The South Bay Tax Report
May 2015
After thousands of cups of industrial strength coffee
(yes, our new coffee pot has performed admirably)
, twenty two pizzas,
several - client donated - bottles of wine, and
dozens of chocolate chip cookies
thankfully contributed to the cause by a few of you,
we here at Wayland & Vukadinovich LLP
can officially declare that April 15, 2015 has passed!!!
Those of you who have been with us for years know that May is when we begin our monthly newsletter series -
or what staff here at
Wayland & Vukadinovich LLP
often refer to as
"Gary/Mike Try Valiantly Not To Act Like Accountants."
Those of you who are new may want to know that
(a) we send this instructive and informative newsletter
(we likely overstate how instructive and informative it is)
to you every month via email and
(b) you can easily unsubscribe at the bottom of the newsletter if you find post April 15th accountant musings off-putting.
Our format changes each month - this month is our "Frequently Asked Questions"
edition which is a compilation of those questions you have either asked or we wished you had asked.
Thanks for reading!
Who Am I?
No, we here at
Wayland & Vukadinovich LLP
haven't evolved into mental health professionals.
We just wanted to inform you that we saw a dramatic increase in identity theft this tax season.
About 1% of the returns we filed received notifications from the Internal Revenue Service, the Franchise Tax Board or both that a return had already been filed under that identification number.
That's identify theft!
It will increase the time to process your refund.
You'll want to contact all national credit monitoring agencies.
It's serious stuff!
We'll reach out to you if we receive a notice from the tax authorities that your return has been rejected due to identify theft.
We'll also send you a checklist of steps you need to take IMMEDIATELY.
Protect your identify!
Was that really the IRS that just called?
We get calls from you every day telling us that you just received a call from a belligerent IRS agent,
threatening to send the local sheriff to pull you into jail immediately unless you pay the back tax assessment that you owe,
that you call them back,
they actually confirm they are from the IRS, and
that you are willing to send them the $2,032.45 they asked you for.
DO NOT SEND THAT MONEY!
These calls are scams, the IRS does not call you,
and they don't answer on the first ring!
The IRS recently indicated that they've received 290,000 reports, and
taxpayers have given up over $14 million as a result of this scam!
The IRS wants to warn you that these are bad people doing bad things!
Will I Get Audited This Year?
That's always a hard question
(we're simply humble accountants, not fortune tellers),
but new statistics - reluctantly - released by the IRS indicate your risk of audit is about 0.86%, well below the 1.11% audit rate of 2010 and 2011.
On another note, the IRS only answered about 43% of the calls you made to them this year.
IRS budget levels have been reduced.
Service has suffered.
We're so sad!!!
What's the Standard Mileage Rate in 2015?
The IRS just released the 2015 standard mileage rates. For business use of a car, the 2015 rate is 57.5 cents per mile. Driving for medical or moving purposes may be deducted at 23 cents per mile, while charitable mileage apparently doesn't use as much gas as you can only deduct those miles at 14 cents per mile.
I Contributed to the Retired Tax Preparer Charity Fund - Can I take a Tax Deduction?
Tax rules are clear. To take a tax deduction of $250 or more, you must have a notice in hand from a charity before taking the deduction. It should provide the date and amount of the donation and the value of any goods or services received in return, such as a dinner or party favor (or great tax advice from retired tax professionals!).
For cash donations of less than $250, a bank record such as a canceled check may suffice.
I recently was in Monaco, working for a nice English woman and saving civilization from evil wrong-doers.
I won some money at the casino and left it in a bank account.
What do I need to do?
Well, Mr. Bond, US taxpayers with foreign financial accounts or payments above certain levels can pay a huge penalty - even if you are a secret agent - if you don't properly report those accounts on IRS Form 8938 which is due with your tax return, or on the Treasury Department's FinCen Report 114 due June 30th.
You may be secret but your bank account can't be.
Roth?
IRA?
I don't know the difference.
Can you help?
Contributions to a traditional IRA may be tax-deductible, and the money won't get taxed until it's withdrawn.
For Roth contributions, there is no current tax deduction, but withdrawals can be tax-free if a person meets certain criteria - such as having reached age 59 1/2 and having kept the funds in a Roth for five years.
You must start to withdraw a portion of your IRA each year once you hit age 70 1/2 -
it's called a "required minimum distribution," while
Roth IRAs have no required minimum distribution.
My son is headed to Faber College in the fall
Are there any tax benefits?
We'll answer that question but we want to warn you that we've got an array of mind-numbing numbers ready to appear. Read on at your own risk!
You and your student might want to take advantage of the American Opportunity Credit, a credit of up to $2,500 per eligible student for tuition, fees and course materials. You could lose it if you and your spouse earn more than $180,000 per year.
Perhaps you'd be better off with the Lifetime Learning Credit, a credit of up to $2,000 for tuition and fees paid directly to an education institution for post-secondary education or courses to improve job skills. You can't use that credit if you and your spouse earn $130,000 or more in income.
Lastly, you might be able to use the tuition and fees deduction, a deduction of up to $4,000 for tuition and fees paid directly to the education institution. You lose that deduction if you and your spouse earn more than $160,000 in a taxable year.
Wow - that was exhausting, and you are to be congratulated for getting to the end - well done!
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