Financial Services Blog

Beth Overbey

Recent Posts

IRS Tips For 2017 Year-End Charitable Contributions

Posted by Beth Overbey on Mon, Dec 04, 2017 @ 10:15 AM

In a news release, IRS has reminded individuals and businesses making year-end charitable contributions of several important tax law provisions, including substantiation requirements, that they should keep in mind.

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You May Need To Add RMDs To Your Year-End To-Do List

Posted by Beth Overbey on Tue, Nov 28, 2017 @ 11:54 AM

As the end of the year approaches, most of us have a lot of things on our to-do lists, from gift shopping to donating to our favorite charities to making New Year’s Eve plans. For taxpayers "of a certain age" with a tax-advantaged retirement account, as well as younger taxpayers who’ve inherited such an account, there may be one more thing that’s critical to check off the to-do list before year end: take required minimum distributions (RMDs).

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Year-End Moves to Make in Light of Tax Reform Legislation

Posted by Beth Overbey on Tue, Nov 21, 2017 @ 04:21 PM

As Congress moves closer to the finish line on tax reform, many clients may be asking what they should be doing right now to best position themselves for tax savings, and to avoid or soften the impact of disappearing deductions. The following Client Letter offers year-end moves that can accomplish both goals.

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The Trump Tax Reform Plan: What Is and What May Be

Posted by Beth Overbey on Mon, Nov 06, 2017 @ 10:38 AM

Major tax reform enactment is a rare event, with the last occurring back in 1986 under President Ronald Reagan. As a result, current discussions could pan out to be much ado about nothing; however, with the solid majorities that Trump and the Republicans hold in both houses of Congress, there is real potential for tax reform to pass.

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How to prepare for auditing Quickbooks

Posted by Beth Overbey on Mon, Oct 30, 2017 @ 10:52 AM

Now that the weather is reminding us that Fall is here, it's time to think about year-end financial tasks. If your business uses QuickBooks as your accounting system, then auditing QuickBooks should be a regular November or early December activity. Looking over the accounting records is important, even if you don't expect a formal IRS tax audit of the books. Making sure accounts and balances are reconciled now can point out any areas of concern in plenty of time to look for supporting documents, like receipts and pay stubs.

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Avoid IRS Trouble by Reporting Bitcoin Cash

Posted by Beth Overbey on Mon, Sep 11, 2017 @ 04:15 PM

IRS guidance on the tax treatment of cryptocurrencies already exists. Right now, the IRS considers cryptocurrencies to be "intangible assets." As a result, they are subject to capital asset treatment. However, recent developments complicate matters.

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We're Hiring!

Posted by Beth Overbey on Mon, Aug 28, 2017 @ 10:33 AM

At Lindemeyer, CPA, we are excited that we are growing as a company and expanding our resources for clients! We are thrilled to be offering a new position and opportunity, which you can learn more about in this blog or by visiting our Careers page

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Financial Forecasts and Projections

Posted by Beth Overbey on Mon, Jul 24, 2017 @ 11:44 AM

Businesses rely on effective financial planning to succeed. Two of the most common business reports used for strategy sessions are financial forecasts and projections. These reports are very similar and yet are developed and utilized in different ways. If you are starting a business and possibly seeking investors or looking for the best way to expand your existing business, then knowing how to produce and apply this type of financial information can help you plan effectively for the future of your business.

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Yes, You Can Lower Your Property Taxes

Posted by Beth Overbey on Wed, Jul 05, 2017 @ 10:34 AM

You can pay off your mortgage, never again seeing a bill from the bank for principal or interest, but you can never pay off your property taxes. Property taxes also, unfortunately, only seem to go one way – UP! You’ll never be able to get rid of your property taxes completely, but you can take steps to lower them or reduce increases.

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Bookkeeping Tips for Small Businesses

Posted by Beth Overbey on Wed, Jun 28, 2017 @ 04:12 PM


Keeping up with the cash flow for your business is essential if you want to get and stay profitable. You do this primarily by tracking the money in (sales) and the money out (expenses). This makes sense, of course, but it isn't always easy to achieve - especially if you are a small business owner and must wear the "bookkeeper cap" to accomplish it. And getting behind in bookkeeping tasks can create an overwhelming accounting mess that could threaten the long-term health of your business.

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Why You Should Outsource Bookkeeping

Posted by Beth Overbey on Tue, May 16, 2017 @ 12:18 PM

If you own a business, then you know that "maintaining the books" is crucial for success. Knowing the ebbs and flow of cash through your business is essential to productivity, efficiency, regulation compliance, and growth. But did you know that actually handling the bookkeeping tasks in-house is not a necessity? And especially for small businesses, it can be a burden or even a hindrance to your business' success. Outsourcing the bookkeeping function could offer an important advantage to building and maintaining a viable business and it's even easier now with so many online capabilities available.

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Tax And Financial News For May 2017

Posted by Beth Overbey on Thu, May 04, 2017 @ 12:42 PM

Bundled in with a 2015 law, Congress gave the IRS a directive to give private debt collection agencies the task of collecting certain types of delinquent tax debt. This isn’t a first; in fact, a similar tactic was attempted about two decades ago resulting in a myriad of complaints about harassment and dubious collection practices. Another stab at private collection was again attempted during George W. Bush’s tenure in office and yielded similar results.

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Benefits of using Lindemeyer CPA for small businesses

Posted by Beth Overbey on Tue, Apr 25, 2017 @ 11:54 AM

Here at Lindemeyer CPA, we strive to provide the financial planning and accounting services that help small businesses thrive. And we love to hear from our clients about how our services are helping them be more successful!

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Posted by Beth Overbey on Mon, Apr 10, 2017 @ 10:25 AM

It’s not long before tax returns for individuals will be due for 2016. This year April 18 is the deadline for filing. For a lot of people, filing on time is not only impractical but outright impossible. Many taxpayers will still be waiting on information before they can file. 

For example, it is common for S-Corporations as well as partnerships to file extensions because their Schedule K-1 won’t be ready in time. For others, investments can cause the hold-up. Whether it is a broker letting you know that a corrected 1099B is coming, you are an active trader, or you have an investment in a hedge fund, there is a good chance you will need to file an extension.

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2017 Q2 tax calendar: Key deadlines for businesses and other employers

Posted by Beth Overbey on Thu, Apr 06, 2017 @ 12:27 PM

Here are some of the key tax-related deadlines affecting businesses and other employers during the second quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

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Who can — and who should — take the American Opportunity credit?

Posted by Beth Overbey on Tue, Apr 04, 2017 @ 09:11 AM

If you have a child in college, you may be eligible to claim the American Opportunity credit on your 2016 income tax return. If, however, your income is too high, you won’t qualify for the credit — but your child might. There’s one potential downside: If your dependent child claims the credit, you must forgo your dependency exemption for him or her. And the child can’t take the exemption.

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2016 IRA contributions — it’s not too late!

Posted by Beth Overbey on Tue, Mar 28, 2017 @ 03:05 PM

Yes, there’s still time to make 2016 contributions to your IRA. The deadline for such contributions is April 18, 2017. If the contribution is deductible, it will lower your 2016 tax bill. But even if it isn’t, making a 2016 contribution is likely a good idea.

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Deduction for state and local sales tax benefits some, but not all, taxpayers

Posted by Beth Overbey on Thu, Mar 16, 2017 @ 03:11 PM

The break allowing taxpayers to take an itemized deduction for state and local sales taxes in lieu of state and local income taxes was made "permanent" a little over a year ago. This break can be valuable to those residing in states with no or low income taxes or who purchase major items, such as a car or boat.

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Wait a Minute - My 1099 Doesn't Look Quite Right

Posted by Beth Overbey on Tue, Mar 14, 2017 @ 02:10 PM
The rules around Form 1099s are long and can be complex. So what are you supposed to do if someone sends you a 1099 that doesn’t look quite right? Perhaps they made a mistake and put an extra zero on it, taking your income from $2,000 to $20,000! Worse yet, what if it looks like they intentionally put down the wrong amount? Mistakes and fraud both happen, and we will look at how to handle each situation below.
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Tangible property safe harbors help maximize deductions

Posted by Beth Overbey on Fri, Mar 10, 2017 @ 03:59 PM

If last year your business made repairs to tangible property, such as buildings, machinery, equipment or vehicles, you may be eligible for a valuable deduction on your 2016 income tax return. But you must make sure they were truly "repairs," and not actually "improvements."

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Top Tips to Prepare for Tax Season

Posted by Beth Overbey on Fri, Feb 24, 2017 @ 03:59 PM

It’s here again, the most wonderful time of the year – tax season. Uncle Sam is the reason for the season, and the IRS is ready to give everyone a nice tax bill. Fortunately for you, we have the top tax tips, so you don’t end up with an excessive bill.

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Help prevent tax identity theft by filing early

Posted by Beth Overbey on Thu, Feb 16, 2017 @ 02:29 PM

If you’re like many Americans, you might not start thinking about filing your tax return until close to this year’s April 18 deadline. You might even want to file for an extension so you don’t have to send your return to the IRS until October 16.

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What you need to know about the tax treatment of ISOs

Posted by Beth Overbey on Fri, Feb 10, 2017 @ 01:40 PM

Incentive stock options allow you to buy company stock in the future at a fixed price equal to or greater than the stock’s fair market value on the grant date. If the stock appreciates, you can buy shares at a price below what they’re then trading for. However, complex tax rules apply to this type of compensation.

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Accelerating your property tax deduction to reduce your 2017 tax bill

Posted by Beth Overbey on Thu, Feb 02, 2017 @ 03:20 PM

Smart timing of deductible expenses can reduce your tax liability, and poor timing can unnecessarily increase it. When you don’t expect to be subject to the alternative minimum tax (AMT) in the current year, accelerating deductible expenses into the current year typically is a good idea. Why?

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Can you pay bonuses in 2017 but deduct them this year?

Posted by Beth Overbey on Tue, Jan 24, 2017 @ 06:02 AM

You may be aware of the rule that allows businesses to deduct bonuses employees have earned during a tax year if the bonuses are paid within 2½ months after the end of that year (by March 15 for a calendar-year company). But this favorable tax treatment isn’t always available.

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2017 Q1 tax calendar: Key deadlines for businesses and other employers

Posted by Beth Overbey on Fri, Jan 13, 2017 @ 03:40 PM

Here are some of the key tax-related deadlines affecting businesses and other employers during the first quarter of 2017. Keep in mind that this list isn’t all-inclusive, so there may be additional deadlines that apply to you. Contact us to ensure you’re meeting all applicable deadlines and to learn more about the filing requirements.

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Year-end tax strategies for accrual-basis taxpayers

Posted by Beth Overbey on Thu, Dec 29, 2016 @ 12:10 PM

The last month or so of the year offers accrual-basis taxpayers an opportunity to make some timely moves that might enable them to save money on their 2016 tax bill.

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Want to save for education? Make 2016 ESA contributions by December 31

Posted by Beth Overbey on Thu, Dec 22, 2016 @ 10:09 AM

There are many ways to save for a child’s or grandchild’s education. But one has annual contribution limits, and if you don’t make a 2016 contribution by December 31, the opportunity will be lost forever. We’re talking about Coverdell Education Savings Accounts (ESAs).

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Why making annual exclusion gifts before year end can still be a good idea

Posted by Beth Overbey on Fri, Dec 16, 2016 @ 02:30 PM

A tried-and-true estate planning strategy is to make tax-free gifts to loved ones during life, because it reduces potential estate tax at death. There are many ways to make tax-free gifts, but one of the simplest is to take advantage of the annual gift tax exclusion with direct gifts. Even in a potentially changing estate tax environment, making annual exclusion gifts before year end can still be a good idea.

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End of 2016 Means the End of Tax Breaks - Maybe

Posted by Beth Overbey on Fri, Dec 09, 2016 @ 11:44 AM

For a number of years, Congress created significant uncertainty by waiting until the eleventh hour to renew or extend numerous tax provisions. In response to the frustration expressed by both individual taxpayers and the business community, Congress passed the Protecting Americans from Tax Hikes (PATH) Act last year. PATH made a number of tax provisions permanent; however, more than a few were simply extended for another year – and now that year is almost up. Below are a number of provisions set to expire at the end of this year if Congress doesn’t take action.

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There’s still time to set up a retirement plan for 2016

Posted by Beth Overbey on Fri, Dec 02, 2016 @ 02:47 PM

Saving for retirement can be tough if you’re putting most of your money and time into operating a small business. However, many retirement plans aren’t difficult to set up and it’s important to start saving so you can enjoy a comfortable future.

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DOL Final Overtime Rule Delayed

Posted by Beth Overbey on Tue, Nov 29, 2016 @ 02:08 PM

Below is a recent article from ADP found here.

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It’s critical to be aware of the tax rules surrounding your NQDC plan

Posted by Beth Overbey on Wed, Nov 23, 2016 @ 09:31 AM

Nonqualified deferred compensation (NQDC) plans pay executives at some time in the future for services to be currently performed. They differ from qualified plans, such as 401(k)s, in that:

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A quick look at the President-elect’s tax plan for businesses

Posted by Beth Overbey on Thu, Nov 17, 2016 @ 04:31 PM

The election of Donald Trump as President of the United States could result in major tax law changes in 2017. Proposed changes spelled out in Trump’s tax reform plan released earlier this year that would affect businesses include:

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What the self-employed need to know about employment taxes

Posted by Beth Overbey on Thu, Nov 10, 2016 @ 04:50 PM

In addition to income tax, you must pay Social Security and Medicare taxes on earned income, such as salary and self-employment income. The 12.4% Social Security tax applies only up to the Social Security wage base of $118,500 for 2016. All earned income is subject to the 2.9% Medicare tax.

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Tax-smart options for your old retirement plan when you change jobs

Posted by Beth Overbey on Thu, Nov 03, 2016 @ 04:24 PM

There’s a lot to think about when you change jobs, and it’s easy for a 401(k) or other employer-sponsored retirement plan to get lost in the shuffle. But to keep building tax-deferred savings, it’s important to make an informed decision about your old plan. First and foremost, don’t take a lump-sum distribution from your old employer’s retirement plan. It generally will be taxable and, if you’re under age 59½, subject to a 10% early-withdrawal penalty.

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Dog Days of Rentals: Taxes and Your Airbnb, HomeAway or VRBO Rental

Posted by Beth Overbey on Fri, Oct 21, 2016 @ 01:45 PM

The advent of sites such as Airbnb, HomeAway and VRBO have created the opportunity for millions of people to run a great side business renting out their home. There are people who make tens and even hundreds of thousands of dollars a year.

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Prepaid tuition vs. college savings: Which type of 529 plan is better?

Posted by Beth Overbey on Thu, Oct 13, 2016 @ 02:37 PM

Section 529 plans provide a tax-advantaged way to help pay for college expenses. Here are just a few of the benefits:

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Documentation is the key to business expense deductions

Posted by Beth Overbey on Thu, Oct 06, 2016 @ 02:05 PM

If you have incomplete or missing records and get audited by the IRS, your business will likely lose out on valuable deductions. Here are two recent U.S. Tax Court cases that help illustrate the rules for documenting deductions.

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Ins and Outs of the New 529-ABLE Savings Accounts

Posted by Beth Overbey on Thu, Sep 29, 2016 @ 01:41 PM

New 529-ABLE programs are currently available offering tax-free saving options for families with special needs individuals. With what promises to be the first of many, current offerings include Ohio’s STABLE, Tennessee’s ABLE TN, Nebraska’s Enable and Florida’s The ABLE United account. Some such as Florida’s version are only available to residents of the state, while others are open to nonresidents as well.

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Tax impact of investor vs. trader status

Posted by Beth Overbey on Thu, Sep 22, 2016 @ 04:08 PM

If you invest, whether you’re considered an investor or a trader can have a significant impact on your tax bill. Do you know the difference?

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Are frequent flyer miles ever taxable?

Posted by Beth Overbey on Fri, Sep 16, 2016 @ 02:14 PM

If you recently redeemed frequent flyer miles to treat the family to a fun summer vacation or to take your spouse on a romantic getaway, you might assume that there are no tax implications involved. And you’re probably right — but there is a chance your miles could be taxable.

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Unemployment Surcharge Letter from Division of Unemployment Insurance

Posted by Beth Overbey on Wed, Sep 14, 2016 @ 01:02 PM

Recently, the Division of Unemployment Insurance distributed the following letter to employers. The letter states that sufficient funds have been collected to pay off a debt borrowed by Kentucky - along with about half of the other U.S. states - from the federal government, to pay Unemployment Insurance benefits.

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Now’s the time to start thinking about "bunching" — miscellaneous itemized deductions, that is

Posted by Beth Overbey on Thu, Sep 08, 2016 @ 02:26 PM

Many expenses that may qualify as miscellaneous itemized deductions are deductible only to the extent they exceed, in aggregate, 2% of your adjusted gross income (AGI). Bunching these expenses into a single year may allow you to exceed this "floor." So now is a good time to add up your potential deductions to date to see if bunching is a smart strategy for you this year.

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Combining business and vacation travel: What can you deduct?

Posted by Beth Overbey on Wed, Sep 07, 2016 @ 12:03 PM

If you go on a business trip within the United States and tack on some vacation days, you can deduct some of your expenses. But exactly what can you write off?

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IRS Aims to Boost Small Business Tax Compliance

Posted by Beth Overbey on Fri, Aug 19, 2016 @ 03:59 PM

The Internal Revenue Service believes the small business sector is a major source of under-reported income. For the past four years, the agency has run a special independent office charged with finding how to encourage small business owners to report their earnings more accurately. The IRS finds sole proprietors especially challenging. Many operate on a cash basis – at least in part – and report income on their personal tax returns, making it difficult for the taxman to correctly identify the sources of their cash flow.

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Don’t roll the dice with your taxes if you gamble this year

Posted by Beth Overbey on Thu, Aug 11, 2016 @ 03:44 PM

For anyone who takes a spin at roulette, cries out “Bingo!” or engages in other wagering activities, it’s important to be familiar with the applicable tax rules. Otherwise, you could be putting yourself at risk for interest or penalties — or missing out on tax-saving opportunities.

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Should you make a "charitable IRA rollover" in 2016?

Posted by Beth Overbey on Thu, Aug 04, 2016 @ 08:30 AM
Last year a break valued by many charitably inclined retirees was made permanent: the charitable IRA rollover. If you’re age 70½ or older, you can make direct contributions — up to $100,000 annually — from your IRA to qualified charitable organizations without owing any income tax on the distributions.

Satisfy your RMD

A charitable IRA rollover can be used to satisfy required minimum distributions (RMDs). You must begin to take annual RMDs from your traditional IRAs in the year in which you reach age 70½. If you don’t comply, you can owe a penalty equal to 50% of the amount you should have withdrawn but didn’t. (An RMD deferral is allowed for the initial year, but you’ll have to take two RMDs the next year.)

So if you don’t need the RMD for your living expenses, a charitable IRA rollover can be a great way to comply with the RMD requirement without triggering the tax liability that would occur if the RMD were paid out to you.

Additional benefits

You might be able to achieve a similar tax result from taking the RMD payout and then contributing that amount to charity. But it’s more complex because you must report the RMD as income and then take an itemized deduction for the donation. This has two more possible downsides:

The reported RMD income might increase your income to the point that you’re pushed into a higher tax bracket, certain additional taxes are triggered and/or the benefits of certain tax breaks are reduced or eliminated. It could even cause Social Security payments to become taxable or increase income-based Medicare premiums and prescription drug charges.

If your donation would equal a large portion of your income for the year, your deduction might be reduced due to the percentage-of-income limit. You generally can’t deduct cash donations that exceed 50% of your adjusted gross income for the year. (Lower limits apply to donations of long-term appreciated securities or made to private foundations.) You can carry forward the excess up to five years, but if you make large donations every year, that won’t help you.
A charitable IRA rollover avoids these potential negative tax consequences.

Have questions about charitable IRA rollovers or other giving strategies? Please contact us. We can help you create a giving plan that will meet your charitable goals and maximize your tax savings.

© 2016
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To deduct business losses, you may have to prove “material participation”

Posted by Beth Overbey on Thu, Jul 28, 2016 @ 08:30 AM

You can only deduct losses from an S corporation, partnership or LLC if you “materially participate” in the business. If you don’t, your losses are generally “passive” and can only be used to offset income from other passive activities. Any excess passive loss is suspended and must be carried forward to future years.

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There’s still time for homeowners to save with green tax credits

Posted by Beth Overbey on Tue, Jul 19, 2016 @ 08:30 AM

The income tax credit for certain energy-efficient home improvements and equipment purchases was extended through 2016 by the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). So, you still have time to save both energy and taxes by making these eco-friendly investments.

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Throw a company picnic for employees this summer and enjoy larger deductions!

Posted by Beth Overbey on Fri, Jul 01, 2016 @ 11:00 AM
Many businesses host a picnic for employees in the summer. It’s a fun activity for your staff and you may be able to take a larger deduction for the cost than you would on other meal and entertainment expenses.


Generally, businesses are limited to deducting 50% of allowable meal and entertainment expenses. But certain expenses are 100% deductible, including expenses:

For recreational or social activities for employees, such as summer picnics and holiday parties,
For food and beverages furnished at the workplace primarily for employees, and
That are excludable from employees’ income as de minimis fringe benefits.
There is one caveat for a 100% deduction: The entire staff must be invited. Otherwise, expenses are deductible under the regular business entertainment rules.


Whether you deduct 50% or 100% of allowable expenses, there are a number of requirements, including certain records you must keep to prove your expenses.

If your company has substantial meal and entertainment expenses, you can reduce your tax bill by separately accounting for and documenting expenses that are 100% deductible. If doing so would create an administrative burden, you may be able to use statistical sampling methods to estimate the portion of meal and entertainment expenses that are fully deductible.

For more information about deducting business meals and entertainment, including how to take advantage of the 100% deduction, please contact us.

© 2016
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Finding the right tax-advantaged account to fund your health care expenses

Posted by Beth Overbey on Thu, Jun 23, 2016 @ 09:00 AM
With health care costs continuing to climb, tax-friendly ways to pay for these expenses are more attractive than ever. Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs) and Health Reimbursement Accounts (HRAs) all provide opportunities for tax-advantaged funding of health care expenses. But what’s the difference between these three accounts? Here’s an overview:

HSA. If you’re covered by a qualified high-deductible health plan (HDHP), you can contribute pretax income to an employer-sponsored HSA — or make deductible contributions to an HSA you set up yourself — up to $3,350 for self-only coverage and $6,750 for family coverage for 2016. Plus, if you’re age 55 or older, you may contribute an additional $1,000.

You own the account, which can bear interest or be invested, growing tax-deferred similar to an IRA. Withdrawals for qualified medical expenses are tax-free, and you can carry over a balance from year to year.

FSA. Regardless of whether you have an HDHP, you can redirect pretax income to an employer-sponsored FSA up to an employer-determined limit — not to exceed $2,550 in 2016. The plan pays or reimburses you for qualified medical expenses.

What you don’t use by the plan year’s end, you generally lose — though your plan might allow you to roll over up to $500 to the next year. Or it might give you a 2 1/2-month grace period to incur expenses to use up the previous year’s contribution. If you have an HSA, your FSA is limited to funding certain "permitted" expenses.

HRA. An HRA is an employer-sponsored account that reimburses you for medical expenses. Unlike an HSA, no HDHP is required. Unlike an FSA, any unused portion typically can be carried forward to the next year. And there’s no government-set limit on HRA contributions. But only your employer can contribute to an HRA; employees aren’t allowed to contribute.

Questions? We’d be happy to answer them — or discuss other ways to save taxes in relation to your health care expenses.

© 2016
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Combine Business Travel and a Family Vacation Without Losing Tax Benefits

Posted by Beth Overbey on Thu, Jun 16, 2016 @ 11:00 AM

Are you thinking about turning a business trip into a family vacation this summer? This can be a great way to fund a portion of your vacation costs. But if you’re not careful, you could lose the tax benefits of business travel.

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How summer day camp can save you taxes

Posted by Beth Overbey on Tue, May 24, 2016 @ 11:51 AM
Although the kids might still be in school for a few more weeks, summer day camp is rapidly approaching for many families. If yours is among them, did you know that sending your child to day camp might make you eligible for a tax credit?

The power of tax credits

Day camp (but not overnight camp) is a qualified expense under the child and dependent care credit, which is worth 20% of qualifying expenses (more if your adjusted gross income is less than $43,000), subject to a cap. For 2016, the maximum expenses allowed for the credit are $3,000 for one qualifying child and $6,000 for two or more.

Remember that tax credits are particularly valuable because they reduce your tax liability dollar-for-dollar — $1 of tax credit saves you $1 of taxes. This differs from deductions, which simply reduce the amount of income subject to tax. For example, if you’re in the 28% tax bracket, $1 of deduction saves you only $0.28 of taxes. So it’s important to take maximum advantage of the tax credits available to you.

Rules to be aware of

A qualifying child is generally a dependent under age 13. (There’s no age limit if the dependent child is unable physically or mentally to care for him- or herself.) Special rules apply if the child’s parents are divorced or separated or if the parents live apart.

Eligible costs for care must be work-related, which means that the child care is needed so that you can work or, if you’re currently unemployed, look for work. However, if your employer offers a child and dependent care Flexible Spending Account (FSA) that you participate in, you can’t use expenses paid from or reimbursed by the FSA to claim the credit.

Are you eligible?

These are only some of the rules that apply to the child and dependent care credit. So please contact us to determine whether you’re eligible.

© 2016
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Tax Scam Season is Back

Posted by Beth Overbey on Thu, May 19, 2016 @ 09:32 AM

Cybercriminals are on the prowl, and phishing schemes are surging this year. Stolen information is increasingly being used to file fake tax returns.

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QSB Stock Offers 2 Valuable Tax Benefits

Posted by Beth Overbey on Thu, May 12, 2016 @ 01:52 PM
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Unexpected Retirement Plan Disqualification can Trigger Serious Tax Problems

Posted by Beth Overbey on Thu, May 05, 2016 @ 09:30 AM
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Why it’s time to start tax planning for 2016

Posted by Beth Overbey on Thu, Apr 28, 2016 @ 07:30 AM
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What 2015 tax records can you toss once you’ve filed your return?

Posted by Beth Overbey on Tue, Apr 26, 2016 @ 01:10 PM
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Entrepreneurs: What can you deduct and when?

Posted by Beth Overbey on Tue, Apr 19, 2016 @ 09:30 AM
Starting a new business is an exciting time. But before you even open the doors, you generally have to spend a lot of money. You may have to train workers and pay for rent, utilities, marketing and more.
Entrepreneurs are often unaware that many expenses incurred by start-ups can’t be deducted right away.

How expenses are handled on your tax return

When planning a new enterprise, remember these key points:

Start-up costs include those incurred or paid while creating an active trade or business — or investigating the creation or acquisition of one. Organizational costs include the costs of creating a corporation or partnership.
Under the federal tax code, taxpayers can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs. The $5,000 deduction is reduced dollar-for-dollar by the amount by which your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized over 180 months on a straight-line basis.
No deductions or amortization write-offs are allowed until the year when "active conduct" of your new business commences. That usually means the year when the enterprise has all the pieces in place to begin earning revenue. To determine if a taxpayer meets this test, the IRS and courts will generally ask: Did the taxpayer undertake the activity intending to earn a profit? Was the taxpayer regularly and actively involved? Has the activity actually begun?

An important decision

Time may be of the essence if you have start-up expenses that you’d like to deduct this year. You need to decide whether to take the elections described above. Recordkeeping is important. Contact us about your business start-up plans. We can help with the tax and other aspects of your new venture.

© 2016
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Filing for an extension isn’t without perils

Posted by Beth Overbey on Thu, Apr 14, 2016 @ 12:37 PM

Yes, the federal income tax filing deadline is slightly later than usual this year — April 18 — but it’s now nearly upon us. So, if you haven’t filed your return yet, you may be thinking about an extension.

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Make a 2015 contribution to an IRA before time runs out

Posted by Beth Overbey on Thu, Apr 07, 2016 @ 12:09 PM

Tax-advantaged retirement plans allow your money to grow tax-deferred — or, in the case of Roth accounts, tax-free. But annual contributions are limited by tax law, and any unused limit can’t be carried forward to make larger contributions in future years. So it’s a good idea to use up as much of your annual limits as possible. Have you maxed out your 2015 limits?

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Two Extended Credits Can Save Businesses Taxes on Their 2015 Returns

Posted by Beth Overbey on Tue, Jan 12, 2016 @ 03:39 PM

The Protecting Americans from Tax Hikes Act of 2015 (PATH Act) extended a wide variety of tax breaks, in some cases making them permanent. Extended breaks include many tax credits — which are particularly valuable because they reduce taxes dollar-for-dollar (compared to deductions, for example, which reduce only the amount of income that’s taxed).

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Tax Considerations When Delaying Social Security

Posted by Beth Overbey on Fri, Jan 08, 2016 @ 10:20 AM

The timing of when you take your Social Security can have a potentially significant impact on your overall tax strategy during retirement. While each person’s case is unique, delaying Social Security often tends to be the best move. Generally, delaying Social Security gives you a better ability to manage tax brackets when you are no longer earning a salary. Let’s look at the details behind the decision.

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Outside the Gift Box, Year-End Giving Strategies

Posted by Beth Overbey on Tue, Dec 15, 2015 @ 01:31 PM

As we approach the end of the year, it’s a good time to consider making holiday charitable gifts – which might come in handy during tax season. In addition to the usual year-end strategies, you might look a bit outside the gift box for donation ideas.

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Tax, Estate Planning and Benefits Opportunities for Same-Sex Couples

Posted by Beth Overbey on Wed, Oct 14, 2015 @ 11:58 AM

On June 26, the Supreme Court made a historic ruling in the case of Obergefell v. Hodges, affirming a constitutional right to same-sex marriage in all 50 states. Prior to this decision, the following 13 states still did not recognize same-sex marriage:

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Legal Settlements - Taxing Thoughts

Posted by Beth Overbey on Wed, Sep 09, 2015 @ 04:05 PM
Legal Settlements - Taxing Thoughts 
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Tax Strategies For Selling Your Business - A Family Affair?

Posted by Beth Overbey on Thu, Aug 13, 2015 @ 10:18 AM

When it comes to selling your business, finding an optimal tax strategy depends on the purchaser. Transferring a business inside a family requires very different tactics and treatment compared to a sale to an independent third party. There is no one-size-fits-all strategy; the best tax treatment is always determined by the unique circumstances of the situation.

The best tax strategy for an interfamily transfer largely depends on whether the owner has sufficient outside resources or if they are counting on the sale to fund their retirement or next venture.

In cases where the owner has sufficient resources, one option is to directly gift shares or interests in the business to family members. Gifting can trigger gift tax consequence but not income tax consequences, and the recipient assumes your cost basis in the transferred asset. Let’s look at a few scenarios to see how this could work out.

In the first example, assume that at the time of the owner’s retirement, the value of the company is $10 million. If you gift the company to family members at that time (assuming gift-splitting from a married couple), the $10 million value is assessed against your lifetime gift/estate tax unified credit), the current total unified credit in this situation is slightly less than $11 million. As a result, gifting in this scenario would not result in any tax owed and leave you with just under $1 million of unified credits to apply to other assets.

In a second scenario, assume the owner holds on to the company until death and then transfers it via their estate to family members. Also assume that the company has grown since it was worth $10 million and that at the owner’s death is now worth $40 million. In this scenario, there is now a substantial estate tax issue. So we can see thatgenerally,if the value of a business is expected to increase substantially over time, it pays to transfer to subsequent generations sooner rather than later.

Next, let’s look at options under the opposite situation – where the owner needs to take out proceeds from the sale or transfer of the company to live on.

The first option here is that the owner could retain actual ownership and only transition management to the following generation. This allows the owner to keep an income stream from the business. The problem here is that eventually the family will end up in the same situation as discussed above, where waiting and passing the entity through the owner’s estate will result in substantial estate tax liabilities. So the question remainsthen,if the owner is dependent on the company for income, what can be done to avoid estate taxes upon transfer?

The second option is that the owner sells the company to the next generation.In this caseassume the children do not have the cash to buy the business outright, so the owner issues a note to enable the purchase at the time that the business was worth $10 million. Here, issuing the promissory note would essentially freeze the transfer value at $10 million. The purchasing children would then pay deductible interest on the promissory note to the parents out of income from the acquired company. At the time of the issuer’s death, the children’s own promissory note would pass to back to themselves. The issue here is that upon the sale of the company, the parent would realize a capital gain and incur an income tax liability. Overall, it is likely (but not certain, dependent on the exact situation) that the capital gains tax on an early sale is likely to be far less than the estate tax incurred on a transfer at death after significant appreciation.

As you can see, there are many variables and options at play in transferring a company to the next generation, so it is best to plan ahead with the help of qualified professionals.

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Quickbooks Now Has Tutorials

Posted by Beth Overbey on Wed, Aug 05, 2015 @ 04:35 PM

QuickBooks has always been a great tool to use for any business. They take pride in making their software easy to use and to help make your business run smoother. A while back, we were excited about the QuickBooks apps that made managing your business easier while saving time. Now, QuickBooks is stepping up their game again with easy to use tutorials, including 1-2-minute videos and step-by-step instruction guides.

Quickbooks Tutorials

  • What are they for? Whatever you need, whether it's sending an invoice, running expense reports, paying your employees, or tracking your expenses, there is now a tutorial to help walk you through each step.
  • Who are they for? The tutorials are for everyone; veterans and new business owners alike. If you have been using Quickbooks for a few years, the tutorials can teach you how to take your business to the next level.
  • How do they work? The videos are clear, concise, and well made. Each tutorial is kept short, so you don't need to spend hours in front of the computer. It walks you through each step and holds your attention.
  • What if the videos aren't helpful for me? Not a visual learner? Not a problem. QuickBooks has also included downloadable instruction guides you can keep on hand for future reference.

Tutorials by Industry

  • Your unique business--A non-profit organization is going to have different needs than a retail business. QuickBooks has taken this into consideration when designing their new tutorials. Each guide is broken up by industry for convenience.
  • How to find the right fit--To find the right tutorial, simply go to the QuickBooks Tutorial page, click on the industry that best describes your business, and walk through the steps to get organized, run your business, and learn more short-cuts.

Lindemeyer CPA is still here to help you if you prefer to learn something face-to-face or if one-on-one training works better for you. Schedule a first consultation with one of our QuickBooks ProAdvisors today.

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Things to Know Before Applying for Social Security Benefits

Posted by Beth Overbey on Wed, Jul 01, 2015 @ 10:27 AM
Social Security benefits are largely funded by today’s workers via payroll taxes. However, the number of retired workers is projected to double in less than 30 years. Furthermore, the ratio of workers paying Social Security taxes relative to the number of people collecting benefits is expected to fall from 2.9:1 to 2:1 by 2034.
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Disability Insurance: How to Create Tax-Free Income Replacement

Posted by Beth Overbey on Wed, Jun 17, 2015 @ 09:01 AM
Disability insurance has traditionally been offered in two forms: short-term (typically from 90 days to a year) and long-term (beginning after 90 days/year). Some companies offer a base amount of disability coverage at no cost to employees, giving them the opportunity to purchase a higher level of coverage using their own salary or benefit dollars. As a general rule, the premium for the additional level of coverage is nominal compared to the benefit received should the worker become disabled.

For example, if an employer-sponsored portion provides 50 percent of salary benefit, the employee may be able to buy up additional protection to bring the total coverage to 60 percent. For someone earning an annual salary of $40,000, this would increase his monthly income payout from $1,667 to approximately $2,200.

Disability insurance is designed to cover only a portion of income – not all of it. The highest percentage of income replacement is generally 70 percent, but the actual take home amount may vary depending on income sources and tax status.

Also bear in mind that most policies place a maximum cap on how much disability income is paid out each month, ranging anywhere from $15,000 to $40,000. Most group disability policies further complicate the issue by replacing only base income. In other words, an annual bonus would not be factored into the income calculation.

Disability payouts can shrink even further depending on tax status. When an employee is enrolled in a group disability insurance plan sponsored by his employer, if he pays the total premium using after-tax income, then his benefits will be tax free. On the other hand, if the employer pays the total premium and does not include the cost of coverage in the employee’s gross income, then the benefits will be taxable.

Many times the cost is split between the employer contribution for base coverage and the employee contribution for additional coverage. In this scenario, if the employee pays his share of premiums with after-tax dollars, that portion of his disability benefits will tax-free income. He will be taxed only on the portion of the benefit related to the employer’s contribution. However, should the worker pay his share with pre-tax dollars, the entire disability benefit will be taxable.

Bear in mind that an employee who becomes totally and permanently disabled and receives taxable disability benefits from an employer-sponsored disability insurance plan may be eligible to claim a tax credit on his income tax return.

A worker can save money by paying his share of disability insurance premiums with pre-tax dollars. However, if he ever needs to use his disability benefits, he’d be better offer having paid with after-tax dollars so that taxes won’t decrease his income even further. In other words, to create a plan for tax-free income replacement, it may be worth it to purchase a disability insurance policy with taxable income.

Other Disability Benefits

Social Security: To qualify for Social Security disability benefits, you must be totally disabled, unable to work at any job, and your disability must be expected to last at least one year. Social Security disability income isn’t generally taxable unless your modified adjusted gross income (which may include investment income) plus one-half of your Social Security benefit exceeds the base amount for your filing status.

Workers’ Compensation: Generally, workers’ compensation disability benefits are not taxable. However, there are some situations in which the employee may be able to return to work and continue to receive payments. In this scenario, the workers’ compensation benefit is taxable.

In general, veteran’s disability benefits are not taxable, with the exception of certain payments for rehabilitative services. Military disability pensions are taxable unless the recipient became disabled due to injury or illness resulting from active service, in which case benefits may be tax free under certain conditions.

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Posted by Beth Overbey on Wed, Jun 10, 2015 @ 10:07 AM
Eight Things to Consider When Filing an Amended Tax Return
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The Obamacare Tax: What Happens When You Don't Pay?

Posted by Beth Overbey on Wed, Jun 03, 2015 @ 09:34 AM
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News: Thieves Access IRS

Posted by Beth Overbey on Fri, May 29, 2015 @ 12:33 PM

On Tuesday, May 27, the IRS released information which revealed that thieves were using specific information to gain access to about 100,000 taxpayer accounts through the IRS's Get Transcripts online application. Due to this breach, the application has been temporarily shut down.
The Get Transcript app is thankfully not hosted on the IRS computer system that handles tax return filing submissions and, therefore, remains secure.

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End of Tax Season... Now What?

Posted by Beth Overbey on Thu, May 28, 2015 @ 10:29 AM

We made it! You're alive, we're alive, so take a moment and breathe. It's good to be back in a more natural rhythm around here, and we hope you are finding ease as well. Tax season is over for most people, but depending on how your personal season went, there might still be more ahead.

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Lesser Known Trusts Can Create Big Tax Savings

Posted by Beth Overbey on Thu, May 14, 2015 @ 01:27 PM

The big issue for tax planning with trusts is who gets the tax liability. Different trusts attach the tax liability to different sources. This is important because it determines how the trust impacts income taxes versus estate and gift taxes.

There are two types of lesser known trusts – Intentionally Defective Grantor trusts (IDG) and Incomplete Gift Non-Grantor trusts (ING). Each attaches the tax liability associated with the assets and the income they produce to different sources.

IDG trusts are often used by well-off families to reduce the gift and/or estate tax paid during a shift of assets from generation to generation. This type of trust allows the parents make a gift to their children while they are still deemed the owners for the purpose of income taxes. Transferring a gift in the present instead of at the time of death creates a situation where the value that the gift tax is imposed on in the present will be significantly lower than the estate tax that would later be imposed at death (assuming the asset appreciated in value). Sometimes known as an estate freeze, this maneuver can provide large tax reductions; however, they also produce another benefit.

IDG trusts are called “intentionally defective” for a reason. This type of trust purposefully makes a defect stop the completion of the gift for income tax purposes. In situations where the family overall will owe income tax on trust assets, it allows the parents to pay the income taxes now and reduce the ultimate size of their estate. This can be helpful since assets transferred via the estate are often taxed at a higher rate than the decedent’s income rate.

A related trust is the Incomplete Gift Non-Grantor trust. An ING tries to accomplish the opposite of an IDG. ING trusts create a transfer that is completed for income tax but not for estate tax purposes. In this case, the parents are the beneficiaries of the trust.

Take the situation where the parents have assets and they want to keep ownership. Also, assume the parents have significant income from investments or plan to incur a gain from the sale of a business. In situations like this, an ING trust can become a valuable planning device.

With an ING trust, the parents no longer own the assets for purposes of income taxes and the trust becomes its own taxpayer. Additionally, since the trust acts as a separate taxpayer, it can have its own domicile that can be set up in a state lacking any tax on income. As an example, assume the state you live in has an 8 percent income tax rate and you have $80,000 of interest income. If you transfer the interest income producing asset into this type of trust domiciled in a state without income tax, you would save $6,400 per year.

Does this sound too good to be true? Consider that the Internal Revenue Service first recognized the ING trust structure in 2001 via a private letter ruling. Since then, there has been substantial case law in the U.S. tax and appellate courts affirming this trust structure.

The remarks above are intended as general commentary and are not intended to replace specific advice and counsel from tax and investment professionals.

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Health Savings Account Strategies

Posted by Beth Overbey on Thu, May 07, 2015 @ 01:07 PM

While the growth in healthcare expenses has slowed in recent years (3.6 percent in 2013), it’s still growing substantially higher than the overall inflation rate (1.5 percent for 2013). For this reason, it’s a good idea to utilize saving, spending and investment options available with today’s popular health savings accounts.

Health Care Flexible Spending Arrangement

A Flexible Spending Arrangement (FSA) is an employer-sponsored health savings account that allows you to defer pretax income to pay for qualified medical expenses each year. Employers also may offer either (1) up to $500 in unused funds carried over to the next plan year, or (2) an extra 2½ months into the next year to incur and pay for expenses.

Health Savings Account

A Health Savings Account (HSA) may be offered in concert with a high deductible healthcare plan (HDHP). The HDHP+HSA strategy offers multiple tax advantages: an upfront income tax deduction, tax-deferred growth of contributions and tax-free withdrawals for qualified healthcare expenses. If an employer makes contributions to your HSA, they are free of FICA taxes.

Emergency Savings Strategy

If you contribute to an HSA but pay for out-of-pocket medical expenses with current income, save your receipts because you can withdraw funds to reimburse yourself at a later date – even years later. Used in this manner, the HSA makes for a nice emergency savings account.

HSA Retirement Strategy

If you pay for healthcare expenses out-of-pocket, your HSA contributions will be able to compound unfettered for years before you retire. After age 65, you’ll pay no taxes on medical expenses and only income taxes (no penalty) on nonqualified withdrawals, which makes the HSA an additional tax-free savings vehicle for retirement.

In fact, for some people saving with an HSA can be even more advantageous than through a traditional IRA. First of all, the $6,650 annual contribution for a family account (in 2015) is higher than the IRA contribution limit. Second, there is no income limit for deducting contributions – even if you earn $1 million a year.

IRA to HSA Rollover Strategy

You can avoid income taxes on traditional IRA assets via a direct transfer (up to your annual HSA contribution limit) to an HSA. With this strategy, you avoid having to pay taxes or penalties on the IRA distribution and, as long as you use the money for qualified medical expenses, avoid ever having to pay taxes on that money altogether.

Note, however, that this strategy does have a few drawbacks: (1) You can use this strategy only one time; (2) the IRA rollover contribution does not qualify for a tax deduction; and (3) the transfer is subject to a 12-month testing period during which you must remain HSA-eligible.

HSA Strategy for Older Employees

Seniors still in the workforce can combine health savings account strategies to help give their retirement savings an extra boost. If you delay signing up for Medicare, you may continue making tax-free contributions to an HSA. Once you turn age 70½, you might have to begin taking required minimum distributions from a traditional IRA, but you can use that money to make HSA contributions and claim the income tax deduction.

If available, save money tax free through a limited-use FSA. Then use those FSA funds to reimburse out-of-pocket vision and dental expenses so you don’t have to tap the HSA for them – which will enable your HSA more opportunity to grow tax deferred.

HSA Investment Opportunity

An HSA also offers investment options once you reach a minimum account balance, so your money has the opportunity to grow over time. Over the past three years, HSA accounts have produced an average annualized return of 12.5 percent.

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Deferring Gain with a Like-Kind Exchange

Posted by Beth Overbey on Mon, Apr 20, 2015 @ 09:28 AM

As a business owner/ real estate investor looking to sell or buy property, a like-kind exchange can be an optimal choice to defer tax consequences. Finding a property of a like-kind, that qualifies under Sec. 1031 can require some research since both properties must be similar enough to make a transition.

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QuickBook Apps Make Business Easier

Posted by Beth Overbey on Fri, Mar 27, 2015 @ 09:23 AM

When it comes to your company's finances, time isn't just money, time is... time! It's being at the park with your kids, going on walks with your dog, and visiting that new restaurant on the other side of town-- things you miss when you are burning the midnight oil and crunching numbers. Your time is invaluable, and QuickBooks has created an opportunity to help you better manage your business without missing out on the day-to-day moments you treasure.

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5 Things You Need to Know to Guard your Identity this Tax Season

Posted by Beth Overbey on Wed, Mar 25, 2015 @ 02:15 PM

You protect your PIN, are careful who you give your credit card information to, and yet you still got a Letter 5071C reporting suspicious tax returns in the mail-- don't panic. The IRS has recommended an easy method to verify your identity, and uses caution on any indication of suspicious tax returns or identity theft.

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When Should You Take Social Security?

Posted by Beth Overbey on Tue, Feb 17, 2015 @ 11:52 AM

After years in the workforce, many people may be approaching the season when they ask the question, "When should I take my Social Security?" Of course, there isn't a right or a wrong answer to that question, but the answer does have many variables and there are some facts you need to know about how Social Security income will impact your tax obligations.

First fact to get straight is this: if you are under the impression that your Social Security benefits are not taxable, that's not correct. Anywhere between 50-85% of Social Security benefits are taxable when half of the Social Security benefits plus all other income, including tax-exempt interest, is in excess of:

  • $25,000-$34,000 for single, head of household, qualifying widow and married filing separately if the couple lived apart the entire year
  • $32,000-$44,000 for married filing jointly
  • $0 for married filing separately if the couple lived together at any time during the year

Also, any Social Security that is received before the taxpayer reaches full retirement age (FRA), benefits are reduced by $1 for each $2 earned over $15,720 in the year 2015. In the year the taxpayer reaches FRA, the reduction is $1 for each $3 earned over $41,880 up until the month FRA is reached.

The first year of retirement, there is a break when earnings before collecting Social Security could already exceed the limits. Full Social Security benefits could be given to the taxpayer for any whole month they are retired regardless of the earnings for the year. So what that means is, the annual Social Security earnings limit is prorated monthly and earnings after retirement cannot exceed the monthly limit.

Here are some additional things to keep in mind if you hope to minimize taxes on Social Security:

  • If your spouse is working and earning more than $44,000 when you decide to take your Social Security, 85% of your Social Security is taxable.
  • If you work part-time, your earning levels will be limited until you reach FRA, assuming you don't want your Social Security reduced.
  • If you wait until FRA to get a part-time job, there are no income limitations and you will receive 100% of your benefits instead of 75% upon reaching FRA.
  • By collecting Social Security early, you reduce your FRA benefits by 25%.
  • Your Social Security grows at a rate of 5-6% annually until you reach FRA.
  • Between FRA and age 70, Social Security benefits grow at a rate of 8% per year.
  • The break even point for collecting Social Security at the different starting ages of 62, FRA or 70 is about 76 years of age.
  • When you wait to collect, you ultimately make more money tax-free.

If you are still uncertain what the best decision is for you when deciding on Social Security income, speak with one of Lindemeyer's staff accountants who can advise you in the right direction. Send us a message with your specific needs and we will get back with you shortly.

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Mortgage Interest Deduction - Not as Simple as it Seems

Posted by Beth Overbey on Wed, Feb 11, 2015 @ 12:20 PM
The mortgage interest deduction is one of the most popular in the whole tax code; however, it is more complicated than it first appears.

Generally, you need to satisfy five factors before you can deduct mortgage interest. These factors are:

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Provisions for Disabled Through ABLE Act

Posted by Beth Overbey on Thu, Feb 05, 2015 @ 10:39 AM

Important new provisions in the tax laws now allow families of those with disabilities to create tax-free accounts that can be used to save for disability-related expenses. Thanks to the recently enacted "Achieving a Better Life Experience (ABLE) Act of 2014," ABLE accounts can now be created by individuals to support themselves or by families to support their dependents and can be properly set up by Lindemeyer CPA.

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Avoiding Early Distribution Taxes on Retirement Plans

Posted by Beth Overbey on Wed, Jan 21, 2015 @ 01:13 PM
Withdrawing money from your individual retirement account before you turn 59 1/2 will cost you. A ten percent early withdrawal penalty in addition to income taxes will be assessed on the amount withdrawn. This means that taking a $5,000 withdrawal in mid-career by a worker in the 25 percent tax bracket will result in $1,750 in taxes and penalties. But, there are ways to avoid the IRA early withdrawal penalty. Here are the top 10 examples.

Turn 59 1/2.

Once you turn 59 1/2 you can withdraw any amount from your IRA without having to pay the 10% penalty. You will still owe regular income tax on each withdrawal but the penalties are avoided.


Use the distribution to pay for higher education costs for you, your spouse or your children or grandchildren and avoid penalties. College costs include books, fees, tuition, and other supplies required for attendance. If the college student is at least a half-time student, room and board also count toward the exemption. Qualifying institutions include colleges, universities and vocational schools that are eligible to participate in federal student aid programs.

Buying First Home

If you want to buy, build or rebuild your first home or the first home of your child, grandchild or parent, you can take a penalty-free IRA distribution of up to $10,000 ($20,000 for couples). If you or your spouse did not own a home during the two-year period leading up to the home sale, the IRS considers you to be a first-time homeowner. If the purchase or construction of your home is canceled or delayed the money can be put back into your IRA within 120 days of the distribution to avoid penalty.

Medical Expenses

IRA distributions can be used to pay for unreimbursed medical expenses that exceed 10% of your adjusted gross income without incurring the early withdrawal penalty as long as the distribution is in the same year as the medical expense.

Health Insurance

Following a period of unemployment, IRA distributions can be taken without penalty to pay for health insurance for you, your spouse and your dependents. To qualify, you need to receive unemployment compensation for 12 consecutive weeks due to job loss. The distribution must be taken the year unemployment compensation was received or the following year and no later than 60 days after you have been reemployed.


You can qualify for an exemption to the early withdrawal penalty if you become disabled to the point that you cannot participate in profitable activity due to your physical or mental condition. You will have to show proof of this condition from a physician stating that your condition can be expected to result in death or to be of long, continued and indefinite duration.

Give it to an Heir

If you die before the age of 59 1/2, your traditional IRA can be distributed to a beneficiary or your estate without incurring the 10% penalty. However, if your spouse inherits the IRA and elects to treat it as his or her own, it may become subject to the 10% penalty.

Military Service

Withdrawals taken by members of the military reserves, including the Army Reserve, Naval Reserve, Marine Corps Reserve and Air National Guard will not receive a penalty for IRA withdrawals if they were called to active duty after September 11, 2001, for a period of more than 179 days or an indefinite period. The distribution must be taken during the active duty period to avoid penalty.

Roth IRA Withdraw

If you have a Roth IRA that is at least five years old, you may be able to withdraw your contributions, but not the earnings, without incurring an early withdrawal penalty.

Keep the Money in a 401k

Any employee who leaves their job the year they turn 55 or older can make 401k withdrawals for any reason without having to pay the 10% early withdrawal penalty. However, if you roll the money over to an IRA, you will have to wait until you turn 59 1/2 to avoid the penalty. If you have retired after 55 and prior to 59 1/2, you might want to reconsider before rolling over that 401k plan to an IRA because there are opportunities available prior to rolling that money to an IRA to get penalty-free withdrawals.

Maybe you still aren't sure if you qualify to use any of these options. Lindemeyer CPA can help. We know the requirements and eligibility of retirement accounts and can help you decide if early withdrawal is best for you. Click here to learn more about early withdrawal or to set up an initial consultation with our team.

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2015 Tax Deduction, Exemption and Credit Update

Posted by Beth Overbey on Fri, Jan 16, 2015 @ 07:19 PM
It is that time of the year again. The Internal Revenue Service has announced its annual adjustments for 2015 tax provisions. Many are different than last year, but some remain unchanged. Remember, the amounts listed below have nothing to do with preparing your 2014 tax return this spring. These amounts are valuable now in budgeting and tax planning for next year. Let’s look at the changes to basic deductions and expenses as well as specific ones detailed by category.

Basic Deductions and Exemptions

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QuickBooks Online or QuickBooks Desktop?

Posted by Beth Overbey on Wed, Jan 14, 2015 @ 12:26 PM

The question has been posed countless times to those in the accounting field and to clients attempting to properly manage and juggle their own personal numbers. Which one is best...QuickBooks Online or QuickBooks Desktop? Although there are advantages and disadvantages to both, some key factors emerge as the benefits and downfalls to each program. Here are a few key points in each category that might help your business make a more informed decision in one direction or the other.

QuickBooks Online Strengths:

  • Runs well from any computer with good internet access and incorporates simple, multi-user access in a browser
  • Low cost per user, about $7-13 per user per month without payroll
  • Automatic bank and credit card downloads
  • Automatic backup provided
  • QuickBooks Online Accountant (QBOA) provides a simple system for inviting and billing clients and managing them from a single console

QuickBooks Online Negatives:

  • Additional cost for running multiple companies - each one requires separate subscription
  • Retaining older company files will cost you
  • Depth of inventory and costing is lacking
  • Frequent updates are harder to document and teach
  • Product features are not comparable to QuickBooks Desktop

Efforts by Intuit have been made in order to improve QuickBooks Online, with revisions taking place in September 2013. Online currently has the largest installed base of any entry level SaaS product and with the goal of having 3 million users by the year 2017, it is clear this is where the company sees its future.

QuickBooks Desktop strengths:

  • Can run more than one company file at no additional cost
  • Broad ecosystem of third party add-ons to extend the product
  • Longevity in the market
  • Good reference and learning materials in books, classes and consultants
  • Improvements for users and consultants are easy to make

QuickBooks Desktop Negatives:

  • Online access is expensive to host with costs varying from $30-60 per month per user
  • Escalating prices
  • Mac and Windows version inconsistencies
  • Periodic updates have created other issues

Even with the move to QuickBooks Online and a user count of 5.2 million, current Intuit forecasts expect no more than a 25% decline in QuickBooks Desktop licensing through 2017, which would bring the count of active users to 3.9 million. There are some licensing costs that can be reduced with the higher end versions, but end user speeds still haven't been noted to increase.

So what's the bottom line? It really all depends on your business model. What features best fit your company goals? If your clients desire to have local control of their files and are running multiple entities, the results you get with QuickBooks desktop may be perfectly adequate.

For others, preserving the future of your business in the cloud is key, so QuickBooks Online is the only solution.

If you need help deciding what your business goals are, or want to learn more about how QuickBooks could help serve your business accounting needs, click here and one of our tax professionals will get back with you to schedule a time to discuss. At Lindemeyer CPA, we view every client relationship like a partnership.


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Tip of the Month for January 2015

Posted by Beth Overbey on Fri, Jan 09, 2015 @ 02:16 PM
Tip: Start Now for Tax Savings Later

Procrastinators rarely seize the opportunity to leverage tax breaks to the max. In order to fully benefit from the range of deductions available, small business owners must invest a little time in preparation and planning well ahead of filing deadlines. Here are some of the deductions most frequently overlooked by business owners and entrepreneurs.

  • Business Travel
    The key to maximizing travel deductions rests with keeping good daily records. Most of us know that any travel expenses involving client visits, new business meetings and trips to provide service to customers are deductible. However, it’s easy for busy entrepreneurs to forget to include parking fees, tolls, baggage handling charges and other incidentals that occur along the way. It’s especially easy to forget these if you don’t make daily notes on money spent. A smart phone can be a big asset for logging items like this.

    Using your own vehicle for work purposes allows you to deduct the cost of gas, repairs and maintenance as these expenses relate to work-related activities. Many executives opt to deduct the standard amount per mile driven as outlined by the IRS (the rate currently is 56.5 cents per mile.) Maintaining a mileage log (think smart phone program or calendar) is the smart way to record expense-related travel. Don’t forget to include runs to the post office or to suppliers.
  • Technology
    If you maintain a home office, it can be tricky to determine what percentage of expenses involving computers and phones are deductible. For that reason, many home-based entrepreneurs prefer to use the formula that allows a home business deduction of $5 per square foot of the space that serves as a home office. The space – which, for deduction purposes, is limited to 300 square feet – has to be used exclusively for business and be your principle place of business where you meet clients/customers. Fortunately, when it comes to items like website expenses, life gets less complicated. These expenses – which could include web design fees, hosting and domain charges, licensing fees, and software – are all deductible if they are used exclusively for your business website.
  • Advertising and Marketing
    Most business owners realize that advertising expenses are deductible, but perhaps overlook promotional costs that might include buying space at a trade show, or paying for press releases or news alerts to be developed and disseminated.

Accurate record-keeping to support all the tax deductions you take is critical. If you know that you have not logged all expenses, or have mislaid receipts, meet with your tax professional for advice and to discuss tools that will make it easier for you to do things differently in 2015. Mixing up your personal business records with the costs of doing business creates an accounting quagmire. In the event of an audit, the IRS wants to see separate banking and PayPal accounts, as well as credit cards used exclusively for business purposes. You will be required to prove it or lose it based on their record-keeping standards, not on a system of your own making.

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Extender Provisions Extended Again for 2015

Posted by Beth Overbey on Mon, Jan 05, 2015 @ 01:59 PM

Congress has again extended a package of expired or expiring individual, business and energy provisions that offer an assortment of more than 50 individual and business tax deductions, tax credits, and other tax-saving possibilities. These "extenders" stem from the recently enacted "Tax Increase Prevention Act of 2014" and have been on the books for years, but technically are temporary because they have a specific end date. Congress has repeatedly temporarily extended the tax breaks for short periods of time (e.g., one or two years), which is why they are referred to as "extenders." The new legislation retroactively extends the tax breaks, most of which expired at the end of 2013, through 2014.

The extended individual provisions include:

  • The $250 above-the-line deduction for teachers and other school professionals for expenses paid or incurred for books, certain supplies, equipment, and supplementary material used by the educator in the classroom;
  • The exclusion of up to $2 million ($1 million if married filing separately) of discharged principal residence indebtedness from gross income;
  • Parity for the exclusions for employer-provided mass transit and parking benefits;
  • The deduction for mortgage insurance premiums deductible as qualified residence interest;
  • The option to take an itemized deduction for State and local general sales taxes instead of the itemized deduction permitted for State and local income taxes;
  • The increased contribution limits and carry forward period for contributions of appreciated real property (including partial interests in real property) for conservation purposes;
  • The above-the-line deduction for qualified tuition and related expenses; and
  • The provision that permits tax-free distributions to charity from an individual retirement account (IRA) of up to $100,000 per taxpayer per tax year, by taxpayers age 701⁄2 or older.

The extended business credits and special depreciation and expensing rules include:

  • The research credit;
  • The work opportunity tax credit;
  • Three-year depreciation for racehorses;
  • Fifteen-year straight line cost recovery for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail improvements;
  • Fifty percent bonus depreciation (extended before Jan. 1, 2016 for certain longer-lived and transportation assets);
  • Increase in expensing (up to $500,000 write-off of capital expenditures subject to a gradual reduction once capital expenditures exceed $2,000,000) and expanded definition of property eligible for expensing;
  • The exclusion of 100% of gain on certain small business stock;
  • The reduction in S corporation recognition period for built-in gains tax;
  • The empowerment zone tax incentives;

The energy provisions which are extended through 2014 include:

  • The credit for non-business energy property
  • The credit for construction of energy efficient new homes

If you are wondering whether you are able to take advantage of these "extenders," contact Lindemeyer for a consultation and we will walk you through the steps to determine your eligibility. Lindemeyer CPA provides experienced financial guidance in a variety of tax related areas and can also assist individuals and businesses in many other bookkeeping and accounting services. We are eager to help. Get your tax year off to a great start by calling Lindemeyer.

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Tax Strategies for Rental Property

Posted by Beth Overbey on Tue, Dec 23, 2014 @ 12:00 PM
Rental property can be a great long-term investment while providing current income. However, they also can be a lot of work. And continuing the role of landlord during retirement can be downright exhausting. Another consideration is if you have paid-off properties and/or own significant equity in them, selling them to bolster your retirement savings could result in a rather large capital gains tab. After all, you won’t qualify for the same exclusion as you would for a primary residence.

Charitable Remainder Trust
One strategy to consider is the use of a charitable remainder trust (CRT) – even if you’re not charitably minded. With a CRT, you donate rental properties directly to a charitable trust. Because charities are exempt from paying capital gains taxes, the trust can then sell the properties and invest the full proceeds in an income-producing portfolio. The way a CRT works is that you receive income derived from that portfolio each year for the rest of your life, as either a fixed percentage of the value or as a fixed dollar amount. The bonus is that you’ll also benefit from an immediate tax deduction. The deduction will equal the fair market value of the assets, minus the present value of the estimated future income stream (calculated with an IRS formula). This deduction also can be carried forward for use in future year tax returns. When you pass away, the remaining trust balance will then transfer to the charity(s) you selected. If you’re worried about cheating your loved ones out of an inheritance, consider using a portion of the income stream you receive to purchase a life insurance policy with comparable proceeds, naming your heirs as beneficiaries.

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How to Choose a Retirement Plan If You're Self-Employed

Posted by Beth Overbey on Tue, Dec 09, 2014 @ 11:47 AM

When you work for a business, you don't get to choose your retirement plan or what type of benefits are included. But as a self-employed worker or an owner of your own business, there are several retirement plans that have options beyond the basic IRA. Choosing which one is best for your needs depends on many factors including how you have structured your business plan, how much you want to contribute, how many employees you may have, and if you get income from a regular job. If you are weighing your options, Lindemeyer CPA can help you target the best solution. Here are a few of the major plans we can help you choose from.


One of the easiest retirement plans to set up is the Simplified Employee Pension plan or SEP IRA. This type of plan is ideal for anyone self-employed or a business that has just a few employees. SEP IRAs allow you annual tax-deductible contributions of 20% of your self-employed income or 25% if you are an employee of your own corporation, up to the limits for that year. Flexibility around the amount and timing of your contributions is also a perk of this plan if your profits fluctuate from year to year. A SEP IRA can be opened quickly through most brokers with very little paperwork.

Solo 401k

The Solo 401k is the best choice if you are looking to save as much money as possible. It allows you to contribute more money than the SEP IRA and to include your spouse in the plan as long as they are an employee of the business. The employee and the business can both fund the Solo 401k. As an employee of your business you can contribute up to the annual 401k contribution limit. Anyone 50 years old or older can make a catch up contribution, as shown below. In addition, your business can make annual tax-deductible contributions of 20% of your self-employed earned income or 25% if you are an employee of your own corporation, up to the max allowed limit for the year.

If you also have a regular job that offers a 401k in addition to running your business, you can contribute to both the 401k and the Solo 401k, but the combined total cannot exceed the max limit for the year. Most brokerage firms can set up a Solo 401k with applied administrative costs.

Tax Year Limits
Catch Up Contribution (Age 50+) Max Limits w/ Employer Contribution
2015 $18,000 $6,000 ($24,000 total) $53,000 ($59,000 w/ catch up)
2014 $17,500 $5,500 ($23,000 total) $52,000 ($57,500 w/ catch up)

Simple IRA

Simple IRAs or Savings Incentive Match Plans for Employees are ideal for small businesses with less than 100 employees. Employees can contribute up to $12,000 per year through the Simple IRA. The employer is required to make a matching contribution of up to 3% of each workers annual compensation. Catch up contributions are also allowed for employees who are at least 50 years old.

Simple IRAs (Savings Incentive Match Plan for Employees) are ideal for small businesses with less than 100 employees. It's easy to set up a Simple IRA with low administrative costs and no IRS reporting requirements.

Tax Year Contribution Limits
Catch Up Contribution (Age 50+)
2015 $12,500 Additional $3,000 ($15,500 total)
2014 $12,000 Additional $2,500 ($14,500 total)

Keogh or Qualified Plans

Keogh plans are ideal if you have employees and require a more advanced retirement plan, but are more complex and have more stringent reporting requirements. They do offer more possibilities including profit-sharing plans, defined benefit plans, and money purchase plans.

Which Retirement Plan is Right for You?

Choosing the best plan for you or your small business depends on your situation and the growth goals you hope to achieve. Lindemeyer CPA can help you target those goals and find a retirement plan that fits your needs completely. For more information on Retirement Plans or how to select a plan that fits your individual needs, click here to schedule an initial consultation and we will help you narrow down all of the information you need to get started.


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Time for a Year-End Business Assessment

Posted by Beth Overbey on Fri, Dec 05, 2014 @ 10:04 AM
As the year-end fast approaches, it’s a good idea to invest some time and effort to conduct a review to see where your business stands and what impact the changes you encountered in 2014 had on your bottom line.

Here’s a checklist to get you started:

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Smart Year-End Tax Strategies

Posted by Beth Overbey on Thu, Dec 04, 2014 @ 02:45 PM

Now may be the best time to jump start your new year's plan not to procrastinate, particularly when it comes to taxes. Since most tax-smart strategies take time to implement and come with a December 31 deadline, an early start can save you money and hassle. Regardless of your income or tax situation, one rule applies to all, the sooner you get started, the more effective you can be in managing your taxes. Here are ten helpful year-end tax strategies.

  1. Accelerate Deductions and Defer Income. One of the key elements of tax planning is deferring tax. Generally, this means accelerating deductions into the current year and deferring income into next year with the many items and expenses you are able to control. Consider deferring bonuses, consulting income or self-employment income. You may be able to accelerate state and local income taxes, interest payments and real estate taxes on the deduction side.
  2. Combine Itemized Deductions. There are many expenses that can be deducted if they exceed a certain percentage of your adjusted gross income. Grouping itemized deductible expenses into one year can help you exceed these AGI floors. Consider scheduling any costly non-medical procedures in a single year to exceed the 10% AGI floor for medical expenses. (7.5% for taxpayers ages 65 and older). This may mean that certain optional procedures be postponed until next year when you'll have more medical expenses. In order to exceed the 2% AGI floor for miscellaneous expenses, bunch professional fees like legal advice and tax planning, as well as unreimbursed business expenses such as travel and vehicle costs.
  3. Make Up a Tax Shortfall with Increased Withholding. Check your withholding and estimated tax payments now while you have time to adjust. Try to make up any shortfall through increased withholding on your salary or bonuses if you are in danger of an underpayment penalty. Larger estimated tax payments can still leave you exposed to penalties for previous quarters, while withholding can be paid throughout the year.
  4. Leverage Retirement Account Tax Savings. You can still increase contributions to a retirement account. Contributions reduce taxable income at the time you make them and you don't pay taxes until you take the money out at retirement. Limits for 2014 are $17,500 for a 401(k) and $5,500 for an IRA (not including catch-up contributions for those 50 years of age and older).
  5. Reconsider Roth Rollover. Converting a traditional IRA into a Roth IRA has become popular recently. This type of rollover allows you to pay tax on the conversion in exchange for no taxes in the future if the withdrawals are made properly.
  6. Leverage State and Local Sales Tax Deduction. If you itemize deductions, you can deduct state and local sales tax instead of state income taxes. This is valuable if you live in a state without an income tax, but can also help give you a bigger deduction in different states if you made big purchases subject to sales tax. If you have paid enough sales tax that you will make the election for 2014, consider making any planned large purchases before the end of the year. If you wait to purchase in 2015 and won't be electing to deduct sales tax that year, you won't get any tax benefit.
  7. Don't Squander Gift Tax Exclusion. In 2014, you can give up to $14,000 to as many people as you want as a free gift or estate tax. Every year you will get a new annual gift tax exclusion. If you combine gifts with a spouse, you can give up to $28,000 per beneficiary, per year.
  8. Understand the New Home Office Deduction Safe Harbor. If you use your home as your principal place of business, use it to meet clients and customers, or use your office as a separate structure not attached to your home, you can deduct some of the cost of your home. The amount of deduction has been controversial recently, but the IRS has a new safe harbor this year that allows you to deduct up to $5 per square foot of home office space, up to $1,500 per year.
  9. Maximize "Above-the-Line" Deductions. Above-the-line deductions can be deducted before you calculate your AGI. They can be deducted in full and make it less likely that your other tax benefits will be limited. Common above-the-line deductions include traditional IRA and health savings account (HSA) contributions, moving expenses, self-employed health insurance costs and alimony payments.
  10. Perform Overall Financial Checkup. End of the year is a good time to assess your current financial situation and plan for the future. Consider cash flow, health care, retirement, investment and estate planning. Check wills, powers of attorney and health care proxies for changes that may have occurred during the year and use the open enrollment period to reconsider employer-sponsored programs that could reduce next year's taxable income. HSAs and flexible spending accounts for dependent care or medical expenses allow you to use pre-tax dollars.

If you need help determining what deductions you may be eligible for, click here and let Lindemeyer CPA help you effectively manage your taxes before the end of the year.


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QuickBooks Payroll Recent Updates

Posted by Beth Overbey on Wed, Nov 26, 2014 @ 11:05 AM

QuickBooks Payroll recently made some changes. Here's what you can expect with the latest updates:

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IRA-Rollover-Per-Year Rule Clarified

Posted by Beth Overbey on Tue, Nov 25, 2014 @ 11:15 AM

Earlier this year the IRS announced that individuals with an IRA account can only do one rollover from one IRA to another in a 365-day period, noting that the rule would go into effect January 1, 2015. That decision came directly after a pivotal Tax Court case, Alvan L. Bobrow and Elisa S. Bobrow v. Commissioner of Internal Revenue.

That regulation would apply to rollovers from one IRA to another, as well as one Roth IRA to another. Rollovers out of retirement plans and Roth conversions aren't covered under this rule. The latest announcement further clarifies the timing and application of this regulation.

First, this clarification made clear that the rule will not be implemented before January 1, 2015, putting to rest any concerns from advisers that rollovers made in 2014 might be subject to the new regulation. This way, if a rollover is completed for a client today, another rollover that's completed in January for the same client won't be considered a "second rollover" under the IRS' regulation, giving IRA owners a fresh start in 2015 when applying the one-per-year rollover limit to multiple IRAs.

Also, the announcement clarifies that the rule applies to all of a given client's IRA accounts. Previously, some people thought that the rules applied individually to IRAs and Roth IRAs, allowing one IRA-to-IRA rollover and one Roth-IRA-to-Roth-IRA rollover, but that's not the case. Only one of these transactions will be allowed per 365-day period beginning in 2015.

Clients moving an IRA, who end up getting a check, need to ensure that the check is made to the receiving IRA and not to them personally. Any check made directly to the client is considered a rollover and rules will apply. Checks made to an institution, however, will be considered a trustee-to-trustee transfer.

Next year, the limit on IRAs will require advisers to handle rollovers as a direct transfer from one trustee to another. In order to avoid losing money to taxes, advisers should be asking clients where any new money is coming from, so that the IRA is not lost to taxes because it is coming from another IRA rollover. The IRS is encouraging IRA trustees to offer to do direct rollovers to individuals requesting rollover distributions so that account holders will not be subject to these rules.

Lindemeyer CPA seeks to help our customers navigate these complicated changes and make the most informed decisions. For inquires about the IRA clarification rule, contact us and we'll be happy to answer questions.


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Year End Tax Planning for Small Businesses

Posted by Beth Overbey on Thu, Nov 13, 2014 @ 11:52 AM
It’s not too early to start thinking ahead and begin planning to ensure you don’t miss a possible business tax deduction on next year’s filing. Smart tax planning begins with good financial records – be sure you have a good accounting software program that makes it easy for you to record reimbursements and revenue. You will want to keep all invoices and receipts that involve your business to make sure they line up with the data in your accounting software program.

Here are some of the most commonly overlooked deductions.

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Tax and Financial News for November 2014

Posted by Beth Overbey on Tue, Nov 11, 2014 @ 11:00 AM

Mutual funds held in taxable accounts are subject to a wide range of distributions rules. This can make the taxability of income and capital gain distributions you receive seem unfair or overly complex. This guide will walk you through a variety of fund distribution rules to help you better understand why the money you receive from your funds is taxed the way it is.

  1. Flow-Through. Funds themselves are not taxed at a corporate level; instead, they pass on their dividends and capital gains to shareholders, who then declare and pay taxes on them. This might seem similar to partnership taxation, where all activity is passed through to the partners; however, unlike partnerships, funds cannot flow through losses.
  2. Corporate Dividends. Most people pay favorable tax rates on corporate dividends. Dividend tax rates range from 0 percent for low-income taxpayers up to 20 percent for higher-income taxpayers; however, most people pay 15 percent. There are certain circumstances where you can lose the tax-favored rates from fund distributions. For example, dividends from real estate investment trusts often do not qualify for the low rates. Additionally, certain funds often lend securities to short-sellers. Payments received from the short-sellers to replace the missing dividends are considered substitute payments and do not receive favorable tax rates.
  3. Hot Potato Rule. Distributions and their accompanying tax bill are passed through to whoever is holding the fund when the distribution goes out. Say you purchased a fund for $25 per share and then a few weeks later receive a distribution of $2 with the fund immediately dropping in value to $23. Technically, you are breaking even; however, you are responsible for the tax liability on the distribution. One way to prevent problems like this is to avoid buying funds when large lump sum distributions are likely.
  4. Municipal Interest. Funds that own municipal bonds sold by states, cities and certain other organizations are allowed to pass through the federally tax-exempt interest to its investors. The catch is that the fund must hold at least 50 percent of its assets invested in these municipal bonds. If the fund falls below this level, then none of the distributions receive tax-exempt treatment.
  5. Treasury Interest. Most states do not make you pay tax on the interest earned on U.S. Treasury debt. However, certain states have a rule similar to the municipal interest rule, whereas the interest is tax exempt only if a certain percentage of the fund’s assets are invested in treasury debt. States with tricky rules on treasury debt include California, Connecticut and New York.
  6. Foreign Tax Credit. Funds can pass through a federal tax credit for foreign taxes, allowing you to claim the foreign taxes paid on your behalf by the fund.

As you can see, there are a variety of rules that affect the taxability of distributions you receive from your funds. This makes it important to understand the underlying rules and operations of the funds you invest in, especially if tax considerations are part of your investment strategy. Contact Lindemeyer CPA to help you navigate all of the details of tax credits, interest rates and distributions involved with your mutual fund. We will help you understand the laws and explain the best ways for you to take a distribution without penalty.

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Minimum Required Distribution Rules

Posted by Beth Overbey on Thu, Nov 06, 2014 @ 03:54 PM

As an incentive to help you save for retirement, the government offers tax-deferred growth and deductible contributions through IRAs and work-sponsored plans. Although the government does forgive taxes on the front end of those perks, it doesn't totally forego them. By the age of 70 1/2 you are required to start taking withdrawals from most retirement accounts; otherwise you will face a stiff penalty. Those withdrawals are known as distributions, or RMDs. They're intended to prevent individuals from hoarding money so the IRA can eventually receive its cut of your savings.

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Selecting a Retirement Account Beneficiary

Posted by Beth Overbey on Wed, Oct 29, 2014 @ 12:44 PM

In order to save your heirs the burden of paying more income and estate tax than necessary after you are gone, it is important to designate a beneficiary for your IRA as a part of your estate plan.

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What is the Alternative Minimum Tax (AMT) and Does it Apply to Me?

Posted by Beth Overbey on Tue, Oct 21, 2014 @ 01:28 PM

The Alternative Minimum Tax (AMT) is a tax system that works parallel to the regular tax system. It was developed by Congress back in 1969 because many wealthy taxpayers at that time were claiming so many deductions and taking advantage of other tax breaks, they were paying no federal income taxes at all. The AMT was then implemented to make the tax system more fair and to keep wealthy taxpayers from using loopholes to avoid paying taxes. But because the AMT was not indexed to inflation (like the regular income tax is each year) more and more middle-income taxpayers were being subjected to the AMT.

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How to Use an IRA for Asset Protection

Posted by Beth Overbey on Tue, Oct 14, 2014 @ 01:20 PM
Most people do not anticipate a situation in which a creditor will come after their assets, but these situations are more common than you might think. For example, say your teenager is involved in a car accident and the injured party files a civil suit – your assets could be vulnerable. Likewise, if you get divorced or must file for bankruptcy, your assets can be attached or garnished.
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Tax Strategies for Owners of Life Insurance

Posted by Beth Overbey on Thu, Oct 09, 2014 @ 09:58 AM

If you have purchased life insurance, you might be under the impression that the only benefit to the plan is financial protection for your loved ones should you pass away. While that is definitely one benefit, there are a number of tax-related strategies you can implement to get more bang for your life insurance buck. Being aware of these strategies will help you in making the best decision when it comes to purchasing life insurance... and deciding what to do with it before you die. 

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Tax Information for Students Who Work a Summer Job

Posted by Beth Overbey on Thu, Jun 26, 2014 @ 04:31 PM

Earning your first paycheck can be an exhilarating, yet eye-opening experience. If you are employed for the first time, the realities of the working world will begin to be clearer, including how taxes are paid to support the place where you live, your state, and your nation. Here are eight things you should know about taxes when starting your first summer job.

  1. As an employee, taxes will be withheld from your paycheck by your employer. That's how you pay taxes when you're an employee. If you are self-employed, estimated taxes may need to be paid directly to the IRS on specified days throughout the year.
  2. New employees will fill out a Form W-4, Employee's Withholding Allowance Certificate. Your employer will use this to figure how much federal income tax to withhold from your pay. Employees can use the IRS Withholding Calculator tool or to help you complete the form.
  3. If you earn tips, that income is also taxable, so you must keep a log so that can be reported. Any cash tips of $20 or more in one month must be reported to your employer and you must report all of your yearly tips on your tax return. Any subsistence allowance you get while in advanced training is not taxable.
  4. All money you earn doing work for others is taxable. Some work you do for others may be considered self-employment, including babysitting and lawn mowing. Keep good records of expenses related to your work and you may be able to deduct (subtract) those costs from your income on your tax return. Deductions may help lower your taxes.
  5. If you serve in the ROTC, your active duty pay, such as pay you get for your summer camp, is taxable. A subsistance allowance you get while in advanced training is not taxable.
  6. Not everyone earns enough in their summer job to owe income tax, but your employer must still withhold Social Security and Medicare taxes from your pay. If you are self-employed, you may have to pay these taxes yourself, but they will count toward your coverage under the Social Security system.
  7. Newspaper carriers or distributors have special rules that apply. If you meet certain conditions, you are considered self-employed. If you don't meet those conditions and are under 18, you are usually exempt from Social Security and Medicare taxes.
  8. You may not earn enough money from your summer job to be required to file a tax return. Even if you don't, you may still want to file. For example, if your employer withheld income tax from your pay, you will have to file a return to get your taxes refunded. You can prepare and e-file your tax return for free using IRS Free File, which is available exclusively on

For more information on tax rules for students, visit or schedule a short consultation with Lindemeyer CPA. Our office of seasoned Louisville tax accountants can walk you through the beginning process of becoming a new employee and how/if you will need to file taxes.

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Choosing the Business Entity That's Best for Your Business

Posted by Beth Overbey on Wed, Jun 25, 2014 @ 07:02 PM

Establishing a business requires a lot of planning and legal expertise so that the business will run smoothly and the partners involved in running the business will be properly protected and compensated. If you are considering starting a small business and are not sure which type of business is best for you regarding taxes, profits, loss, and liability, here is a description of a Limited Liability Company (LLC) and a Limited Partnership (LP) and some of the advantages for choosing each one.

A partnership is formed when two or more people come together and establish a business. The simplest way to establish a partnership is through a general partnership because it requires the least amount of formalities. The disadvantage to forming a general partnership is that a general partner can end up in legal trouble as a result of this business structure. Certain Legal troubles can be minimized by business partners when a limited partnership or limited liability company is formed.

What is a Limited Partnership?

The ownership of a limited partnership is made up of at least one general partner and one limited partner. In this type of setup the general partner holds unlimited liability, while the limited partner holds limited liability. With a general partnership all partners are subject to personal liability. That means that each general partner can be sued for the debts or the wrongs of the business. When this happens, in order to cover the lawsuit or business debt, a general partner can end up losing a significant amount of personal assets. A partner can protect himself from personal liability by creating a limited partnership.

What is a Limited Liability Company?

For a limited partnership to be formed, the law requires at least two owners, while an LLC can have just one owner. Owners of an LLC are called members instead of partners. Similar to the limited partnership, the owners of the LLC have limited liability and therefore only bear liability for the debts of the business up to the value of their investment in the business. The difference is, unlike a limited partnership, LLC owners do not bear unlimited liability for the debts of the business, therefore, the owners of an LLC do not stand to lose their personal assets to cover business debts assuming the member did not personally guarantee the business debt.

Advantages of an LP over an LLC

For an entrepreneur who is looking to gain investors while retaining managerial control, this set up is ideal. Here are a few other advantages to organizing your business as an LP:

  • Low cost of operation
  • Lower filing fees
  • They begin the moment the partners begin doing business
  • Fewer ongoing operational requirements
  • Quick to dissolve
  • Ideal for short-term projects
  • Death, withdrawal, or bankruptcy of the general partner ends the partnership

Advantages of an LLC over an LP

Legal Organization for most businesses begins in order to protect your assets from creditors and minimize taxes. There are several other advantages of choosing an LLC for your business over an LP status. Here are a few:

  • Protected assets. Creditors cannot pursue the personal assets of the owners to pay business debts.
  • Pass-through taxation. Taxes are not paid at the business level but "passed-through" to owners and reported on personal income tax returns.
  • Heightened credibility. Forming an LLC is seen as a formal commitment to your business and can help new businesses establish credibility.
  • Limited compliance requirements. An LLC will face fewer state-imposed annual requirements and ongoing formalities
  • Flexible management structure. Organizational structure is open and decided on by company owners.
  • Fewer restrictions. There are fewer restrictions on who can be an LLC owner or how many owners an LLC may have.

Laws vary greatly depending on where the LLC or LP was formed and where it conducts the majority of its business. When choosing whether you want to organize your business as an LLC or LP, take time to assess the importance of having effective control over your business and how the legal and tax requirements will affect you. When making a decision, consult the professionals at Lindemeyer. We will walk you through the process and help you make the decision that will best benefit your business.

Remember that laws vary greatly depending on where the LLC or LP was formed and where it conducts the majority of its business. As you gather information on legal and tax requirements, you must also take time to assess how important it is for you to have effective control over your business. Would you rather trust experts or trust your gut instincts? It has helped other business owners to convert value judgment decisions like these into dollar values. How much is responsibility and control worth to you?

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How to Make Estimated Tax Payments

Posted by Beth Overbey on Thu, Jun 12, 2014 @ 06:20 PM

If you are self-employed and don't have taxes withheld from your pay, or you don't have enough tax withheld, you may need to make estimated tax payments. Here are six tips to help facilitate making your estimated tax payments.

  1. If you anticipate owing $1,000 or more when you file your federal tax return in 2014, you should pay estimated taxes. Special rules apply to farmers and fishermen.
  2. Estimate how much income you expect to make for the year and determine the amount of taxes you may owe. Make sure that you take into account any tax deductions and credits that you will be eligible to claim. Any life changes, such as change in marital status or birth of a child can affect your taxes.
  3. Estimated tax payments are generally made four times each year. The dates that apply to most people are April 15, June 16 and September 15 in 2014 and also January 15 in the year 2015.
  4. You can pay estimated taxes online or by phone. You may also pay by check or money order, credit card or debit card. If you mail your payments to the IRS, be sure to use the payment vouchers that come with Form 1040-ES, Estimated Tax for Individuals.
  5. Check out the electronic payment options on This free and easy Electronic Filing Tax Payment System is a great way to make your payments electronically.
  6. Use Form 1040-ES and its instructions to figure your estimated taxes.

Additional IRS Resources:
Publication 505, Tax Withholding and Estimated Tax
Estimated Tax – frequently asked Q & As
Tax Topic 306 – Penalty for Underpayment of Estimated Tax
IRS YouTube Videos:
Estimated Tax Payments – English | Spanish | ASL
IRS Podcasts:
Estimated Tax Payments – English | Spanish

If this information sounds confusing or you would just like the assistance of a qualified and professional CPA to help you mutter through the lingo and paperwork of self-employed compliance, fill out the brief form here and we will set up a time to meet and discuss your tax expectations and strategy for your near future.

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Tracking Partner and Shareholder Basis

Posted by Beth Overbey on Thu, Jun 05, 2014 @ 08:37 AM

A partner in a partnership and a shareholder in an S corporation hold similar responsibilities and serve similar purposes in each type of business. When a business experiences losses that are passed through to either a partner or a shareholder, tax deductions will encounter a limit based on the calculated owner basis or amount the owner has the risk of losing. One major difference between the two types of ownership could make a difference if significant levels of losses are expected to be generated.

Taxpayers who own an interest in a partnership or S corporation stock often do not realize the tax complications that accompany the ownership of these two interests. As flow-thru entities, Partnerships or S corporations allow its partners and shareholders to avoid double taxation, however, when it comes to tracking the basis of the partnership interest or S corporation stock, the task is a bit more complicated.

Business Structure and Taxation

There are several different business structures that a small business can choose to be organized under. Partnerships and S corporations both allow the company to avoid taxation at the company level and pass any deductions, income and losses on to the partners or shareholders. As company owners, the value of a partner's or shareholders holding in the company is considered their basis. Understanding basis is important when the time comes to sell or pass on the owner's share on to heirs. Basis is also important when it comes to tax reporting because any losses passed through to an owner's individual tax return cannot exceed the owner's basis.

Determining Basis

Partnership or S corporation ownership basis can be determined by calculation. Basis begins with the amount of money an owner puts into the business through money paid for S corporation shares or an initial cash investment that was used to start the partnership. Monetary contributions or company profits in addition to those initial cash investments will increase the owner's basis. Any losses or distributions of cash to the shareholder/partner will decrease the owner's basis. In short, taking the additions and subtractions calculates basis.

Basis and Borrowed Money

Basis changes dramatically for S corp shareholders and partners when it comes to the business of borrowing money. Partners are allowed to include their share of borrowed funds in their basis if the loan is personally guaranteed by the partner, but an S corp shareholder cannot include borrowed money to their basis, even if it is personally guaranteed. For example, a business with two owners who each contributed $10,000 cash as an initial investment then borrows an additional $20,000 for which the loan is personally guaranteed. If the business in the example were an S corp, the calculated basis would be $10,000 (initial investment) per shareholder. In a partnership, each partner's basis would be $20,000 (initial investment + loan) since the partner personally guaranteed the borrowed funds.

When profits or losses occur in a partnership or S corp business, they cycle through the individual owners to be claimed on their own tax returns. Deduction of losses is limited to the basis in the company. So, if an owner's basis is at zero, net losses cannot be deducted on their individual income tax return. Remember, certain debt backed by a partner's personal guarantee is included in a partner's basis and not in an S corp shareholder basis, so tax benefits are affected differently in the two types of ownership. A partnership structure may be the best route for a new business that expects to undergo significant, tax-deductible losses with loans that are personally guaranteed.

For more information on how to structure your business or determine basis for your company, click here for a first consultation and a Lindemeyer employee will contact you with more information.

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Foreign Asset Reporting Deadline is Approaching

Posted by Beth Overbey on Tue, Jun 03, 2014 @ 12:04 PM

If you are a U.S. citizen, resident alien, or citizen with dual citizenship who has lived or worked abroad during all or part of 2013, the Internal Revenue Service would like to remind you that you may have a U.S. tax liability and filing requirement in 2014.

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Renting Personal Residence and Vacation Property

Posted by Beth Overbey on Fri, May 02, 2014 @ 09:33 AM

Whether you vacation on the beaches of Monterrey or in the mountains of Tennessee, your home, condominium, boat, or other living quarters may be subject to reporting on your federal income tax return if you rent that home to others. In most cases, you can deduct the expenses of renting your property, which include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance and depreciation, but your deduction may be limited if you also use the home as a residence.

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Itemized Deductions: Miscellaneous Expenses

Posted by Beth Overbey on Thu, Apr 03, 2014 @ 08:13 PM

Lindemeyer continues its series today on writing off itemized deductions from your taxes. If you would like to keep up with our other blogs in the series you can read more here.

Today we will discuss writing off miscellaneous expenses.

You can deduct the total amount of miscellaneous itemized deductions only if they exceed 2% of your adjusted gross income. There are three certain types of expenses that are subject to the 2% limit. They are:

  1. unreimbursed employee expenses
  2. tax preparation fees
  3. other expenses

Certain unreimbursed employee expenses are deductible as miscellaneous itemized deductions on Schedule A. To be deductible, the expense must be:

  • Paid or incurred in the current tax year
  • For carrying on your trade or business of being an employee
  • Ordinary and necessary

You can deduct other expenses subject to the 2% limit that you pay to:

  • Produce or collect taxable income
  • Manage, conserve, or maintain property held for producing such income
  • Determine, contest, pay, or claim a refund of any tax

Other expenses can include the following:

  • Hobby expenses, but generally not more than hobby income
  • Fees to collect interest and dividends
  • Appraisal fees for a casualty loss or charitable contribution
  • Casualty theft losses from property used in performing tasks as an employee
  • Clerical help and office rent in caring for investments
  • Depreciation on home computers used for investments
  • Excess deductions (including administrative expenses) allowed a beneficiary on termination of an estate or trust
  • Tax advice fees
  • Indirect miscellaneous deductions from pass-through entities
  • Investment fees and expenses
  • Repayments of income
  • Repayments of social security benefits
  • Legal fees related to producing or collecting taxable income or getting tax advice
  • Loss on deposits in an insolvent or bankrupt financial institution
  • Trustee's fees for your IRA, if separately billed and paid
  • Service charge on dividend reinvestment plans
  • Loss on traditional IRAs or Roth IRAs, when all amounts have been distributed to you
  • Safe deposit box rental, except for storing jewelry and other personal effects

With all of these possible deductions, it can be difficult to remember what is and isn't deductible. That's why it is important to have the tax preparation professionals of Lindemeyer CPA on your side to help you maximize what you can claim on your taxes for your maximum return.

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Itemized Tax Deductions: Casualty, Disaster and Theft

Posted by Beth Overbey on Tue, Apr 01, 2014 @ 10:51 AM

Our series on itemized deductions continues with an explanation of casualty, theft, and disaster losses that can be claimed as a tax deduction. Here is how each of them breaks down:

What is a Casualty Loss Tax Deduction?

A casualty loss can result from the damage, destruction, or loss of your property from any sudden, unexpected, or unusual event such as a flood, hurricane, tornado, fire, earthquake, or even volcanic eruption. A casualty does not include normal wear and tear or progressive deterioration.

What Tax Deduction Can be Taken Due to Theft?

A theft is the taking and removing of money or property with the intent to deprive the owner of it. The taking must be illegal under the law of the state where it occurred and it must have been done with criminal intent.

Many do not realize that losses due to theft of this nature, can, to a certain extent, be a deduction on your tax return. The amount of loss you can claim is the lesser of the adjusted basis of your property or the decrease in fair market value of your property as a result of the casualty or theft loss. For property held by you for personal use, once you have subtracted any salvage value and any insurance or other reimbursement, you must subtract $100 from each casualty or theft event that occurred during the year. After all of the amounts have been added up, 10% of your adjusted gross income is subtracted from that in order to calculate your allowable casualty and theft losses for the year.

You may not however, deduct casualty and theft losses covered by insurance unless you file a timely claim for reimbursement through your insurance company. When that occurs, you must reduce the loss by the amount of any reimbursement.

Some of these adjustments could be waved under special circumstances, which are released by the government during natural or severe disasters. There are several rules and exceptions that may apply to you and could help you during your time of loss. Let Lindemeyer CPA put our experience to work for you and help you through this difficult time.

For more information about tax deductions or how Lindemeyer can assist you or your business with critical tax information, visit our website for more information.

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Itemized Deduction Series: Deducting Non-Business Taxes

Posted by Beth Overbey on Fri, Mar 28, 2014 @ 01:37 PM

Our series on itemization continues with a look at deducting tax fees and expenses.

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Itemized Deduction Series: Interest Expense Deductions

Posted by Beth Overbey on Thu, Mar 27, 2014 @ 05:01 PM

Next in our blog series on itemization, we will explain how itemized deductions, such as interest expense, can lower you tax liability.

Interest is an amount you pay for the use of borrowed money. To deduct interest you paid on a debt, you must be legally liable for the debt. There must be a true debtor-creditor relationship. Additionally, you generally must itemize your deductions, unless the interest is on rental or business property or on a student loan.
If you prepay interest, you must allocate the interest over the tax years to which it applies. You may deduct in each year only the interest that applies to that year. However, there is an exception that applies to points paid on a principal residence.
Types of interest you can deduct as itemized deductions on Schedule A include:

  • investment interest (limited to your net investment income)
  • qualified residence interest

You cannot deduct personal interest. Personal interest includes interest paid on a loan to purchase a car for personal use. Personal interest also includes credit card and installment interest incurred for personal expenses.

Items you cannot deduct as interest include:

  • points (if you are a seller)
  • service charges
  • credit investigation fees
  • interest relating to tax-exempt income, such as interest to purchase or carry tax-exempt securities

You can deduct student loan interest on the front page of the 1040. Generally, the amount you may deduct is the lesser of $2,500 or the amount of interest you actually paid.

Qualified residence interest is interest you pay on a loan secured by your main home or a second home. Your main home is where you live most of the time. It can be a house, cooperative apartment, condominium, mobile home, house trailer, or houseboat that has sleeping, cooking, and toilet facilities.

A second home can include any other residence you own and treat as a second home. You do not have to use the home during the year. However, if you rent it to others, you must also use it as a home during the year for more than the greater of 14 days or 10 percent of the number of days you rent it, for the interest to qualify as qualified residence interest.

Qualified residence interest and points are generally reported to you on Form 1098 (PDF), Mortgage Interest Statement, by the financial institution to which you made the payments. The following mortgages yield qualified residence interest and you can deduct all of the interest on these mortgages:

  • A mortgage you took out on or before October 13, 1987 (grandfathered debt)
  • A mortgage taken out after October 13, 1987, to buy, build, or improve your home (called home acquisition debt) up to a total of $1 million for this debt plus any grandfathered debt. The limit is $500,000 if you are married filing separately.
  • Home equity debt other than home acquisition debt taken out after October 13, 1987, up to a total of $100,000. The limit is $50,000 if you are married filing separately. Home equity debt other than home acquisition debt is further limited to your home's fair market value reduced by the grandfathered debt and home acquisition debt.

You may be able to take a credit against your federal income tax if you were issued a mortgage credit certificate by a state or local government for low income housing.
You may be subject to a limit (phase-out) on some of your itemized deductions including mortgage interest.
Itemized deductions, such as Interest expense, can be key in lowering your tax liability.

For more informaton on interest expense deductions, please contact the tax professionals at Lindemeyer.

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S-Corp Election

Posted by Beth Overbey on Thu, Mar 13, 2014 @ 05:30 PM

A corporation organized in a traditional way pays federal taxes out of company resources. The IRS allows qualified corporations to receive a special status, S Corporation, which changes the way taxation is paid for the company. The S Corporation, usually a small business, may use Form 2553 to achieve the S Corporation identity. When a business elects this status, the taxes for the year in question will not be assessed on the business itself, but split amongst the shareholders. However, the small business may still be responsible to pay tax on income in certain situations. 

Does My Small Business Qualify as an S Corporation?

Here is a list of general requirements that your business must meet in order to qualify as an S Corporation. There are several more specific qualifications, so if you plan to elect your small business, be sure to contact the IRS to be sure your business meets all of the criteria.

  • The small business must be a domestic company within the the United States and must file Form 2553 before the deadline.

  • The corporation must qualify as a small business, having no more than 100 shareholders who are all U.S. citizens. These shareholders will assume responsibility for the company's tax burden. The company's shareholders must be comprised of individuals, not larger corporations, that own shares in the small business. Shareholders who are married must also count as one shareholder combined.

  • The small business must only have one class of stock, as is common for most small businesses.

  • Small businesses that are ineligible for this election are those such as banks, insurance companies, or small businesses that operate internationally.

  • Every stockholder must consent to the election prior to filing Form 2553.

When Do I Submit My Form 2553 to Become an S Corporation?

If the business desires to be elected as an S Corporation in the current tax year, the form must be submitted no later than two and a half months after the start of the tax year. In other words, in order to apply for S Corporation status for the year 2014, the company must file Form 2553 by March 15, 2014 in order for the election to apply to the 2014 tax year. The best time to file Form 2553 is any time during the year prior to the year in which the election will apply. Planning ahead is best, but if the company fails to file the form on time, the IRS may still provide relief for late elections, given the appropriate information.

What Information is Needed to File Form 2553 for S Corporation Status?

Shareholders attempting to file for S Corporation status must provide the following information:

  • The corporation's legal name and address (located on the corporate charter)

  • The Employer Identification Number (EIN)

  • Effective date of election

  • The selected tax year to apply S Corporation status

  • The signature of one or more of the corporation's officers

  • A statement of consent by the shareholders

When Does My Status as an S Corporation End If Approved?

If the IRS approves the election of a small business to be treated as an S Corporation, that election remains in effect until the shareholders agree to terminate or revoke the election.

For more information about applying for S Corp status, or more tax questions realted to your small business, contact Lindemeyer CPA.

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What to Do If My W-2 or 1099-R is Missing or Incorrect

Posted by Beth Overbey on Thu, Feb 06, 2014 @ 04:53 PM

Employers have until January 31 to issue certain informational documents to employees. If you have not received your Form W-2 or Form 1099R by January 31, or you discover that the information printed on these forms is incorrect, contact your employer immediately.

If the missing or corrected form is not received from your employer by February 14, you may call the IRS at 800-829-1040. You will need to provide your name, address (including zip code), phone number, Social Security Number, dates of employment, employer's name, including address and zip code and phone number.

After February 14, the IRS will contact your employer on your behalf and request the forms you are missing. The IRS will also send you a Form 4852 (PDF), a substitute Form W-2 or Form 1099R, along with instructions on how to fill it out. If the missing forms are not received in a time frame that is sufficient for you to file your tax return, you may use the Form 4852 to complete your return.

If the missing or corrected form should arrive after you have filed your return and a correction is needed, use Form 1040X, Amended U.S. Individual Income Tax Return.

If you have additional questions on filing your 2013 tax return, contact Lindemeyer and a member of our tax services team will follow-up with you promptly.

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Injured Spouse and Refund Offsets

Posted by Beth Overbey on Tue, Feb 04, 2014 @ 06:44 PM
Your tax refund could be less than you were expecting if you you have outstanding debt in certain areas. Congress recently authorized the Treasury Offset Program (TOP) to take place through the Department of Treasury's Bureau of Fiscal Service (BFS), which issues IRS tax refunds. Under this program, your refund or overpayment may be reduced and taken by the BFS to pay any:
  • Past-due child support
  • Federal agency non-tax debts
  • State income tax obligations
  • Certain unemployment compensation debts owed to a state (generally debts for compensation that were paid due to fraud or contributions due to a state fund that were not paid due to fraud)

Guidelines for Filing Form 8379, the Injured Spouse Allocation

  1. By filing Form 8379, the Injured Spouse Allocation, you may request your portion of the refund if you filed a joint return and you are not responsible for the debt.
  2. Form 8379 may be filed with your original joint tax return (form 1040), your amended joint tax return (form 1040X), or by itself after you are notified of an offset.
  3. If you file Form 8379 with your joint return and write, "INJURED SPOUSE" in the top left corner of the first page of the return, the IRS will process the form before the offset occurs.
  4. Filing Form 8379 with your original or amended joint tax return, may take up to 11 weeks to process if you filed electronically or 14 weeks if you filed a paper return.
  5. Both spouses' social security numbers must appear on Form 8379 in the same order as they appeared on your joint income tax return.
  6. You, the "injured" spouse, must sign the form and follow the instructions carefully and be sure to attach all required forms to avoid delays.
  7. Send the Form 8379 to the Service Center where you filed your original return and allow at least 8 weeks for the IRS to compute the injured spouse's share of the joint return for you.

If you need additional information on refund offset penalties or have tax return questions, contact us here and a professional team member will get back with you.

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Innocent Spouse Relief

Posted by Beth Overbey on Thu, Jan 23, 2014 @ 02:14 PM

There are certain benefits that married taxpayers benefit from when filing a joint tax return. With a joint return, both taxpayers are jointly and severally liable for the tax, additions to tax, interest or penalties that arise as a result of the joint return, even if they divorce at a later date. Joint and several liability means that each taxpayer is legally responsible for the entire liability. So, both spouses are generally held responsible for all the tax due, even if one spouse earned all the income or claimed improper deductions or credits.

Even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns, it is still true that both spouses will be held responsible. However, in some cases, a spouse can get relief from joint and several liability. There are three ways a spouse can get relief from joint and several liability, even if they filed joint returns.

Innocent Spouse Relief

This provides you relief from any additional tax you might owe if your spouse or former spouse failed to report income, improperly reported income, or claimed improper deductions or credits. Here are the conditions you must meet all of in order to qualify for the Innocent Spouse Relief:

  • You filed a joint return that has an understatement of tax (deficiency) that is solely attributable to your spouse's erroneous item. An “erroneous item” includes income received by your spouse but which was omitted from the joint return. Deductions, credits, and property basis are also erroneous items if they are incorrectly reported on the joint return.
  • You establish that at the time you signed the joint return you did not know, and had no reason to know, that there was an understatement of tax.
  • Taking into account all the facts and circumstances, it would be unfair to hold you liable for the understatement of tax.

Separation of Liability Relief

If an item was not reported properly on a joint return, this type of relief provides for the allocation of additional tax owed between you and your former spouse or your current spouse from whom you are separated. The tax allocated to you is the amount for which you are responsible.

To qualify for "separation of liability relief" you must have filed a joint return and must meet one of the following requirements at the time you request relief:

  • You are divorced or legally separated from the spouse with whom you filed the joint return.
  • You are widowed.
  • You have not been a member of the same household as the spouse with whom you filed the joint return at any time during the 12-month period ending on the date you file Form 885, Request for Innocent Spouse Relief.
  • If, at the time you signed the joint return, you had actual knowledge of the item that gave rise to the understatement of tax, you may not qualify for separation of liability relief.

Innocent Spouse Relief or Separation of liability relief must be requested no later than two years after the date the IRS first attempted to collect the tax from you. For equitable relief, you must request relief during the time the IRS has to collect the tax from you. If you are seeking a refund of tax you paid, then your request must be made within the time period for seeking a refund, which is generally three years after the date the return is filed or two years following the payment of the tax, whichever is later.

Equitable Relief

This may apply when you do not qualify for innocent spouse relief or separation of liability relief for something not reported properly on a joint return and generally attributable to your spouse. Equitable relief may also apply if the correct amount of tax was reported on your joint return, but the tax remains unpaid.

To qualify for equitable relief, you must establish that, under all the facts and circumstances, it would be unfair to hold you liable for the understatement or underpayment of tax. You must meet other requirements, in addition, listed in Publication 971 entitled, Innocent Spouse Relief.

Joint and several liability should not be confused with an injured spouse claim. An "injured spouse" is a person who filed a joint return and all or part of your share of the refund was or will be applied against the separate past-due federal tax, state tax, child support, or federal non-tax debt (like student loans) of your spouse with whom you filed the joint return.

To find out more about how you can protect yourself from issues arising due to filing joint tax returns, contact Lindemeyer CPA. We will provide some insight into how to better recover lost funds and file in the most efficient way in the years to come.

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How to Get a Transcript or Copy of a Previous Year's Tax Return

Posted by Beth Overbey on Tue, Jan 21, 2014 @ 10:57 AM

There are many reasons to keep copies of your federal tax return. For example, you may need the information when applying for a student loan or a mortgage. But if you haven't kept past returns, or can't seem to find one, the IRS can provide you with a copy or give you a transcript of the information you are looking for. Here's what a transcript is and how to get the one when you need it:


  • A free document that includes all of the information you need concerning your past taxes from the current year and up to the past three years.
  • Shows most line items from the tax return you originally filed.
  • Includes items from any accompanying forms and schedules you filed.
  • Does not reflect changes made after you filed the original.
  • Provides information on marital status, type of return filed, adjusted gross income, and taxable income.

To order:

  • To receive a transcript by web, phone or mail, request a transcript online by visiting and using the Order a Transcript tool. To order by phone, call 800.908.9946 and follow the prompts.
  • To request a 1040, 1040A or 1040EZ transcript by mail or fax, complete Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript. Businesses and individuals who need a tax account transcript should use Form 4506-T, Request for Transcript of Tax Return.
  • If you plan to order online or by phone, transcripts should be received within five to 10 calendar days. Allow 30 days for delivery of a tax account transcript if you order by mail.
  • If you need an actual physical copy of a previously filed and processed tax return, it will cost $50 for each tax year. Complete Form 4506, Request for Copy of Tax Return, and mail it to the IRS address listed on the form for your area. Copies are generally available for the current year and the past six years. Allow 60 days for delivery.
  • Forms 4506, 4506T and 4506T-EZ are available at or by calling 800-TAX-FORM (800-829-3676).
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2013 Individual Year-End Tax Planning Guide

Posted by Beth Overbey on Thu, Dec 12, 2013 @ 12:17 PM

The year-end for 2013 brings numerous new individual tax planning opportunities, thanks to the American Tax Payer Relied Act (ATRA) of 2013 and the Affordable Care Act (ACA). Additionally, there is the prospect of comprehensive tax reform in 2014 and even a delay to the 2014 filing season as the result of the IRS shutdown in October. This article will explore some of the best new opportunities that exist, along with traditional ones.

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FSA Modification for 2014

Posted by Beth Overbey on Thu, Dec 05, 2013 @ 12:16 PM
The IRS recently announced an updated guidance that will permit insurance holders to carryover up to $500 of unused health Flexible Spending Account (FSA) dollars at the end of a plan year, putting a virtual end to the Use-It or Lose-It panic.

Here are some of the highlights of the new modification that will go into effect for the year 2014:
  1. The IRS will begin allowing carryover of up to $500 from one plan year to the next plan year beginning in 2014. The amount that may be carried over to the following plan year is equal to the lesser of: any unused amounts from the immediately preceding plan year; or $500.
  2. Any unused amount in excess of $500 after all current year expenses are paid, is forfeited.
  3. The carryover does not affect the “run-out period” which is the period immediately following the end of a plan year during which a participant can submit a claim for reimbursement of expenses incurred for qualified benefits during the plan year. (For example, submitting a claim in February 2013 for unused 2012 FSA funds to cover medical expenses incurred in 2012).
  4. When a plan allows for a carryover provision, a grace period is not permitted. Grace periods allow payment for expenses incurred within 2 ½ months of the end of the plan year. For example, with a grace period, you could use money left over from the 2012 tax year to pay for expenses incurred until March 15, 2013.
  5. A FSA plan is permitted to treat reimbursements of all claims for expenses that are incurred in the current plan year as reimbursed first from unused amounts credited for the current plan year and, only after exhausting these current plan year amounts, is then reimbursed from unused amounts carried over from the preceding plan year. Any unused amounts from the prior plan year that are used to reimburse a current year expense reduce the amounts available to pay prior plan year expenses during the run-out period and must be counted against the permitted carryover of up to $500, and cannot exceed the permitted carryover.
  6. The carryover of up to $500 does not count against or otherwise affect the $2,500 salary reduction limit applicable to each plan year.
  7. Cafeteria plans must be amended to adopt the carryover provision and remove the grace period rule, if applicable.
  8. Amendments to adopt the carryover provision generally must be adopted on or before the last day of the plan year from which amounts may be carried over.
  9. For a plan year beginning in 2013, an amendment including the carryover provision may be adopted on or before the last day of the plan year that begins in 2014.
For more examples and clarification of how this modification plan will work, go to fsamodification.doc. Here you will find an explanation and example chart distributed by the IRS to help explain how to apply everyday scenarios to the new system. 

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Year End Tax Planning For 2013

Posted by Beth Overbey on Tue, Nov 19, 2013 @ 11:36 AM

Year-end tax planning could be especially productive this year because timely action could nail down a host of tax breaks that won’t be around next year unless Congress acts to extend them, which, at the present time, looks doubtful.  Businesses and individuals can potentially achieve significant tax savings by taking advantage of tax provisions that are in place this year, but are scheduled to expire on December 31, 2013. 

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IRS Warns of Pervasive Telephone Scam

Posted by Beth Overbey on Wed, Nov 13, 2013 @ 01:01 PM

The IRS has released the following information on its website warning taxpayers of a pervasive telephone scam.

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Posted by Beth Overbey on Fri, Nov 08, 2013 @ 12:10 AM
The American Taxpayer Relief Act of 2012 tax code contains temporary business tax provisions to incentivize and help businesses from becoming over-taxed. Congress generally introduces legislation at the end of a tax year when these provisions expire to extend the provisions.

Proposals submitted on behalf of Congressional members to extend the expiration of a given tax provision have been called "tax extenders." Many business tax extenders are set to expire this year. Although Congress extended many business provisions in 2012, there are several that were not permanently extended beyond this tax year. Provisions that were not initially extended permanently by the ATRA of 2012 are now set to expire. Here is a brief list of what provisions originally announced in the ATRA that are slated to expire at the end of 2013.

Additional first-year "bonus" depreciation

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What you need to know about the 9% Medicare surtax and the new 3.8% tax on net investment income

Posted by Beth Overbey on Tue, Nov 05, 2013 @ 12:21 PM
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Summertime Tax Tips for Newlyweds

Posted by Beth Overbey on Fri, Aug 23, 2013 @ 11:47 AM

In the heat of the summer, many newly married couples are returning from honeymoons or preparing to take one. Along with the change in marital status also comes many changes that can affect your taxes. Here are several tips for newlyweds from the IRS.

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Easing of Penalties for Misclassification of Employees

Posted by Beth Overbey on Wed, Jul 03, 2013 @ 02:42 PM

The Voluntary Classification Settlement Program (VCSP) has a temporary eligibility expansion available to taxpayers who are currently treating their workers as independent contractors or other non-employees, and want to reclassify the workers as employees. Eligible taxpayers who take advantage of this temporary eligibility expansion can voluntarily fix worker classification errors and pay a modest penalty. 

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Tax-Free Settlements for Physical Injury Lawsuits

Posted by Beth Overbey on Tue, Jul 02, 2013 @ 01:52 PM

Navigating taxes owed on settlements received from lawsuits can be a confusing process. Money received from lawsuits is generally treated as taxable income, including: 

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Creating a Disaster Plan for Your Business

Posted by Beth Overbey on Thu, Jun 20, 2013 @ 11:47 AM

The recent tornadoes in Texas and Oklahoma remind us how vulnerable we are when disaster hits. Whether you live in tornado alley, a coastal area, or inland, unexpected disaster can threaten your home or business with very little warning.

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Does your Business Qualify for Hobby Losses?

Posted by Beth Overbey on Wed, Jun 19, 2013 @ 02:46 PM

For taxpayers who operate a small business that does not turn a profit and is not necessarily intended to turn a profit, they may be eligible for deductions based on the Hobby Loss Rule. These type of businesses are on-the-side, part-time hobbies. For example, say you weld together metal lawn ornaments on the weekends and at the sale of each item you may make a small amount of money. However, after all of the time and supplies that you put into your handmade pieces, the expenses exceed any substantial profit. If you continue to operate your hobby-business and do not make a profit three out of five consecutive years, the hobby loss rule may be an ideal way to claim losses and help reduce your annual taxes.

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Tax Consequences when Filing Chapter 13 Bankruptcy

Posted by Beth Overbey on Thu, Jun 13, 2013 @ 01:30 PM

Filing for Chapter 13 bankruptcy applies only to individuals or sole proprietors of a business. Chapter 13 cases allow the individual to pay off debts from the individual’s future income over a set period of time. The goal of filing for Chapter 13 is to develop an installment plan for the individual to pay off the occurred debt in part or full over 3-5 years without further penalty or interest. The individual must have a regular income to be eligible for Chapter 13. Since 2005, the amount of debt that can be discharged has been significantly reduced. Below is the current outline for debt that must be paid in full and may be eligible for discharge.

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Health Savings Account Inflation Adjustments for 2014

Posted by Beth Overbey on Wed, Jun 12, 2013 @ 02:00 PM

Lindemeyer CPA is digging into a popular form of medical savings account offered by many employers, especially when deductibles are set at a high out of pocket cost. 

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Get Ready for Possible Internet Sales Tax Law

Posted by Beth Overbey on Thu, May 30, 2013 @ 02:40 PM

Lindemeyer CPA is tracking along with some topics that could affect you as a Louisville tax payer. Read below for the latest developments.  

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How to Find a Good CPA in Louisville, KY

Posted by Beth Overbey on Tue, Apr 23, 2013 @ 01:59 PM

When you are on the lookout for a good, qualified CPA in Louisville, keep in mind that not all tax preparers are created equally. Although all preparers are registered, they don't all carry the same credentials, areas of expertise, or experience. Even if you choose a CPA to prepare your taxes, as the taxpayer, you are legally responsible, so choose wisely. 

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Important Tax Dates to Remember

Posted by Beth Overbey on Thu, Apr 18, 2013 @ 03:11 PM

As a quick reminder from your Louisville, KY CPA, for all small businesses and individual employees, here is a list of important dates to remember for the second quarter of the 2013 Tax Calendar. These dates are applicable for most taxpayers and employers.

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A Louisville CPA's View on Tax Deductions

Posted by Beth Overbey on Fri, Apr 12, 2013 @ 02:52 PM

As tax season comes to a close, we're going to revisit a blog published last year on tax deductions.   

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Timely Reporting of Foreign Bank Accounts

Posted by Beth Overbey on Tue, Apr 09, 2013 @ 02:11 PM

The Foreign Bank Account Report, or FBAR, is an annual report that discloses the existence of bank accounts, investment accounts, retirement savings plans and similar financial accounts that are located in a financial institution that is outside of the United States. 

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Track Your Tax Refund

Posted by Beth Overbey on Thu, Apr 04, 2013 @ 02:50 PM

Our Louisville CPA office has created an easy way for you to track when that anticipated tax refund will hit your bank account. Tracking your tax refund is easy, secure, and can be done with just a few key pieces of information. As your Louisville tax firm, we are happy to provide you with the tools and information you need this tax season. 

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How to Claim Children and Other Dependents on your Taxes

Posted by Beth Overbey on Thu, Mar 28, 2013 @ 12:36 PM

There are many rules that pertain to claiming a child or relative as a dependent. There are a few things to note before deciding whether you can claim someone or not. Our Louisville CPA firm has put together somethings to consider.

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Louisville CPA Checklist: Write off these expenses on your taxes

Posted by Beth Overbey on Tue, Mar 26, 2013 @ 02:48 PM

Relocating due to your job? Keep in mind that certain items related to the moving expense can be written off on your taxes. Contact our Louisville CPA office for more information, and make sure to keep all receipts, and follow these rules issued by the IRS. 

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Taxpayers filing delayed forms get late-payment penalty relief

Posted by Beth Overbey on Thu, Mar 21, 2013 @ 03:02 PM

The Journal of Accountancy has released the following information regarding late payment of income tax. Visit the website for the complete story

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Louisville Tax Series: How much of your Meals are Deductible?

Posted by Beth Overbey on Tue, Mar 19, 2013 @ 02:37 PM

As a business owner, you want to get as much out of your deductions as possible. That includes deducting your meals that qualify as a business expense. Read this information that our Louisville CPA office has put together to help you determine how much of your business meals you can deduct.

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Louisville tax series: Unreimbursed Employee business expenses

Posted by Beth Overbey on Fri, Mar 15, 2013 @ 02:33 PM

Our Louisville, Ky CPA firm continues its itemized deduction series today talking about unreimbursed employee busness expenses. Read below to see how this can affect tax filings. 

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Louisville CPA Tax Series: Deducting Miscellaneous Expenses

Posted by Beth Overbey on Tue, Mar 12, 2013 @ 11:36 AM

We're knee deep in tax season here in Louisville, Ky. We hope you've been following along as we've been re-sharing some relevant tax articles we've written about in the past. We hope these posts have helped you this year as you (or your Louisville accountant) are hard at work filing your taxes.

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Louisville Tax Series: Casualty, Disaster & Theft Loss

Posted by Beth Overbey on Thu, Mar 07, 2013 @ 02:29 PM

Today we're continuing our tax season itemized series by helping you understand what can be a tax deduction when it comes to theft and disaster losses. Contact your Louisville CPA for more information, or learn more about Lindemeyer CPA by visiting our website.  

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Louisville Tax Series: Taking Charitable Deductions

Posted by Beth Overbey on Tue, Mar 05, 2013 @ 03:05 PM

Taking charitable contribution deductions in your itemized deduction is a good way to decrease your tax liability while helping out an organization in need. There are many types of contributions that you can and cannot take. Below we discuss contributions and what you can and cannot donate:

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Interest Expense Deduction—Louisville CPA itemized blog series

Posted by Beth Overbey on Thu, Feb 28, 2013 @ 12:57 PM

As tax season rolls on, we're continuing to reshare some of our past Louisville tax blogs that will help you as you prepare your taxes this year. This one was part of our itemized series. In this blog we'll explain how itemized deductions, such as interest expense, can lower your tax liability. 

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Louisville CPA Series: Medical & Dental Expenses

Posted by Beth Overbey on Thu, Feb 21, 2013 @ 03:21 PM

Since tax season is here, our Louisville CPA firm will be re-running a series we shared last year on itemized deductions. Over the next few weeks, we will focus our attention on helping you understand how you can get the most out of your tax return this year.

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10 Ways to Prepare for Tax Season

Posted by Beth Overbey on Tue, Feb 19, 2013 @ 01:13 PM

Tax season is here! Some people have already filed their taxes and some are still in the planning stages. If you're still planning, there are several things that you can do right now to make your tax season quick, easy, and less expensive. Following these ten tips to prepare for tax season can save you a lot of frustration and a lot of money.

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Is it Tax Deductible? A Quick Quiz to Help you Decide

Posted by Beth Overbey on Wed, Feb 06, 2013 @ 01:12 PM

Our Louisville CPA office is gearing up for this year's tax season, and one question we always hear a lot is, "Is this tax deductible?" 

While you should always contact your Louisville tax firm for guidance on your particular situation, this quick quiz from Kiplinger might shed some light on some of your tax-related questions. 

Click here to take the quiz, and if you're looking for a Louisville CPA firm, check out our website to learn more about Lindemeyer CPA. 

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A Louisville Tax Perspective on Traditional and Roth IRA Increases

Posted by Beth Overbey on Thu, Jan 31, 2013 @ 09:43 AM

On Tuesday we looked at Louisville tax considerations to make when it comes to your 401(k). But did you know that you can also put money into an individual retirement account, either a traditional IRA or a Roth account? Here's what you need to know about each: 

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Retirement Alternatives – What’s changing in 2013

Posted by Beth Overbey on Tue, Jan 29, 2013 @ 01:24 PM

From a Louisville tax perspective, we're taking a look at 401(k) plans and assessing what rules are changing this year. Are you worrying a bit more every day about when -- or whether -- you'll be able to retire? 

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A Louisville CPA's Point of View on Children and Other Dependents

Posted by Beth Overbey on Thu, Jan 24, 2013 @ 02:10 PM

There are many rules that pertain to claiming a child or relative as a dependent. There are a few things to note before deciding whether you can claim someone or not. Our Louisville tax firm has put together this information to help you understand it better.  

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What are estimates and how do I know what is due?

Posted by Beth Overbey on Tue, Jan 22, 2013 @ 07:33 AM

Calculating estimates can be tricky, so hopefully this information from our Louisville tax firm will help explain it better. Estimates are payments made quarterly throughout the year in order to cover your tax liability. The due dates are as followed:

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Louisville Tax Information on College Savings Plans

Posted by Beth Overbey on Thu, Jan 17, 2013 @ 03:02 PM

College can be very costly for people who are without scholarships or grants. The annual cost of tuition and books for a student could reach as high as $15,250 for public schools and $43,990 at a private school. While these are extreme numbers, the burden of even smaller, four year colleges can hit some pretty big numbers. Student loans for present college students are higher and higher by the year so now more than ever it is important for parents and grandparents to start early in helping kids save for college. There are tax-favored options out there like the 529 accounts and Coverdells. Grandparents can use a special rule to save gift and estate taxes too!

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Louisville Tax Tips: Save College Textbook Receipts

Posted by Beth Overbey on Tue, Jan 15, 2013 @ 02:25 PM

With tax season among us, this tip from your Louisville CPA could save you thousands!

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Self Employed Medical Insurance Deduction

Posted by Beth Overbey on Mon, Jan 07, 2013 @ 02:56 PM

There are many benefits that come with having self-employed income, one of them being a medical insurance deduction. If you have taken on any medical insurance premiums for you or your dependents, you can deduct those expenses if you meet the qualifications:

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Breaking Down What the Fiscal Cliff Means for You

Posted by Beth Overbey on Thu, Jan 03, 2013 @ 12:12 PM

The New Year is upon us and Congress decided it was time to act as they rolled out and passed their solution to the fiscal cliff. Here are some highlights:

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Casualty, Disaster & Theft Loss: our Louisville Tax Series Continues

Posted by Beth Overbey on Thu, Nov 29, 2012 @ 10:16 AM

Today we're continuing our itemized series by helping you understand what can be a tax deduction when it comes to theft and disaster losses. Contact your Louisville CPA for more information, or learn more about Lindemeyer CPA by visiting our website.  

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Louisville Tax Series: Taking Charitable Deductions

Posted by Beth Overbey on Wed, Nov 28, 2012 @ 02:40 PM

Taking charitable contribution deductions in your itemized deduction is a good way to decrease your tax liability while helping out an organization in need. There are many types of contributions that you can and cannot take. Below we discuss contributions and what you can and cannot donate:

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Louisville Tax Series: Interest Expense Deduction

Posted by Beth Overbey on Mon, Nov 26, 2012 @ 01:17 PM

We're continuing our itemized series today with a blog on interest expense. In this blog we'll explain how itemized deductions, such as interest expense, can lower your tax liability. 

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Louisville Tax Deductions

Posted by Beth Overbey on Fri, Nov 16, 2012 @ 12:22 PM

On Wednesday we talked about medical and dental expenses to kick off our itemized blog series. Today we're looking at deducting tax fees and expenses.   

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Louisville Tax Series: Medical & Dental Expenses

Posted by Beth Overbey on Wed, Nov 14, 2012 @ 01:33 PM

Since tax season is just around the corner, our Louisville CPA firm is starting a series on itemized expenses. Over the next few weeks, we will focus our attention on helping you understand how you can get the most out of your tax return. 

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Understanding Bonus Depreciation from a Louisville CPA

Posted by Beth Overbey on Thu, Nov 08, 2012 @ 01:50 PM

Extending the bonus depreciation for the entire year of 2012 was great news for small businesses, but 2012 is almost over and all qualifying property has to be placed in service before January 1, 2013 to get the bonus depreciation deduction of 50%. Here are some general guidelines to help you determine if your property qualifies for the bonus.

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Section 179 and Your Small Business

Posted by Beth Overbey on Wed, Nov 07, 2012 @ 10:56 AM

Opening a small business or becoming self-employed is one of the highest ideals in American culture, but taxes often scare many people from opening their own business. In order to encourage people to become self-employed and to invest in their own business, section 179 was created. Simply put, section 179 allows the tax payer to expense the full amount of equipment, software and similar products from his/her income in the year placed in service rather than capitalizing the equipment. 

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Why use a CPA?

Posted by Beth Overbey on Wed, Oct 17, 2012 @ 11:22 AM

As a Louisville tax firm, here are six reasons why we think it's important to use a CPA and/or a CPA firm when dealing with taxes:

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Louisville Tax Information: What you can and can't write off on your taxes

Posted by Beth Overbey on Fri, Oct 05, 2012 @ 11:43 AM

While the list of acceptable tax write-offs—and unacceptable write-offs—can be never ending, today we're focusing on two instances that many people might not be aware of. Louisville tax season is fast approaching, so if you're a homeowner who is thinking about demolishing your property to rebuild, or if you're a mother—first time or otherwise—take a look at some important information below.

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AICPA Urges Congress to Quickly Fix Tax Cliff

Posted by Beth Overbey on Fri, Sep 28, 2012 @ 10:35 AM

The Journal of Accountancy reported Jeffrey Porter's address to House Subcommittee last Thursday in Washington. His message: Congress must reach an agreement on expiring tax provisions as soon as possible. 

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Kentucky Tax Amnesty period begins Oct. 1 through Nov. 30

Posted by Beth Overbey on Thu, Sep 27, 2012 @ 11:46 AM

The Kentucky Department of Revenue is launching a Tax Amnesty Program which allows people or businesses who owe back taxes to the Commonwealth of Kentucky to pay with no fees or penalties and at only half of the interest due.  

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Louisville Tax Tips: What you Need to Know about Gift Tax Rules

Posted by Beth Overbey on Wed, Sep 26, 2012 @ 11:39 AM

Life is unpredictable, and sometimes you can be blindsided with a large sum of money that comes to you. Nothing can be more heartbreaking than coming into money as a result from the death of a loved one. On the other hand, you could be thinking of giving a large gift of money to a friend or relative and need to know the rules of what is the taxable limit. In the event that you are left with a sum of money from a loved one who has died or you are looking to give a loved one a large monetary gift, there are some things you should know.

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10 Ways to Prepare for Tax Season

Posted by Beth Overbey on Fri, Sep 21, 2012 @ 10:39 AM

While tax season is still a few months away, it will be here quicker than you realize. There are several things that you can do right now to make your tax season quick, easy, and less expensive. Following these ten tips to prepare for tax season can save you a lot of frustration and a lot of money.

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Louisville Tax News: 3.8% Medicare Surtax Won't Apply

Posted by Beth Overbey on Thu, Sep 20, 2012 @ 10:29 AM

Rumor has it that the 3.8% Medicare surtax will be applied to all home sale profits after 2012. This tax is intended to fund future Medicare benefits. For those worried about increasing taxes, let us clarify. The Federal Insurance Contributions Act imposes two taxes on employers and employees: Social Security and Medicare. Social Security finances the federal old-age, survivors, and disability act program while Medicare finances hospital and hospital service insurance for those over age 65. The 3.8% Medicare surtax will only be applied to profits that exceed the $250,000 or $500,000 exclusion for the sale of your principal residence.  

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Louisville Tax Tips: Determining Employment Status: Part 2

Posted by Beth Overbey on Thu, Sep 13, 2012 @ 12:43 PM

On Tuesday we reported on the first 10 steps the IRS uses to determine if an individual is considered an employee or a contract worker. The degree of importance of each factor varies depending on the occupation and the factual context in which the services are performed.  

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Louisville Business Tips: Determining Employment Status

Posted by Beth Overbey on Tue, Sep 11, 2012 @ 09:52 AM

As a business owner, it's imperative for you to correctly determine whether individuals providing services to you are employees or independent contractors.

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Bush Tax Cut Series: Tax Changes and You—Marriage Penalty Relief

Posted by Beth Overbey on Tue, Jul 31, 2012 @ 10:14 AM

Over the last couple of weeks we've been talking about the Bush Tax Cuts and the different aspects that could affect your tax filing next year. This article is our final article in the Bush Tax Cut series. Check out our blog to view the entire series. Or, download our free content offer for even more detials on the Bush-era tax cuts. 

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Bush Tax Cut Series: Tax Changes and You—Reduction of Itemized Deductions

Posted by Beth Overbey on Thu, Jul 26, 2012 @ 10:18 AM

This article is one in a series highlighting possible implications of the Bush tax cuts. These articles are meant to inform taxpayers on how their taxes could change and how to plan for the change to avoid any adverse effects.

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Bush Tax Cut Series: Tax Changes and You—Income Tax Rates for Individuals

Posted by Beth Overbey on Tue, Jul 24, 2012 @ 09:43 AM

This article is one of the articles in the Bush Tax Cuts article series. These articles are meant to inform you on how the new tax laws will affect you and how you can effectively plan for them.

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Bush Tax Cut Series: Tax Changes and You—Child Tax Credit and Child Dependent Care Credit

Posted by Beth Overbey on Thu, Jul 19, 2012 @ 10:31 AM

This is our second article in the Bush Tax Changes series. If you would like to learn more about the tax changes that may be put into place in 2013 and how they apply to you, be sure to keep reading our blog and following along online

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Bush Tax Cut Series: Tax Changes and You—Personal Exemption Phase-outs

Posted by Beth Overbey on Tue, Jul 17, 2012 @ 09:51 AM

This article is the first in our special series highlighting the possible implications of the Bush Tax Cuts. These articles are meant to inform you of the upcoming changes and provide insights on how to properly plan for the changes that could affect your taxable income.

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The Top Tax Mistakes of 2012

Posted by Beth Overbey on Thu, Jul 12, 2012 @ 10:15 AM

The recently-completed filing season of 2012 saw a number of errors made by both individuals and preparers. The large majority of these mistakes were made on paper returns as opposed to e-filed returns, and far fewer mistakes were committed by preparers than individuals. The IRS have released a report on the common mistakes.

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Tax Implications of the Affordable Care Act

Posted by Beth Overbey on Tue, Jul 10, 2012 @ 11:00 AM
With the Supreme Court's recent decision to uphold the Affordable Care Act, many Americans are wondering what tax implications this has on their own accounts. Most of the changes only occur to those making over $200,000 a year ($250,000 if married and filing jointly). However, everyone who pays taxes is sure to see some adjustments to their taxes. How severe the added expenses are to individuals is up to a variety of factors. 

For starters, the most significant tax implication is a tax penalty for not obtaining health insurance by the year 2014. A government-provided insurance or a private insurance policy are both acceptable, but without coverage, an individual will receive the tax hit on their personal income.

Deducting medical expenses as an itemized deduction is increasing, starting in the year 2013. The percentage of one's total income is now increasing from 7.5 percent to 10 percent. Along with this, the penalty for withdrawing funds from a health savings account is increasing to 20 percent, as it attempts to push individuals away from making such a deduction.

For individuals making over $200,000 ($250,000 for married, filing jointly), there's an additional .9 percent Medicare hospital insurance tax starting in the year 2013, and another 3.8 percent of Medicare hospital insurance tax on investment income.

There are some perks for tax implications on the new health bill. One option is a business tax credit of up to 28 percent of the covered drug costs for employees, when the business provides health plans for  prescription drug coverage. There's also an increase in a tax credit for small businesses, ranging from 25 to 50 percent, when providing health insurance coverage to employees, effective starting in the year 2010 and lasting through 2015. 

We're sure to see more changes take place before all said and done. If you're curious about how the Affordable Care Act will affect your taxes specifically, contact Lindemeyer and schedule a first consultation.
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Tax Considerations When Getting Married

Posted by Beth Overbey on Thu, Jul 05, 2012 @ 10:13 AM

If you're getting married this year, upcoming taxes are probably the last thing on your mind! Up until this point, you didn't have many tax options to consider. That, however, will all change once you walk down the aisle, so it's never too early to start planning for and thinking about how you will file your taxes now that you're no longer single. 

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Can I Deduct That? Automotive Expenses

Posted by Beth Overbey on Tue, Jun 26, 2012 @ 11:10 AM

As a business owner or someone who uses their vehicle for business purposes, you need all the help you can get when it comes to taxes. Deductions are an important part of the financial health of your business and they also ensure that you are reimbursed for necessary expenses. This is especially true for vehicles. Decide if (and how much) you can deduct from your taxes from the use of your vehicle.

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A Tax Guide that Shows You What to Pay

Posted by Beth Overbey on Tue, Jun 19, 2012 @ 01:44 PM

Are you confused about how the United States tax system works? If you are, you are not alone as it is one of the most misunderstood systems in the world. Not only is the tax code confusing, but it also breaks down by state, county, and even city. Before the American Institute of Certified Public Accountants released their new “Total Tax Insights Calculator,” only CPAs could figure out your taxes. Now you can get a sneak peak of exactly what you need to pay.

What it is
The Total Tax Insights Calculator is meant to give the average person a clear view of their federal, state, and local taxes they pay in any given year based on the information they put into the calculator. This interface draws from over 20 different databases and takes into account most of the different situations in which you pay taxes or can receive deductions.

The calculator was made to give the public a comprehensive and transparent view of their taxes. Once you know what taxes you pay, you can decide what impact buying a new car, home, etc. will have on your taxes. Not only will you be better equipped to make informed decisions, but this is just another step in becoming financially sound.

How it Works
When you first enter the calculator, you must pick your state. Once you have done that it redirects you to the page where you put in all your tax information such as: your filing status, your adjusted gross income, your expenditures, etc. After you have filled out all the information it will then take you to a page that breaks down all taxes that you will pay in any given year.

The Total Tax Insights Calculator is quick, easy, and fun to use to get you on your way to financial stability.

Where to find it
You can find the Total Tax Insights Calculator here.

Call Lindemeyer for a more detailed look, or schedule a first consultation online.

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Work From Home? You Can Deduct Your Expenses!

Posted by Beth Overbey on Tue, Jun 12, 2012 @ 02:13 PM

Working from home is often considered the ultimate dream, but it comes with a whole other set of tax concerns. Now that you are self-employed, your taxes are higher because you have to pay self-employment tax on top of income tax. How do you combat these expenses? You can deduct your home expenses as business expenses to bring your taxes down to a manageable level.

To qualify for using your home expenses as deductions for your home business you must:

  • The part of your home that you use for business must be used exclusively and regularly used for your business. Take pictures of your home office once every few months to show your accountant to assure him/her that it is used for business.
  • Your home must be your principal place of business where you meet or speak with your clients. It can be a separate structure not attached to the home, but still on your property. Again, take pictures or have your spouse take pictures of you dealing with clients.

You passed the test, now what can you deduct?

  • The biggest deduction for those who work at home is their mortgage or rent. The easiest way to figure out how much to deduct is to use this equation: total square footage of your office / total square footage of home * 100 = % of your payment you can deduct.
  • Most other expenses (such as utilities, insurance, phone use, repairs, security systems and mileage) are subject to the same rule of calculating the percentage that you use for your business from your total bill.
  • If you own the home you use for business you can also deduct the depreciation of the wear and tear of the area you use for said business. To learn more about this, talk to an accountant and keep track of all expenses before and after the month you started using the home as part of your business.

The most important thing to do to make sure you get the deductions you deserve is to keep track of everything. Even a $4 stapler qualifies for a deduction and will reduce the amount of taxes you pay. Furthermore, keep all of your information organized and easily accessible to you and your accountant. It will make your life easier and your business more profitable.

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How Long You Should Keep Records

Posted by Beth Overbey on Tue, May 22, 2012 @ 10:39 AM

Owning a small business comes with a lot of responsibilities. Among those is getting in the habit of keeping good records, both electronically and physically. It’s required that you keep a hard copy of all important documents and files, but for how long is the question.

The length of time depends on the action, expense or the event the document verifies. We typically tell our clients to hold onto files for eight years. Here are some general rules to follow for good record-keeping practices at your business from the IRS. Contact Lindemeyer for more guidance on this topic by scheduling a first consultation.

  • Keep a good record of your business assets
    Keep a complete and detailed record of such assets showing when you acquired them, how much you paid for them, and how the assets are used in your business. This record will allow you to depreciate your assets properly and report the correct gain or loss when you dispose of them.
  • How long to keep employment tax records
    You must keep all records of employment taxes for at least four years after the date the tax becomes due or is paid, whichever is later.
  • Records that are connected to assets
    Keep records relating to property until the period of limitations expires for the year in which you dispose of the property in a taxable disposition. You must keep these records to figure any depreciation, amortization or depletion deduction and to figure the gain or loss when you sell or otherwise dispose of the property.
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