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Tax Tips Newsletter
Serving you since 1993
May 2014 - Vol 9, Issue 5
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Greetings!
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We have been busily working on deadlines that have occurred after April 15th. We anticipate that we will start working on tax returns after June 1st.

Our tax software company has notified us that they will not be upgrading their document management software. That is our electronic file cabinet. We are going to be looking for a new solution and will be rolling it out sometime over the summer. We hope that the new solution will offer new features that will be great for our clients too.

The office will be closed on Monday, May 26 for Memorial Day. Have a wonderful holiday!

Many thanks for your referrals. We have met some wonderful new clients this tax season that have been referred to us. I appreciate your confidence in my staff and me.

Collecting Taxes
Are you expecting a tax refund this year? No doubt you've already heard the standard admonishment about why you should not be giving the government an interest-free loan. Maybe you've decided to "do better" during 2014 by revising your withholding or estimated tax payments to reduce the amount of next year's refund - or maybe you haven't.

Either way, set aside your guilt. Financial planning means creating effective strategies that work for you - which can include forcing yourself to save by overpaying your income tax during the year.

The more important consideration is what you do with the money you get back. Here are ideas for making the most of your refund.

Save. The unexpected happens. The question is, how do you pay the resulting bills? Parking part of your refund in a readily accessible location, such as a bank checking, savings, or money market account, will help you weather short-term, temporary setbacks without incurring penalties or transaction fees.

Spend. Spending your refund wisely can get your finances in shape and pay off over the long run. For instance, home improvements like energy-efficient windows or a new water heater may result in lower electric and insurance bills, or utility company rebates. Refinancing your mortgage reduces your monthly cash outlay, freeing money for investing or saving. Ditto for paying down high-interest credit cards - so long as you resist the urge to reload them.

Self-invest. Using your refund to refresh your current career-related skills or to learn new ones can provide a double benefit: more employment opportunities and tax savings. Unsure of your job security? Put your refund to work by financing a home-based business and creating a second stream of income.

Give me a call for any assistance you need related to your tax withholding, estimated tax payments, or tax refund.
Taxes with flag
A recent Tax Court decision will change the way the IRS applies the law on IRA rollovers.

For years, the IRS has interpreted the IRA rollover rules to mean that a taxpayer could do one rollover per year for each IRA he or she owned. In doing a rollover, the taxpayer is not taxed on the funds taken from the IRA so long as the funds are redeposited into an IRA within 60 days of the withdrawal.

The recent court decision changed the way the tax rule is applied, ruling that the limit on rollovers should be applied on an aggregate basis - that is, only one rollover per year is allowed for all the IRAs a taxpayer owns. If a taxpayer takes funds from one IRA and rolls the money back into an IRA within 60 days, he or she can't do any other tax-free rollovers within the following 365 days.

This change goes into effect January 1, 2015; therefore, the aggregate rule won't apply for rollovers done during the remainder of 2014. Note, also, that trustee-to-trustee transfers can still be done as often as the taxpayer likes; the limit doesn't apply to these transfers because the taxpayer never has possession of any of the IRA funds.
Flag & Eagle
Tax Tip of the Week: Are you thinking of renting your house? Then check out the Tax Tip this week that has some things to consider before you do it. There may be some limitations to rental deductions so make sure you check with us first.

Business Tip of the Month: Are you hands-on in your business? With all the technology today there is info available to you at any time that will tell you the health of your business. Do you understand all the reports and what they mean? One of those reports is your cash flow statement. Educate yourself so that you can pinpoint where your business is before it's too late to do anything about a problem that could devastate you. Read this article for more info.

Financial Tip of the Month: How important is your credit score? If you want to increase your financial wealth you will need an excellent credit score. Read this article for ways that will devastate your score so that you know what NOT to do.

Fraud Alert: Some of you may still be waiting for you tax refunds. If you requested to have yours mailed instead of direct deposit, follow up with the IRS to keep track of when it is being mailed. The crooks are out in full force at this time of year - stealing your refund is just one of the ways. Read this article for more info as to what you should be aware of so that you won't get defrauded.
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Let me know if I can help you with any Quickbooks problems.

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Sincerely,
Linda Heineman
Linda L. Heineman, CPA

phone: 626-577-0979