents per mile. That's down from 57.5 cents in 2015. (What is the IRS thinking?)

For medical and moving, the rate went down from 23 cents to 19 cents per mile.

And lastly, for charitable service miles, it remains at 14 cents per mile.

If you like to learn more, click the link and subscribe to my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2016-01-07 03:19:51 PM

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17 Dec 2015
Do you know who you're giving to?

Posted in tax

Do you usually feel charitable during the holidays? Before, you give your check to a charity organization though, you need to do a little bit of a homework.

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Normally, many charities use your donations wisely. Unfortunately, others spend too much of your contribution on fundraising and administrative expenses. Some even misrepresent themselves and ask for your money for phony causes. In today's world, investigating a charity before you make a donation is the smart way of doing it.

Here's a checklist on how you can protect yourself:

  • Number 1. You have to request a written documentation about the charity's mission and how your contribution will be spent. You have to ask for proof that your donation is tax deductible. If a charity is reluctant to provide information, think twice about making a gift.
  • Number 2. When you receive a phone solicitation, the caller must provide their name, charitable organization name, telephone number and address. If a caller refuses to give you this information, hang up. Report the call to local authorities to help protect others.
  • Number 3. Do not provide your credit card number over the phone. Instead, consider mailing your contribution once you've confirmed that the charity is legitimate and that it represents a cause you'd like to support.
  • Lastly, number 4. Just because an organization gives you a receipt for your records doesn't mean the organization is tax-exempt or that your contribution is tax-deductible. To find out if an organization is exempt from federal income tax and how much of your contributions to it are tax deductible, visit the IRS website at and type in “EO select check”. Once your there, type in the organization’s info.

Asking the right questions and obtaining information about a charity is the only way you can be sure your contribution will be used to benefit the causes and people you want to support.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-12-17 01:10:23 PM

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03 Dec 2015
Seek liquidity for short-term investments

Posted in general

Hi guys, this is Noel Dalmacio, your ultimate CPA at

The stock market may not be the right place for all of your money at all times. Here are two situations when cash accounts can be a better solution.

#1. Usually, the stock market is not a good place to invest funds you will need during the next two to three years, such as when you need to pay ongoing living expenses in retirement. In that case, your cash is better invested in money market funds, bank CDs, or bonds with maturities matched to your needs. The plan is to eliminate the risk that you'll be taking withdrawals when the stock market is depressed.

#2. Maintain your emergency fund – three to six months of current living expenses – has only one purpose: to provide the cash you might need for unforeseen events like job loss, illness, or major unexpected repairs. These are situations when you can't afford to wait until the market recovers to get your funds.

However, cash savings has some drawbacks like losing your purchasing power during inflation. And historically, the stock market has provided better returns over long time periods. But those returns come at the price of volatility. If you need to withdraw your savings during a market downturn, you might NOT recover your investment. Wherever you choose to invest your other savings, consider keeping some of the funds you will need in the short-term in less volatile, old-fashioned cash investments.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-12-03 10:21:41 AM

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18 Nov 2015

Posted in general

Last Updated by Admin on 2015-11-18 10:58:42 AM

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18 Nov 2015
Make use of your 2015 gift tax exclusion

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

This year you can give up to $14,000 to as many persons as you want without any gift tax liability. If you're married and your spouse joins in the gift, you can, as a couple, elect to give $28,000 to each person with no gift tax liability. Once December 31st, has come and gone, your 2015 gift tax exclusion is also gone. If you plan to make gifts this year, remember that your gifts must be completed by then.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-11-18 10:58:47 AM

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11 Nov 2015
Need money to pay bills? Raiding your 401(k) is not a good idea

Posted in tax

Need money to pay bills? Raiding your 401(k) is not a good idea

Hi guys, this is Noel Dalmacio, your ultimate CPA at

When you're short of cash, raiding your 401(k) plan is NOT a good idea. Here are two reasons why.

Penalties and taxes. If you're under 59½ years old, you'll be hit with a 10% early withdrawal penalty. There are some exceptions to the rule, but the money you take out will be taxed at your regular tax rate.

Lost opportunity. If your 401(k) earns an annual return of 5% over the next 30 years, an account balance with $50,000 could grow to over $215,000. A withdrawal taken and spent today will cost you that growth.

Bottom line: You got to find other ways to pay your bills, even if that means contributing less to your 401(k) in the short term. While it's wise to take advantage of the company 401-K matching, you might consider reducing contributions that exceed the matching amount.

You might be thinking, what about 401-K loans? A 401(k) loan also has drawbacks. Again, money that's not in your account won't grow. So if you lose your job, you'll have to repay the the loan balance or you’ll have to report it as taxable distribution with 10% tax penalty.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-11-11 11:09:43 AM

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04 Nov 2015
Should you increase your withholding before end of the year?

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Can your wage income tax withholding cover your income taxes liability before the end of the year? If not, here are your 3 options:


  1. Make estimated tax payments. The only downside is that you might be subject to penalties for underpayment of quarterly estimated taxes  – meaning you may owe a penalty when your quarterly estimated tax payments (plus withholding) total less than 25% of your required annual payment.
  2. The better option is, you can increase your wage income tax withholding before the end of the year. What is the advantage of doing that? You are not subject to any underpayment penalties because IRS looks at wage income tax withholding as paid equally throughout the year.
  3. And lastly, here’s the best option, look if you can either maximize your 401-K deductions, company pre-tax benefits or prepay some expenses that is deductible for this year. That way, your taxes will be reduced and will hopefully result in a tax refund next year.


If you like to learn more, click the link and subscribe to my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-11-04 10:49:41 AM

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29 Oct 2015
When do you claim social security benefits?

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Whether you should take social security retirement benefits at the earliest possible date or defer benefits until reaching normal retirement age (or even age 70), depends on several factors. For example, you'll want to consider your overall health and life expectancy, your plans to earn income before reaching normal retirement age, anticipated returns on your other investments, and, surprisingly, your guess about the future of the social security program. As you can tell, the decision isn't one-size-fits-all.

For instance, say your savings won't cover ongoing expenses and you need to rely on social security income to make ends meet. In that case, deferring social security benefits may not be an option for you.

But if your financial situation offers more flexibility, deferring your benefits can be an advantage. For each year you delay (up to age 70), the payouts increase. In addition, if you plan to earn significant income between age 62 and your normal retirement age (65-67, depending on the year you were born), putting off your social security benefits may make sense. That's because any benefits in excess of specified limits ($15,720 in 2015) will be reduced. You'll lose $1 of benefits for every $2 in earnings above the limits. Note that you won't lose any social security benefits (regardless of earnings) once you reach full retirement age.

On the other hand, let's say you've accumulated a healthy balance in your 401(k) and expect that account to generate a good annual return. Under this scenario, you might be better off leaving your retirement savings alone and taking your social security benefits early to cover living expenses.

Or perhaps your family has a history of health problems and you don't realistically expect to live into your 80s. Again, taking social security benefits at age 62 might be a good choice.

If you like to learn more, click the link and subscribe to my weekly blog.


Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-10-29 10:54:07 AM

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22 Oct 2015
Carryovers on your prior return that can affect year-end planning

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Today, we’re going to talk about carryovers on your prior return that can affect year-end planning.

As the year-end is coming to a close, remember to check your prior tax return for carryover items that can affect your year-end planning. Here are four items to look out for:

  1. Capital loss carryover. If your capital losses were more than your capital gains last year, you may be able to carryover any unused loss to future years. You can apply the loss against this year’s capital gains as well as up to $3,000 of other income – a benefit to remember when you're rebalancing your portfolio over the next few months.

Here’s a tip: Keep track of your capital loss carryforward for alternative minimum tax planning and projections. In some cases, this amount can be different from the carryforward calculated for your regular income tax.

  1. Passive loss carryover. If you are selling a rental property, did you know that you can release the suspended rental losses for that particular rental? So make sure your unused rental losses were carried forward correctly every year since this usually happens when you change tax preparers.
  2. Charitable contribution carryover. Was your charitable donation deduction limited from prior years due to low income or business losses? If so, you may have a carryover that you can use if you're going to itemize on this year’s taxes.

Here’s a tip: Take this carryover into account when planning this year’s donations so you don't lose the benefit of older unused amounts. Why is that important? Because charitable contribution carryforwards only have a five-year life.

And the last one:

  1. Net operating loss carryover. If your business had a loss last year, you had to make an election to carry the entire loss forward to the current year. Otherwise, the general rule of carrying the net operating loss back two years applies, with the remainder carried forward 20 years.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-10-22 04:26:27 PM

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30 Sept 2015
IRS gives worker classification criteria

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at


Today, we’re going to talk about IRS worker classification criteria


Since independent contractor or 1099 payments are not subject to payroll taxes, there is a temptation to classify some employees as independent contractors when they should not be. The IRS uses certain criteria to help determine who should be classified as an employee subject to payroll taxes and eligible for employee benefits. Here's a partial list –


  • Who controls when, where, and how the work is to be done?

  • Who sets the working schedule?

  • Is the payment by the hour or by the job?

  • Whose tools will be used to accomplish the work?

  • Does the contractor provide services to the general public?

    Your answers to those questions, will help determine if you are an independent contractor or an employee.

    If you like to learn more, click the link and subscribe to my weekly blog.

     Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2015-09-30 07:19:15 PM

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16 Sept 2015
A Quick Recordkeeping Guide

Posted in tax

Is your file cabinet overflowing? Do you hesitate to purge tax information because you're not sure what to keep and what to discard? Here's a quick guide to help you cut through the clutter.

Hi guys, this is Noel Dalmacio, your ultimate CPA at

  1. 1.  Expenses. Support for deductions includes charitable donation acknowledgments, receipts for employee business expenses, and automobile mileage logs. Retain these at least seven years after claiming this on the return.
  3. 2.  Income. The same seven-year rule also applies to common tax forms such as 1099s showing interest, dividends, and capital gains from banks or brokerages, and Schedule K-1s from partnerships and S corporations. The IRS recommends holding on to your W-2s until you start collecting social security.
  5. Tip: You can shred interim income reports once you've compared the totals to annual forms.
  2. 3.  Retirement accounts. You may have to calculate the taxable portion of distributions, so keep records showing your contributions until you've recovered your basis.
  4. 4.  Tax returns. The statute of limitations is usually three years but can be six years if underreported income is involved. In cases of fraud or when no return is filed, the IRS has an indefinite time period for assessing additional tax.

As a general rule, keep federal and state returns a minimum of seven years.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2015-09-16 11:01:58 AM

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10 Sept 2015
IRS publishes tips for amending returns

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at


Did you ever have an error in your return? Do you know you can amend it to report the correct amounts? On this segment, I will give you some tips for amending returns:

  1. Use Form 1040X. You must file a paper amended return; this form can't be e-filed.

  2. File an amended return to correct errors or change your original filing.

  3. Don't file an amended return to correct math errors or to attach forms you forgot to attach originally. The IRS will mail a request for the forms and will automatically correct math errors.

  4. You generally have three years from the original filing date to file an amended return.

  5. If you're filing for multiple years, you must file a separate Form 1040X for each year.

  6. If you're due a refund from your original filing, wait until you've received the original refund before you file Form 1040X for an additional refund.

  7. If you owe more tax with Form 1040X, pay it as soon as possible to avoid added interest and penalties.

  8. You can track the status of your filed Form 1040X with the IRS's "Where's My Amended Return?" tool at

     If you like to learn more, click the link and subscribe to my weekly blog.


 Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2015-09-10 01:28:57 PM

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02 Sept 2015
Tax Tip: Consider making tax-free gifts

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

If you are in a position to give, making annual gifts can be an excellent strategy for reducing both your estate and income tax liability. Planning and doing your gift-giving before year-end is especially smart if you are giving real estate property. You will then remove more income from your 2015 tax return. The annual tax-free limit for 2015 gifts is $14,000 to as many individuals as you like.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-09-02 03:58:16 PM

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26 Aug 2015
Midyear tax planning tip

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Here’s a midyear tax planning tip for you Take time this summer, to review, your investment portfolio, for potential tax savings. Here are some tax strategies you might want to incorporate:

1) Sell stocks that you bought and went down in value to offset your capital gains.

2) You can donate appreciated stock that you have owned for more than a year to charity. By doing this, you can avoid capital gains altogether – plus you will get a deduction for the stock's fair market value. Sweet!

3) You can buy investments that pay tax-free income, such as municipal bonds.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-08-26 11:17:38 AM

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19 Aug 2015
Summer Job Tax Tip

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Do you have any summer job tax tip? Yes I do! If your child has a summer job, consider opening an IRA for your kid. If he has W-2 or earned income he can contribute to a regular or a Roth IRA. The regular IRA is tax deductible. However, since your child might have minimal income, the IRA deduction will result in smaller tax savings. Conversely, the Roth IRA is not tax deductible. However, the advantage of a Roth over a regular IRA is that withdrawals in retirement will be tax-free. That’s huge! We’re talking about tax-free income. Lastly, the contribution limit for both kinds of IRA for 2015 is the lesser of your child’s W-2/Earned income or $5,500.

If you like to learn more, click the link and subscribe to my weekly blog.

Until then. This is Noel Dalmacio, your ultimate CPA at - See more at:

Last Updated by Admin on 2015-08-19 11:44:48 AM

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12 Aug 2015
Making an IRA change could be tax-smart move

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

Did you convert all or part of a retirement account to a Roth IRA during 2014?

 And do you now wish you hadn't?

Here's some good news: You have until October 15, 2015, to change your mind, even if you already filed your federal income tax return. The tax term that we use for undoing the conversion and switching your funds back to a traditional IRA from a Roth is "recharacterization." You can recharacterize any amount of your original conversion, no matter your income, and for any reason. When you recharacterize the entire conversion amount, you put yourself back in the position you were in originally. Why would you want to do that? Here are some tax situations that might warrant the “redo” You might be in higher tax bracket than what you anticipated and reconverting will reduce your income. Your investments didn't do as well as you anticipated and the value in your account has declined. Leaving the money in the new Roth means you pay tax on the original amount you converted.  If you do a “redo” you will save tax dollars.

If you like to learn more, click the link and subscribe to my weekly blog.

 Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-08-19 11:45:51 AM

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30 July 2015
Safeguard records before a disaster strikes

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

How to safeguard records before a disaster strikes?

There's never a good time to plan for a disaster. There's never a better time either. So why wait? Instead of having to reconstruct personal and business records in the aftermath of an unexpected calamity, safeguarding documents before you suffer a loss will make it easier to claim casualty deductions and other tax breaks.

Here's an overview of some of the paperwork to include in your disaster preparedness plan and why you'll need it.

  1. Purchase and acquisition information. The amount of a casualty loss is generally the lesser of your adjusted basis or the reduction in your property's fair market value due to the casualty. With the exception of gifts, inheritances, and certain other property, adjusted basis typically equals what you paid for your assets plus improvements, reduced by depreciation or other reductions.

    Tip: Make duplicates of titles, mortgages, closing papers, and receipts or scan them into digital form. Store the originals and the copies in separate locations, preferably in fire- and water-proof containers.

  2. Prior-year tax returns. When your loss occurs in a presidentially declared federal disaster area, you can amend an already filed prior-year federal return to claim the deduction and the resulting tax refund.

  3. Detailed inventory. As a general rule, you're required to reduce the amount of your personal property casualty losses by $100. In addition, losses must exceed 10% of your adjusted gross income (except in federal disaster areas). A list of your possessions, supplemented by photographs or a video, is essential for maximizing your deduction. So please make sure you have all these paperwork to streamline the process in case of any casualty.

      If you like to learn more, click the link and subscribe to my weeklyblog.

 Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-08-19 11:46:54 AM

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22 July 2015
Seven summertime tax-savers

Posted in tax


Hi guys, this is Noel Dalmacio, your ultimate CPA at


Guess what? Summer is here and let me share 7 summer tax-savings that you can apply right now:


  1. Rent out your vacation home. If you own a second home, rent it out this summer when you're not using it. You can offset the rental income with rental-related expenses, leaving you with little or “0” tax liability.

  2. Harvest capital gains or losses. Review your semi-annual investment portfolio to spot investments with built-in capital gains or losses that can offset transactions you made beginning of the year. You can deduct up to $3,000 of excess capital losses against your ordinary income.

  3. Hire your kids. Does your child need a summer job? Hire him to work in the family business. The wages earned will be taxed using your child's lower tax bracket. In addition, he can contribute to a ROTH IRA. 

  4. Send the kids to camp. Are you a working parent of under-age-13 children? If yes, you may be able to claim a tax credit for the cost of day camp. Just remember, overnight camps don't qualify.

  5. Combine pleasure with business. When you travel out of town for business reasons, you can deduct the full cost of your airfare, even if you spend time sightseeing while you're away. Expenses for side trips aren't deductible.

  6. Entertain business customers. Generally, you can deduct 50% of the cost of entertaining customers before or after a substantial business discussion. This includes golf outings or an evening of dinner and drinks.

    And the last one:

  7. Host a staff get-together. The usual 50% limit on entertainment deductions doesn't apply to summer barbecues and picnics if the entire staff is invited. In that case, you can write off 100% of the cost.


If you like to learn more, click the link and subscribe to my weeklyblog.


Until then, this is Noel Dalmacio, your ultimate CPA at


Last Updated by Admin on 2015-07-22 11:35:50 AM

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15 July 2015
How do you maximize tax breaks for your vacation home?

Posted in tax

Hi guys, this is Noel Dalmacio, your ultimate CPA at

How do you maximize tax breaks for your vacation home?

If you own a vacation home, a boat or an RV that you also rent out to others, keep track of the rental use during the year to maximize your tax breaks.

Here are some tax strategies you need to consider:

Number 1. Receive tax-free income. Yes! You heard it right!

If you rented it out for 14 days or less during the year, you don't have to report the income. You get tax-free income!

You can generally deduct mortgage interest and real estate taxes, but you can't deduct any other rental expenses. Hey, tax-free income is still  great stuff!

Number 2 - Limit your personal use so you can deduct all your rental expenses.

If you limit your personal use to NOT more than 14 days or 10% of the time the home is rented, all rental expenses are deductible.

However, conversely, number 3* If you use the property personally for more than 14 days or 10% of the number of days it's rented, the rules change. Your rental deductions (except for taxes and mortgage interest) are limited to the amount of your rental income.

So here’s an example: You stayed in your vacation home 20 days last year. It was rented at fair market value for 190 days. In this example, your personal use exceeded the 10% limit (19 days). Therefore, your rental deductions are limited to the rental income you received.

Number 4. Convert the property as your primary home, and the gain when you sell may be tax-free. If you use your vacation home as your principal residence for two out of the five years before you sell it, you may exclude up to $250,000 of gain ($500,000 for married couples) from your income. However, you will have to pay tax on gain to the extent of certain depreciation you previously taken after May 6 , 1997 and you might need to allocate the gain on sale between the primary home and the rental.

The rules are a little bit complex, but a basic understanding of the rules and good recordkeeping will help you get the best tax breaks from your vacation home.

If you like to learn more, click the link and subscribe to my weeklyblog.

Until then, this is Noel Dalmacio, your ultimate CPA at

Last Updated by Admin on 2015-07-15 05:24:57 PM

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08 July 2015
IRS launches new "Misclassification Initiative"

Posted in tax


How you classify your workers – as "independent contractors" or "employees" – matters a great deal to the IRS. The IRS is aware that employers prefer to treat workers as independent contractors to avoid paying fringe benefits and payroll taxes. The IRS estimates that 80% of workers who are classified as independent contractors are actually employees. About 100 new auditors have been hired with the specific task of investigating misclassifications, and the government is estimating that the crackdown will generate at least $7 billion in revenue over the next ten years. For guidance in classifying your workers, contact our office.


Last Updated by Admin on 2015-07-08 10:42:24 AM

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04 June 2015
Miscellaneous tax news

Posted in tax


Summertime tax tip


If you itemize your deductions, you can deduct the mortgage interest and property taxes paid for your vacation home. A boat or RV can qualify as a vacation home if it has sleeping quarters, cooking facilities, and a bathroom. If a retreat also serves as rental property, you can control your tax deductions by changing the number of days you use it for vacation.




IRS announces 2016 HSA limits


The 2016 inflation-adjusted amounts for health savings accounts (HSAs) have been released by the IRS. Individuals will be allowed to contribute up to $3,350, and contributions for family coverage will be limited to $6,750. As before, an individual aged 55 or older may contribute an additional $1,000. For 2016, a "high-deductible health plan" is one with an annual deductible of not less than $1,300 for individual coverage and $2,600 for family coverage.


Check the "support" test to maintain dependent deductions


Keep your college student qualified as your dependent by meeting the "support" test. Generally, your child cannot provide over one-half of his or her own support during the year. Add up funds your child will have received from work, student loans, and other sources of income. Do you need to increase your level of support during the rest of the year in order to claim the exemption?


Last Updated by Admin on 2015-06-04 12:35:54 PM

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28 May 2015
Every estate plan should have these basic documents

Posted in tax


Estate planning is not just a task for the wealthy. Even though federal tax implications kick in only if your estate exceeds $5,430,000, there are other issues that make estate planning important for most individuals.

Start your estate planning by meeting with an attorney and your accountant. They can instruct you in the essentials of estate tax law and the requirements for establishing an estate plan. A key part of estate planning is compiling the documents that will accomplish your goals.

A basic estate plan should include the following documents:

  • Your will, which should name the guardian you choose for your minor children and an executor (personal representative) to carry out your instructions.

  • A listing of your assets. Include your home and other properties, pension and retirement accounts (401(k) & IRAs), investments (noting the cost basis), automobiles, jewelry, and any other assets.

  • Life insurance information such as your insurer, your policy number, the amount of insurance, and the location of your policies.

  • Financial and business records, including real estate deeds, tax returns and related support papers, your social security number, investment statements, and stock and bond certificates.

  • Funeral instructions, including your burial wishes and people to be notified upon your death.

  • Medical information and a list of your doctors.

  • Durable power of attorney, designating the individual(s) you select to act on your behalf if you're incapacitated.

  • Health care proxy naming the individual(s) you want to make health care decisions for you if you aren't capable.

    Keep your original documents in a fireproof safe or with your attorney. Put your list of documents and the copies in a binder at home and tell your executor where the documents are located. If you would like assistance with your estate planning, please contact our office.

Last Updated by Admin on 2015-05-28 11:17:56 AM

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20 May 2015
What every spouse should know before signing a joint return

Posted in tax


The advantage of filing a joint tax return is well known – you generally save money compared to filing separately. However, there is at least one potential disadvantage. Both spouses are jointly and severally liable for the entire income tax bill, including interest and penalties, even if one earned most or all the income.

This issue most commonly arises when there are unpaid taxes from joint filing years, and a couple later separates or divorces. The IRS can pursue either spouse for the full amount. If you're the easiest one to find, or if you have liquid assets, you can end up paying the entire bill.

When this happens, the only relief is the so-called innocent spouse rule. If you can prove that you had no reason to suspect tax shortfalls and you did not personally benefit from unreported income, or that you signed joint returns only under duress, you may get off the hook. Unfortunately, this is easier said than done. The IRS and the courts have been notoriously stingy in allowing innocent spouse relief.

What can you do to head off trouble? First, consider the obvious. If your family spends much more money than the income shown on your tax returns, warning lights should go on. If you don't understand all the tax and financial issues in the joint return, ask questions. In certain circumstances, you may even want to consider hiring your own tax professional to advise you before signing.

If you are headed toward separation or divorce, it may be best to file separately. You may pay a little more tax, but that's better than leaving yourself liable for the tax sins of someone who is no longer on your side. Don't file jointly unless you're sure that all income has been reported on the return and that the taxes have actually been paid.

Last Updated by Admin on 2015-05-20 10:51:46 AM

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13 May 2015
Roth IRAs: A smart tax idea for children

Posted in tax

Persuading your working children to make retirement contributions may not be easy, but investments in Roth IRAs may be the wisest possible use of their earnings. The nature of Roth IRAs, coupled with the effects of long-term compounding, can create exceptional returns on such early investments.

Although contributions to Roth IRAs are not deductible, earnings within the accounts (such as interest or dividends) are not taxed and qualified withdrawals are completely tax-free. Tax-free compounding can result in sizable accumulation in a Roth. For example, if a 15-year-old contributes $2,500 for each of four years, and the account earns 5% annually, the fund will be worth about $85,000 when the child reaches age sixty.

It's generally best to leave IRA funds untouched until retirement, but if necessary, your child's contributions to a Roth IRA (excluding the earnings) can be withdrawn at any time without triggering taxes or penalties. This flexibility provides an advantage over a traditional IRA, where most withdrawals before the owner reaches age 59½ will be taxed and penalized.

The owner's ability to deduct contributions is the one advantage a traditional IRA offers over a Roth IRA. However, this feature is relatively insignificant for most young earners. The first $6,300 of a child's 2015 income will be entirely sheltered by the standard deduction, and any earnings above $6,300 are likely to be taxed at very low rates.

This year, most working people can contribute up to the lesser of their earned income or $5,500 to a Roth IRA. Although Roth eligibility is phased out for individuals with income above certain ceilings (e.g., $116,000 to $131,000 for a single person in 2015), a working child's revenue rarely will approach such thresholds.

If you'd like to learn more about the benefits of setting up Roth IRAs for your children, contact us for assistance.

Last Updated by Admin on 2015-05-13 12:53:19 PM

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06 May 2015
Various Tax News

Posted in tax

20 million qualify for ACA penalty exemption

According to a Brookings Institution paper on the Affordable Care Act, an estimated 20 million taxpayers who had no health insurance in 2014 will qualify for an exemption from the penalty for failing to have insurance. It's not known how many of those who qualify for the exemption will actually claim it. To check the available penalty exemptions, visit the IRS web site at


New myRA program now available

A new simplified Roth IRA is the newest retirement plan. The account is called a myRA (short for "my retirement account"). It's funded by having your employer make direct paycheck deposits to your account. The contributions to your myRA are invested in government-guaranteed Treasury securities. A myRA isn't connected to your employer; it belongs entirely to you and can be moved to any new employer that offers direct deposit capability. The annual contribution limits that apply to regular Roth IRAs apply to myRAs. To find out more about myRAs, contact our office.


IRS tax audits cut by budget issues

The IRS reports that its enforcement budget has been cut by $254 million, a 5% reduction from the previous year. As a result, the Agency expects to cut the number of individual and business audits it conducts. In 2014 the IRS audited 0.86 percent of individual taxpayers and 26% of large corporations. Though audit statistics show a decline in examinations, the IRS contacts many more taxpayers with questions about their returns. Once statistics include these taxpayer contacts, the 2014 return examination rate is closer to 4% or one in every 25 returns filed.


Your 401(k) and a job change

If you change jobs this year, don't forget about your 401(k) in your old employer's retirement plan. You may be tempted to cash out the balance in the account, but remember that distributions from such accounts are generally taxable. Instead, ask your plan administrator to make a direct rollover to your IRA or another qualified plan. If you're under age 59½, this decision also avoids the additional 10% penalty on early distributions. An added benefit: Your retirement money can continue to grow tax-deferred.

Last Updated by Admin on 2015-05-06 04:54:46 PM

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23 Apr 2015
Use your income tax refund wisely

Posted in tax

To many people, an income tax refund might be one of the largest single cash receipts for the entire year. Avoid the temptation to spend your refund on consumption items. There are several places you can invest the refund to enhance your long-term financial goals. You can pay off current debt, invest in the stock market, make home improvements, or invest in a pension plan for retirement.


Let's assume you will be getting a $5,000 tax refund. The best return on your investment may well be to pay off current amounts you owe that have high interest rates. If you are carrying a credit card balance at 15% interest, a reduction in the balance is the equivalent of earning a 15% return on your money. Your $5,000 payment will save you $750 in interest expense over the next year. This is an outstanding return when compared to most other investments. If you leave the $5,000 balance on the credit card and make only the minimum monthly payment, you can pay up to twice that amount in interest, depending on your interest rate.


A second choice might be to pay down the principal balance on your home mortgage. A $5,000 reduction in a 4% thirty-year loan will save $11,000 in interest expense over the life of the loan.


Consider putting the cash into your retirement program. Only one out of five Americans can retire with adequate resources to live independently. $5,000 invested at a 6% compounding return will be worth $28,000 in thirty years. Your retirement fund could grow to almost $450,000 if you invest $5,000 each year for thirty years at a 6% compounding return. Have you ever heard anyone say that they retired with too much money?

Last Updated by Admin on 2015-04-23 12:25:59 PM

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08 Apr 2015
Tax Extension and Gift Tax filing requirement

Posted in tax

Can’t file by April 15th? Get an Extension

If you can't file your 2014 tax return by the April 15 deadline, file for an extension to get until October 15, 2015, to file. You can request the extension on paper, by phone, or online. You don't need to explain why you need more time, but be aware that an extension doesn't give you more time to pay taxes you owe. To avoid penalty and interest charges, taxes must be paid by April 15.


Gift Tax filing requirement

If you made gifts in 2014, check this tax filing requirement.  Here's another filing deadline that might apply to you: April 15 is the due date for filing 2014 gift tax returns. If you made gifts last year in excess of the $14,000 annual limit to any one individual, you may need to report the transaction to the IRS. If you and your spouse agree to "gift-splitting," you could give up to $28,000 to any one individual with no gift tax liability. However, gift-splitting requires that each of you file a gift tax return.

Last Updated by Admin on 2015-04-08 10:14:30 AM

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01 Apr 2015
No paperwork means no deduction

Posted in tax

Did you give contributions to qualified charities during 2014? Be sure to get a receipt. Tax rules are strict when it comes to substantiating your contributions. In order to take a deduction, you must generally have a written contemporaneous receipt from a qualified charity. "Contemporaneous" means you must receive an acknowledgment of your contribution by the earlier of the date on which you actually file your return for the year of the contribution, or the due date (including extensions) of the return.

Last Updated by Admin on 2015-04-01 12:10:44 PM

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25 Mar 2015
Tax Scams

Posted in tax

One very common form of tax fraud involves the scam artist stealing your social security number and filing a false return in your name in order to get your tax refund.


The Federal Trade Commission is urging people to file their tax returns as early as possible "to get ahead of scammers" who may try to steal social security numbers and use them to get a fraudulent refund.


Likewise, the FTC's Bureau of Consumer Protection is advising consumers about a tax scam that has resulted in an "explosion of complaints about callers who claim to be IRS agents – but are not." These IRS impersonation scams count on people's lack of knowledge about how the IRS contacts taxpayers. The IRS never calls a taxpayer about unpaid taxes or penalties; the initial contact is made by a mailed letter. If you get a call purporting to be from the IRS telling you to send money for unpaid taxes, hang up and report the scam to the FTC and the Treasury Inspector General for Tax Administration at

Last Updated by Admin on 2015-03-25 12:11:45 PM

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25 Feb 2015
Sticking to budgets and diets

Posted in tax

Budgets, like diets, are short lived for most of us. You do a proper job of planning by looking over the past and determining where you need to make changes to meet your goals. And, you live by your plan for a few days, maybe even a few weeks. But, then all the detail of keeping track of what comes and goes gets to be more than you are willing to put up with.


If you can plan a budget and live with it, more power to you. This should put you with the 5% of people who can retire without financial assistance from family or the government.


For those of us who can't live with the detail of tracking budget numbers, here is a simple way to make sure you don't retire totally broke. Take a fixed percentage of every dollar that comes into the household and set it aside for retirement investing. Say, for example, that you decide to save 10% of your $100,000 income. Here are some rough numbers for those aged 35 who would like to retire in 30 years. $10,000 invested each year will accumulate to $697,000 in 30 years at a 5% annual return. The earlier you start, the greater the retirement benefits. If you started at age 25, the accumulated value at age 65 would be over $1,268,000.


You may think it is impossible to save 10% of your current income. Let's assume that you lose your current job. The next job you find pays 10% less than your current job. The chances are that you will figure out where to cut the spending to make it work. So, why not discipline yourself and your family in order to make your current income provide both a current living and an investment in your retirement.

Last Updated by Admin on 2015-02-25 10:18:39 AM

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18 Feb 2015
Check qualification for health insurance exemption

Posted in tax

 If you didn't have health insurance in 2014 or the insurance you had did not meet minimum requirements, you may have to pay a penalty on your 2014 federal income tax return - unless you qualify for an exemption. Exemptions include unaffordable coverage when premiums would have exceeded 8% of your household income, a coverage gap of three months or less, and general hardship. You can claim some exemptions directly on your tax return. However, for certain others, be aware you may need to complete an application on the government insurance marketplace website.

Last Updated by Admin on 2015-02-18 11:23:54 AM

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11 Feb 2015
Warning: Watch out for aggressive phone scams again this tax season

Posted in tax

The Treasury Inspector General for Taxpayer Administration (TIGTA) is warning taxpayers about one particular category of tax scams that has proven to be very widespread, very aggressive, and very relentless. Callers claim to be IRS employees, and they tell their intended victims that they owe taxes that must be paid immediately using a prepaid debit card or wire transfer. The fake IRS agents threaten those who refuse to pay with arrest, deportation, or loss of a business or driver's license. The scammers have been operating in every state in the country.


Here are some practices used by the scammers that taxpayers should watch out for:

* Use of automated robocall machine.

* Caller gives fake IRS badge numbers.

* Caller knows last four digits of victim's social security number.

* Caller ID is changed to appear as if the IRS is the caller.

* A fake IRS e-mail is sent supporting the scammer's claims.

* Follow-up calls are made claiming to be from the police department or motor vehicle licensing office, with caller ID again supporting the claim.

If you receive one of these fake calls, complete the "IRS Impersonation Scam Form" on TIGTA's website, or call TIGTA at 800-366-4484.

Last Updated by Admin on 2015-02-11 11:19:09 AM

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04 Feb 2015
Electronic refunds limited to three per account / IRS service will be affected by ACA and budget cuts

Posted in tax

Electronic refunds limited to three per account


The IRS announces that, as part of its efforts to curb fraud and identity theft, it will no longer directly deposit more than three electronic refunds to a single financial account or prepaid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund.


The IRS also warns that direct deposit must be made only to accounts bearing the taxpayer's name.

IRS service will be affected by ACA and budget cuts.

IRS Commissioner John Koskinen has informed taxpayers that the Agency's level of service to taxpayers is likely to decline, thanks to increased workloads resulting from the Affordable Care Act and cuts to the IRS's 2015 budget. Taxpayers can expect longer waits in IRS responses to both written inquiries and phone calls. Refunds may also be delayed this year. The IRS will also have fewer resources to conduct audits, which may lead to lower revenue collection.

Last Updated by Admin on 2015-02-04 10:59:02 AM

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28 Jan 2015
Homeowners: Don't make these common insurance mistakes

Posted in general

Catastrophes, thefts, natural disasters, accidents, fires – they happen. If such misfortunes strike, a well-researched and up-to-date homeowner's insurance policy can keep your family's finances afloat during trying times. Proceeds from a homeowner's policy can provide necessary funds to replace your house and belongings. A good policy can also protect against unexpected liabilities. If you're considering a new homeowner's policy (or already have one), watch out for some common pitfalls, including the following:


Inadequate policy limits. Some homeowners try to lower their premiums by purchasing a policy that doesn't fund their home's replacement value. That's often a big mistake. If the cost to replace your home has risen over the years and policy limits haven't kept pace, you could end up footing the bill for much of the replacement cost (or selling your property at fire sale prices).


Personal property not documented. If you need to file a claim, an insurance carrier will want solid evidence that you owned the items being claimed. It's a good idea to take pictures or videos of all your household goods, and keep receipts of all expensive purchases. Place copies of the pictures and receipts in a safe deposit box and at home in a fireproof safe. You might even send copies to an out-of-town friend or relative. Being able to provide clear evidence of your personal belongings will simplify the claims process and help ensure that you get paid.


Valuables not covered. Check your policy to ensure that expensive jewelry, antiques, and other valuables are included. If not, consider adding a rider to the policy that specifically lists such items.


Deductible too low. Generally, the higher the deductible, the lower the premium. True, in the event a claim needs to be filed, you'll pay a bigger chunk of the repair or replacement cost with a high deductible. On the other hand, with a high deductible you'll generally pay lower premiums each year.


By doing careful research and avoiding some common mistakes, your homeowner's insurance policy will be affordable and still provide solid protection should disaster strike.

Last Updated by Admin on 2015-01-28 11:26:34 AM

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21 Jan 2015
1099 reporting deadline/ 2015 tax withholding/ Retirement contributions

Posted in tax

February 2 is deadline for 1099 reporting.  Form 1099s must be filed by businesses each year. This year the deadline for filing falls on February 2, though electronic filers have until March 31 to file. The most common form for businesses is probably Form 1099-MISC, used to report miscellaneous payments to nonemployees. This includes fees for services paid to independent contractors, such as consultants, lawyers, cleaning services, and others. Generally, you don't report fees paid to corporations, but there are exceptions (payments to lawyers, for example).


Check your tax withholding for 2015.  Withholding too much tax from your wages isn't a smart financial move. Review how much you're having withheld in 2015 to see if it matches the actual tax liability you expect to have. If an adjustment is needed, file a new Form W-4 with your employer.


Make retirement plan contributions early.  With retirement plan contributions, it's the early bird who maximizes tax-deferred earnings. Make your contributions as early in the year as you can. For 2015, you can contribute the following:


IRA - $5,500 ($6,500 if you're 50 or older)

401(k) - $18,000 ($24,000 if you're 50 or older)

SIMPLE IRA -$12,500 ($15,500 if you're 50 or older).

Last Updated by Admin on 2015-01-21 10:39:18 AM

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15 Jan 2015
Update your beneficiary designations

Posted in tax


Who have you designated as beneficiaries for your insurance policies and retirement accounts? If you can't remember, you're not alone. But it's worth checking. If you make the wrong decision, it could affect who inherits those assets. In some cases, it could also change the taxes your beneficiaries will pay and the value they'll receive. Here are some key facts about beneficiary designations.


What are they?


  • When you designate a beneficiary for an account, you are naming the person you want to inherit that account.


  • Your designation determines who will inherit the assets in the account, regardless of what your will might say. Generally, the assets will bypass probate and go straight to the person or institution you named.


  • You can designate a person or group of persons, a charity, a trust, or your estate. You may also want to designate a secondary or backup beneficiary in case the primary is no longer living.


    Why are they important?


  • It's important to keep beneficiary designations up to date because they determine who will inherit the assets in your accounts. Changing your will won't change the beneficiaries.


  • There can be tax implications too. With a traditional IRA, your choice of beneficiary can affect how quickly withdrawals must be made and taxes paid. That can change the value of the IRA to your beneficiary.


    How do you update them?


  • First, find copies of all your current designations. Contact your insurance company and plan trustees if you can't locate the documents.


  • Review them and decide what changes you'd like to make. Make an appointment to go over the changes with your tax or estate planning advisor.


  • Send your updated designations to the account trustees. Make sure you receive confirmations and keep copies in your records.

Last Updated by Admin on 2015-01-15 10:32:45 AM

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07 Jan 2015
Congress retroactively extends tax breaks for 2014

Posted in tax

In its final session of the year, Congress extended a long list of tax breaks that had expired, retroactive to the beginning of 2014. But the reprieve is only temporary. The extensions granted in the Tax Increase Prevention Act of 2014 remain in effect through December 31, 2014. For these tax breaks to survive beyond that point, they must be renewed by Congress in 2015.


Although certain extended tax breaks are industry-specific, others will appeal to a wide cross-section of individuals and businesses. Here are some of the most popular items.


  • The new law retains an optional deduction for state and local sales taxes in lieu of deducting state and local income taxes. This is especially beneficial for residents of states with no income tax.


  • The maximum $500,000 Section 179 deduction for qualified business property, which had dropped to $25,000, is reinstated for 2014. The deduction is phased out above a $2 million threshold.


  • A 50% bonus depreciation for qualified business property is revived. The deduction may be claimed in conjunction with Section 179.


  • Parents may be able to claim a tuition-and-fees deduction for qualified expenses. The amount of the deduction is linked to adjusted gross income.


  • An individual age 70½ and over could transfer up to $100,000 tax-free from an IRA to a charity in 2014. The transfer counts as a required minimum distribution (RMD).


  • Homeowners can exclude tax on mortgage debt cancellation or forgiveness of up to $2 million. This tax break is only available for a principal residence.


  • The new law preserves bigger tax benefits for mass transit passes. Employees may receive up to $250 per month tax-free as opposed to only $130 per month.


  • A taxpayer is generally entitled to credit of 10% of the cost of energy-saving improvements installed in the home, subject to a $500 lifetime limit.


  • Educators can deduct up to $250 of their out-of-pocket expenses. This deduction is claimed "above the line" so it is available to nonitemizers.


The remaining extenders range from enhanced deductions for donating land for conservation purposes to business tax credits for research expenses and hiring veterans.


Finally, the new law authorizes tax-free accounts for disabled individuals who use the money for qualified expenses like housing and transportation. Another provision in the law provides greater investment flexibility for Section 529 accounts used to pay for college.

Last Updated by Admin on 2015-01-07 10:36:41 AM

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17 Dec 2014
How to tell you have credit card problems

Posted in tax

 If you're living beyond your means, you could be courting financial disaster. Here are some indicators that you need to get your credit card usage under control.


* Your income's dwindling but your credit card balances keep growing. Lost your job but can't seem to reign in those charge cards? Don't be surprised when the bill collectors come calling.


* You pay only minimum balances. Still paying off last year's Valentine's Day dinner? Bad spending habits?


* You practice the credit card shuffle. You take out a cash advance on one credit card to pay off another, then apply for another card when the first comes due. Practiced regularly, shuffling credit cards is a losing game. At some point you need enough income to cover your expenses. Eventually, the house of credit comes tumbling down.


* You're working overtime to cover expenses. Say you work for an airplane manufacturer that's building a new line of jets. To increase production, the company asks you to work longer hours. Bigger paychecks become routine and the cash starts flowing. So you take out installment loans to buy a new car or boat or house on the beach. But what happens when the production line slows down and the overtime pay dries up? The car payments, boat payments, and second home payments keep chugging along. And suddenly you're struggling to make the payments.


* You routinely charge everyday expenses. Do you use credit cards to pay for groceries, gas, and fast food? Unless you're disciplined and pay off the charges every month, your credit card balances can grow exponentially.


* The utility company calls. When the local water company threatens to discontinue service because you're behind on the payments, it may be time to seek financial help.


* You're refused credit. These days, even people with good credit may find it hard to obtain loans. But if your credit score is in the don't-call-us-we'll-call-you category, you may have a debt problem.


The best time to seek professional advice is well before your financial boat capsizes. If you'd like help, give us a call.

Last Updated by Admin on 2014-12-17 10:39:13 AM

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10 Dec 2014
Does your business make use of your financial statements?

Posted in tax

Many small business owners pay too little attention to their financial statements. This is due in part to not understanding just what the statements have to offer. In fact, many may not be able to tell you the difference between a Balance Sheet and an Income Statement.


Think of them this way. The Balance Sheet is like a still picture. It shows where your company is at on a specific date, at month-end, or at year-end. It is a listing of your assets and debts on a given date. So Balance Sheets that are a year apart show your financial position at the end of year one versus the end of year two. Showing how you got from position one to position two is the job of the Income Statement.


Suppose I took a photo of you sitting behind your desk on December 31, 2013. And on December 31, 2014, I took a photo of you sitting on the other side of your desk. We know for a fact that you have moved from one side to the other. What we don't know is how you got there. Did you just jump over the desk or did you run all the way around the building to do it? The Income Statement tells us how you did it. It shows how many sales and how much expense was involved to accomplish the move.


To see why a third kind of financial statement called a Funds Flow Statement is useful, follow this case. A printer has started a new printing business. He invested $20,000 of his own cash and borrowed $50,000 from the bank to buy new equipment. After a year of operation, he has managed to pay off the bank loan. He now owns the equipment free and clear. When he is told his net profit is $50,000, he can't believe it. He might tell you that he took nothing out of the business and lived off his wife's wages for the year. And since there is no cash in the bank, just where is the profit? The Funds Flow Statement will show the income as a "source of funds" and the increase in equipment is an "application of funds." The Funds Statement is even more useful when you have several assets to which funds can be applied and several sources of funds such as bank loans, vendor payables, and business profit or loss.


Don't be afraid to ask your accountant questions about your financial statements. The more questions you get answered, the more useful you will find your financial statements. Accounting is sort of a foreign language. Learn to speak a little of it.


Last Updated by Admin on 2014-12-10 11:02:15 AM

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19 Nov 2014
Review your 2014 deductions

Posted in tax

 Some itemized deductions are limited by a percentage of your gross income. An example is miscellaneous deductions. These provide a benefit only if your total outlay for costs such as investment fees and unreimbursed employee business expenses exceed 2% of your adjusted gross income.


If you consistently lose out on these deductions, check now to determine if pulling some of January's expenses into December will help.


Keep an eye on your exposure to the alternative minimum tax whenever you plan a strategy for making the most of deductions. Some expenses aren't deductible under those rules.

Last Updated by Admin on 2014-11-19 10:31:40 AM

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12 Nov 2014
Don't forget to take your RMD

Posted in tax

Don't forget to take your RMD


Did you celebrate your 70½th birthday in 2014? Do you have a traditional or rollover IRA? If both answers are yes, the deadline for taking the initial required minimum distribution from your retirement account is April 1, 2015.


Required minimum distributions are the smallest amount you can withdraw from your account to avoid penalties, and your 70½th birthday is the triggering start date. That's defined as six months after your 70th birthday.


As an example, if your actual birthday was in July 2014, you'll turn 70½ in January 2015. That means you don't have to take a minimum distribution for 2014. Instead, you're required to take your first minimum distribution no later than April 1, 2016. After the first distribution, you must complete each annual withdrawal by December 31.


Note that you may want to take your initial distribution by December 31 (instead of the following April) to avoid two withdrawals in a single year.

Last Updated by Admin on 2014-11-12 10:07:31 AM

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05 Nov 2014
IRS cuts audit rates in face of budget cuts

Posted in tax

The IRS is facing budget cuts that will result in fewer audits and other enforcement activities. The IRS reports that it will do 140,000 fewer correspondence audits in 2014 than it did in 2013. The individual audit rate for 2014 is expected to drop to 0.80%, a decline from the 0.96% rate in 2013. That translates to one audit for every 120 tax returns filed in 2014. The audit rates for partnerships, S corporations, and corporations are falling as well.

Last Updated by Admin on 2014-11-05 11:19:40 AM

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01 Oct 2014
October 15 is final tax deadline

Posted in tax


If you requested a six-month extension to file your 2013 income tax return, you face a major deadline on October 15. That's the final date for filing your 2013 return; the IRS generally does not give filing extensions beyond that date.


October 15 is also the deadline for undoing a 2013 conversion of a regular IRA to a Roth IRA. If you did a conversion to a Roth last year, you can switch it back to a regular IRA without penalty if you do so by October 15.


Need details or filing assistance? Contact our office.


Last Updated by Admin on 2014-10-01 10:52:15 AM

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26 Sept 2014
Use the 80-20 rule to increase your business profits

Posted in tax


How well do you know your customers? Which ones are the most profitable? Which ones take most of your time? It's worth taking the time to find out. If your business is like most, the 80-20 rule applies. That is, 80% of your profits come from 20% of your customers.


If you can identify that top 20%, you can work hard to make sure this group remains satisfied customers. Sometimes all it takes is an appreciative phone call or a little special attention. Also, by understanding what makes this group profitable, you can work to bring other customers into that category.


Keep in mind that it's not always profits alone that make a good customer. Other factors, such as frequency of orders, reliability of the business, speed of payment, and joy to deal with are important too. Ask your accounting staff and your sales staff. You'll soon come up with a list of top customers.


There's another way in which the 80-20 rule applies to your business. Very likely, 80% of your problems and complaints come from 20% or fewer of your customers. If you identify those problem customers, you can change the way you do business with them to reduce the problems. Consider changing your pricing for those customers so that at least you're being paid for the extra time and effort they require. Sometimes the only solution is to tell these customers that you no longer wish to do business with them.


The bottom line is that understanding your customers better can only help your business. Contact us if you need help analyzing your customer profitability.


Last Updated by Admin on 2014-09-26 12:59:39 PM

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18 Sept 2014
There are tax breaks when you do charitable work

Posted in tax

If you do volunteer work for a charitable organization and have not kept track of your out-of-pocket expenses, you might be passing up an excellent opportunity to lower your tax bill. To qualify, your unreimbursed expenses must relate directly to the charity, and you must itemize your deductions on your tax return. Here is a brief rundown of some possible deductions.


* Volunteers may deduct the cost of phone calls, postage stamps, supplies, and other out-of-pocket costs incurred in their volunteer work. For volunteers who are required to wear a uniform, the cost of buying and cleaning uniforms is deductible if they are unsuitable for everyday wear.


* The cost of your time, no matter how valuable it may be, is not deductible. That's true even if you would normally be paid for the type of service you contribute. For instance, accountants who perform free consulting for charities can't deduct what they would normally charge for their services.


* Using your car in connection with volunteer work can earn you a deduction. The standard mileage rate for volunteers who use their own cars is 14 cents per mile. Alternatively, you may deduct your actual unreimbursed expenses for gas and oil - but not maintenance, depreciation, or insurance. Either way you choose, related parking fees and tolls are deductible as well.


* If you travel overnight for charitable purposes, your expenses are deductible as long as they are reasonable in amount and not connected with personal activities or any element of recreation.


* Special rules apply to conventions. Travel and other out-of-pocket expenses related to attendance at a convention for volunteers are deductible only if you have been chosen as a delegate to represent the organization.


Finally, just remember that it is up to you, the volunteer, to substantiate your deductions. If you take these deductions, you should be prepared to show the IRS the connection between the costs claimed and the charitable work performed.

Last Updated by Admin on 2014-09-18 04:58:42 PM

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10 Sept 2014
IRS issues another warning

Posted in tax

 Another strong warning from the IRS is alerting taxpayers to phone scams that have already resulted in 90,000 complaints and the theft of millions of dollars. Here's how the typical scam works: The caller claims to be from the IRS and, using hostile and abusive language, demands immediate payment of taxes by a prepaid debit card or wire transfer. The IRS reminds taxpayers it will never contact you by phone about owed taxes; the first contact will be by mail. It will never ask for credit, debit, or prepaid card information in a phone call, and it will never request immediate payment over the phone.

Last Updated by Admin on 2014-09-10 10:33:35 AM

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03 Sept 2014
September 15th is the deadline…

Posted in tax

 September 15th is fast approaching and it’s the filing deadline for the various returns and form below:


2013 tax returns for calendar-year corporations (C & S-corporations) that had extensions of the March 15th deadline.


2013 partnership tax returns (multi-partnership & LLC) that had extensions of the April 15th filing deadline.


September 15 is the deadline for individuals to pay the third quarter installment of 2014 estimated income tax.

Last Updated by Admin on 2014-09-03 11:12:48 AM

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27 Aug 2014
Dealing with finances after the death of a spouse

Posted in tax


The death of a spouse can be a devastating experience, both emotionally and financially. As the survivor, you'll have to make important decisions while you're in what could be the most vulnerable and distracted stage of your life. The suggestions that follow might at least help ease your financial stress.


* Don't make major decisions right away. Put off selling your house, moving in with your grown children, giving everything away, liquidating your investments, or buying new financial products.


* Get professional help. You'll need an attorney to help interpret and explain the will and/or applicable law and implement the estate settlement; your accountant to provide financial advice and prepare the necessary tax documents; one or more insurance brokers to help with filing and collecting death benefits; and a funeral director, who in addition to the obvious services, can obtain needed copies of the death certificate.


* Gather and review any applicable documents, such as the decedent's social security card and statements, insurance policies, loan and lease agreements, your spouse's birth certificate, the death certificate, investment paperwork, mortgage statements and agreements, deeds, retirement plans and related statements, credit cards and credit card statements, employment and/or partnership agreements, divorce agreements, funeral directives and/or contracts, safe deposit box information, and tax returns. (You'll need a dozen or more copies of the death certificate to provide to insurance companies, government agencies, creditors, credit card agencies, banks, and a host of others.)


* Determine who must be paid, and when. You'll need to notify your spouse's creditors (including joint creditors) and continue paying for mortgages, car loans, credit cards, utilities, and insurance premiums not specific to your spouse. Notify health insurance companies (including Medicare) that you'll no longer be paying your spouse's premiums, and cancel your spouse's memberships and subscriptions.


* Alert the credit card agencies (Experian, Equifax, and TransUnion). Request addition of a "deceased notice" and a "do not issue credit" statement to the decedent's file. Order credit reports, which will provide a complete record of your spouse's open credit cards.


* Determine what payments are due to you, such as insurance proceeds, social security or veteran's benefits, and pension payouts. File claims where needed.


* Maintain your joint checking account to facilitate the deposit of incoming checks payable to your spouse.


Finally, call us as soon as you can. We're always ready to advise and assist you, before or after life's tragic events.


Last Updated by Admin on 2014-08-27 10:25:03 AM

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20 Aug 2014
Avoid five common mistakes in your 401(k) plan

Posted in tax


Participating in a 401(k) or similar retirement plan is a tax-advantaged way to save for retirement. If you have the option of participating in a 401(k) plan, avoid these five common mistakes.


* Failing to participate fully. Too many employees opt out of the plan or don't contribute as much as they can afford. At a minimum, try to set aside enough to receive the full employer-matching contribution. For example, your employer might offer to match 30% of the first 3% of payroll. That match is equivalent to a 30% first-year return on the amount you contribute.


* Over-investing in company stock. Don't invest too much of your plan contributions in company stock. Remember, even if the company is doing well now, things can change. And if the worst happens and you lose your job, you don't want to lose your retirement savings too. (Think of Enron employees.) If your employer uses company stock for the matching contribution, you may have no choice. But at least you can select other investments for your own contributions.


* Failing to diversify. Choose a well-diversified mix of investments in the plan. Then continually monitor and rebalance your investments as they grow. Coordinate your investment choices with your non-401(k) savings to make sure you have an appropriate mix. Seek professional advice if you need it.


* Borrowing from your plan. Take a loan from the plan only as a last resort. Remember, these savings are for your retirement, not to fund everyday needs. When you borrow from the plan, you're losing the tax-deferred growth on those funds.


* Withdrawing your savings if you change jobs. It's tempting to cash out your savings if you change jobs. But if you do, you'll owe taxes and probably a penalty. More important, you'll lose the future tax-favored growth that you might need in retirement. Instead, arrange a direct rollover into an IRA or your new employer's plan.

Last Updated by Admin on 2014-08-20 11:36:47 AM

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13 Aug 2014
IRS to conduct employer compliance survey

Posted in tax

In September the IRS will be sending a survey to 10,000 employers to collect information on tax compliance issues. The survey will ask employers about the time, money, and other resources they spend in dealing with compliance requirements, such as income tax withholding, processing Forms W-2, and filing taxes. The IRS says it will use the data collected to reduce employer compliance burdens. The survey is voluntary; employers who receive a survey and choose not to respond will not be penalized.

Last Updated by Admin on 2014-08-13 10:40:45 AM

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16 July 2014
More about your 2013 tax return

Posted in tax

Once you have filed your 2013 tax return, you may still have a few tax questions. The IRS provides these answers to commonly asked questions.


* How can I check the status of my refund?


You can go online to check on your refund. Go to and click on "where's my refund?" Or call 1-800-829-4477 for automated refund information available 24 hours a day, seven days a week.


* What records should I keep?


Keep receipts, canceled checks, or other substantiation for any deductions or credits you claimed. Also keep records that verify other items on your tax return (W-2s, 1099s, etc.). Keep a copy of the tax return, along with the supporting records, for seven years.


* What if I discover that I made a mistake on my return?


If you discover that you failed to report some income or claim a deduction or credit to which you are entitled, you can correct the error by filing an amended tax return using Form 1040X.


* What if my address changes after I file?


If you move or have an address change after filing your return, send Form 8822 "Change of Address" to the IRS. You should also notify the Postal Service of your new address so that you'll receive any refund you're due or notices sent by the IRS.


For answers to other tax questions you may have, give us a call.

Last Updated by Admin on 2014-07-16 10:26:03 AM

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10 July 2014
Fund an IRA with your child's summer job

Posted in tax

If your child has a job this summer, encourage him or her to set up an IRA. The amount that can be contributed is $5,500 or the child's earnings, whichever is less. If you wish, you can even provide the cash for the IRA and let your child spend his or her earnings. Roth IRAs are generally a smarter choice for children than traditional IRAs.

Last Updated by Admin on 2014-07-10 10:23:06 AM

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25 June 2014
Know the tax rules for selling online

Posted in tax


Selling items on eBay and other online auction Web sites has become a very popular way to get rid of unwanted household stuff, as well as a way to turn a little profit. Many users have even started full-time businesses auctioning merchandise on the Web. But like any business venture, selling items in the virtual world has tax implications that are all too real.


From a tax standpoint, casual selling on eBay is essentially the same as holding a garage sale. If you sell an item for less than you paid for it, you cannot deduct the loss. When you sell something for a profit, however, you must report it on your tax return. Long-term gains on the sale of collectibles, such as artwork, antiques, or rare coins, are taxed by as much as 28%.


Profit is the difference between the selling price and your "basis" in the item. In most cases, basis is simply the amount you paid for it. Inherited items generally have a basis equal to their fair market value at the time of receipt. If the basis cannot be documented, it becomes zero, and you pay tax on the entire selling price.


Online selling activity can reach the point where it is deemed to be a business venture. Status as a for-profit eBay business versus a casual online seller is not clearly defined. Factors considered by the IRS include the amount of time you spend selling online and whether you conduct yourself like other self-employed business owners, such as keeping accounting records and advertising your services.


The good news is that if you are treated as a business, you can deduct expenses related to your selling activity. The downside to business status is that profits from selling online may be subject to self-employment tax. What's more, depending on where you live, you may have to deal with sales taxes.


Taxpayers who operate like a business, but rarely show a profit, may be treated as hobbyists. In this scenario, losses can only be deducted to the extent of gains.


Whether you are an infrequent user of online auction sites, or an all-out eBay business owner, you cannot afford to ignore the tax implications of selling online. For the details you need to avoid tax problems, call our office today.

Last Updated by Admin on 2014-06-25 11:09:00 AM

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18 June 2014
Selling vacant land could bring a tax break

Posted in tax

You probably know that you can exclude up to $250,000 of gain ($500,000 for most joint filers) when you sell your principal residence. IRS regulations may now allow you to apply this gain exclusion when you sell vacant land that is adjacent to your home.


To qualify, the land you sell must be adjacent to the parcel on which your house sits. Also, the land sale must occur within two years before or after the residence is sold. You must meet the other usual requirements for claiming the exclusion. If you qualify, you can apply your $250,000 or $500,000 exclusion to both sales combined.


Example: You own and live in a house which sits on four acres. You decide to sell the house on a one-acre lot and sell the other three acres of empty land to a developer. Provided the land sale occurs within two years before or after you sell the house, you can exclude up to $250,000 ($500,000 if you file jointly) of the combined gain from both sales.

Last Updated by Admin on 2014-06-18 10:19:08 AM

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11 June 2014
Take some of the sting out of a 401(k) loan

Posted in tax

When your financial situation leaves you no other choice but to borrow from your 401(k), there are a few things you can do to make the situation better. Consider withdrawing the funds from the cash or fixed-rate portion of your plan's portfolio. This may leave higher-earning investments at work. Try to pay off the loan as quickly as possible, and continue making regular plan contributions in order to take full advantage of your employer's match.

Last Updated by Admin on 2014-06-11 11:06:37 AM

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28 May 2014
Planning can save your vacation home tax deductions

Posted in tax

You can enjoy a vacation home and cut your taxes - with some careful planning and a little discipline.


The IRS rules can be complex and potentially restrictive, so a word of caution is in order as you plan the use of your vacation home.


Owners of vacation homes often rent out the property when they're not using it themselves. Renting out your vacation home may or may not make sense for you. The principal variables are the number of days you rent the property, the number of days of personal use, your individual tax situation, and your personal wishes for the use of your vacation home.


* Rent for 14 days or less and a simple tax break is available. If you rent your vacation home for 14 days or less, all of the rental income is tax-free. This attractive tax benefit can help provide cash for your mortgage and other expenses.


* Rent for more than 14 days and your tax planning and personal life become more complex. If you rent your vacation home for more than 14 days, all your rental income is reportable. Whether you treat the income and expenses as a second residence or as rental property depends on the personal use of your vacation home relative to the time the home is rented out. This test is made annually and determines the nature of deductions, loss carryovers, and the tax treatment if the vacation home is sold.


Please call us to guide you through the IRS rules to find the rental strategy that meets your financial goals, yet ensures the personal enjoyment of your vacation home.

Last Updated by Admin on 2014-05-28 12:31:24 PM

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21 May 2014
How important are good tax records?

Posted in tax

 Tax records should be kept year-round, not hastily assembled just for your annual tax appointment. Without tax records, you can lose valuable deductions by forgetting to list expenses on your return or having unsubstantiated items disallowed if you're audited.


Generally returns can be audited up to three years after filing. However, if income is underreported by more than 25%, the Internal Revenue Service can collect underpaid taxes up to six years later. In other words, you need good records to verify what you report on your tax return, and you should hang on to those records for seven years.

Last Updated by Admin on 2014-05-21 10:43:21 AM

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14 May 2014
New limit on IRA rollovers

Posted in tax

 For years, the IRS interpreted the IRA rules to allow taxpayers to do one rollover per year in each IRA he or she owned. In doing a rollover, the taxpayer is not taxed on the funds taken from the IRA so long as the funds are redeposited into an IRA within 60 days of the withdrawal.


A recent court ruling stated that the rollover limit should be applied on an aggregate basis, meaning that only one rollover per year is allowed for all IRAs owned by the taxpayer, not one for each. The change becomes effective January 1, 2015.


Contact us for assistance before planning any IRA rollover to be sure you don't end up with a tax surprise.

Last Updated by Admin on 2014-05-14 10:48:01 AM

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30 Apr 2014
Should you incorporate your business?

Posted in tax

 One of the first decisions you face as a new business owner is whether or not to incorporate the business. The biggest advantage of incorporating is limitation of your liability. Your responsibility for debts and other liabilities incurred by a corporation is generally limited to the assets of the business. Your personal assets are not usually at risk, although there can be exceptions to this general rule. The trade-off is that there is a cost to incorporate and, in some cases, tax consequences.


Should you incorporate? You might not need to incorporate. Depending on the size and type of your business, liability may not be an issue or can be covered by insurance. If so, you could join millions of other business owners and operate as an unincorporated sole proprietor.


If you do decide to incorporate, you'll face a choice of corporate forms. All offer limitation of your liability, but there are differences in tax and other issues.


C corporation. The traditional form of corporation is the C corporation. C corporations have the most flexibility in structuring ownership and benefits, and most large companies operate in this form. The biggest drawback is double taxation. First the corporation pays tax on its profits; then the profits are taxed again as they're paid to individual shareholders as dividends.


S corporation and LLCs. Two other forms of corporation avoid this double taxation: S corporations and limited liability companies (LLCs). Both of these are called "pass-through" entities because there's no taxation at the corporate level. Instead, profits or losses are passed through to the shareholders and reported on their individual tax returns.


S corporations have some ownership limitations. There can only be one class of stock and there can't be more than 100 shareholders, none of whom can be foreigners. State registered LLCs have become a popular choice for many businesses. They offer more flexible ownership than S corporations and certain tax advantages.


Whether you're already in business or just starting out, choosing the right form of business is important. Even established businesses change from one form to another during their lifetime. Some companies use more than one type of corporation - for example, an LLC to hold the business's real estate and an S corporation for other operations.


Consult our office and your attorney for guidance in selecting the form that is best for your business.

Last Updated by Admin on 2014-04-30 10:40:10 AM

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23 Apr 2014
Study reveals retirement concerns

Posted in tax

A recent study conducted by Harris Interactive of 1,000 middle class individuals aged 25 to 75 revealed some interesting statistics about retirement attitudes.


Among the survey's findings:


* 37% of respondents say they don't expect to retire; instead they expect to work until they are too sick or die.


* 59% said retirement is not their top priority; their priority is paying day-to-day bills.


* 34% felt they would have to continue working until age 80 or beyond because they won't have saved enough to retire.


* 31% in the 40 to 59 age category say they have a retirement plan; 69% say they have no plan.


* Those who say they have a written plan say they have saved a median of $63,000 for retirement, which represents 32% of their retirement savings goal of $200,000. Those without a written plan say they have saved $20,000 or 10% of their goal.


* A third of those surveyed said that social security would be their primary source of income in retirement.


* 40% said a large unexpected health care expense was their greatest retirement fear; 37% said lower or no social security benefits was their biggest fear.

Last Updated by Admin on 2014-04-23 10:39:36 AM

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17 Apr 2014

Posted in tax

More changes made to Affordable Care Act deadlines


On February 10, 2014, the Treasury Department issued rules that will allow mid-sized businesses to delay for one year the requirement to provide health insurance for their workers. The rules also offered some relief for larger companies.


Businesses with 50 to 99 employees will now have until January 1, 2016, to provide minimum, affordable health insurance to their employees, or face penalties. Previously, the deadline for meeting this requirement was January 1, 2015.


In order to qualify for this extension, employers must certify that they have not laid off employees in order to come under the 100 employee threshold.


Larger employers - those with 100 or more full-time employees - will be allowed to phase in the required health insurance coverage. These companies won't owe a penalty under the insurance mandate so long as they offer coverage to at least 70% of their full-time employees by January 1, 2015, and at least 95% by 2016.

Last Updated by Admin on 2014-04-17 03:26:39 PM

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09 Apr 2014
IRS suggests using tax refund for bonds

Posted in tax


If you're receiving a tax refund this year, the IRS reminds you that you can use it to buy U.S. savings bonds directly from the IRS. Here are the details.


* You may purchase up to $5,000 in U.S. Series I savings bonds.


* The total amount of bonds you purchase must be a multiple of $50. Any refund over the specified bond purchase amount can be deposited in your bank savings account, or you can request a check by mail.


* Bonds will be issued in your name. If you're married and file a joint return, the bonds will be issued in the names of both spouses.


* The bonds will be sent to you by mail.


* You select this option when filing your 2013 return by using Form 8888, "Direct Deposit of Refund to More Than One Account."


* Form 8888 gives instructions on selecting this option and specifying the amount of refund you want to use to buy savings bonds.


For additional information about Series I savings bonds, go to


Last Updated by Admin on 2014-04-09 11:22:40 AM

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19 Mar 2014
You have options for tax refunds

Posted in tax

You can receive your income tax refund in several ways: (1) direct deposit into a single checking or savings account, (2) direct deposit split into up to three different accounts in up to three different U.S. financial institutions, (3) via a paper check, or (4) purchasing up to $5,000 U.S. Series I savings bonds. Split deposits need not be in equal amounts, though buying savings bonds must be done in multiples of $50. You can't split your refund between a direct deposit and a paper check. For direct deposits, verify that your financial institution accepts such deposits, and verify account and routing numbers.

Last Updated by Admin on 2014-03-19 12:07:59 PM

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12 Mar 2014
Notify the IRS about name changes

Posted in tax

If you or a dependent had a name change last year, notify the Social Security Administration before you file your 2013 tax return with the IRS. Why? If the name on your tax return does not match SSA records, the IRS is likely to notify you about the mismatch. Any refund you expected could be delayed. So if marriage, divorce, or child adoption resulted in a name change, file "Form SS-5, Application for a Social Security Card" with the SSA to inform them of the change.


Last Updated by Admin on 2014-03-12 11:00:01 AM

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05 Mar 2014
Health care mandate extended

Posted in tax

 Rules just issued by the Treasury Department give a one-year extension to the health insurance mandate for mid-sized businesses. Companies with 50 to 99 employees will now have until January 1, 2016, to provide health insurance for employees or face penalties. Employers must certify that they have not cut workers in order to come under the 100 employee threshold. Companies with 100 or more employees must still meet the January 1, 2015, deadline for providing health insurance coverage.

Last Updated by Admin on 2014-03-05 10:43:37 AM

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