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News added, Los Angeles, November 18th, 2009: Deductible Expenses
While some legal fees pertaining to divorce settlements are deductible, the Tax Court recently ruled that legal costs to claim ownership of property are not deductible. Neither are the costs involved in ordering the sale of property.
Some loan charges in addition to points, can be deducted over the life of the loan, when refinancing a business or rental property. These fees include escrow, notary, document preparation and others. For primary residences, only the points paid on a refinance are deductible through amortization.
News added, Los Angeles, November 1st, 2009: Foreign Bank Accounts
Amnesty for US citizens with foreign bank accounts will probably not continue past the October 15th deadline. Failure to report your accounts abroad on Form TD F 90-22.1 can result in civil and/or criminal charges. Account holders must file the form separately from their individual tax returns. The deadline for filing the 2009 form is June 30, 2010.
News added, Los Angeles, August 3rd, 2009: Damage Reimbursement
Reimbursements for mental anguish and medical expenses to treat emotion trauma have been determined to be tax free. Amounts paid for emotional distress resulting from nonphysical trauma, such as harassment and discrimination, are still subject to income tax.
News added, Los Angeles, August 1st, 2009: Estate Tax
Power of attorney over assets must specify permission to grant gifts otherwise, gifts paid by the acting attorney will be added back to the estate in figuring estate taxes.
News added, Los Angeles, July 24th, 2009: Audits
The IRS will continue its random audit program in 2010 and thereafter, however the goal is to eventually make audits less random and more targeted toward probable noncompliance returns.
Examiners will also be auditing more clergy returns in which some of the taxpayers income is in the form of tax free parsonage. While not subject to federal or state tax, the parsonage income is still subject to self-employment tax. Clergy must be careful not to take more parsonage then they are entitled to, which is the sum of their housing costs. Exemption claims for social security and medicare taxes will also subject to review.
News added, Los Angeles, July 22nd, 2009: Business
LLC owners and Limited Liability partners can potentially benefit from loss incurred by their company. Previously they were considered passive losses resulting in significantly less tax benefit. Now owners and partners can more easily prove material participation in the business and take the loss as nonpassive.
Living expenses spent while living away from home for a temporary job assignment have now been deemed tax deductible. Expenses include meals, lodging and travel.
Shareholder-employees of an S-Corporation must treat their medical insurance premium, paid by the corporation as wages. These wages are not subject to social security or medicare taxes but must be reported in on their W-2. The shareholder-employee may be able to deduct the premium paid as self-employment medical insurance.
The tax stimulus legislation allows eligible small businesses to carry back net operating losses for up to five years. The statute was previously 2 years in most cases. An eligible small business is, in general, a business whose average gross receipts are less than $15 million a year.
News added, Los Angeles, July 19th, 2009: First Time Home Buyers
Rules for claiming the Home Buyer’s Credit have been made a little easier for 2009. If you purchase a first time home before December 1, 2009, you will be able to claim the Home Buyer’s Credit even if you received government subsidized financing.
A first time buyer can still qualify for the credit even if his parents co-sign the loan.
News added, Los Angeles, July 7th, 2009: Making Work Pay Tax Credit
As part of the American Recovery and Reinvestment Act, working taxpayers may qualify for this new credit. The maximum credit is $400 for singles with income of up to $75,000. For married filing jointly, the maximum credit is $800 with income of up to $150,000. Wage withholding requirements have been reduced resulting in higher net paychecks to provide immediate tax relief. Self-employed taxpayers can similarly reduce their estimated payments by the same amount provided they qualify. The credit will be computed and claimed using a new form, Schedule M, which will be part of the 2009 tax return due in 2010.
News added, Los Angeles, July 3rd, 2009: Non-U.S. Citizens Get A Break
Non-U.S. citizens doing business in the U.S. will not have to file form 90.22-1 for 2009. This form is filed for the purpose of disclosing foreign bank accounts totaling more than $10,000. Though the IRS did initially require filing the form for this year, the reconsideration was due to confusion about who would be subject to the rule. The form will have to be filed in 2010.
News added, Los Angeles, July 1st, 2009: Life Insurance
Whole Life insurance policies can be sold to an outside party for a profit. The profit is generally taxed as capital gains, but under certain circumstances, a portion of the profit may be treated as ordinary income.
News added, Los Angeles, June 15th, 2009: IRS Crackdown on Tax Preparers
Designed to improve accuracy, decrease fraud as well as to protect taxpayers, the IRS is cracking down on unqualified tax preparers. With the exception of CPA’s and EA’s, preparers do not have any accreditation standards they must meet. When the IRS detects a fraudulent return, it is the taxpayer that is charged with additional taxes and interest.
News added, Los Angeles, May 13th, 2009: Good News For First time Home Buyers:
The first time home buyer’s credit increases to $8000 and no longer needs to be repaid for homes purchased in 2009. However if the home is sold within three years of purchase, the credit must be paid back.
News added, Los Angeles, May 10th, 2009: Education Tax Breaks:
The Hope credit will be expanded for the 2009 and 2010 tax years.
Previously the credit had a $2,000 nonrefundable maximum for the first two years of undergraduate, full-time study. The new credit, renamed the American Opportunity Credit, increases to $2,500 and is for four years of college. It is partially refundable, AGI limits are higher and qualifying costs also cover books instead of just tuition.
News added, Los Angeles, May 1st, 2009: Small Business Relief:
2008 losses can be carried back for 5 years instead of 2. Businesses qualify if they averaged $15 million dollars or less in gross receipts over the past 3 years.
Small business owners can pay less estimated taxes in 2009 without penalty. Taxpayers with a 2008 AGI of less than $500K, with more than half of their gross income from their business qualify for the relief. Instead of the usual 100 – 110% of prior year’s liability, business owners estimates can be based on 90% of 2008 liability.
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Proactive tax planning to take advantage of timely tax saving opportunities.
Comprehensive business services that integrate income tax compliance
and planning with investments and insurance choices.
Consulting services that review businesses to find hidden opportunities to
increase wealth accumulation and retention.
Foreign investor tax services.
Individualized accounting system setup for new businesses.
State of the art payroll tax services and sales tax preparation.
Preparation of business and individual tax returns and financial
statements.
Budgeting and projection preparation and monitoring, facilitating the
creation and tracking of events.
Assistance in selection and installation of computer hardware and
software, ongoing monitoring and updating of systems.
