Tax Law Changes Effective 1/1/12 for 1099 Reporting
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Join McIlvain & Associates Wednesday morning at the Keller Lead’s Breakfast!
To our DFW area friends…We hope you can join Sandy McIlvain, Kelli Strube and Janine Castleberry as our firm sponsors the Keller Chamber’s Lead’s Breakfast tomorrow! (Wed. Jan. 18th) Location: Prudential Worldwide Realtors. 1727 Keller Parkway from 7:30-9:00 a.m. Bill Lynch will be giving a great networking presention on ”How to Work a Room” and Sandy McIlvain has an important announcement to make. You won’t want to miss it! The food will be plentiful, and admission is FREE!
Year-End Tips to Reduce 2011 Taxes
The IRS wants to remind all taxpayers that with the New Year fast approaching, there is still time for you to take steps that can lower your 2011 taxes. However, you usually need to take action no later than Dec. 31 in order to claim certain tax benefits. Here are six tax-saving tips for you to consider before the calendar turns to 2012:
1. Make Charitable Contributions – If you itemize deductions, your donations must be made to qualified charities no later than Dec. 31 to be deductible for 2011. You must have a canceled check, a bank statement, credit card statement or a written statement from the charity, showing the name of the charity and the date and amount of the contribution for all cash donations. Donations charged to a credit card by Dec. 31 are deductible for 2011, even if the bill isn’t paid until 2012. If you donate clothing or household items, they must be in good used condition or better to be deductible.
2. Install Energy-Efficient Home Improvements – You still have time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits. Installing energy efficient improvements such as insulation, new windows and water heaters to your main home can provide up to $500 in tax savings. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. The credit equals 30 percent of the cost of qualifying solar, wind, geothermal, or heat pump property. For details see Special Edition Tax Tip 2011-08, Home Energy Credits Still Available for 2011 on the IRS.gov website.
3. Consider a Portfolio Adjustment – Check your investments for gains and losses and consider sales by Dec. 31. You may normally deduct capital losses up to the amount of capital gains, plus $3,000 from other income. If your net capital losses are more than $3,000, the excess can be carried forward and deducted in future years.
4. Contribute the Maximum to Retirement Accounts – Elective deferrals you make to employer-sponsored 401(k) plans or similar workplace retirement programs for 2011 must be made by Dec. 31. However, you have until April 17, 2012, to set up a new IRA or add money to an existing IRA and still have it count for 2011. You normally can contribute up to $5,000 to a traditional or Roth IRA, and up to $6,000 if age 50 or over. The Saver’s Credit, also known as the Retirement Savings Contribution Credit, is also available to low- and moderate-income workers who voluntarily contribute to an IRA or workplace retirement plan. The maximum Saver’s Credit is $1,000, and $2,000 for married couples, but the amount allowed could be reduced or eliminated for some taxpayers in part because of the impact of other deductions and credits.
5. Make a Qualified Charitable Distribution – If you are age 70½ or over, the qualified charitable distribution (QCD) allows you to make a distribution paid directly from your individual retirement account to a qualified charity, and exclude the amount from gross income. The maximum annual exclusion for QCDs is $100,000. The excluded amount can be used to satisfy any required minimum distributions that the individual must otherwise receive from their IRAs in 2011. This benefit is available even if you do not itemize deductions.
6. Don’t Overlook the Small Business Health Care Tax Credit – If you are a small employer who pays at least half of your employee health insurance premiums, you may qualify for a tax credit of up to 35 percent of the premiums paid. An employer with fewer than 25 full-time employees who pays an average wage of less than $50,000 a year may qualify. For more information see the Small Business Health Care Tax Credit page on IRS.gov.
And here is one final tip to remember: you should always save receipts and records related to your taxes. Good recordkeeping is a must because you need records to prepare your tax return, and it will help you to file quickly and accurately next year.
For more year-end tax information and to access all IRS forms and publications, visit the IRS website at http://www.irs.gov.
TV Infomercial Gifts for 2011
Provided by MSN Money
From the days when Ron Popeil began shilling his Pocket Fisherman and Veg-O-Matic, television viewers have been ordering amazing products from those inescapable infomercials. These five classic products that have made it under the tree for years by now and new ones on late-night TV sure to become hits this year. You can thank us when you’re looking for those last-minute gifts on your list.
The Snuggie: How many times have you been sitting in your living room in the winter, keeping the heat down to conserve energy and lower your electric bill and found yourself wishing you had a blanket with arms that still allows you to perform all kinds of tasks such as eating popcorn or reading your Kindle? Snuggies hit the airwaves in 2008 in several basic colors, and while some laughed at the commercials of people wearing Snuggies to football games, millions were being sold. Snuggies now come in a variety of colors and prints, including camouflage, and children’s and adult Snuggies now sell from under $10 to twice that depending on the pattern. For $5.99, you can give your dog a Snuggie too!
The Chia Pet: Ch-ch-ch-chia! The jingle for this little ceramic planter set shaped like all sorts of cute animals has been in the collective memory for decades (it was launched in 1977). Like the fabled Sea Monkeys advertised in the backs of old comic books, most people don’t know exactly what to make of the Chia Pet. Is it a decorative plant or artful ceramic? Maybe it’s both. Chia Pets come in a wide variety of shapes and sizes, from the classic puppies and kittens to pigs, donkeys and even Scooby Doo or Homer Simpson. One of the latest creations is a President Obama Chia. Chia Pets range in price from $15.99 and up. (It’ll cost you $19.99 to grow your Chia hair on President Obama.)
The Clapper: Clap on, clap off, clap on, clap off … The Clapper! Sometimes the infomercial is just as memorable as the product, and The Clapper, while being a handy and unique product, also had one of the most memorable commercials (why, that elderly woman clapped and fell right to sleep without ever having to leave her bed to turn off the light). The Clapper remains one of the most popular infomercial gifts, as it is good for almost anyone, including the elderly. It’s also handy for turning on and off those Christmas lights without having to crawl back behind the tree. The Clapper Plus will handle two lamps or appliances and costs around $25.
The Ove Glove: How many times have you put on a bulky oven mitt, only to have the heat sear right through to your hand? Enter The Ove Glove, a five-fingered glove that allows you to grab a hot pan up to 540 degrees and get it out of the oven safely. A great gifts for husbands who grill or do Dutch oven cooking. The Ove Glove is a classic infomercial gift and can be found for $15.99.
The Garden Claw : Every half-serious gardener needs a tool that cultivates, aerates and weeds – one that would practically take the back-breaking part of the work out of gardening! Enter the Garden Claw, a device that claims to do all of the above, making grandma’s or dad’s gardening a little less work next spring. The Garden Claw now has a mini-me product, the Mini-Claw, which works in rock gardens, plant boxes, greenhouses and other smaller gardening areas. The Garden Claw is sold at major retailers for as low as $27.
Pillow Pets: One of the newer infomercial products on the list, these reversible pillows go from pillow at night to a snuggly friend during the day. There are several to choose from, including a dog in his dog house and a penguin in an igloo. They sell for less than $20, putting them under the threshold for a reasonably small gift.
Forever Lazy: If putting a blanket over your body that has holes for your arms isn’t enough and you would rather completely wear your blanket as a piece of clothing, the Forever Lazy may be the right gift for you and your loved ones. Like those one-piece pajamas many of us wore on Christmas morning when we were kids, these have the benefit of flaps in the front and back so you don’t have to undress completely when nature calls. Priced online at $29.99 plus shipping and handling, there is usually a promotion going on that will give you two for the price of one.
Aluma Wallet: Really, who knew scam artists could be passing by you on a crowded street and pick up information from the electronic strip on your credit and debit cards! Enter the Aluma Wallet, which protects the electronic information held on your cards while providing a stylish look in four colors. Available for men and women, a side benefit to this wallet is that it is also crush-proof. Pay $10.99 plus shipping and handling and the company will include a second one for the additional shipping cost.
OrGreenic Kitchenware: The thing that’s always been a little scary about the traditional non-stick cookware is that if it overheats, the fumes can kill birds and other small pets in the home. When the non-stick coating peels, it can also be harmful when little bits of it get into your food. Enter OrGreenic Kitchenware, which uses a “green” ceramic non-stick coating that is not only more environmentally friendly to produce, but supposedly safer for you and your family. The Web site offers two 9-inch sauté pans for $19.99 plus an additional shipping charge for the second. The purchase comes with a cookbook.
Sandy McIlvain welcomes Kelli Strube, CPA to McIlvain & Associates.
Kelli has over 20 years of diversified accounting, financial management & tax experience with Big Four accounting firm, private industry, internal audit and tax. She has significant experience in interaction with all levels of management, professional services, investment partners/shareholders and various government agencies. Her services include, but are not limited to: estate and gift tax returns, corporate set-up and multi-entity tax planning.
Kelli lives in Grapevine with her husband Gary, has a son attending medical school and a daughter in her first year of college. As our firm continues to grow, we are excited about the benefit Kelli’s vast experience will provide to our current and future clients.
Tips for Taxpayers Who Receive an IRS Notice:
Every year the Internal Revenue Service sends millions of letters and notices to taxpayers, but that doesn’t mean you need to worry. Here are a few things every taxpayer should know about IRS notices — just in case one shows up in your mailbox.
- Don’t panic. Many of these letters can be dealt with simply and painlessly.
- Each letter and notice offers specific instructions on what you need to do to satisfy the inquiry.
- If you receive a correction notice, you should review the correspondence and compare it with the information on your return.
- If you agree with the correction to your account, usually no reply is necessary unless a payment is due.
- If you do not agree with the correction the IRS made, it is important that you respond as requested. Write to explain why you disagree. Include any documents and information you wish the IRS to consider, along with the botom tear-off portion of the notice. Mail the information to the IRS address shown in the lower left part of the notice. Allow at least 30 days for a response.
- Most correspondence can be handled without calling or visiting an IRS office. However, if you have questions, call the telephone number in the upper right corner of the notice. Have a copy of your tax return and the correspondence available when you call.
- It is important that you keep copies of any correspondence with your records.
- Of course, our office is also available to assist you. Simply fax the notice to us at 817-540-1440 and we will advise you of the proper action.
Seven Tax Tips for Job Seekers
Many taxpayers spend time during the summer months updating their résumé and attending career fairs. The Internal Revenue Service reminds job seekers that you may be able to deduct some of the expenses on your tax return.
Here are seven things the IRS wants you to know about deducting costs related to your job search.
- To qualify for a deduction, the expenses must be spent on a job search in your current occupation. You may not deduct expenses you incur while looking for a job in a new occupation.
- You can deduct employment and outplacement agency fees you pay while looking for a job in your present occupation. If your employer pays you back in a later year for employment agency fees, you must include the amount you receive in your gross income, up to the amount of your tax benefit in the earlier year.
- You can deduct amounts you spend for preparing and mailing copies of your résumé to prospective employers as long as you are looking for a new job in your present occupation.
- If you travel to an area to look for a new job in your present occupation, you may be able to deduct travel expenses to and from the area. You can only deduct the travel expenses if the trip is primarily to look for a new job. The amount of time you spend on personal activity compared to the amount of time you spend looking for work is important in determining whether the trip is primarily personal or is primarily to look for a new job.
- You cannot deduct job search expenses if there was a substantial break between the end of your last job and the time you begin looking for a new one.
- You cannot deduct job search expenses if you are looking for a job for the first time.
- The amount of job search expenses that you can claim on your tax return is limited. You can claim the amount that is more than 2 percent of your adjusted gross income. You figure your deduction on Schedule A.
For more information about job search expenses, see IRS Publication 529, Miscellaneous Deductions. This publication is available on www.irs.gov. For any questions relating to your specific circumstance, feel free to call our office at 817-545-1277.
Summer Day Camp Expenses May Qualify for a Tax Credit
Along with the lazy, hazy days of summer come some extra expenses, including summer day camp. But, the IRS has some good news for parents: those added expenses may help you qualify for a tax credit.
Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation.
Here are five facts the IRS wants you to know about a tax credit available for child care expenses. The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year.
- The cost of day camp may count as an expense towards the child and dependent care credit.
- Expenses for overnight camps do not qualify.
- Whether your childcare provider is a sitter at your home or a daycare facility outside the home, you’ll get some tax benefit if you qualify for the credit.
- The credit can be up to 35 percent of your qualifying expenses, depending on your income.
- You may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling 800-TAX-FORM (800-829-3676).
Links:
IRS Publication 503, Child and Dependent Care Expenses
Beware of emails claiming to be from IRS
Bogus email scams are resurfacing, including one involving payments allegedly rejected by the Electronic Federal Tax Payment System. The email has a link that may download malicious software.
Information on what to do if you receive a suspicious IRS-related communication is available on IRS.gov.
