TAX TIPS - Save time, worry, and maybe some money.
Reporting Health Insurance
- for owners (shareholders) of S-Corps
Health insurance paid by an S-Corp for an owner must be reported on the owner's W-2, Box 14.
The reason is the full amount of the premium paid can be written off on page 1 of form 1040. No amount need go on Schedule A - that would then be subject to the 7 1/2% reduction.
For 2018, with higher standard deduction of $24,000 married, and $12,000 for single, reporting health insurance premiums on form 1040 allows you to withhold both the standard deduction plus health insurance costs.
Click links below for examples:
Improvements to Section 529 - College Savings Programs
Some rules have changed - See what changes have been made to improve the program in our Section529 article.
Pay Tax Bills Online and Get Instant Payment Confirmation - For Free!
Go to: http://www.irs.gov/Payments/Direct-Pay and type "Direct Pay" into the search box. Pay your individual tax bill or estimated tax payment directly from your checking or savings account AT NO COST TO YOU. You'll receive confirmation that your payment has been submitted.
Tis the Season...to save on taxes!
Click Struggling to find room for all your Christmas booty? Cleaning out your closets and drawers can not only help you find space, it can save you money on your next tax bill.
In fact now, before the new year, is the perfect time to donate. By donating clothing, household items or furniture to your favorite charity, you’re not only making a big difference for your community; you could be putting money in your pocket on tax day.
Many taxpayers underestimate the value of non-cash charitable donations and miss out on great tax savings. Did you know those designer shoes you never wear could land you a $25 deduction? That suit: $60? Even that old fur coat you’re too afraid to wear could transform into a $400 deduction. Donated item valuations are based on fair market value – and those values have gone nowhere but up.
Make a list of the items you are donating, get a receipt, and surprisingly large tax savings could be yours! Our worksheet is available at: http://dnelsoncpas.com/assets/2016valuations.pdf.
Don’t forget: Those old eyeglasses or hearing aids can be a valuable tax deduction, too. Donating them to charities (such as the Lions Club) can not only help someone who can’t afford them, they can save you money. Visit: http://www.lionsclubs.org/EN/our-work/sight-programs/eyeglass-recycling/how-you-can-help.php or http://www.ehow.com/about_5457287_tax-deductible-value-donated-eyeglasses.html for more information.
Red Flags for IRS AuditorsWonder why your return was flagged for an audit?
A Taxing Season - February, 2009Rumors and Facts
You're going to hear many rumors about proposed changes to the tax laws. The bill, signed by President Obama in February, did not revoke any of the more popular deductions, i.e. home mortgage or charitable contributions, but it did fix AMT for another year.
The bill contained approximately 282 changes to the Tax Code. Most important is the new Making Work Pay credit. Basically, this is a reduction in tax rates. The IRS released the new wage tables that are now available at http://www.irs.gov/pub/irs-pdf/n1036.pdf. Employers should start using the new withholding tables as soon as possible. There are a number of changes in the bill, and we plan to publish a special summary that will cover tax benefits for both individuals and businesses.
Another important note is the $8,000 first-time home buyer refundable credit. If, as a first-time home buyer, you buy a house in 2009, you do not have to repay the $8,000. The energy credit has been increased from $500 to $1,500, and any prior credits will be counted against it. Electric plug-in cars get a special credit, along with a deduction for sales tax on a new car. This is really nothing special since we already have that credit in Washington State, except the nice part about this deduction is that it will be above the line, so folks who don't itemize can take advantage of it.
The amount of qualified college tuition that can be written off has also been increased. For businesses, there is an increase in write-off for depreciation and a change in the net operating loss carry-back which can now go back five years. This can be a real boon for businesses that have been suffering.
This tax season has to be the most difficult and trying I've seen in my 30-plus years of practicing public accounting. All the other practitioners I've talked to say the same thing. Banks are extremely difficult to deal with --or they are not working with existing customers. Our priority right now must be to get work out for our business clients who need reports for financing. If these clients do not get first priority, they will be laying off employees.
We realize many of our clients are undergoing extreme hardship and, fortunately, because we've been able to invest in some new technology, we will be able to hold our fees inline with last year. If the required work is substantially less than prior years, fees should be lower. We are working hard to help as many people as we can through this crisis. Please bear with us. We will get to everyone.
Please keep in mind that the current demands placed on our profession are unprecedented in our lifetime. Although we've seen some softening in the position of the IRS, they are continuing to aggressively pursue delinquent taxes. We do have some special resources, and with the new tax bill, we have some tools to help you get through these difficult times.
2008 - Fourth Quarter
---David S. Nelson, CPA