The South Bay Tax Report
October 1 2014
It is with great sadness that the partners and staff of Wayland & Vukadinoich LLP
announce the passing of a trusted member of our staff.
This staff member didn't prepare tax returns,
but far fewer returns would have been completed without it.
This staff member didn't answer phones, make appointments, process returns or file,
but it played a large part in the life of everyone who handles these jobs here at Wayland & Vukadinovich.
Yes, after five tax seasons and scores of late nights, our coffee pot passed away.
It was fast, it was sudden - one day it fired up right on time at 7:30am
and the next day, it was history.
Fortunately,
(and using a baseball analogy now that baseball playoffs are in the air),
we had a new pot in the bullpen, ready for action, and the caffeinated staff at Wayland & Vukadinovich continues to turn out tax returns, emails, and
nifty newsletters.
Remember
- and how can you forget -
you can always cease hearing about our coffee pot and other interesting topics by unsubscribing at the bottom of this newsletter.
You all did so well last month with our new school year pop quiz that we've decided to give it one more chance to see if you are up to the challenge.
In 2012, taxpayers gave over $38.7 BILLION in non-cash contributions to their favorite charities.
Wow, that's a whole bunch of T-shirts, suits, household items and Wayland & Vukadinovich dead coffee makers.
What item below was the biggest source of
that $38.7 billion?
1 - Corporate stock?
2 - Clothing?
3 - Household items or
4 - Our favorite "Other"?
Interestingly, those incredibly valuable sweaters and suits you gave to Goodwill didn't make it to #1. Corporate stock accounted for 41.3% of non-cash donations in 2012, while "Other" was next with 26.1%, and Household items finished 3rd with 23.3%.
Question 2
Beginning in 2014, individuals are required to have minimum essential health insurance for at least one day per month. Because of this new requirement, you will need to bring the following information for each family member to your tax appointment OR
make sure you provide us with the following:
1 - The name of your health insurer for the year;
2 - Your old kleenex from this summer's cold;
3 - A copy of your most recent MRI from
that old football knee injury;
(yes, we know you were quite the football player...);
4 - Copies of IRS Forms 1095A, 1095B, and 1095C that you might receive from your health insurer;
5 - Number of months covered and a signed health insurance form for your records.
The answer here are items 1, 4 and 5, but we'd love to hear the tales of your football career.
Question 3
What is "RMD"?
1 - Registered Medical Doctor?
2 - Religious Medical Deduction?
3 - Right Handed Medieval Devil?
4 - Required Minimum Distribution?
Well, of course - that's an easy one.
It's a required minimum distribution which is the amount you must take from your IRA or other deferred income account when you have reached that magical age of 70 1/2.
The required minimum distribution is based on your account balance at December 31 2013 divided by your life expectancy
(which is established by the Internal Revenue Service and not by some higher being - which shows you how powerful the IRS really is...).
That RMD must be taken by December 31st this year, so if you are over 70 1/2, make sure you review your RMD calculation SOON.
Question 4
Your college-graduate son has recently TAKEN A JOB.
And it's a paying job!
And he's moving out of the house!
He can deduct his moving costs if he moves:
1 - Into the guest house in your backyard;
2 - More than 50 miles farther from his old home than the old job was;
3 - Into his girlfriend's apartment.
The correct answer here is "2."
Reasonable moving expenses covered by this deduction include packing and traveling costs but not meals -
or beer given to his friends.
His new workplace must be more than 50 miles farther from his old home than the old job was. If this is his first job,
it must be more than 50 miles away from his old home.
Moving expenses are eligible to be deducted if incurred within the period six months before or after the first day your son reports to his new job.
Did you ever think you'd say "his new job"?
Question 5
Speaking of your student, here's a question about
student loans.
The average 2014 graduate
(and yes, we know, your student IS NOT average)
owes how much in student loans AND - for bonus points - what is the maximum amount of student loan interest he/she can deduct each year?
1 - $250,000, $1
2 - $1 million, $50,000
3 - $37,000 and $2,500 or
4 - $10,000 and $2,000
The correct answer is "3"
The average college graduate owes $37,000 in student loans, and that student can deduct $2,500 in student loan interest each year if his income is less than $60,000 per year.
Question 6
The IRS is coming!
The General Accounting Office indicates that - since 2010 - the IRS has lost 10,000 employees and had its budget cut by $900 million.
We're so sorry..........
These budget cuts will hamper IRS audit goals but what entities or issues will the IRS continue to target this next year?
1 - The rich and their entities?
2 - Cash businesses?
3 - Partnerships and LLCs?
The answer here is 1, 2 and 3!!!
High income taxpayers will continue to receive audit attention - the IRS hopes to audit 9% of those reporting $1 million to $5 million in income.
Partnerships are THE fastest-growing segment of all tax returns filed and the IRS HOPES to expand audits of partnership and LLC returns.
In fact, the IRS did special training this year to increase the number of auditors who actually understand
partnership returns.
Lastly, the IRS is convinced that many of you don't report cash you receive in your business so they continue to pay attention to those "cash-intensive" businesses.
They don't trust you!!!
Be careful!!!!
Question 7
You just got a call from "John" at the
Internal Revenue Service.
He indicated that you owed the IRS money and that you need to give him a credit card to pay the balance due NOW or he will send the local sheriff to your house tomorrow to throw you into the nearest county jail.
You -
1 - Tell your wife you won't be home tomorrow;
2 - Promptly give them your AMEX card number and hope that you have enough available credit for whatever they decide to charge?
3 - Realize it's a scam, that the IRS NEVER makes those types of calls, and you can relax and consider using your AMEX card to buy a gift certificate for your favorite tax accountant who told you that they'd be
trying to frighten you!
The answer here is 3 and
the gift certificate should be made out to
"Gary and Mike"
Question 8
You receive social security, self-employment income, interest, dividends, or some other type of income that has no tax withholding.
The Internal Revenue Service -
1 - Pleads with you to make estimated tax payments;
2 - Sees no need for estimated tax payments as they know they will get their money every April;
3 - Appreciates any payments of estimated tax you decide to make;
4 - Can, depending on your tax situation, and other withholding you may have, require estimated tax payments four times per year and will charge you penalties and interest should you NOT make those estimates.
Yes, of course, the answer here is "4."
The IRS has certain estimated tax payment requirements, and you may need to make estimates if you have income that is not subject to withholding.
The last estimate for this year is due January 15, 2015.
Consider speaking with us to review your tax situation to avoid any unforseen penalties.
That's it!
How did you do?
We're sorry the newsletter is a bit late this month.
We're diligently working on tax returns for those of you who didn't see the need to file by April 15th.
Contact us after October 15th should you wish to talk about any of the items above.
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