So, you have a few extra pennies to donate and you'd like to get a tax deduction for it. How can you be sure that the organization you're donating to is 'legitimate' from the IRS' perspective so that your charitable contribution deduction is deemed acceptable?
To be sure, it's best to check with the IRS for the up-to-date listing, and it's easier to do than you might think.
To search for the organization you're considering donating to, you can go to: http://www.irs.gov/app/pub-78 to access the IRS' search tool. You can also call 877-829-5500 to inquiry directly. You can get the IRS letter giving the organization tax exempt status from the organization itself, but it wouldn't indicate if it had been suspended.
There are certain exceptions (as always in the tax law). Churches and certain affiliated organizations, governmental units (schools, municipal libraries, fire departments, etc.) and subordinate units of tax exempt groups are generally also qualified organizations, but would not be listed in the IRS database.
So, on this last day of the year, give generously to the many, many organizations which do so much good for so many - just make sure that they are really a charity (according to the IRS).
Happy 2010!
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
Thursday, December 31, 2009
Wednesday, December 23, 2009
Last Minute Year-end Tax Actions
OK, time to stop procrastinating. Only 1 week left in 2009, so there's a few things you need to do now to affect your tax bill or refund for this year.
If you are self-employed, make that retirement plan contribution now (SEP IRA, 401(k), etc.) Contribution limits increased this year and there's an extra amount allowed if you are better than 50 years old.
If you are fortunate enough to have some money to give as gifts, you should make your tax-free gifts to individuals now. You can give up to $13,000 per donor, per donee in 2009. This means that you, in conjunction with your spouse, can give up to $26,000 to each person, free of gift taxes. In addition to the annual exclusion, you can use the lifetime exemption of $1 million.
Give to charity now. Checks written and sent by December 31, 2009, are considered 2009 donations, regardless of when the charity cashes the check. Donations made by credit card works the same way. The donation is based on when you make the charge rather than when you pay the credit card bill. Remember to get a receipt for all donations - cash or non-cash. Lastly, remember that not all not-for-profit organizations are qualified to receive tax deductible contributions. Ask for their documentation to ensure that you are giving to a qualified organizaions to avoid having your deduction disallowed by the IRS.
For small businesses, now is the time to be sure that your mileage and other miscellaneous expenses are properly documented. This continues to be a target audit area for the IRS. Mileage expenses must be documented in a "contemporaneous" record, meaning you can't rush to create mileage records when you receive an IRS audit notice. If you haven't done so on a daily basis (my recommended 'best practice'), please do it now.
Sell loss stock - maybe. Tax effects are one consideration in your investment strategy - but not the only one. If you are considering selling a stock that is in a 'loss position' in your portfolio, you may want to do this before year-end to offset gains from other stock sales. (I write "stock," but this applies to any investments in securities and many types of other property).
Pay your real estate property taxes, if advantageous. Deductibility of real estate taxes is based on when you pay. In some cases, it may be better to 'bunch' your real estate tax payments for 2 years into 1 tax year. This can be done by paying one year's bill in January and the following year's bill in December of that same year. Why? If the total of your itemized deductions (medical, taxes, interest, donations, casualty and theft losses, job expenses, tax return preparation fees and other miscellaneaous items) without real estate taxes is less than your "Standard Deduction," if you 'bunch' your real estate tax payments into one year, you may be able to take the Standard Deduction in one year and a higher Itemized Deduction the following year. Be careful to check your state tax rules to see if there are limits which may affect the value of this bunching strategy.
Call me anytime with any last minute questions. Merry Christmas!
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
If you are self-employed, make that retirement plan contribution now (SEP IRA, 401(k), etc.) Contribution limits increased this year and there's an extra amount allowed if you are better than 50 years old.
If you are fortunate enough to have some money to give as gifts, you should make your tax-free gifts to individuals now. You can give up to $13,000 per donor, per donee in 2009. This means that you, in conjunction with your spouse, can give up to $26,000 to each person, free of gift taxes. In addition to the annual exclusion, you can use the lifetime exemption of $1 million.
Give to charity now. Checks written and sent by December 31, 2009, are considered 2009 donations, regardless of when the charity cashes the check. Donations made by credit card works the same way. The donation is based on when you make the charge rather than when you pay the credit card bill. Remember to get a receipt for all donations - cash or non-cash. Lastly, remember that not all not-for-profit organizations are qualified to receive tax deductible contributions. Ask for their documentation to ensure that you are giving to a qualified organizaions to avoid having your deduction disallowed by the IRS.
For small businesses, now is the time to be sure that your mileage and other miscellaneous expenses are properly documented. This continues to be a target audit area for the IRS. Mileage expenses must be documented in a "contemporaneous" record, meaning you can't rush to create mileage records when you receive an IRS audit notice. If you haven't done so on a daily basis (my recommended 'best practice'), please do it now.
Sell loss stock - maybe. Tax effects are one consideration in your investment strategy - but not the only one. If you are considering selling a stock that is in a 'loss position' in your portfolio, you may want to do this before year-end to offset gains from other stock sales. (I write "stock," but this applies to any investments in securities and many types of other property).
Pay your real estate property taxes, if advantageous. Deductibility of real estate taxes is based on when you pay. In some cases, it may be better to 'bunch' your real estate tax payments for 2 years into 1 tax year. This can be done by paying one year's bill in January and the following year's bill in December of that same year. Why? If the total of your itemized deductions (medical, taxes, interest, donations, casualty and theft losses, job expenses, tax return preparation fees and other miscellaneaous items) without real estate taxes is less than your "Standard Deduction," if you 'bunch' your real estate tax payments into one year, you may be able to take the Standard Deduction in one year and a higher Itemized Deduction the following year. Be careful to check your state tax rules to see if there are limits which may affect the value of this bunching strategy.
Call me anytime with any last minute questions. Merry Christmas!
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
Thursday, December 17, 2009
Future (2011) Good News Proposed - By the IRS!
I know it may not seem like much to everyone, but the IRS has issued proposed regulations that will require stock brokers and mutual fund companies to report to you and the IRS the cost and gain/loss information for stock purchased beginning in 2011.
This change will significantly reduce your bookkeeping burden. Beginning with your 2011 tax year, you'll receive the data you need to more easily determine your gains and losses. Currently, you have several methods available for you to select in determining how to calculate your gains and losses including specific identification, averaging or FIFO. These different methods often yield dramatically different results - affecting cash in your pocket now! It will be interesting to see how these will be dealt with in the final regulations.
Form 1099-B, long used by brokers and mutual funds to report sales prices, will be expanded in 2011 to include the cost or other basis of stock and mutual fund shares sold or exchanged during the year and whether gain or loss is long-term or short-term, a very important factor affecting the tax treatment of gain or loss.
If you'd like to give any of your thoughts about these changes to the IRS, you have until February 8, 2010, either electronically, by mail or hand delivered to the IRS. If you are really passionate about it, and want to share your thoughts in-person, a public hearing is scheduled for Feb. 17, 2010, at the IRS New Carrollton Federal Building, 5000 Ellin Road, Lanham, Maryland 20706.
Bookkeeping for tax gains & losses on stock and mutual fund trades is often time-consuming and can cost clients several hundred dollars more in fees for tax preparation, if left to your CPA to do the work. Even now, for the 2009 tax season, you can reduce your tax prep fees by gathering your purchase information for all your securities purchases and summarizing it in spreadsheet form (I can give you a practical format). This will prove useful and will continue to keep tax prep fees lower year after year.
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
This change will significantly reduce your bookkeeping burden. Beginning with your 2011 tax year, you'll receive the data you need to more easily determine your gains and losses. Currently, you have several methods available for you to select in determining how to calculate your gains and losses including specific identification, averaging or FIFO. These different methods often yield dramatically different results - affecting cash in your pocket now! It will be interesting to see how these will be dealt with in the final regulations.
Form 1099-B, long used by brokers and mutual funds to report sales prices, will be expanded in 2011 to include the cost or other basis of stock and mutual fund shares sold or exchanged during the year and whether gain or loss is long-term or short-term, a very important factor affecting the tax treatment of gain or loss.
If you'd like to give any of your thoughts about these changes to the IRS, you have until February 8, 2010, either electronically, by mail or hand delivered to the IRS. If you are really passionate about it, and want to share your thoughts in-person, a public hearing is scheduled for Feb. 17, 2010, at the IRS New Carrollton Federal Building, 5000 Ellin Road, Lanham, Maryland 20706.
Bookkeeping for tax gains & losses on stock and mutual fund trades is often time-consuming and can cost clients several hundred dollars more in fees for tax preparation, if left to your CPA to do the work. Even now, for the 2009 tax season, you can reduce your tax prep fees by gathering your purchase information for all your securities purchases and summarizing it in spreadsheet form (I can give you a practical format). This will prove useful and will continue to keep tax prep fees lower year after year.
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
Friday, December 11, 2009
Year-end Tax Planning - What's Different This Year?
There's an important difference to tax planning this year-end compared with most: The expectation that income TAX RATES WILL RISE next year.
We agreed (through our elected officials) to borrow and spend billions to prop-up the economy over the past 18 months. Maybe that was a good thing, maybe not. Either way, we'll have to begin repaying this debt soon.
It's clear that the current Congress and administration are very inclined to tinker with the tax code to achieve desired social outcomes. There's been so many changes in 2009 that it's become a nearly full-time job for CPAs to remain experts. So . . . many (including me) expect that income tax rates will be increased in 2010.
What that means for year-end tax planning is that the traditional guidance to accelerate deductions and credits and defer income many need to be reversed for this month. Why? Because moving deductible expenses into the current year lowers your current tax bill, thus giving you the advantage of the "time value of money." In other words, a dollar today is worth more than a dollar you receive later. However, if tax rates rise, this may more than offset this advantage.
One win-win option for many is for converting your traditional IRA into a Roth IRA in 2009, if your AGI (adjusted gross income) is less than $100,000. This gives you the benefit of this year's tax rates. If your AGI is over $100,000, you'll have the option in 2010 of converting and spreading the income over the following 2 years. There's even a provision in the tax law giving you the benefit of 20/20 hindsight (by October 15, 2011) to see whether the conversion was beneficial, and to reverse it if it wasn't!
The MAIN IDEA for converting your traditional IRA into a Roth IRA is really quite simple: Do you expect that your income tax rate will be higher when you withdraw the money? If so, convert. If not, don't convert. What affects your tax rate? Tax law and your annual taxable income. Will the IRA withdrawals and social security payments be your only income in retirement? Which tax bracket will that put you in? If lower than your current backet, the traditional IRA would give you a better result. Of course, you also need to consider your own personal cash flow. Can you pay the tax on a current Roth conversion from personal funds or would you need to take from the account assets?
There are a few, more complex options for year-end tax planning, including harvesting gains or losses on investments, making new deductible business purchases, among others.
If the tax law doesn't change, there's still some built-in tax bracket increases coming in 2011:
The 10% bracket becomes 15%, 15% becomes 28%, 25% to 31%, 28% to 36% and the 33% and 35% brackets rise to 39.6%.
Also, for Dividends and Capital Gains: The maximum rate is 15% in 2009. It's expected to increase to 20% in 2011 for capital gains and 39.6% for dividends. If this isn't changed, plan to make some significant changes to your investment portfolio, as well as tax planning.
These are just a few thoughts I wanted to share while there's still a little time to do something about it before year-end.
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
We agreed (through our elected officials) to borrow and spend billions to prop-up the economy over the past 18 months. Maybe that was a good thing, maybe not. Either way, we'll have to begin repaying this debt soon.
It's clear that the current Congress and administration are very inclined to tinker with the tax code to achieve desired social outcomes. There's been so many changes in 2009 that it's become a nearly full-time job for CPAs to remain experts. So . . . many (including me) expect that income tax rates will be increased in 2010.
What that means for year-end tax planning is that the traditional guidance to accelerate deductions and credits and defer income many need to be reversed for this month. Why? Because moving deductible expenses into the current year lowers your current tax bill, thus giving you the advantage of the "time value of money." In other words, a dollar today is worth more than a dollar you receive later. However, if tax rates rise, this may more than offset this advantage.
One win-win option for many is for converting your traditional IRA into a Roth IRA in 2009, if your AGI (adjusted gross income) is less than $100,000. This gives you the benefit of this year's tax rates. If your AGI is over $100,000, you'll have the option in 2010 of converting and spreading the income over the following 2 years. There's even a provision in the tax law giving you the benefit of 20/20 hindsight (by October 15, 2011) to see whether the conversion was beneficial, and to reverse it if it wasn't!
The MAIN IDEA for converting your traditional IRA into a Roth IRA is really quite simple: Do you expect that your income tax rate will be higher when you withdraw the money? If so, convert. If not, don't convert. What affects your tax rate? Tax law and your annual taxable income. Will the IRA withdrawals and social security payments be your only income in retirement? Which tax bracket will that put you in? If lower than your current backet, the traditional IRA would give you a better result. Of course, you also need to consider your own personal cash flow. Can you pay the tax on a current Roth conversion from personal funds or would you need to take from the account assets?
There are a few, more complex options for year-end tax planning, including harvesting gains or losses on investments, making new deductible business purchases, among others.
If the tax law doesn't change, there's still some built-in tax bracket increases coming in 2011:
The 10% bracket becomes 15%, 15% becomes 28%, 25% to 31%, 28% to 36% and the 33% and 35% brackets rise to 39.6%.
Also, for Dividends and Capital Gains: The maximum rate is 15% in 2009. It's expected to increase to 20% in 2011 for capital gains and 39.6% for dividends. If this isn't changed, plan to make some significant changes to your investment portfolio, as well as tax planning.
These are just a few thoughts I wanted to share while there's still a little time to do something about it before year-end.
Contact me:
kfolberg@mynetcpa.com
(262) 421-1170 Office
(877) 277-7151 Fax
Thursday, December 10, 2009
Internet CPA Services Site Launched - MyNetCPA.com
Admittedly, this is a bit of self-promotion for a new website for a CPA firm. BUT - It's offering something NEW & innovative! Complete income tax prep services with:
1) Pricing below what the seasonal chain store temps charge
2) Fixed-fee, easy to understand, upfront pricing with no hidden fees
3) Unmatched convenience - you don't have to take time to go visit an office
4) You get the services of CPAs with up to 20 years of experience and
5) Online ordering which can be done 24/7.
MyNetCPA.com is the website for KSF CPA Services LLC, headed by (me) Ken Folberg. You can read more about me and the firm at the website. The firm is based in the Milwaukee, Wisconsin area, but serves all 50 states.
The NEW offering works simply:
1. You order at MyNetCPA.com
2. You'll receive a prepaid, pre-addressed FedEx Pak along with instructions in the mail.
3. You follow the instructions, throw your documents (W-2, 1099's, prior year tax returns, etc.) in the FedEx Pak and call for a prepaid pick-up or drop it in any FedEx collection box.
A short while later, you'll get an email link to your secure web page at MyNetCPA.com where you'll view your scanned documents, your preliminary tax return and any notes from me or our other associate CPAs. We may request a brief phone call to chat about the return, at your convenience.
Once you approve the return online, we e-file it with the IRS & your state(s) for you and you'll get your tax refund in just a few days (if applicable).
"It just couldn't be easier!"TM
Take this opportunity to check out the website & order before the rush begins!
Go to MyNetCPA.com
Thanks!
Ken
1) Pricing below what the seasonal chain store temps charge
2) Fixed-fee, easy to understand, upfront pricing with no hidden fees
3) Unmatched convenience - you don't have to take time to go visit an office
4) You get the services of CPAs with up to 20 years of experience and
5) Online ordering which can be done 24/7.
MyNetCPA.com is the website for KSF CPA Services LLC, headed by (me) Ken Folberg. You can read more about me and the firm at the website. The firm is based in the Milwaukee, Wisconsin area, but serves all 50 states.
The NEW offering works simply:
1. You order at MyNetCPA.com
2. You'll receive a prepaid, pre-addressed FedEx Pak along with instructions in the mail.
3. You follow the instructions, throw your documents (W-2, 1099's, prior year tax returns, etc.) in the FedEx Pak and call for a prepaid pick-up or drop it in any FedEx collection box.
A short while later, you'll get an email link to your secure web page at MyNetCPA.com where you'll view your scanned documents, your preliminary tax return and any notes from me or our other associate CPAs. We may request a brief phone call to chat about the return, at your convenience.
Once you approve the return online, we e-file it with the IRS & your state(s) for you and you'll get your tax refund in just a few days (if applicable).
"It just couldn't be easier!"TM
Take this opportunity to check out the website & order before the rush begins!
Go to MyNetCPA.com
Thanks!
Ken
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