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Important Filing Dates

 

 

 

 

September 15 2014

Third 2014 estimated tax payment due

 

Extended corporation and partnership tax returns due

 

October 15 2014

Extended personal income tax returns due 

 

 

 

 

 

 

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The South Bay Tax Report    
July 2014

It's summer time here in Hermosa Beach; 
actually, it's summer time everywhere in the United States, and summer time is generally our opportunity to "sharpen the saw" by attending tax education classes, installing new software updates, reading about new developments in interesting areas like foreign asset reporting and tax-deferred exchanges and generally learning about those things that can - eventually - 
save you money.

Who wants to play beach volleyball under sunny skies with warm temperatures when you can explore the intricacies of a good tax-deferred real estate exchange?

And surfing? 
No, we'll take an analysis of the alternative minimum tax anytime.

And paddle boarding?
Well, it's doubtful Gary and Mike can stay atop a paddle board but they can certainly stay atop regulations regarding what is and is not deductible, what is and what is not taxable, and what new credits might be out lurking in the tax ocean 
for our clients.
It's why we believe we are the best tax preparation firm in 
Hermosa Beach!
Okay, that's not saying much in there aren't THAT many tax preparers in Hermosa Beach, but it's all we have!

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 Many of you ask us "What's new," 

and we generally answer that Congress is currently busy exploring farm subsidies in Arkansas, the funding of the highway construction trust fund for bridges and roads across the country, and whether we should stop minting the penny. 

As a result, there have been few tax laws enacted this year.

Often, that's a good thing.

 Many in the tax community expect a bill of "extenders," various credits and deductions that expired at year end and have not yet been extended for 2014. 

Given how Congress usually handles tax laws these days, 

we expect those extenders will likely be passed six minutes before midnight on the last day of this tax year.

You and I celebrate the new year watching fireworks and the dropping ball at Times Square.

Congress celebrates by passing new tax laws for old years.

Democracy in action!

 

We always like to remind you that this is our monthly opportunity to reach out to you. 

If you'd prefer we keep our reach to ourselves, you are welcome to drop to the bottom of this newsletter and "Unsubscribe."

With that, we'll explore some of this month's tax questions.

 

 

 

I just received some type of official-looking 

tax form in the mail. 

It's from the bank that holds my IRA.

Is it important, and if it's important,  why didn't I get this before you filed my tax return?

 

You likely received Form 5498 - IRA Contribution Information.

This form is an "information only" filing. 

The bank or brokerage that has your IRA, Roth, or SIMPLE plan must provide information to the IRS regarding what you contributed to the plan in calendar 2013.

The IRS uses this information to match with your 2013 personal tax filing which is why the form is not due until 

June 30, 2014.

It DOES NOT require a change to your personal tax return and can be filed along with wherever you file your extremely important tax papers - your file cabinet, your secure computer, or 

the bottom of your pet parrot's cage. 

 

 

 

I sent the Franchise Tax Board a check on April 15th for $624. It's June 30th, and they've not deposited it quite yet AND I just received a notice from California indicating that I owe that same amount plus a penalty.

What should  I do?

 

Assuming moving to Nevada or Arizona isn't a solution, it's likely that the Franchise Tax Board HAS your check since it can often take them as much as two months to deposit checks they receive.

Consider calling them - that's always an adventure, but do not send a new check before speaking with them.

Consider visiting the FTB website - ftb.ca.gov

They often have information regarding the status of your deposit, and  - in the future - consider making payment electronically through the Franchise Tax Board website.

It's safe, secure and quick! 

 

 

   

I've seen too many editions of that reality show about hoarders. I'm cleaning everything out, and 

I want to shred all documents. 

Remind me again what I should keep for tax reasons?

 

Remember - paper shredders can be a blessing and a curse.

We can't cover all possible document retention guidelines here, but in general -

You should keep tax returns permanently.

You should keep 1099s, W-2s, loan records, and receipts for your deductions for four years.

Information regarding home improvements must be kept until four years AFTER you sell the house.

Records regarding stock basis must be kept until four years AFTER you sell the stock, and

wills, trust agreements, birth and death certificates, alimony, custody, and prenuptial agreements should be kept permanently and not burned in a huge bonfire after you hear bad things from your divorce attorney.

 

 

   

 

I read somewhere that I could pay a tax of 3.8% on the sales price of my personal residence.

Is that true?

 

This particular statement has wandered around the internet for several years, and it is not true, 

but has a bit of truth in it.

Starting in 2013, those individuals who made more 

than $250,000 pay a 3.8% Medicare tax 

on investment income.

 Investment income includes dividends, taxable interest, 

net rental income, and royalties. 

 

The tax DOES APPLY to capital gains - 

both short and long-term - 

and here's where the statement above is partially true.

 

If your gain on the sale of your house is above the $250,000 single and $500,000 married amounts that you can exclude from taxable income, then that net capital gain WILL be subject to the 3.8% Medicare tax. 

The tax does NOT apply to municipal bond interest, social security income, pension income, life insurance proceeds, and wages.

 

We're sorry - that's far too complex for a summer tax newsletter but remember, we're tax animals!

 

 

 

I just received a call / email from the Internal Revenue Service saying I am owe money.

What should I do?

 

Don't return that call, and

Don't return that email

Our insurance carrier has notified us that there has been a significant uptick in scam calls from individuals claiming to be Internal Revenue Service or 

Criminal Investigation Division agents. 

The scam is simple.

These nasty charlatans 

(we know, the term sounds so sinister!)

pretend to be an IRS or CID agent calling about a problem with a tax return. 

There are several variations, instances where callers say the victims owe money or are entitled to a huge refund. 

Some of the callers can be very threatening and abusive, threatening potential victims with arrest or deportation. 

They may also claim that they can revoke a license or shut down a business if you don't pay right away.

The callers may use fake names 

(George Washington IS NOT an IRS agent).

and IRS badge numbers

They may know the last four digits of your 

social security number. 

They may send bogus emails to support their calls but 

 

Don't fall for this scam!!!!

Be careful to not divulge any personal information!

The IRS does not use email for notifications, and they rarely make personal phone calls, preferring to send letter after letter, each one a bit more threatening.

Watch out!!!!!

 

 

 

 

I'm divorcing.

My spouse has the kids.

Can I take the deduction for the dependents because 

I will be paying child support?

 

Only one person is eligible to claim the your child, 

and in many cases, it is the parent who will have physical custody of the child for most of the year.

Let's call that parent the custodial parent.

Assuming that both parents contribute 50% of the child's living expenses, the custodial parent will typically claim the child as a dependent.

 

Yet, there are special circumstances - tax law is filled with "special circumstances" - that allow the non-custodial parent to claim the child as a dependent.

If over 50% of the child's expenses are covered by at least ONE of the parents, and the child is in custody of at least one parent for over half of the year, and the parents are separated or divorced by written agreement by the end of the year or have lived apart during the last six months of the year, then the non-custodial parent can claim the child as dependent PROVIDED he/she has the custodial parent sign IRS Form 8332.

 

 

Wow - that's another heavy topic in this July's 

South Bay Tax Report

What happened to warm and fuzzy articles?

What happened to bad pictures of prior 

Hermosa Beach Arts Fiestas?

And the funny comings and goings at 

Wayland & VukadinovichLLP?

 

We're sorry - we just had to get a few of things into print; we promise jokes and funny stories galore next month!

 

  

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Happy July 4th!

 

 

 

 

 

 

 

 

 

 

 

    

 

 

 

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Wayland 2Contact Us

 Visit our website:

   

 Gary Wayland - [email protected]
Mike Vukadinovich - [email protected]
Susan Patterson - [email protected]
Sonia Tramel - [email protected]
Midge Leatherbury - [email protected]
Debbie Reasor - [email protected]
Gina Stevens - [email protected]
Shelly Milam - [email protected]
Emily Yamate - [email protected]

 

Certified Public Accountants
1097 Aviation Blvd
Hermosa Beach CA 90254
(310) 376-0455   (310) 379-4523 fax