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Out of school and into the workforce. If that description
fits you or a family member this summer, filling out
Form W-4 properly can make your first job less taxing.
Here's why: The amount of federal income tax withheld from your wages depends on how you complete IRS Form W-4, the "Employee's Withholding Allowance Certificate," which tells your employer your marital status and the number of withholding allowances you're claiming. Withholding allowances are similar to the number of
dependents you have. Claiming more allowances generally
reduces the income tax deducted from your paycheck, but
you can only claim the number you're entitled to.
Think too much tax will be withheld? As long as you expect to work no more than 245 days for all employers during 2011, you might want to consider making a written request to have your federal withholding calculated using an alternative method. The "part-year employment method" of withholding can boost your net pay. Just be sure to complete a new Form W-4 next January. Caution: Estimate your annual income carefully. Form
W-4 affects only the amount of tax withheld, not the
total tax that will be due with the tax return you'll
file at the end of the year.
You may also be entitled to tax breaks such as above- the-line deductions for moving expenses and student loan interest. Please contact our office if you need additional information or assistance. |
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Once you've filed your 2010 tax return, you may wonder
what records you need to keep and how long you need to
keep them.
Here are some recordkeeping guidelines that will help you keep important papers and minimize the clutter. * TAX RECORDS. Keep tax returns (and any records used to prepare them) for at least three years after you file the return if you have only W-2 and interest income, preferably seven years if your returns are more complex. That's because the IRS can audit your return for up to three years after it's filed - up to six years if you underreport income. If you own property or businesses in more than one
state, check the statute of limitations in each state
since some are longer than the federal statute. Save
copies of the tax returns themselves permanently
because you might need information in the returns for
other purposes.
* HOMEOWNER AND PERSONAL RECORDS. Keep homeowner records (deeds, escrow statements, mortgage and title papers, etc.) at least seven years after your home sells. For household purchases and home repairs, keep receipts and cancelled checks for the warranty period of the item. Before you toss insurance policies, check with your agent. Generally, you'll want to hold insurance policies for the life of the policy plus three years. * INVESTMENTS. Keep monthly or quarterly investment
statements until you receive the year-end summary.
Save year-end statements and ownership papers until
you liquidate the investment, plus seven years.
Retain annual reports for IRAs and other retirement
plans permanently.
* OTHER RECORDS. Important records, including vehicle
titles, wills, trust documents, insurance policies,
contracts, and birth and marriage certificates,
should be kept in a safe place. An inventory of your
valuable property, along with photographs or a video,
should be made and kept current in the event your
house is robbed, damaged, or destroyed.
Call us if you have questions about retaining records. |
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The recent events in Japan are reminders that disasters
can occur at any time - often with staggering human and
financial costs. If you're an unlucky victim of a
disaster, you may receive help from insurance and
federal disaster aid. But the tax code also offers some
relief. You may be able to take an itemized deduction
for part of your loss. In tax terms, it's a "casualty
loss," and it can also apply to events such as a car
crash, a house fire, or theft. Here are the basics:
* The loss or damage must be due to an unexpected and sudden event. Losses due to slow deterioration over the years, such as rot, rust, or insect damage, don't qualify. * Your tax deduction won't equal your total loss. You must subtract any insurance or other reimbursement. Then you must also deduct $100 for each loss and 10% of your adjusted gross income. * Your loss may also be limited by your adjusted basis
in the property. That's generally what you paid for it,
plus or minus any improvements or previous losses.
* In a widespread disaster, the area may be classified as a "Presidentially declared disaster area." If that happens, you have a special option. You can claim your casualty loss against the current year's taxes. Or you can amend the previous year's return and claim your loss against that year's taxes. That usually generates a faster refund, but it may change the amount of your deduction. If you suffer a casualty loss, please contact me. I'll explain the rules and help you claim the maximum possible tax benefit. |
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The Tax Tip of the Week. Some IRA terms you should know. This article describes several terms that are significant if you have an IRA and/or are considering doing an IRA conversion..
The Business Tip of the Month. Monitoring your cash flow can save your business from failing. Also, some good tips that we can use for our personal finances. Read up on these useful tips! The Financial Tip of the Month. Identity theft is at an all time high. Should you buy theft insurance? Read up on what you need to do to protect yourself from identity theft happening to you.
The Fraud Alert. Charity scams are on the rise and especially targeting the elderly. Read up on how you can check out the charity before making a donation. |
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Photos © Bigstockphotos.com, istockphoto.com, Felix Orona
Sincerely,
Linda Heineman
Linda L. Heineman, CPA
email:
linda@llhcpa.com
phone:
626-577-0979
web:
http://llhcpa.com
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