The South Bay Tax Report
October 2015
October 15th has come and gone.
Those of you who file February 1st may not know
why that is important,
but around here,
at Wayland & Vukadinovich LLP,
(a Daily Breeze Favorite Tax Preparer)
it's a big day as it signals the end of the 2014 tax season, and you MUST file your extended return by that date.
It also implies the opening of the 2015 tax season.
Don't let our staff hear that, they'll get depressed!!
Mike and Gary believe the sun never sets on tax season here at
Wayland & Vukadinovich LLP.
We'll spend the next few months waiting for Congress to retroactively approve some 2015 tax law changes,.
Congress says
"Why pass a bill of 2015 tax laws in 2014 when you can wait until December 31, 2015 and make it retroactive."
We'll continue to take seminars,
we'll be talking to many of you about what you can and cannot do for 2015.
Taxes are a 24/7 effort here in Hermosa Beach.
Is it any wonder that Gary and Mike have no other life?
By the way, statistics show that 5.3 out of 10 of you actually read this monthly report - if you are one of the 4.7 who don't and would like to unsubscribe, simply visit the bottom of this page to safely do so.
Are there any great new - legal - tax strategies?
Truly, little has changed in the world of accounting and tax since Luca Pacioli entered the first check into his Quickbooks program in 1495.
("Quickbooks, of course, is Italian for
"Accounting software").
That being said, it's never a bad idea to remind you of things you can do before year end.
So, let's review a few areas....
Medical expenses
If you are under 65 in 2015, medical expenses aren't deductible until they exceed 10% of your income, while they only must exceed 7.5% of your income if you are 65 or older. Consider bunching payment of medical expenses into one year in an attempt to exceed the limitation rather than paying some expenses each year.
Consider also not getting sick.
Gifting
Maximize gifting strategies - remember, you can gift $14,000 each year to your children (or your CPA).
Cash gifts may be better if the recipient is in a high tax bracket.
Give appreciated assets to individuals who are in lower tax brackets.
Consider medical or education expense gifts to avoid gift tax. Payments directly to the medical provider or to the university or other qualified educational organization are not counted toward the annual gift tax exclusion of $14,000.
Charitable gifting
Consider contributing appreciated assets such as stock, rather than cash, to a charitable organization. You will generally receive a deduction of the full fair market value of the gift and will not pay tax on any capital gain.
Whew - that's exhausting and far too intense.
That's enough deduction insights for this month.
We'll visit a few more next month.
We have to keep you coming back.
What happened in 2012?
Well, clearly, you had too many drug trips in the '60s and '70s if you can't remember what happened in 2012,
but we suspect you are asking about the recently released IRS study about tax return data in 2012. Yes, it's true - it's October 2015 and the IRS is just releasing information about 2012 tax returns.
Well, Gary and Mike are numbers guys, and we love the annual "IRS Statistics of Income Bulletin" that comes out this time of year. To us, it's more anticipated that Christmas catalogs.
The IRS has announced that they received 144,928,472 returns in 2012.
Is it any wonder they lost yours?
About 5,200,000 of you had income of more than $200,000 per year.
More interestingly, about 19,000 of those with $200,000 or more in income had ZERO income tax and
1,068 of you who made more than $200,000 in income had negative US taxable income.
Now those 1,068 CERTAINLY had good tax preparers!
I just donated $250 to the
Federal Institute of Dog Owners ("FIDO").
They told me it was tax deductible.
I don't need anything more than my cancelled check, right?
The IRS is VERY particular regarding record-keeping rules on those charitable donations.
If you donate $250 or more to a charity, be sure to get an acknowledgement that includes important details such as the name of the charity, the amount and date of your gift, and whether you received goods and services in return.
Also, let's not wait to see whether your return gets audited before asking the charity for a receipt. The law says donors "cannot claim an income-tax deduction for a contribution of $250 or more unless the donor has a contemporaneous (wow, the IRS loves those big words) written acknowledgement of the gift."
Internal Revenue Service Revenue Officer John Smith (who spoke with a distinct Indian accent) called me yesterday, threatening me with jail time unless I sent him a $750 cash card to cover the balance that I owe for 2009 back-taxes. He sounded VERY important.
We include this question - or some variant of it - in EVERY newsletter, yet we still get dozens of phone calls about it every month.
The IRS DOES NOT call you and threaten jail if you owe money.
The IRS is passive aggressive;
they send letters, certified mail, more letters, and more certified mail until eventually they tire of the game and simply take money from your bank account.
Those calls EVERYONE seems to be receiving are FRAUDULENT.
Do NOT talk to them!
Do NOT worry about them!!
IGNORE them!!!
I want to schedule my appointment for next year's tax interview!
Shall I call tomorrow?
If you call tomorrow, Director of Office Internal Operations Gina will likely slit her throat.
She's SO done with appointments now that the extended due date for tax filing - October 15th - has passed.
So let's give her a break.
The 2015 tax filing season calendar will open on December 15th,
Call her then.
She'll be back to her normal, charming self.
What is the IRS doing about identity theft?
When Mike and Gary started the business back in 1979
(they were tax prodigies and fourteen years, of course), they would see identify theft about once every two years - now, they see it about once every two hours!
The IRS has been flooded with identity theft as hackers have found your identity at Target, Walmart, UCLA Health and everywhere in between.
We're thrilled, therefore, to see the following IRS announcement (and we quote...)
"The IRS, state tax administrators and leaders of the tax industry announced today continued progress to expand and strengthen protections against identity theft refund fraud for the 2016 tax season.
The public-private sector partnership announced success in IDENTIFYING more than 20 new data elements on tax returns submissions..."
Wow - they're all over it!
Protect your identify!!!!!
And What About Those Form 1099s?
I'm in business, I don't want to issue them.
I don't have to, right?
We actually answered this question last month but we have a new answer this month.
Call us nothing but flexible.
If you have a business, no matter how small, and you pay an individual more than $600 per year, YOU MUST issue that individual a Form 1099.
The IRS is RABID these days in enforcing compliance of this rule. They really don't care about YOU, they ARE worried that the individual you paid is not reporting the income, so they will penalize you AND take away the deduction if they find you did not issue a Form 1099 when required.
In prior years, we at Wayland & Vukadinovich charged outrageous fees
(okay, we NEVER charge outrageous fees, but we know that you can find a cheaper and easier alternative)
to prepare Form 1099s.
We've decided to get out of the 1099 business and we suggest you visit
The great folks at Track 1099 -
who we actually don't know -
will sell you an annual subscription for $9 which will allow you to prepare 25 1099s AND make the IRS happy.
Try it!
Is there anything new at Wayland & Vukadinovich?
Madison Rudd has joined the jolly team at
Wayland & Vukadinovich.
Say hello to Madison when you call us as she answers our phones, handles our front desk and acts as our first line of defense should any crazed IRS representative attempt to breach the outrageous security here in Hermosa Beach.
We're also making plans to go completely paper-less this year.
We can still provide you with paper copies of returns but we'll certainly be thrilled if you elect to have us send you electronic copies.
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